99dresses was a virtual closet platform that allowed women to trade fashion items using a virtual currency called "buttons."[1] Founded by 18-year-old Nikki Durkin in 2010 and later accepted into Y Combinator's Winter 2012 batch, the company showed early promise with strong user engagement in Australia before expanding to the US market.[2][3]
Despite achieving impressive early traction—including 1,000 transactions per week within two months of its US launch—99dresses ultimately failed due to a cascade of execution problems.[4] The company's downfall stemmed from team instability, repeated technical failures, funding challenges, and an inability to achieve sustainable product-market fit in the American market. The startup officially shut down in June 2014 after four years of operation.[5]
99dresses began as a post-HSC (Higher School Certificate) project by Nikki Durkin, who was just 18 years old when she founded the company in December 2010.[6] The startup emerged from a collaboration with Pollenizer, an Australian startup accelerator, positioning it as one of the early fashion-tech ventures in the region.[7]
Durkin's vision was to create a virtual closet where women could trade fashion items with each other, addressing the common problem of having clothes they no longer wore while wanting access to new styles. The platform used a virtual currency system called "buttons" to facilitate these exchanges, creating a community-driven marketplace for pre-owned fashion.[8]
99dresses operated as a virtual closet platform that enabled women to trade fashion items using a proprietary virtual currency system called "buttons."[17] Users could upload photos of clothing items they no longer wanted, set prices in buttons, and browse other users' virtual closets to find items they desired.
The platform's core innovation was its currency system, which eliminated the need for direct monetary transactions between users. Instead, women earned buttons by listing and selling their own items, which they could then spend on other users' clothing. This created a circular economy within the platform that encouraged active participation and repeat engagement.
The technical infrastructure supported photo uploads, user profiles, search and discovery features, and a transaction system that handled the button-based exchanges. After relaunching in 2012, the platform was rebuilt with a new team including technical co-founder Marcin, along with team members Chandra, Oguz, and Clare.[18]
99dresses positioned itself in the emerging fashion resale market, targeting women who wanted access to variety in their wardrobes without the cost of constantly buying new clothes. The platform competed in a space that would later see successful companies like The RealReal, Vestiaire Collective, and Poshmark.
The company's differentiation lay in its virtual currency system, which created a more engaging, game-like experience compared to traditional resale platforms. This approach aimed to build stronger community engagement and reduce friction in peer-to-peer fashion trading.
However, the market dynamics differed significantly between Australia, where the company first found traction, and the United States, where it struggled to replicate its success. The platform faced challenges achieving product-market fit in the US market compared to its initial Australian user base.[19]
99dresses operated on a transaction fee model, taking a percentage of each exchange facilitated through the platform.[20] This approach aligned the company's revenue directly with user activity and platform usage.
However, the business model faced significant challenges as transaction values decreased over time, directly impacting revenue generation.[21] The virtual currency system, while engaging for users, may have contributed to this problem by abstracting the real value of transactions and potentially encouraging lower-value exchanges.
The company raised a total of $105,650 in funding, including $17,000 from Y Combinator.[22][23] Investors included Pegasus Tech Ventures alongside Y Combinator.[24]
99dresses demonstrated strong early traction in its Australian market, going live in September 2010 and hosting up to 1,500 dresses at a time.[25] This initial success helped secure the company's acceptance into Y Combinator's competitive Winter 2012 batch.
The most impressive traction metrics came after the company's US relaunch in 2012. Within just two months of launching in the American market, 99dresses achieved 1,000 transactions per week—a significant volume that demonstrated strong product-market fit potential.[26]
However, this early traction proved unsustainable. The company struggled to maintain growth momentum and faced declining transaction values that undermined its revenue model. Despite the promising initial numbers, 99dresses could not convert early user engagement into a viable long-term business.
99dresses failed due to a cascade of execution problems that compounded over time. The most critical failure point came when Durkin had signed a $1.2 million seed funding round, but the investment fell through when her co-founders left the company.[27]
The situation deteriorated further when the technical co-founder was hospitalized with a serious illness and subsequently dropped out, causing additional loss of investor confidence.[28] As Durkin later wrote, "massive technology problems brought sales to a halt" multiple times, creating a cycle of technical debt and operational instability.[29]
Operational challenges compounded these team and technical issues. The company experienced visa problems that complicated operations between the US and Australia, adding administrative burden during a critical growth phase.[30]
Ultimately, the business model proved unsustainable as transaction values decreased, undermining the revenue foundation built on transaction fees.[31] The company struggled with product-market fit in the US market compared to its initial success in Australia, suggesting that the platform's appeal didn't translate across different consumer behaviors and market dynamics.[32]
Team Stability is Critical During Fundraising: The loss of co-founders directly caused the collapse of a $1.2 million funding round, demonstrating how team instability can destroy even signed investment commitments. Founders should address team dynamics and commitment levels before entering serious fundraising processes.
Technical Debt Can Kill Growth: Repeated technical failures that "brought sales to a halt" show how accumulated technical debt can create a death spiral. Early-stage companies must balance speed-to-market with building robust technical foundations, especially for transaction-heavy platforms.
Market Validation Doesn't Always Transfer: Strong traction in Australia didn't guarantee success in the US market, highlighting the importance of validating product-market fit in each target geography rather than assuming global applicability.
Revenue Model Sustainability Matters Early: The declining transaction values that undermined the fee-based revenue model suggest that founders should stress-test their monetization approach under various user behavior scenarios, not just initial adoption patterns.
Transparent Failure Can Create Value: Durkin's honest post-mortem gained massive attention, being read over 250,000 times in 48 hours.[33] This transparency helped establish her credibility for future ventures, including CodeMakers, which teaches programming to kids using Minecraft.[34]