Julie Wainwright – Founder & CEO of The RealReal
Kara Goldin: Hi everyone, it’s Kara Goldin from Unstoppable, and we’re here with Julie Wainwright, my friend and fellow CEO, and founder of The RealReal. We’re so excited you’re here, Julie.
Julie Wainwright: Oh, thanks, Kara.
Kara Goldin: Yeah. Very very excited. Julie, just a little bit of background. She’s an eCommerce … Not just a pioneer, a legend in my mind. She founded The RealReal back in 2011, and for those of you who are not familiar with The RealReal, luxury consignment online. I’ve been buying and selling from her for years, and absolutely love The RealReal. They’re so amazing. She really changed the way people buy and sell high end luxury across all categories. I was actually on there yesterday looking for some home items as well, so it’s not just about clothing, and just super super amazing.
Julie also raised lots and lots of venture capital. Also she took The RealReal public in 2019. I was cheering from the sidelines saying, “Yay Julie!” So excited for you. She’s built a membership of millions and millions online, sold millions and millions of products to date, and just overall is just an awesome, awesome, awesome person. We’re so excited to have you here, to learn so many lessons, and hear your journey. So welcome.
Julie Wainwright: Thank you. Like I said, it’s great to be on an entrepreneur’s program. As an entrepreneur, talking to an entrepreneur.
Kara Goldin: Actually, there’s very few women … We were talking about this earlier, about women CEOs writing books, but there’s very few women that are actually operating CEOs that are doing podcasts these days. Part of the reason why I decided to start mine was that I was having lots of great conversations that I would tell my friends who were not kind of entrepreneurs or living in this world about these interesting conversations that I had. I thought, I need to bring them to more and more people, because there’s so many learnings.
Really, what I realized too is that there’s real people behind these great brands. I mean, you’re one of them, that just have had lots of challenges, and in spite of it have been able to move things forward. In spite of doubts maybe along the way, you just said, “No, I’m going to just go do it.” So I’m really excited to have you here, just to have a conversation. Take me back, prior to … For those of you who don’t know Julie. Prior to The RealReal, what were you doing?
Julie Wainwright: I was figuring out what I was going to do. Look, I’ve had a long career. I started my career in a really great place with Clorox, as the second … Actually, I think it’s the second undergraduate they ever hired in brand management. I’ve had a lot of training, that was great grounding in P&L management, and actually data analysis, even though we were working off dumb terminals off mainframes then.
That was awesome, and then I went into the tech world at a very young age, at around 25, at a company called Software Publishing, no longer in existence. At that time there was Microsoft, VisiCalc and Software Publishing. Subsequently Lotus, which ate VisiCalc. Anyway, so it was early on, and I would say one of the most formative things I did when I was at that company was, I raised my hand to do international for them. At the age of 27, I was setting up international distribution based out of London, and ended up, because the VP of International ended up getting fired, running that whole division of international, setting up partnerships all over the world.
Living in London, in France, in Paris, and Munich, at least twice a week, and then Milan and Barcelona at least every month … I mean, twice a month for Paris and Munich, and then usually every month in Barcelona and Milan. Then also in Hong Kong, Singapore, Australia, New Zealand, Rio, Brazil, Sao Paulo. At least every four months. It was an awesome … And Taiwan, I don’t want to forget about Taiwan. Where the first time I ever encountered that I had to go in the women’s only wing, which I don’t think they do anymore. I haven’t been back there in a long time. I had to go in the women’s only wing, and I could request a blind masseuse. I thought, well that’s something.
Anyway, but that was in the ’80s.
Kara Goldin: Crazy.
Julie Wainwright: So it was a long time ago, and needless to say there weren’t a lot of women flying all over the world, and there weren’t a lot of women setting up their companies overseas. But that probably was one of the better experiences I had for preparing me to be an entrepreneur. Because it really was just, you’re out there on your own. You’re making hard decisions. You’re choosing [inaudible 00:05:34]. But having said that, I wasn’t developing product. I was an offshoot of the mothership there. But it was a lot of fun, and great responsibility, and really broaden your life. I did that about six years.
Kara Goldin: And then you started a company, prior to The RealReal.
Julie Wainwright: Well, I didn’t really. Oh, I did a small one, yes. An information company for women. But you know, even with pets.com, which is the one everyone loves to talk about, I was brought in to run it. Another entrepreneur had started it, and the venture capital team had asked me to run it. It was probably about 400,000 in revenue when I took it over.
Kara Goldin: Really? They were that small? I didn’t realize.
Julie Wainwright: Well, when I was brought in. It was early stages. It was a guy shipping product out of his spare bedroom, really, what was happening. I mean, a lot’s been written about Pets. Most of it should be rewritten now that Chewy.com went public, and there’s nothing that Chewy does that Pets.com didn’t do. Which just shows, timing is everything. I’m just going to say, in life, timing is everything. It’s everything when you find a partner, or if you don’t find a partner. If you start a business, if you get funded, if you don’t get funded. Yes. Pets-
Kara Goldin: Timing is everything. I agree.
