Nov 20, 2023 · 1h 13m · how-i-built-this
Everlane: Michael Preysman
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of How I Built This, host Guy Raz interviews Everlane founder Michael Preysman about disrupting traditional retail markups through direct-to-consumer basics, pioneering the model of 'radical transparency,' and navigating explosive growth, supply chain hurdles, and organizational crises.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 42.8% of the talking time here. How this is scored →
Guy as informed peer 3.7 Guest teaching 2.4 Guest disagreement 1.4 Guy pushing back 2.6
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:05:47 Guest defends limits of internal transparency
Michael firmly qualifies the company's trademark philosophy, asserting that unrestricted internal transparency can induce anxiety and paralysis in decision-making.
Hardest push from Guy ▶ 34:38 Host cites fashion blog calling infographic ludicrousGuy Raz quotes a direct critique of Everlane's pricing infographic, challenging whether the company demonized competitors by omitting legitimate marketing overhead.
Biggest teaching moment ▶ 22:53 Detailed breakdown of garment manufacturing costsMichael breaks down the exact unit economics of Supima cotton, cutting, dyeing, and grading, revealing why direct production yielded low factory costs.
Guy holds their own ▶ 15:29 Host questions ethical framing of standard retail markupsGuy Raz challenges Michael's moral characterization of high apparel markups, forcing him to concede that it reflects standard capitalism rather than wrongdoing.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Leaving Finance and Heading to Silicon Valley | 3 | 2 | 1 | 1 | Guy Raz prompts Michael about his transition from finance in New York to tech entrepreneurship in Silicon Valley. Preysman explains his mindset and search for a technical co-founder in a collaborative manner. | |
| Iterating on E-Commerce and the iPhone Case Store | 3 | 3 | 1 | 1 | Michael recounts early experiments with Etsy and Tumblr, including an on-demand iPhone case store. Raz asks clarifying questions about seed funding and business margins without friction. | |
| The Pivot from Tech Platform to Direct-to-Consumer Basics | 5 | 3 | 2 | 4 | Guy Raz pushes back gently on Michael's claim that a 7x markup is 'borderline unethical,' questioning whether it is simply basic capitalism. Michael concedes the point, framing it as early twenties idealism. | |
| Mastering Supply Chains and Choosing the Everlane Name | 2 | 2 | 1 | 1 | Preysman explains learning the clothing supply chain from scratch and purchasing the domain name Everlane. Guy lightly questions the meaning behind the name. | |
| Crafting the Direct-to-Consumer Value Proposition | 5 | 3 | 2 | 4 | Guy Raz presses Michael on what truly set Everlane apart, noting that high-end customer service already existed at stores like Nordstrom. Michael clarifies that transparent pricing and low markup were the core differentiators. | |
| Viral Pre-Launch Campaign and 80,000 Sign-Ups | 3 | 2 | 1 | 1 | Michael describes the viral pre-launch referral campaign that generated 80,000 email signups before selling a single shirt. Guy asks about communication and product availability. | |
| Sponsor Break: Rocket Money, Squarespace, and Listener Memo | 0 | 0 | 0 | 0 | Mid-roll sponsor reads and listener voicemail break; host-side scoring is zeroed out. | |
| Launch Day Success and the Radical Transparency Infographic | 6 | 4 | 3 | 6 | Guy reads a critical fashion blog review of Everlane's 'Making of a Designer Tee' infographic, challenging whether the graphic was an oversimplification that ignored branding and distribution overhead. Michael defends the PR move. | |
| The Failed Experiment with Ties and Bow Ties | 4 | 2 | 1 | 2 | Guy and Michael humorously analyze Everlane's second product: an ill-fated run of ties and bow ties. Guy jokes about the hipster fashion bubble of 2011. | |
| Co-Founder Departure and Evolving Radical Transparency | 5 | 3 | 2 | 4 | Guy questions the departure of co-founder Jesse Farmer and asks whether Everlane's branding implied that legacy retailers were dishonest. Michael explains the evolution from honesty to transparency. | |
| Introducing Backpacks, Fundraising, and the Midnight Launch Spike | 3 | 2 | 1 | 1 | Michael walks through raising an additional 2.5 million dollars and releasing backpacks and cashmere, culminating in a 2:00 AM sales spike on their one-year anniversary. | |
| Sponsor Break: Mint Mobile and Sonos Beam | 0 | 0 | 0 | 0 | Mid-roll sponsor reads for Mint Mobile and Sonos Beam; host-side scoring is zeroed out. | |
| Explosive Organic Growth, Culture, and Leadership Lessons | 4 | 3 | 1 | 3 | Guy probes Michael about rapid revenue growth to 100 million dollars and whether top-line expansion overshadowed profitability. Michael openly discusses early mistakes with micromanagement. | |
| Factory Transparency and Sustainable Denim Innovation | 5 | 3 | 2 | 5 | Guy asks whether transparent factory auditing makes Everlane vulnerable to charges of hypocrisy and whether ordinary consumers genuinely care about sustainability metrics. | |
| Brick-and-Mortar Expansion and Tackling Sustainability Metrics | 6 | 3 | 2 | 5 | Guy cites the critical 2-out-of-5 rating from ethics watchdog Good On You regarding greenhouse gases and living wages. Michael acknowledges the critique and explains how Everlane adjusted. | |
| COVID-19 Disruption, Layoffs, and Internal Transparency Friction | 6 | 4 | 3 | 6 | Guy directly raises employee allegations of union busting and internal frustration regarding wage transparency during pandemic layoffs. Michael acknowledges that radical transparency internally can generate paralyzing friction. | |
| Stepping Down as CEO and Reflections on Luck and Identity | 3 | 2 | 1 | 1 | Michael explains his decision to step down as CEO to become executive chairman and reflects on the interplay between luck, preparation, and founder identity. |
Statements from this episode (19)
Preysman raised $1M from top VCs to build a Tumblr retail store
“And it was the, You know, famous SV Angel, Ron Conway. It was Kleiner Perkins putting a little bit of money. It was a whole host of different people that just said, hey, this sounds cool. Tumblr, shopping, these guys seem smart. We'll give them a shot.”
