The Exchanges

Q And you, you mentioned that when you found out that your 45 dollar t-shirt cost seven dollars, right, did you think that, okay, we're just gonna source those t-shirts from the same factories and sell them for less? Was that the idea?

A It should have been the idea, but the idea was we're gonna source all the material and control the entire supply chain. And then sell directly to the consumer. And what I mean by that is the difference is, in one case, you go to a manufacturer, and you say, can you make me t-shirts, and what are you going to charge me, and I'll get the final product. And in the other one, we, you know, met a number of people down in Los Angeles, and we bought the fabric. We learned how to do the patterns for the fabric. We had those patterns, what we call grading, so it can go from small to extra large. Every step of the process, because there was this theory that if you're going to become a great chef, what you need to do is go to cooking school. And so we kind of, we believed we got, had to go through, call it apparel school one-on-one.

AI assessment note: “It should have been the idea, but the idea was we're gonna source”

Q How were you able to make the shirt so, for so little money? Is it because you guys were literally driving it from one, one part of the production process to the next?

A To me, that was the secret of the whole industry. You know, you're, you're making the fabric might have been a, I think, call it a buck 50 to two dollars. Uh, the cutting, 45 cents. 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. And so, yeah, ours was a little bit cheaper out of the gate because we managed all the different steps ourselves. But eventually, a few months in, we contract manufactured with one vendor who actually managed all the processes for us.

AI assessment note: “ours was a little bit cheaper out of the gate because we managed all the different steps”

Q And that's it. Isn't that enough? Or do you think that it has to be more than that? That it's gotta be ethically made, ethically sourced?

A I used to. I think now what I would say is it's whatever is right for you. I have a lot more admiration and respect than I used to for people that, for these luxury businesses that create incredible, beautiful product, tell beautiful stories, and make their 30% profit, and that's totally fine. It was also this respect for Others that perhaps changes as you grow up and face your own set of challenges and realize maybe there's a reason they do things the way they do, because as long as they're doing, to your point, capitalism, but as long as they're content and it's working for them, and they're not inflicting harm and other people are into it, power to you.

AI assessment note: “I used to. I think now what I would say is it's whatever is right”

Q But that's, right, that's how they make money. I, I understand you wanted to, you basically wanted to produce clothing and, and make it as, you know, become an online retailer, but, What was it, what else were you gonna do that was different from other brands?

A When I say that do right where others do wrong, all of that came out over a period of time in a way that we really became students of the industry and tried to say if we were to build this from the ground up in a way that put the customer first, what would that look like? So pricing transparency was one. Customer experience. The customer experience we really focused on, the communication, the community, really having an open dialogue with the consumer. Which felt the opposite of what you actually experienced oftentimes in retail, where you would go in and somebody might talk to you, somebody might not. Getting help was challenging. Knowing how to return things was challenging. So customer experience and customer service was always a big, big part of what we hung our hat on.

AI assessment note: “pricing transparency was one. Customer experience. The customer experience we really focused on”

Q exactly a one-to-one comparison, but I wonder, and Michael, you may have some thoughts on this, I mean, is there a world where Todd really, you know, needs to kind of lean in on this kind of You know, collab style, uh, influencer kind of thing to really start to build momentum or, or, or is that just like, you know, a money pit, just pouring money down the drain?

A Well, I don't think it's a money pit. I think you hit the nail on the head though with something interesting, which is golf is aspirational. And, and the other one is of course, tennis is aspirational, which is where you see brands like sporty and rich on the female side. Um, and just so many different tennis brands that have been successful. There is a An opportunity for that to happen here, but it's not there yet. I think there's a bit of a how much you want to invest in creative so that you're creating a bit more of An aspiration and pickleball. And I think that could be really interesting because that isn't yet owned in the world of pickleball. And, and is anyone providing that aspirational lifestyle right now? I would say when I look at kitchen, it's a little bit more casual. Um, right. When I look at Melbourne that you're talking about, there's some casual, but it is, it, it, it's got a vibe to it that feels cool and being cool. It just takes expensive.

AI assessment note: “Well, I don't think it's a money pit.”

Q And did you have any ideas at all?

A I had a little bit of an idea. You know, what I was really inspired by at the time was this company that still exists in some shape or form called Guilt Group, which had really changed how people bought luxury online. No one had really bought luxury items online, and all of a sudden Guilt Group came around during the recession and exploded because people could get Prada, Gucci, all these companies that say 50% off. And while it was a discount business, which isn't what I love, it was a eye-opening experience that people were willing to buy these brands online. And I had the idea for me was really critical was I wasn't technical. Um, even though I studied computer engineering, I didn't code, uh, which is strange. I don't know. It just never really sang to me. And so I was really set on finding, um, A co-founder, and I, you know, happened to link up with a really great guy, Jesse Farmer.

AI assessment note: “I had a little bit of an idea. You know, what I was really inspired by”

Q a bunch of crap every year and throw it away. But now you've got the parents saying, hey, I want this stuff for my size. I want this comfortable Jersey cotton and, and, you know, to wear around the house. Michael Praseman, what do you think? I mean, we're, I mean, the car customers are demand asking for this, but she's so early in the business. What does she do?

A Oh my goodness. I mean, first of all, I'm with you. What a great idea. I have a, I have a seven month old. And so as we, as we think about all the clothes you got to buy, it's like every two, three months, new clothes. It's always, uh, it's just a train of new clothes. And then you're just hoping you have more kids that they can grow into. And then eventually you have to give it all away. So, um, it's a very cool idea. And what I like about what you're doing is the positioning. And I was telling guy positioning is so important. Um, You have a very clear positioning in the market. And I, I guess my question for you is what are adults looking for in your clothes? Like what, what are they, do they just love how they bought it for their kids and they just love how comfortable it is? Like, what's the, what's the story there?

AI assessment note: “my question for you is what are adults looking for in your clothes?”