Julie Wainwright: It is. It is. The whole thing, oh, I was lucky. No, you probably weren’t lucky. Timing can be lucky. When I started RealReal, it happened to be sort of a perfect time. Because we were coming out of 2008 recession, and the audience for internet was much bigger for eCommerce, and people were experimenting with different ways of selling. I think the other thing that was cool, you could get a business up really cheaply and test it. Where things used to cost you millions of dollars to get server farms and blah blah blah, now you could get one up say for 100 to 200K and see if it works, and that’s exactly what we did.
I actually started with just a little bit of money. Just a little bit of money, 200 to 300K. I think it was about 1.2 million in seed when it was all done, before I got series A, but not a lot of money. Just to see where we’re going with this, and if I could perfect the business model. Yeah, and it worked, and it worked.
Kara Goldin: When you were thinking about this idea, were you on Ebay a lot? What else was kind of out there?
Julie Wainwright: No!
Kara Goldin: No.
Julie Wainwright: No, I wasn’t. No no no. I had never bought resale. I didn’t really get it, to be honest. I was sort of out of the loop there of how big it was, and the opportunity. Not until about two years into the company did I really understand how bad the fashion in general is, on an environmental impact, and how much product was going into landfill. So no, what I was doing is looking for something that Amazon couldn’t replicate, going back into commerce. I knew I wanted to go back and run an eCommerce business, and I wanted to do something I thought would be really hard for Amazon, because if it could be third party sourced, Amazon will do it, there’s no doubt about it, and they’ll do it better, and they’ll probably do it cheaper, and then you’re gone.
Certainly, having been the CEO of Reel.com, the first site to sell movies, where you were selling DVDs at the time. And we weren’t a rental site, we were a DVD sale site, and Amazon could undercut us, and they did. In fact, they undercut us so much in pricing that I was buying from Amazon to resell on my site, until they found that out. Because their price was $10 my cost at buying wholesale.
I had a great respect for, and still do, for Amazon and what they do. So I wanted to do something they couldn’t. There’s not a lot they can’t do. Now I know they just said they’re going into luxury, and God bless them, they’ll try. But the truth is they’re not good at selling luxury. So I did have development of luxury products as a way, but I also knew I wasn’t going to be able to compete with luxury brands. So I sort of tucked that away, and that’s when my shopping exercise with my friend Ann Winblad, where she bought resale in a store in Menlo Park, the light went on. I’m like, “That’s it.”
Kara Goldin: That’s the business.
Julie Wainwright: That’s when I started going around and figuring out, how many brick and mortar consignment stores? At the time, there was something like 25,000. How does Ebay handle luxury goods? And the answer was poorly. And how big is that market? You couldn’t get real data, but it looked to be about … Ebay sales around then about 2 billion in luxury, but there was no real data. Then you said, well how do you sell jewelry? Well, you go to a pawnshop. Talk about unpalatable. How do you sell art that maybe you bought at a gallery, and you paid $5000? The answer is, you don’t, because no one wants to buy that art back. It’s not like a car, or even $10,000, or 15, where you can drive it up and they’ll go, “I’ll do a trade in.” They don’t do a trade in. No one wants that art back.
But maybe you’re over the art, or maybe you moved, or maybe you downsized and you’ve got all this property that you have, that you’ve been collecting. That’s what the impetus was. It was always like, we’re going to resell things that Ebay can’t do, because they don’t have the authority, because they’re never going to really authenticate, and they’re not a luxury experience. We can certainly beat consignment stores, because we can aggregate audiences and really try to get the optimal price for everyone, using algorithms and really technology where they can’t.
We can certainly beat pawnshops. I knew we could beat the experience of just dropping stuff off at a brick and mortar store, trying to do it yourself. That was it, really.
Kara Goldin: You know what I love about that story, Julie? Is that so many people will look at a business idea and think, there’s so many reasons why I can’t do it. You kept seeing the reasons why you could, right? I think that is the key between incredible entrepreneurs and ones that … I don’t even know what to call them. I won’t even say bad entrepreneurs, but there’s just a DNA there, and I think a lot of it also is by experience too. I think that when you live to tell about sort of other things, as you and I were talking about earlier.
I talk about in my book that’s coming out, it’s not just about the building of Hint. It’s about other things that have happened to me in life, and journeys that I’ve been on. I always say to people, until you’ve lived in someone’s shoes you don’t know how they’ll react to things, right? I think with so many stories, whether they’re business or personal or whatever, you just become better. Right? You’re just a lot of things that you were talking about, everything from you weren’t necessarily a resale buyer, but you had a friend who was and she would tell you stories, and then all of a sudden you saw that. Ann didn’t necessarily see that immediately. You might have said something and all of a sudden, then you start incubating and thinking about these things, and seeing this hole in the market.
I absolutely love, love, love that. You talked about, so initially it was women’s clothing. Then how did you start to think about other categories you were going into?
