'Everything Really Hit Rock Bottom': How Nasty Gal's Culture Went Nasty

Adding to the company’s toxicity, two lawsuits alleges that Nasty Gal fired multiple pregnant employees either before or during their parental leave, and an employee with a serious illness who was awaiting an organ transplant.

Aimee Concepcion filed suit in March of this year alleging that she and other pregnant women were illegally fired before or during maternity leave, as well as one man who was supposedly fired as he was about to take paternity leave. George Azadian, a lawyer for Concepcion, sent Jezebel a statement saying that he’d be representing three of Nasty Gal’s former employees in arbitration hearings, whose results will, by law, be confidential:

I am very proud to represent these three brave women, who had their careers derailed by Nasty Gal. Unfortunately, Nasty Gal forces its employees to sign arbitration agreements – depriving them of a jury trial, requiring that their cases be decided by an arbitrator paid for by Nasty Gal, and making the entire arbitration completely confidential. These days, employers are getting much smarter and roping employees into “restructurings” and saying that they lost their job. But knowing the facts of these three remarkable women, how they were the only pregnant females who provided notice of maternity leave before being terminated, and how their jobs were taken over by other employees, I knew these were cases I had to take and fight to make sure other pregnant womentrying to already juggle so much are not catapulted back to the “Mad Men” era of being asked to leave work when their employer learns they are pregnant.

And there’s Nasty Gal’s former accountant Farah Saberi, who, as Buzzfeed was first to report, says she was laid off while suffering from advanced kidney failure. In a lawsuit that will soon enter arbitration, Saberi says she was first diagnosed with end-stage renal failure in 2013, and soon discovered she would need both a kidney and pancreas transplant. She also underwent bypass surgery to correct a blocked artery in her heart. In August 2014, she was laid off due to “elimination of her role,” and, she alleges, was offered a severance agreement in which she gave up her right to sue, in exchange for six months of healthcare and two weeks’ pay.

Saberi alleges that the company let her healthcare coverage lapse anyway, in violation of the agreement. She was unable to afford her blood pressure medication. Her brain became swollen, and in January, she suffered a grand mal seizure in traffic. She still needed the kidney transplant, but because her insurance lapsed, a hold was placed on the process. In April 2015, when the lawsuit was filed, she was still hospitalized, watching as her bills zoomed up astronomically. Her lawyer says she still hasn’t gotten a new kidney. Her lawsuit accuses the company of violating California’s Fair Housing and Employment act, saying Nasty Gal illegally discriminated against her because of a physical disability. Among other things, she’s suing for emotional distress, negligence, and breach of contract.

Even the employees without catastrophic stories say they’re dismayed by the sharp divide between Nasty Gal’s early days as a fun, positive workplace for women and a company that today is increasingly controlled by a mostly-absent Amoruso and Waterson as an unpleasant, harsh, unpredictable CEO, the two of them buoyed up by a small army of Yes women. (Amoruso, Waterson and a public relations company retained by Nasty Gal were all contacted for comment by Jezebel about the specific allegations outlined in this article. They have not responded.)

Few workplaces are entirely bad or entirely good, and Jezebel made a sincere effort to chase down Nasty Gal employees with positive experiences working at the company. The ones currently employed who we were able to contact did not respond to requests for comment, and the ones who spoke with us said they had nothing positive to say. None of the former Nasty Gal-ers would allow their names to be used in this story, saying they feared retribution from Amoruso or Waterson.

“Usually after people quit, Sophia is very openly bitter,” one person who left voluntarily told us. “I feel like she takes it as a betrayal or something. So I think we are all a little nervous about what could happen if she found out we had any part in tainting her brand.”

Kim Hunt, Nasty Gal’s Head of People and Culture (the company’s version of HR), has also warned employees not to talk to press, in an internal email forwarded to Jezebel:

Hi Team,

Some of you may have seen publicity today around the restructuring at Nasty Gal that took place over nine months ago. The accusations and the articles are completely without merit and we are responding appropriately and defending the claims. I understand that certain reporters have attempted to contact some of you for comment— please direct all inquiries to [email protected]. As a reminder, employees are not authorized to speak on behalf of Nasty Gal unless coordinated with our internal PR team.

“As much as I want to be brave and take a stand,” one former employee told me, about her reasons for anonymity, “I know Sophia is as vengeful as she is self-described ‘punk.’” (That said, if you have worked for NastyGal and had a positive experience working there, we’d welcome your feedback.)

