The Exchanges

Q But that didn't, didn't happen, at least initially. So, so what happened instead? What, what happened that summer?

A Yeah, so I was surfing in La Jolla one day, and I came out of the water, and I was going back to my car, and a woman stopped me on the beach and asked me if I had ever considered modeling before. And, um, It was something I kind of chuckled at at the time, but she explained to me that her son had been living in Europe and had been traveling and having this incredible life experience. And, um, if I'd be open to exploring it, um, she would introduce me to this guy. So I said, okay, well, I'll take a meeting. So I met this gentleman. Uh, he was a manager and he was having a casting in San Diego with a, an agency from Milan in Italy. And So he encouraged me to come to this casting, and he told me that if I happened to get picked, he would represent me, and so I remember I showed up, there was a line wrapped around the block, and I waited in line, and I met with this group, and you know, they ended up choosing me to go, and I think I was like one of, there was three guys that were selected, and so I flew straight to Milan with a suitcase of the wrong type of clothing, and I ended up spending the summer working in the, in the fashion industry as a model and fell in love with it and was like, why would I go home? I'm traveling the world. I have an opportunity to continue doing this. And, and so that's what I did for a couple of years.

AI assessment note: “I ended up spending the summer working in the, in the fashion industry”

Q right, when you go DTC, um, It's working, but you also decided to work with retailers, brick and mortar stores as well, and a lot of DTC brands then, even now, won't do that, because you can make a lot more money just selling direct to consumers. Can you kind of give me, sort of help me understand why you wanted to work with brick and mortar and do DTC?

A I think partly because we had to out of necessity, you know, we weren't flush with the capital. And so keep in mind, like over, so over the first few years of the business, we raised two million dollars of, of capital from friends and family, no financial institutions. Some of our competitors had raised 20, 25, upwards of fifty million dollars. We couldn't compete with them solely on the social playing field. Um, so we knew that we needed to compliment what we were doing, and we needed another customer acquisition vehicle, and we knew that wholesale could be a critical component of that. So after kind of hitting the pause button on wholesale while we were developing and building our digital community, once we established an engine of growth and we got out of the gates, And these wholesale accounts could take note of what we were doing. A lot of the no's that we originally got when we first showed the samples to these buyers turned into yeses.

AI assessment note: “partly because we had to out of necessity, you know, we weren't flush with the capital.”

Q Alright, let me, let me back up and fill some gaps in before you go to market with this. So, you've got a design, and by the way, were you able to hire anybody else, or was it really in the first year just bringing in consultants?

A Yeah, so, you know, it was really myself and Rebecca initially, and then the first person we hired with the little fundraising that we had done, because I, I chose not to take a salary from the business, um, just to be able to keep the lights on longer. Um, the first person we hired was Nikki Sekilio, who is our CMO today, and Nikki's been with me since day one. Rebecca's still with us today, but, but Nikki had a, an incredible marketing background. Um, she was most recently before Viore with a company called Prana, which is like a outdoor kind of climbing Patagonia-esque brand. And then also she worked in the surf industry. She worked for a company called Globe and OP back in the day. And so she had this interesting hybrid background between action sports and surf and beach culture and yoga and performance and outdoor.

AI assessment note: “the first person we hired was Nikki Sekilio, who is our CMO today”

Q So, I mean, basically, this takes you to your first really big fundraise, which I think happens in 2019, which is forty five million dollars. And this is really the first time you brought in a lot of money from an outside investor, right?

A Yeah, the business was growing really fast. And so we weren't in a place that we needed capital. And I think that's, you know, the funny, the funny thing about this entrepreneurial journey is like when you need it desperately, it wasn't available, but, but as soon as we didn't need it, um, you know, there it was, but we chose to partner with Norwest Venture Partners because they were really supportive. They saw the vision for the brand clearly. They believed in us. They believed in the management team and they, they wanted to be invited guests. They wanted to be a line along for the ride and Be helpful where they could be helpful, but not really disturb the creative nucleus that we cherished so much at the brand. And so, yeah, we, we raised our first round. A lot of the money ended up going to shareholders because the business didn't need capital. So we didn't go out and put a bunch of money on the balance sheet at that time because we didn't want it to create bad habits. We were very proud of the discipline and the financial rigor with which we were building the business. So we didn't want a big check to sitting on our balance sheet to disrupt that.

AI assessment note: “Yeah, we, we raised our first round. A lot of the money ended up”

Q So that was the model. It was like, you buy this shirt, we're going to give some of the proceeds to this group. And, and, and how did you get into, did you get into, uh, Like, how many stores did you get into?