Julie Wainwright: Well originally we thought we’d do all categories, but the question was timing. What was happening is, we go to people’s houses, they’re like, “Well you’re selling this. Why can’t you sell my jewelry?” I thought, well, let’s try it, right? That’s what you always say, well let’s try it, and then we had a gemologist that we contracted with, because we weren’t big enough at that point to have anyone on staff. Now we have about 100 on staff. But we certainly weren’t big enough to pay someone salary and take them out of wherever they were working.
Then jewelry started selling. Then that part time person became, we needed a full time gemologist. I would say our consign … I always thought about, we’re going to consign the house but not the physical house. Our consigners kept saying, “Well if you’re doing this, can you just do this, and what about that?”
We got pulled into it. We tested our way into it. We put structure around each new category, and now we’re in every category we’re going to be in. We do do home and art. Home is going crazy during COVID times.
Kara Goldin: I’m sure.
Julie Wainwright: So is art. I mean, we can’t keep art off the shelves, so to speak. It’s flying. But everything is selling. It’s such a good thing, to buy things that are previously owned. It’s so good for the planet, you get a better value, you’re already buying a depreciated asset. Tends to be a unique item at this point, you’re not buying anything you’re going to necessarily see in other people or in other people’s homes. Then if you are tired of it, or you do change your location and you want to get rid of things, the things you buy have resale value.
Kara Goldin: Totally.
Julie Wainwright: You can keep that circle going, that circular economy going, and it’s good all the way … Everybody wins. The planet wins, you win.
Kara Goldin: Do you see …
Julie Wainwright: The only people that could not see the value of it is maybe some of the brands, and some of the brands haven’t seen the value of it. But they’re sort of living in another universe than the universe we’re in now. We’ve changed the way people shop.I wouldn’t exist if customers didn’t want me to exist.
Kara Goldin: 100%.
Julie Wainwright: This is a consumer business. I mean it’s just like, Kara, if you developed a product no one wanted, you’d be dead.
Kara Goldin: Right.
Julie Wainwright: It’s like, okay.
Kara Goldin: Well, we’ve seen this over and over again, too. Outside of entrepreneurial companies, Kodak, right, was a company years ago that basically owned film. I mean, they owned it. There was nobody coming in, and nobody … I know people that talked to them early on about digital, and they were like, “No one wants digital.” Today, now it’s become cool again to go and actually get film, but there definitely … When you act as this big giant, and basically try and control what consumers ultimately want or need, then it’s not helpful, and ultimately it will kill you, right?
Julie Wainwright: Oh, absolutely. You know, Clorox, interestingly enough when I was there, they really said, “Look, if you don’t obsolete yourself your competition will obsolete you.”
Kara Goldin: Smart.
Julie Wainwright: They sort of implanted that in everybody’s brain. I took it to heart, and you saw it all the time. If you don’t figure out a way to do it better at this, or if someone wants powdered bleach, they’re going to buy powdered bleach, and that’s going to cut into your market. So why not develop powdered bleach? Don’t just say, “I need to have this type of bleach.”
A true packaged goods marketer gets that. I think when you get so invested in your past or your technology or your board, your board’s force. The classic ones are the video stores, long gone. Who didn’t see video on demand coming? They were talking about it when I was running Reel.com. Five years before … It was being talked about before Netflix was being born. It was like, well, we’ll get the … The methodology of the way it was going to be delivered turned not to be the way it worked, because other things happened, but it was going to work. At some point it was going to happen.
All these artificial barriers that the movie industry had set up. First it goes to the cinema, and then it goes to DVD, and then it goes to … First you’re going to buy it, and then you can rent it. All of that didn’t matter, as soon as you could have video on demand. It’s really fascinating. It’s just like, that business which was huge is gone. It’s just gone. Occasionally you’ll find an old … It’s like you’re talking about film. Occasionally you’ll find somebody that really wants to work on film, and they may be an incredible photographer that really loves working on film, or a great amateur who likes film. Just like records are sort of back. Are they mass? No, but they’re back, and they offer a different sound quality and experience versus digital music, so I get it.
But now they’re not the majority, they’re the minority, sort of the nerds. The nerds are into it. And that’s cool, because it is different. There are video stores around that have incredible selection. I don’t know how people can even play a video anymore. But the world moves on. Consumers vote every single day.
Kara Goldin: I think it’s so key. What do you think is the most important aspect of an entrepreneur?
Julie Wainwright: Resiliency. I would say resiliency. Because I don’t, and this isn’t about being a female or male or anything. It’s just you are going to be told no, so many times. You’re going to have so many challenges that you didn’t anticipate. There are so many reasons to quit. If you don’t have this attitude, like oh no, I’m going to fix this, and I’ve got this, and we’ll figure it out. Yeah, it’s sort of … We’ve got this.