Preysman and his co-founder bought the domain Everlane.com for just $17
“Jesse and I were sitting in a room one day on instantdomainsearch.com, and we were just, for three hours, typing in names, names, names, and I had a whole bunch of scratch, and I always, you know, we liked the names that were simple and clear, and all of a sud…”
Preysman undercut James Perse's 6x apparel markup with Everlane's 2x margin
“The James Pursty cost six, seven dollars to make, too. And they were selling that for a four to six X markup. And the basic principle of Everlane in the early days was two to two and a half X markup. That's it.”
Everlane's pre-launch viral referral landing page generated 80,000 email sign-ups
“And next thing you know, I kid you not, this thing blows up, and we have 80,000 people. Sign up. 80,000 people.”
Everlane's initial launch inventory of 1,500 t-shirts sold out in two days
“The first run sold out, I mean, it was 1500 t-shirts times 15 dollars. It sold out in a day or two.”
Preysman argues Instagram and TikTok have become America's new shopping malls
“I think Instagram and TikTok have become the shopping malls of America. You're discovering small brands all the time.”
Everlane's first product was 1,200 ties sourced from a Bronx factory
“Made in a factory in the Bronx that manufactured everything for Brooks Brothers. And we sold them for 35 dollars, and we bought 1200 ties and bow ties.”
Co-founder Jesse Farmer left when Everlane pivoted from tech to apparel
“At the end of the day for Jesse, what he wanted was to build a technology business, and what we moved away from was being a technology business, and we moved into building a brand. And that Wasn't the journey he wanted to be on”
Everlane shifted from calling traditional retail dishonest to radical pricing transparency
“Because it, to us, felt dishonest, and then I think there was a point where we realized, actually, they're not dishonest, they're just doing what they're doing, but the vehicle that we can have that's different is transparency.”
Everlane hit $200K in monthly revenue and sold out in early 2012
“It was March, 2012, I believe, when we raised our next amount of money. We had been doing about a hundred to 200,000 dollars a month, but selling out every month.”
Everlane doubled revenue from $53 million to $100 million in 2017
“And so we raised twenty-five million in total, and we were profitable, and that was the year of 2017, which was a hugely pivotal year for Everlane, when we went from fifty-three million dollars to a hundred million in one year.”
Preysman believes Everlane should have prioritized profit after hitting $100M revenue
“The decision I would have made now, and I think everybody's making even today, is that when we hit a hundred and we were profitable, that it was the time to transition from growing what we call the top line, which is the revenue, to growing the bottom line. So…”
Everlane live-blogged factory conditions from its Chinese manufacturing partners in 2013
“In 2013, there were a couple of key events that happened for us. One is we had started to manufacture in China, and we really wanted to understand are the factories we working, we're working with in China, high quality. And myself and a few of us went to China…”
Everlane labeled garments with specific manufacturing cities instead of just importing countries
“On every label, we would name the city where things were made, not just the country. We wouldn't say imported.”
Preysman claims discovering where luxury brands manufacture their products is almost impossible
“Normally if you're another brand and you want to know where someone makes things, it's almost impossible. You can't find out where a luxury brand makes its products.”
Preysman says sustainability drives brand resonance, not individual consumer purchase decisions
“I believe we have some data to support that it creates resonance with the brand, but when it comes to the individual buying decision of, do I buy this coat versus that coat, the answer is usually not so much, especially today.”
Everlane lost money in 2019 after increasing paid digital advertising spend
“Break even, and then losing a bit of money in 2019.”