A We were probably selling to 25 to 30 stores when we decided that we needed to close the business, and, and a couple of things happened, kind of concurrently, but the great financial crisis of, like, 2007, 2008 hit right after we started the business, and all of a sudden, Walmart started selling organic cotton graphic t-shirts for 25 dollars, and we just, Kind of, we just could not compete, and the, the plan that we had wasn't, we weren't getting the type of traction that we needed to see in order to continue on, and Chad wanted to go and travel, and, uh, and came to me one day and said, hey, I, I'm gonna go travel around the, the US in an RV, and, and I'm, I'm out.

AI assessment note: “We were probably selling to 25 to 30 stores when we decided”

Q How did those initial samples come out? Were you happy with what they made?

A No, the first samples, the fabric was way too heavy. The prints weren't executing properly. The liner didn't fit well. And, you know, today it's funny. We have these big technical design teams and they're pattern makers. They're experts in making product fit exceptionally well. In those days, it was Rebecca and I, we were winging it. You know, we would get a sample in my size. I would try it on and we would talk through how to change the fit. And we would try to communicate that to the factory. And then we would get another proto back and Our vision is to create the best product on the planet, but when we started, the product kind of sucked, and we had a lot of work to do to improve it.

AI assessment note: “No, the first samples, the fabric was way too heavy. The prints weren't executing properly.”

Q I remember you calling this pivot a Hail Mary. You were like down to your last 10 or 20,000 dollars. Um, why do you think that simple shift in how you marketed the product, why do you think that worked?

A I think it always comes back to being intimately aware of who your customer is and, and, and what it is that you're making that connects with them in an authentic way. And, and so we, we had our ideas about who the customer was and what they would like about our product, but it wasn't until we started listening and developing that direct relationship and just hearing it from them that it became crystal clear. So I think, I think that's the, The most important thing you can do in those early days is like you, you have to like develop this relationship with your customer and be open to acknowledging that maybe you don't have it right on the bullseye.

AI assessment note: “it wasn't until we started listening and developing that direct relationship”

Q the boutique at Casa del Mar in Santa Monica, or, or, you know, Faena Hotel in Miami. You know, this is where, like, Massive celebrities go and stay, and they will stop in those shops, and I feel like that's a small, marginal tactic, but it could actually be, you know, much, much more impactful than taking out Facebook ads. I don't know. What do you think about that, Joe?

A I agree. I mean, I think wholesale is a very good channel. I think, you know, you know, advertising online is just, is challenging. It's hard to cut through in today's environment, so I really am a Much bigger believer in the right wholesale partners, the right activations at those wholesale partners to build awareness and getting the staff excited, um, and, and, and, you know, press and influence or strategy to build excitement and community around the brand and then really create hype. And, and then, then you start getting the attention of the bigger, um, accounts, but I'm a hundred percent, a big believer in that. I think it is important that you geographically look at where you want to be. I think Los Angeles, um, Miami has become a very influential market in the U S and then New York. Um, you know, I would, I would really focus your attention on those three markets.

AI assessment note: “I agree. I mean, I think wholesale is a very good channel.”

Q people at the beginning of their careers. Joe, a question for you about looking for a marketing person. How would Lori go about that? I mean, she's, you know, got a really prominent position in her field, but probably doesn't come across a lot of marketers, unless, I guess, unless you're, like, operating on them in the middle of the night, you know, like, how would she find that person?

A You know, if it was me, I would probably be looking at companies that are in your space, maybe other scrub companies that have had some success, even though it's, you know, maybe they're more centered right down the aisle, but they understand the market, they understand the customer, um, and look for somebody that's, you don't need somebody who's at a VP level. Find somebody who's young and hungry and wants to go show up at conferences and put up the booth and talk to people and has a, has a passion for what you're building. You know, and in the early days, you know, you might want to think about granting a little bit of stock options or some equity to somebody to motivate them to join you. I mean, in my early days, our head of marketing took a 50% pay cut to join us, um, because she believed in what we were building and she had some skin in the game. They're not going to be co-founders technically, but they're going to be right there alongside you in these really early, formidable years, and you might want to motivate them with some upside via equity.

AI assessment note: “I would probably be looking at companies that are in your space”

Q And so you, so you thought, all right, I'm gonna, I'm gonna go for this. And was Chris also ready to do it at that point or, or not quite yet? Was he still, cause he, he was running a business. Yeah.