It’s sort of, I don’t know if you were ever a Monty Python fan, but you know when they meet in the woods, and the guy cuts his arm off, and he’s like, “Oh, that’s just a little wound.” His blood is gushing, but he’s still got one arm, and then they cut off the other arm, and then the legs. He comes back, he’s like, “Come here, I’ll bite you to death.” It’s sort of like, you have to have that mentality. You’re like, you know what, all right. Now I can’t go that route, I’ll go this route.
I also, you combine that with vision, and it’s pretty powerful. That’s the positive side of being an entrepreneur. The downside is, you could have a really bad idea, and you’re really resilient, and you’ve got this vision, and no one cares. I would say if you just go with resiliency first, vision is also really important. But then also you have to have this genetic part of you that says, I’m not going to believe my own PR. I know what I’m doing is great. I believe it can be huge. I’m going to overcome every obstacle.
But then part of you has to say, but what if I’m wrong? Let me see what I’m wrong at. Then you test yourself. You don’t believe your own BS, really. You just say, okay, I could be wrong. Let me test this. I could be wrong, let me test this. You could be directionally right and tactically wrong, and if you don’t have that mindset, you could fail. So-
Julie Wainwright: For example, when I got started there were a lot of companies that got funded all along the same time, in the … Re-commerce, and actually in resale. Almost all of them are dead or the walking dead. Why is that? Why did we pull out versus others? My theory is, they weren’t testing their assumptions. It’s not I would say, especially in some businesses, it’s pretty easy to get to $10 million. But it’s hard to grow a business to a billion, which is what we were at last year.
So how do you get there? You test your way. I could be right on this, I could be wrong, let’s test away. Okay, that worked, now let’s put process to expand it. I could look at their businesses and tell them where they’re going to fail, and that’s just experience. But first of all no one asked me, and B they were getting money and higher valuations than I was, so I wasn’t going to help them out anyway.
But I think that we would have had more competition and a bigger struggle if all of … Because the money would have gone to the men in the business. You think of, I think about six resale companies get funded, within probably six months of each other. I was the only female entrepreneur. Other people have a female cofounder, but I was the only female entrepreneur and founder. We could have been wiped out, because they were raising more money at bigger valuations. And they didn’t succeed, and they didn’t get-
Kara Goldin: What did you do when you saw that news, that they were getting this funding, and they’re going to go out and crush you, right? Whatever sort of-
Julie Wainwright: That was the other thing. I got that a lot. I actually had one person call one of my venture capitalists to tell me that they were going to crush me. I said, “Well, all right, what am I going to do, pack up and take my tent someplace else?” No, I just thought it was hubris. I just thought it was the silliest thing. First of all, I can’t control what they were doing, so when they listened I thought, “Wow, here we go again.”
It was just hubris, and it was sort of silly. I don’t know what reaction … It’s not like I was shaking in my boots, you know? It’s like, oh, boy, there we go, he’s going to kill me. He’s not going to kill me. It’s not a technology play, where a lot of companies got wiped out by picking the wrong operating system in the ’80s. They didn’t go with MS-DOS, they went some other way, and they were wrong. Or they put too much money into Apple, and early on Apple wasn’t a major player as an OS.
It’s not a technology play, it’s a consumer play. When you do that, then they can say whatever they want. I just thought, I did get that quite a bit. I loved the ones where they actually called a VC who had invested in us, and then they called, they go, “I met with so-and-so, and they said this.” I’m like, okay. Don’t see how that works.
Kara Goldin: What are you supposed to do with that information, too?
Julie Wainwright: No, exactly. It made me laugh. It does make me laugh. But look, when I was running Pets.com, the Petco guys literally put me in a room. They wanted to meet. I thought, “Oh, they want a partnership, maybe.” This is before they had an online business, and the CEO had two bullies, big guys. We’ll call them bodyguards, but they were really bullies.
So me and one of my VPs had a meeting with them, thinking it was going to be strategic. He then had these guys stand in front of the doors. It was an act of intimidation, saying, “I will make sure that your company does not exist.” All right? That was then, and I remember thinking, “Well, okay. Good luck.” And they tried, they even tried to derail … Because Pets.com had an IPO. They offered, I think it was Merrill Lynch was our lead, $10 million not to take us. $10 million to renege the business.
So you know what, this is just the world. They were acting thuggery.
Kara Goldin: I love the story. Yeah, I mean I love stories like that, because I think that everybody’s had them, and you sound like you’ve had a lot of them, right? Along the way. It’s really about what you do with that information. I mean, I remember when Coca-Cola came out with a competitive product to Hint, a couple of years into us launching this company, and everybody was writing about, “Oh, Hint is dead. Nothing’s going to happen.”
I knew that if I focused on the product and the quality of our product-
Julie Wainwright: Exactly.
Kara Goldin: Right? Was it annoying? 100%. I was more annoyed around the press and around people talking to me about it, but I thought, there’s really not a whole lot I can do about it. What I didn’t realize, and I bet this happened to you as well, is that they stumbled upon themself, right. In developing this product. Because for example, a soda company has a really hard time with telling their consumer to drink water. Right? It’s just not what they do, right.