Nasty Gal’s staggering success story has been outlined in a number of glowing features ( “If ever there were a Cinderella of tech, Sophia Amoruso might be it,” the New York Times raved, back in 2013.) To make the fairy tale a little shorter: the company began its astronomical growth in 2011, when Amoruso and her first employee, buying director Christina Ferrucci, moved with 11 other people from San Francisco to Los Angeles. In the first year, they hired close to 100 people.

An early employee describes that time as “close to perfection.”

“We were really enjoying ourselves,” the former employee says. “We had zero debt. Every single week we were bringing in cupcakes, because we had reached $100,000 an hour in sales, or $1 million on Black Friday weekend. We were always celebrating.”

In 2012, as Amoruso has written about in #GIRLBOSS, the company brought on its first investors, Index Ventures, raising an eye-popping $40 million to grow the business. But it’s then, a former employee says, that the culture subtly began to change: “I think when the investors came in there was a lot of pressure. Pressure for us to be bigger. They wanted more profit, they wanted more product, they wanted to expand.”

That’s what successful businesses do, of course. And it was inevitable, too, that some of the early core group began to leave, deciding they’d rather work for a 50-person business than one whose employees would soon number close to 300. But the company’s earliest layoffs were handled well, a longtime employee says: “We let go of 100 people because we transferred our warehouse to Kentucky in 2013. [The head of HR at the time] made sure that it was done with compassion. At the end of the day, there was a temp agency waiting for everyone coming out, signing them up. She contacted them so she can be sure those people have jobs when they get laid off.”

In March 2014, Sheree Waterson was hired. Waterson came from Lululemon, where she was fired in the wake of See-Through Pantsgate, for which she was held personally responsible. In January 2015, Amoruso stepped down as CEO and appointed Waterson in her place. (Amoruso said at the time that she’d continue leading the creative and brand marketing wings of the company, as well as acting as executive chairman of the board.)

The longtime employees say that while Waterson is deeply intelligent, she has little sense of what made Nasty Gal so successful.

“She’s not really listening to the Nasty Gals and what they wanted,” one says, referring to longtime, loyal customers: “the hardcore Nasty Gals that brought us where they are.”

Several former employees say that Waterson’s focus is on raising the Average Unit Retail (AUR), the average cost of an item in the store, even though a cornerstone of the business has always been inexpensive clothing. The AUR at Nasty Gal is now around $100, the former employees say, which is the highest it’s ever been, and up by 50% from this time last year. The sales volume, they say, has plummeted 40% at the same time. Waterson, who is 58, reportedly blamed that on “inexperienced merchants,” but one former employee says the real problem was that she pushed styles she personally liked without paying attention to what actually sold.

The former employees describe nightmarish marathon meetings where Waterson tore down everything about the brand’s current look. One told Jezebel:

Sheree prevented anyone from doing any real work by keeping us in 3-5 hour meetings where she would tear down all the products on the site, which was literally based on nothing but her own 58 year old opinion. Even when people presented her with legit selling data on items she deemed irrelevant, she would brush it off and push the merchants to invest in styles that she personally liked. She would show up late to meetings (or leave after 10 minutes), talk for about an hour about nothing in particular, and then comment about how terrible everything looked.

At the same time, the former employees all agree, Amoruso was increasingly absent, writing #GIRLBOSS, starting the #Girlboss Foundation, a laudable organization that provides grant funding to up-and-coming female entrepreneurs, and going on her book tour. One describes her as “barely present,” saying when she did show up for meetings, she was buried in her phone and seemed unfamiliar with anything about the company’s finances, numbers, processes, or even the most basic merchandising terms.

Another employee says Amoruso became difficult to work with when she did come around:

She probably actually addressed me directly 5 times. She never made any effort to actually connect with her employees. If she wasn’t out doing press or interviews, she would be locked in her office; there was no visibility or sense of presence. Especially when #GIRLBOSS came out and her ego exploded, she began acting like a celebrity not a CEO. There were so many directors and executives who would share that her head had grown so large, it was impossible to work with her.

But another employee who’d known Amoruso for a long time denies she changed or that success got to her. They said she’d always been blunt about not knowing much about the fundamentals of running a business—a point she makes clear in the book—and that Waterson taking over as CEO earlier this year made sense: “In fairness to her, she’s been open about that from the beginning. When she stepped down, the originals thought it was about time.”