A Yeah, you know, ultimately we decided that we were gonna, that I would be the first one to leave. I would quit my day job, and the plan originally was that Chris would eventually kind of follow suit and join me on the journey. And I understood that if we were going to have a chance at doing it, um, I was going to have to jump in with two feet because there's just too many opportunities where things get tough and you want to retreat back to what's comfortable. And if you have a day job, you have a salary paying the bills. It's too easy to return to that safe space. Um, people thought I was crazy at that time. Um, especially my parents who were like, wait a minute, you've just invested eight years of your life building this great company of great flexibility. Like, why would you leave to start your third apparel company, two of which have already failed? And I had this acute awareness of what it would be like to be on my deathbed, looking back and saying, gosh, I saw that opportunity so clearly, and I didn't pursue it. And I just wasn't willing to live with that. I couldn't live with that.

AI assessment note: “ultimately we decided that we were gonna, that I would be the first one to leave.”

Q And this was around 2013 when all those started, you start to see an explosion of DTC companies raising money. Some of them succeeded, some of them didn't. But imagine that also some of the questions were like, so wait, you're gonna make, like what, like yoga pants or yoga tops? Like, tell me what you're gonna make for guys.

A It almost never even got to that point, honestly. I think when people realized that there was nothing proprietary, or there wasn't a customer acquisition gimmick or hook to the business, a lot of meetings were short, and there was a lot of passes. You know, it's just funny, you know, when you talk about a relationship with rejection, being a model and working in Europe, it was constant rejection. And then my experience at Vaco, trying to be a salesperson, when I was a pretty shy guy, naturally, I developed a really unique relationship with rejection. And so That was all building my backbone up for trying to raise capital for an apparel brand, because it was kind of like starting a band and telling your friends you're going to be the next Rolling Stones. People are like, yeah, good luck.

AI assessment note: “It almost never even got to that point, honestly.”

Q So what were the biggest, I mean, the biggest obstacles presumably were just, I mean, there was everything, but what do you remember in that first year and a half just getting frustrated over, you know, what kind of things like were driving you crazy?

A Well, there were other brands that were launching around the same time that had similar ideas or similar takes on this category, whether they were women's or men's, but we were, we were hearing that some of these brands were having a lot more success raising capital than we were. And so I developed a complex that, man, these other brands have a lot more money. They're going to outspend us. They're going to out market us and ultimately just beat us to market. With a similar idea. Um, because you know, here we were, we had raised a couple 100,400 thousand dollars. Um, I wasn't paying myself. We were working in a garage, um, from one of our investors that, that, uh, didn't require us paying rent. And it was a true bootstrapped business. And, and I had a, you know, a little bit of an insecurity around whether or not we could go out and compete with these brands that were raising a lot of institutional capital. And getting big, kind of, retail names on their boards. And that was really nerve-wracking.

AI assessment note: “some of these brands were having a lot more success raising capital than we were”

Q And tell me how you would do that. Like, you, you would say, I'm looking for, like, this kind of waistband, and, and, This kind of fit? Like, what would you say? How would you describe what you wanted?

A Yeah, I mean, the first thing we were aligned with was like, we wanted to create a more casual point of view in the category. You know, uh, there's a, a saying in our space that, you know, activewear is turbo, meaning it's like, it looks like really technical activewear product that identifies you as somebody that's going to the gym or competing in a sport, you know, and, um, We wanted to be the antithesis of that. So we wanted it to be effortless, easy to wear. We wanted to have functional details that would support you through a workout, but we wanted to almost hide them from eyesight. And it wasn't that turbo kind of technical look and feel that was so commonplace in the active market.

AI assessment note: “We wanted to have functional details that would support you through a workout, but”

Q Who, who, who is the marketing strategy? I mean, how did you find the right, because there are hundreds of digital marketing companies that were pitching you, and how did you land on the right one?

A Well, you know, it's so interesting because back in those times, my reflection was that advertising on search was very much a proven industry, but social advertising was very new. And we got a list of names and we ultimately landed on a digital agency that, um, you know, we trusted. And so I remember, you know, we got started in this advertising and we started paying a lot of attention to the ads and what was kind of getting a better response than others. And you know, after an okay response, like I remember our first month we invested 5000 dollars, we got 5000 dollars back. And so we were like, okay, we just gave away essentially a lot of product, but we got some new customers wearing the brand.

AI assessment note: “we got a list of names and we ultimately landed on a digital agency”