So people had a really difficult time trying to understand why they should drink this product. Then they also used the cherry syrup that wasn’t real fruit from Cherry Coke, right, so the quality of the product. What happened was, they got all the shelf placements that they were supposed to have, because they had bought into the large retailers and got this great placement that we never were allowed to have. We got kicked out temporarily, because they came in and crushed us, there was nothing we could do about that.
When they decided to back out, the grocery buyers came to us and said, “We still have a customer for this product, and will you take their space?” Every time over the last 15 years that a competitor has come out, we have gained space. Within six months, every time. Every time this happens, we sit here and talk about internally, where’s it going to happen? And we place bets on where is this going to happen. It’s now happened seven, eight times over the last 15 years. A huge launch, lots of money.
And I bet the exact same thing. I mean, these people screwed up internally, and then now you’ve got a consumer that is into buying and selling luxury items, and they come back to The RealReal.
Julie Wainwright: Yeah, they do. I mean, the cool thing about our space, it’s huge. There’s literally billions of products trapped in … Value trapped in people’s homes, so there’s room for people doing what they do. Maybe they’ll get to 100 million, that’s fine. But I mean literally, we’re sort of in this for the long run, and we’re going to be fine. I just look at it as, at some point … And honestly, Kara, if that would have happened to you in your second year of business, it may have put you under.
Kara Goldin: Yeah.
Julie Wainwright: But it’s a point, you’ve got enough moats around your business, you’ve got a bigger base, you’ve got enough reputation. Then the key is, how do we make it more efficient, get it bigger, and keep satisfying the customers? So your goals change. In our case also get to profitability, and expand worldwide.
We’ve got other goals now. But if someone would have copied our model early on, and they’ve tried it in other countries. Our first year of funding, of our first 10 million we raised, because they were raising 20 million at 50 million valuations. On no revenue, by the way, and I had 10 million, and I had my pre-money. I had 10 million, was 10 million. I mean, we sort of got screwed there, but not really. At the end of the day you don’t, because it felt bad at the time, but on the other hand I got a partner that stood by me until we went public, and it took a long time. It took about six, seven years to go public, so I had a partner that stood by me.
I got an investor that really cared about my business. It wasn’t just an investment, someone that wanted to see … All of them that came in, all of them felt this way. Because I still have investors on my board that really want to see the company succeed, and gave me good advice, without also knowing, they weren’t running the company. I got low ego involvement around the table, not like, “I know more than you do.” And it’s been a big success.
When you really look back it’s like, all of these little gripes along the way and things, it doesn’t really matter, especially when you make it happen. If someone would have copied my model and with that money they got, the first year I got capital, and they executed better than me? I might be dead. But no one did. Part of the reason no one did is, they weren’t consumers. They weren’t the person ever consigning … They didn’t understand-
Kara Goldin: I was going to say, you were the consumer. I was the consumer too, I understood how to think about it. I think that’s another piece that I noticed about you as well. Yes, your core business obviously is selling luxury goods in lots of different categories. But I think also you’ve done a lot of things, including we touched on this before, but you talk a lot about the future of fashion is circular. You going and … I remember when I first saw you working with Stella McCartney, and …
Julie Wainwright: Right.
Kara Goldin: Really calling attention to the bigger issue, do you want to talk a little bit about that?
Julie Wainwright: Oh, absolutely. Well look. When we were about half a billion I started calling on different brands and talking to them, the brand groups and talking to them. Because by then I was really switched on about the eco-damage that fashion does. Now certainly it’s done more by fast fashion, because it’s sort of meant to be disposable. But every supply chain in the fashion world is sort of a mess, and it really wreaks damage in the environment.
I started talking about the importance of sustainability. I started talking about how when there is a resale value for an item in the primary market, it supports the primary market, it doesn’t compete with it. Knocking on the doors, and I got various levels of receptivity. I would say there was a curiosity factor, and a somewhat interest factor in just a female entrepreneur that was … Some people really did listen intently, and one of them was Stella McCartney.
Now, Stella McCartney has a brand and a reputation that transcends the size of the brand. I mean, she is a fashion forward thinker. Things she does or did three years ago, the industry is like, “Oh, maybe that’s a good idea. Maybe not killing animals for fur is a good idea.” Gucci came around to that, Stella’s been there from the day one. She never is harsh on her judgment. She’s like, “I think this is the right thing to do, I’m going to push the edge on coming up with faux leather. I’m going to push the edge with sustainable fabrics. I’m going to see how far I can push it.”
When we talked to her about the circular economy, well she’s a big … She loves resale. She really believes in the circular economy. Ellen MacArthur was the one that coined that phrase, as far as I know. Anyway, Ellen MacArthur out of the UK had been working on ways to get products that were possibly disposable out of the environment and then back into another use. Her number one thing she was talking about were the plastics, but you have a British woman, a famous British woman, Stella McCartney, who is also friends with Ellen MacArthur, who is also a famous British woman, who is changing the laws and the way people think, businesses operate in Europe and hence the world.