After the last batch of firings, the employees who were left say they wept openly in a meeting as Amoruso described aloud why their friends didn’t fit the company values.

“The speech Sophia made was 90% spent blaming all the people let go,” a former employee says. “Saying it was because they weren’t team players or following the Nasty Gal ‘values.’ Mind you this was said to a room of people crying because they just watched 30 of their friends lose their job. Not a single mention that they over-hired.”

One former employee described the day of the layoffs, and the months that followed, as devastating for morale, the lowest point in the company’s history:

Everything really hit rock bottom with the layoffs. It was a rough day. To my understanding the managers weren’t even aware until the morning of when Sheree forced them to fire team members due to “reorg”. Some departments where dissolved, but other layoffs seemed very strange—despite the fact that they were presented as re-organization, these eliminated positions where filled with new, outside hires a month or two later. People started to get pissed. We were a close family. Friends. We watched people’s lives get ruined for no reason.

The morale was so low that Sophia and Sheree brought in a consulting company called Nobel. They have worked with HUGE companies, so I assume they couldn’t have been cheap. They stayed with us for three months, listened to complainants, told us they were a safe place to air our grievances, and tried to implement new processes (especially in our epically unproductive meetings). All of the “processes” that they paid Nobel to teach us were never adopted or enforced. It was a hilarious waste of time, money and energy.

A short while later, three of her longest-serving and most loyal employees were also let go, including Christina Ferrucci, described by several people as “Employee #1” and the person who suggested Nasty Gal start selling new clothing, now a huge part of its business model.

People who were present at these meetings say that Amoruso described Ferrucci and the other employees as having been let go for “being mean girls.” Other employees dispute her take.

“These three were some of the most beloved employees,” a former employee tells Jezebel. “Especially in the merchandise department. They couldn’t be further from mean girls. The reality is that when Sheree Waterson came in, she wanted all the power in the buying and merchandise departments but [the fired employees] were these young, intelligent and respected managers who had the ears of their teams. Eliminating them allowed her to get rid of any opposing voices.”

“These people were amazing,” another person agrees. “They built the company. They had never had one write-up, complaint, meeting about behavior, nothing. It was shocking and terrifying. Everyone was scared for their jobs.”

After the layoffs, the former employees say it was also common knowledge that every pregnant woman at the company had been among those let go. There was soon talk of, as they put it, “the pregnants suing.” Although one longtime employee says the intention was obviously to just get rid of enough people to try to make the company profitable again, the stupidity of laying off all the pregnant people was obvious from an HR standpoint: “I mean, come on.”

In November 2014, just as the dust was settling from all the firings, Nasty Gal opened its first brick-and-mortar location in West Hollywood. In April 2015, they opened a second in Santa Monica. The former employees who spoke to Jezebel say that wasn’t a popular decision either, and that neither store is performing well. (There’s no question, though, that Nasty Gal as a company is still performing just fine, enough so that it was able to raise another $16 million in venture capital funding earlier this year.)

In the end, the former employees occasionally seem angry about their time at Nasty Gal and what the company became. Mostly, though, they seem deeply sad.

“I don’t hate Sophia,” one says. “I hate what happened. I hate what Nasty Gal is now. What it’s becoming. It really hurts, and most of the originals are really hurting. We really loved Nasty Gal. We built that company.”

And the company’s still hiring. Though their 2012 influx of cash arguably led to unsustainable company spending that resulted in layoffs axing more than 10 percent of the company’s staff people by the end of last year, Nasty Gal may be on another upswing powered by investor money: according to a recent Instagram post from the company’s “Talent Aquisition Manager” Iris Hanu, they appear to be recruiting in San Francisco.

Nasty Gal is still attractive to hip young women wanting to work in fashion, but another ex-employee says it’s important to be aware what they’re getting into.

“When these stories come out and ex-employees follow up, I think sometimes it can seem like they are bitter or looking for revenge and so skewing the reality,” she says. “But that is not where the fire comes from. I want the young women who are applying to Nasty Gal thinking it will be their dream job to know the truth behind the company’s external image of glitz and glamour. I saw too many incredibly hard working, ambitious, and eager people lose so much self confidence, self worth and motivation, including myself. And I wouldn’t wish that on anyone.”

Correction: An earlier version of this story said the first Nasty Gal store was opened in Melrose — it was opened on Melrose Avenue in West Hollywood. I regret the error.

Ad Screenshots via Nasty Gal/MAC