The Exchanges

Q had been an entrepreneur himself, and he said, hey, I think this could be bigger than something here. Do you want to go into business, and how did that work? Did you, did you start to think to yourself, hey, maybe I should turn this into a business, or how did you go from running a gym at the JCC to start thinking, hey, there could be something bigger here?

A Well, before that, I opened a second one on behalf of the Jewish Community Center in a neighboring community, the one I lived in, Mill Valley, which was a lot. So I had two of them, and they were really making money, and they were supporting all the, you know, sort of do-good programs of, you Other things that the center was doing, and, um, that's when the guy who had been running these , he was the president of the board. He was all of 32, and I'm 26, and I think he seems like an old man to me, but he, he had run these Rick Berry basketball camps, and he'd sold them, and he was in a non-compete cause. He was looking for something else to do, and he came to me and said just what you said. I think this could be commercial. I'll put up the money. You run them. What do you think? And I was completely naive. I had no, this was not even, I never even thought of it as a commercial venture. It was all him.

AI assessment note: “I never even thought of it as a commercial venture. It was all him.”

Q there's something here. Do you want to go into business together? So what did that, what did you then do? I mean, you have two, two of these centers in JCCs. At that point, it's not your business. So, so then do you say, all right, I'm going to start a business. It's going to be called Kinder Gym or whatever. Like, is that, did that happen at that point?

A Yeah, well, but I was afraid to leave my job, my, you know, my important 5000 dollar a year job. I just, so I skipped down to south of San Francisco to the peninsula, we call it, um, San Mateo, to open up the first one. Um, as a business, calling a kinder gym, none of this trademark or any of that stuff is even, I think about all that stuff. And, um, and so I open up at the, at a temple, um, I convinced a temple that we could use their, their social hall a couple of days a week and that we could store the equipment, you know, a little bit here, a little bit, that sort of thing.

AI assessment note: “so I skipped down to south of San Francisco... to open up the first one”

Q No money. Now you're going back and say, okay, we figured something out. I'm going to present this to you, and I need money? Is that what you did?

A Yeah, I said, um, I, I think we really have come up with a winner to, to, to take the best of our reputation, the press, and all of that, and come up with something that is super sustainable, and it will need an investment, and I'm going to tell you how it works. So I just, I was all in sales mode. You know, we'd had, you know, a beautiful mock-up of the store, which is pretty much how it ended up looking, you know, like a gym, and then some clothing. Um, the woman who had done our clothing, her husband was the GM of the gap, so he knew all these people in, in China that could manufacture for us, you know, and she did a great job designing our first line. We couldn't design a boys and a girls because we couldn't make enough products, so we did a unisex line. Anyway, so I went to the board that, that, Phil Schlein, who had been the head of the, of Macy's, had just joined US Venture Partners, my venture capital firm, and he asked the board if he could sit in on the meeting, because he was like the retail guy, and he wanted to hear what, what the deal was, and so I made the presentation. I could tell that it was, um, it was going over well, and then he asked if he could speak, and he looks at the board, he says, you'd be crazy to invest in this business. First of all, they don't know how to run the business they have, True. They don't know the first thing about retail, and he just…

AI assessment note: “Yeah, I said, um, I, I think we really have come up with a winner”

Q This is like around, and again, in the Bay Area, yeah?

A Yeah, the Bay Area. This is in the South Bay. Um, and I go to this restaurant, and I heard a bunch of, you know, sort of Entrepreneurial types, young sort of wannabe Silicon Valley go-getters talking, and I heard them say, you know, a consumer company went public yesterday for quite a valuation. It's Gymboree. And I overhear this, and I thought, what? Gymboree went public? And I'm sort of half-assed interested, really interested, and I go up to where, where they're, you know, and I see a bunch of New York Times sitting on the, a little bench next to where you cash out, and I took a paper, and I opened it up, and sure enough, in the financial section, I see one of those tombstone ads that Jimbery was going public.

AI assessment note: “Yeah, the Bay Area. This is in the South Bay.”

Q plan, because from what I understand, the model that you, you and Bud put together was, was somewhat different. It wasn't like, um, hey, you want to own a Taco Bell or a McDonald's? It was, you, you really wanted women actually to be the franchisees. Correct. Particularly women maybe who were not working at the time. Tell me a little bit about that model that you start to develop.

A That was sort of the, the, I think one of our brilliant moments. What we, what we were trying to do is really replicate people like me, but a little bit younger. Now I'm in my early thirties. So we're looking for women in their mid to late twenties who were, um, raising a family, but also had ambition for some kind of professional focus. And this was like the perfect business. And so we had a unique strategy, um, because again, this is also pre-social media. We knew that Um, the local newspapers were the next best thing to anything. I mean, paid ads, not, none of that was going to work like having, having a press endorse you and write a big story on you. So we just went about going to the local press and every community that we were thinking about going to and saying, we're thinking about going here. And then some story about the neighboring community with the local franchisee and blah, blah, blah. And then people started running. We also ran kind of an interesting strategy. We ran editorials.

AI assessment note: “we're looking for women in their mid to late twenties who were, raising a family”

Q And from what I understand, you really focused on the East Coast initially. You didn't, you didn't, even though you were based in California, you You really wanted to push the New York market from the beginning. Why was that?

A Well, first of all, we built out already the Northern California market because I was able to do that on my own even before we were growing, but when we opened in LA, it was a different story, and the LA franchisees, um, were extraordinary, and they knew how to get all the press, and they were part in the film industry, and so they were on all the fancy You know, TV shows, and they got all the movie stars in their classes, and they had about eight locations. And because of their success, we were able to build up the Southern California market because people who were in their classes would say, I want to do this. So that, uh, grew naturally. So the East Coast was where we needed to put our energy, which is when we did the, the, um, Wall Street Journal ads. I hired a PR firm. They helped us get some big stories and, you know, we're happening.

AI assessment note: “So the East Coast was where we needed to put our energy”