When we met with her, she goes, “I want to do this.” She said, “I absolutely want to do this, and let’s work together on a program.” It shook the industry to their core. Because again, smaller brand, not a big brand. But big voice, big impact.
Kara Goldin: Yeah, no, I listened. I mean, I loved seeing this, and no one was having this conversation. I felt like you guys really led that conversation for a lot of other industries to start having these conversations.
Julie Wainwright: Well, we were … And honestly, I was having the conversation with myself, even when I was sitting with other brands, and not until we got to Stella did she say, “I want to do this.” I would also just want to credit, Stella at that time was under the Kering Group, which also has Gucci and Alexander McQueen. Pinault, who runs the group, could have said, “I don’t want her to do this.” He didn’t. That’s also a credit to them. They’re like, you know what, it’s important, let’s do it. Because he could have killed it, he could have killed it.
Kara Goldin: Do it, yeah.
Julie Wainwright: He didn’t. He actually is incredibly environmentally concerned, and really believes in sustainability. I’m sure he viewed it as a good experiment. Well, it turned out to be more than an experiment. People understand, they understood it. We ran commercials together. We then worked with some data scientists and collaborated with some of her scientists to quantify the impact of consigning. It’s a repeatable formula. It’s real, so now you can go up and say, “Look, I sold this much, I bought this much, here’s how I’m reducing the carbon footprint.”
It’s real, it’s from environmental scientists, we don’t make that up. We wanted to have a repeatable formula. That all started with Stella saying yes.
Kara Goldin: I love it.
Julie Wainwright: It was great. I mean honestly great. I just think, when you start thinking about badass people that live their principles, that’s Stella McCartney.
Kara Goldin: Yeah. That’s awesome. That is my perception from the outside, but it’s great to hear you say that from the inside. We obviously are recording this during, hopefully coming at the end of the pandemic. I don’t know if that’s optimistic of me to say this. But what do you think was the key thing that you learned about your company, stepping in?
Julie Wainwright: Well, what has been critical during this time, and to some degree we lost a little bit of it, was agility. Agility, creative problem solving, and resilience again. I would say that it’s put a big test on all my leadership, to see who could be the most agile. We had to think about redefining our business. We had to do it really quickly. One of the things we did do is switch from in person appointments to appointments done virtually, with curbside pickup in a series of vans.
When you think of anybody that runs an operation center, we also had to put a safety protocol in place. With changing information from the science and medical community regularly. We had to make sure our employees were safe, and originally it was don’t wear a mask, and then it was well wear a mask. Well, you don’t wear a mask because we can’t get a mask for our nurses and our front line workers. We also had to make sure that environment was safe, and we were trying to set up safety protocols so our people could go to work.
Then make sure you’re measuring that, and you have checks and balances on that, and this had to happen incredibly quickly. Then we weren’t contemplating another raise of capital, but you say we’re almost coming in, I think we’re probably halfway through this pandemic myself. I hope it … I do think 2021, around midyear, is when we’re going to really start pulling out as a world.
But when you start thinking of how much capital did you raise when you’re going public, were they enough to get us to profitability, but what if this is a prolonged experience? We also, in the midst of reimagining the business, then getting the new tactics in place and making it a safe environment for employees, and then we had to right-size our team because our brick and mortar stores were shut, so we had to have a layoff and a furlough. We thought, “Oh, let’s raise money.”
So we also raised a round of capital, and that went incredibly well. But this all started happening from March 15th until the end of May. When you think of, you weren’t going in that direction, it was actually March 12th I think in the Bay Area. You aren’t going in that direction on March 7th, and then all of a sudden March 11th you’re shutting down. Between the 12th and the end of May, we went through massive changes and a capital raise.
And on top of that, we had to develop really good working relations within the state of California, which we didn’t have with our local governments. It wasn’t for us not trying. I would say we did try. We tried in Brisbane, we tried in San Mateo. But it became critical, because Brisbane was shut down, and they said, “You can only have two people there.” In almost 260,000 square feet. So we had to start working with our local government, which was harder in California. It was super easy in New Jersey, and super easy in New York.
But they knew who we were, so this is the fascinating thing. The people in New Jersey and New York knew who we were, the people in California didn’t really care about us.
Kara Goldin: Yet this is where you founded the company, in California.
Julie Wainwright: Yes. I think it’s … But we’re pretty small in the shadow of Facebook and Twitter and the bigger tech giants. I think we just didn’t matter there, where in the state of New Jersey when you employ 1100 people in an economically depressed environment, they care, and they give you incentives to work. In California, when you employ 400 and you tell them you have to lay off 400 people, they’re like, “Okay.”
Kara Goldin: Yeah.
Julie Wainwright: Right, so it was a different mentality. We had to figure out how to work with them, and that was a challenge, but now I think we’ve got it and I think we have a good working relationship with the state, so I feel good about that. I would say in general they still don’t know who we are. Cuomo knows who we are, Murphy knows who we are in New Jersey, and the state of California still doesn’t but that’s okay, because now Brisbane does and the county of San Mateo. We had to work on that.
The other thing is, my employees and my executive team now were teaching their kids at home. Think about that. Now as a leader, you have people that have phenomenal pressures on them. They’ve got to figure out, how am I going to make sure my kids are getting educated, and my work’s okay, and I’ve got to do this, and now I’m working at home, and I’ve got all this, and I didn’t ever think I was going to work at home. Oh, and by the way, the virus thing is scary, because no one really understands at that point. It was all like surface contact. Remember, people were washing everything.
Kara Goldin: Yeah.
Julie Wainwright: I never believed that. I’m sorry, I’m not a germaphobe anyway. I wasn’t bringing my food home and washing it. I’m like, oh come on. Anyway, so … But look, the fear is real. You have to honor people’s fear, and all you need is a little germaphobe in you and it really lights up all your big fears. That’s a lot. And then people’s vacations were being canceled, because you can’t travel. So you have … It was just a lot. Some people had made it through, and some people just didn’t, to be honest. Some of my execs didn’t, some of my employees didn’t. Oh, and then you have social unrest. The Black Lives Matter movement, really important. Really, really important, and not something I thought we would be in during the pandemic. I’m glad we are. I think the world is going to come out better for it. I think the US will come out better for it.
But a lot of tension. Most of my employees are not white, and there’s a big difference between someone who’s not white and is black, and there’s a big difference between somebody who’s black and born in this country versus black and born in another country that’s now in this country. Also people that have black sons, big difference. We’ve also had to all get educated, and really take a good look at our own selves as white leaders. I always think, “Oh my God, I’ve had it so hard being a female entrepreneur,” which is true. I mean, every female entrepreneur has it harder than a male.
But I’m not a black female entrepreneur. I mean, I don’t even know … I do, I know one. I know one black female entrepreneur. Maybe two now, that have gotten funding. But I mean, the thing about that is-
Kara Goldin: Yeah, the funding issue is a huge problem. Actually, it’s tough to … There are very few black founders, and very limited black female funders that have gotten out of the gate. There’s a few in the beauty industry, but other than that, it’s very very dismal. Just another reason I think to pay attention, because there are some good ideas out there, but the funding is really really limited, and sadly limited in so many ways.
Julie Wainwright: Well, I mean, look. Women only get 2.5%. We slipped again. Remember, we went up to 2.7, and everyone’s like, “Oh, they’re gaining.” I’m like, really, we’re gaining?
Kara Goldin: Not really, yeah.
Julie Wainwright: I think gaining would be 40%, going from 2 to 40. But we’re back down to 2.5, and the numbers don’t even break out women of color, but you know it’s almost nothing.
Kara Goldin: Yeah, no, it’s super limited.
Julie Wainwright: So look, as a human race, we’ve gone through a lot. As a business owner in a public market, we’ve gone through a lot. As a person who assesses talent, the people with the agility in thinking, the best creative problem solvers, and resilience have risen to the top and other people haven’t. That’s okay. Because I think those traits, you don’t want to lose those traits as a business. You don’t want to lose agility, creative problem solving, and resilience. You can see how people in a business that hit a billion dollars could get complacent.
Or possibly, were used to replicating, not thinking. You can see how, as a company moves from entrepreneurial to more structured and more process managed, maybe we weren’t. Maybe some people needed to go to a low growth environment. Maybe someone needed to do something different, because too much change was too much for them.
Kara Goldin: Well, and I think that’s what’s so beautiful about founder led companies. We’re still, you and I, we’re both CEOs but both the founders. I think unfortunately as companies grow, as hopefully they always do, so often you don’t necessarily have a founder there that can grow with them. I think when the shit hits the fan, or whatever you want to say, that is what I found in your description of what you did. You actually thought about lots of different aspects, and you really have to be able to think on your feet, I think, because that is exactly …
One day there will be an article about leadership and really talking about … I mean, this was a test of leadership.
Julie Wainwright: And you know what’s really fascinating? I’ve learned a lot of watching different leadership styles, not within just my company. But watching how different governors have handled it, because we’re in multiple states. It’s really been an exercise for me in watching during a crisis, what’s the most effective way to govern? I would say Murphy and Cuomo really have my support in the way they govern. Not that they … Everyone made mistakes during this time, because it’s crazy. Like I said, science kept changing, we don’t have a playbook for this.
But I think they rose in national ranking, because of the way they handled it. I’ve been so impressed. Look, at the end of the day this story hasn’t written. You don’t want to pass … When everybody said, “Oh, this person’s doing a great job,” I’m like, look. Let’s get past this, because the next phase of being a leader, and for us, we’re just getting back to 2019 levels now. Our business dropped by 40% in April, and so now here it is in September, and our goal is just to get to where we were in 2019. We were growing 35 to 40%, so we still have a big swing there.
We have a long way to go, and that’s going to require a different form of leadership. The same thing with the leadership in our country, and at the state level. The states have ended up more in debt than ever before, more troubled. The pandemic is still going on, so what kind of leadership will both create jobs and safety? Because we can’t … And you have to have a different way of thinking. You can’t take job creation for granted in any state, and I think it’s going to be a really big challenge.
Some states have had to work harder. I would say New Jersey had to work harder to convince people to put different businesses in New Jersey, and California hasn’t. I think it’s going to be a test of California leadership, can they readjust their thinking to think about job creation and enticing people to stay here? Because with the pandemic, with high costs of living, still a housing shortage and wildfires, it’s becoming really hard as an employer to say, “Yeah, we really want you in the state of California.” For people-
Kara Goldin: Well, and you talked about 400 people losing their jobs. 400 people is 400 people, right? It’s a big deal.
Julie Wainwright: I want to go on record, we did bring almost all of them back, but I think we’re still down 100 and-
Kara Goldin: But I’m just saying, for a state to sort of compare that to larger sized companies. It kind of doesn’t matter, and I think it should be … You’re not the only person that I’ve heard say this. I think it’s something, it’s an awareness issue, and I think it’s really … Particularly California is, there are many industries, there’s disruptors. You’re a disruptor, right? You’ve created a category, you’re a serial entrepreneur, you’re somebody that I personally think that we should want to keep in the state. That there’s revenue being produced, right?
I just think that it’s very shortsighted when leaders are not looking closer at, who are these people? It doesn’t matter if it’s 40 people or 400. They’re still jobs, right? And I think that that’s what you were trying to ultimately preserve. Anyway-
Julie Wainwright: I will say, I mean honestly to me, this is actually probably the most important point of that discussion. Every time I see something new happening, I’m always observing different things. One of the things I say to entrepreneurs, which is really relevant perhaps for this, is let’s say you’ve always wanted to be an entrepreneur but you haven’t. There are a lot of businesses being created around you, and if you have any tech affinity at all, on TechCrunch you can go see Series A, what’s getting funded. If you know technology, you may have a point of view, will that business succeed or not.
If you know business to consumer, which is my niche, I would have a point of view. Then you watch, I always watch, and I do my own investment thesis. Would I invest in this? Where are they going to hit the wall? Where are they going to have problems? Is this really a fundable business?
Kara Goldin: You don’t necessarily invest. This is just, you sit there and watch.
Julie Wainwright: No no no, it’s just to learn.
Kara Goldin: Yeah. I love it. I love it.
Julie Wainwright: You’re always observing from afar, right? You’re sort of always looking at it from a case study. Then you see, did they get their next round? What have they said about the business? Then five years out, where are they? Maybe not even five years, two years out. Then you can say, here was the thesis of the business. Did it work? Did it not work? Why do you think it didn’t work? Why do you think it did work? What surprised you?
Same thing with this situation we’re in with the pandemic, looking at leadership styles. What’s been effective? What hasn’t? What attitude is going to take us forward? What’s not? Said another way, everything around you, if you want to be a good leader, there are examples of leadership that are alive every day. You can learn from it. There’s examples of businesses that are failing or succeeding every day, and even though you’re not in it and maybe you really don’t know what’s going on, you can read a lot about it and form your own premise, and you can be …
Because, listen. And you can’t really listen to the entrepreneur, because a really good entrepreneur is never going to tell you what went wrong, like my premise was wrong. Or if it fails, they’re like, “Boy was I off.” They’ll say something else. A really good entrepreneur will say the truth, but most of them will still believe in their own bullshit.
Kara Goldin: I was going to say, I would say what went wrong, and you would say what went wrong.
Julie Wainwright: Yeah. I would, I would. But most of them are still believing in their own bullshit.
Kara Goldin: But most of them won’t, yeah.
Julie Wainwright: Most of them won’t. They’re going to say, “Well, blah blah blah.” And in fact the premise was just stupid. As an entrepreneur in waiting, I would say, test it. Test out your skills.
Kara Goldin: Love it.
Julie Wainwright: I would also say, and this is true of me, boy. I was so envious of entrepreneurs. It’s like, well why was I … Because I wanted to be one! So don’t be envious, do it.
Kara Goldin: I love it.
Julie Wainwright: You know what I mean? It’s like, just do it! Because when you’re really envious of something, it’s more because you’re not doing it yourself.
Kara Goldin: Yeah.
Julie Wainwright: That’s where that stems from. Just do it. The other thing I think is always fascinating, and I’m sure you get this, because we all get it. People come up and they go, “I had that idea.” It’s like, okay. That’s good. Ideas are great, that’s where you start. But it’s what you do with the idea that’s the difference between running your own business and not. But you know, I get that a lot, “Oh, I had that idea.” I’m like, okay, super.
[Listen to the interview for the rest of the story.]
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