Joan Barnes (5:38)

I go to New York to sign the deal. One of the investors is on the plane, the lawyer, you know, whatever. They're all coming for this big celebration.

Guy Raz (5:46)

Wow.

Joan Barnes (5:47)

I get a call that afternoon. I'm sitting in the hotel room, and she says, hello, my name is Carol Anderson. I'm the senior vice president of something. And I said, oh, hi, Carol.

Guy Raz (5:57)

I'll probably.

Joan Barnes (5:58)

Probably meet you tomorrow. She says, actually, you won't. The deal is off. We're not coming.

Guy Raz (6:03)

What?

Joan Barnes (6:04)

That's what I thought.

Guy Raz (6:06)

What? Welcome to How I Built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how a casual children's playgroup grew into a national franchise, a stomping ground for kids, and a lifeline for parents. Gymboree. Every founder eventually hears a version of the same work harder, push further, and don't give up. That it's the combination of discipline and drive that can turn a small idea into a big one. And don't get me wrong, this is not bad advice. But there's also a darker side to that story, because when drive goes unchecked, it can quietly begin to erode everything around you. Your relationships, your health, your business, and ultimately your entire sense of self. Today's story is about that very tension. Now, if you're younger than, say, 35, it might be hard to understand just how ubiquitous Gymboree once was. In the 1980s and 90s, Gymboree wasn't just a place you took your kids, it was the place. A brightly colored padded world of parachute games, circle songs, and structured chaos. For many parents, it was also something else. A lifeline. A place to connect with other parents and find community. Gymboree began as a simple idea. Get groups of kids to play and offer classes and activities that would give parents a reason to show up. And it worked. At its height, Gymboree operated hundreds of franchises around the world, along with more than 200 retail locations selling children's clothing. And like so many stories on this show, it started with someone trying to solve her own problem. Joan Barnes was a new mom living in a new city, far from family and looking for connection. She began hosting playgroups at her local Jewish community center. The response was immediate, and the demand was overwhelming. And before long, Joan found herself running a national franchise business. From the outside, it looked like a runaway success. But inside, there were serious problems. The business wasn't making enough money to pay back investors. The pressure was relentless, and the stress began to take a devastating toll on Joan's personal life and her mental health. Eventually, she was forced to make some incredibly hard decisions about the company and about herself. But before any of that. Joan grew up in a suburb of Chicago. She studied dance and English in college, where she met a journalist named Bill Barnes. They got married, and after a few years living on the east coast, they decided to move.

Joan Barnes (9:17)

I was pregnant, you know, and we didn't really plan it, but I knew. We knew we would want to have a family someday. And we've been married four years. So we decided, okay, we'll go for it. And I said, I'd like to just pick up and go. You know, the east coast was dreary, and I just couldn't get over the weather. And so we just, you know, packed up everything and just took kind of see our America tour and went across the country and thought, well, what about here? And what about here? And was like, okay, well, let's try the next stop. Until we landed in San Francisco.

Guy Raz (9:46)

And Bill took that job for the San Francisco Examiner.

Joan Barnes (9:49)

Right, Exactly.

Guy Raz (9:50)

Okay. Within, I think, about a year of moving there, you guys left San Francisco, moved outside to suburb in Marin County.

Joan Barnes (9:59)

Correct.

Guy Raz (10:01)

And you are a young mom. This is 1973. 74. And from what I understand, you, you were kind of lonely. You felt a little isolated at that time.

Joan Barnes (10:12)

100% lonely and isolated. 1973 was the lowest birth year since forever. And the media had dubbed the families or the people who were living in that era as dinks. Double income, no kids. And so having kids was against the grain. And so I was looking for comrades. I was looking for people who'd made the same choice. My family was a gazillion miles away. His family was in New York. My family was in Chicago. And, yeah, lonely and isolated. So I wanted to meet some people who had made a similar choice.

Guy Raz (10:46)

So how did you. I mean, you wanted to meet other moms and kids. So were there playgroups and things? I'm assuming they were like, play parent plays.

Joan Barnes (10:56)

None of that stuff existed. None of it existed. And so I was in a dance company because I was still into dance. And a woman there, she had been offered a job at the local Jewish community center to run the children's programming. And she was scared because she had two kids. And I said, why don't we share it? This is long before job shares were even. Even there weren't job shares that we were really kind of revolutionary. And they. So we did. We shared our big $10,000 a year job and each made $5,000.

Guy Raz (11:27)

And what did that mean? Like, sing sing along and. And, you know, coloring and arts after.

Joan Barnes (11:33)

School programs, you know, the preschool programs, the family programs. My My colleague took all the Jewish stuff and I took the secular programming.

Guy Raz (11:43)

Okay, you're running the after school program and, and this is basically, this is what you're doing. And I guess at one point you had just by chance you had gone to a class at a YMCA in Berkeley. So on the other side of the bay to see this, like a gym, a gym for kids, for little kids that they were doing at the YMCA there. Tell me, tell me what you remember about that visit.

Joan Barnes (12:08)

So one of the women on the board had come into our. At that time we were operating our offices in a trailer because we were going to, we were building a real JCC and she came in and she said with her then two to three year old daughter and said she was going to a program called kindergym at the Berkeley YMCA and maybe I ought to come see it with her because it was really special. So I said, okay, you went to.

Guy Raz (12:34)

Go observe this and what did you see?

Joan Barnes (12:36)

So it was in a gym at the Berkeley Y and they had basically had, they were borrowing the UC gymnastics equipment. So there was full size trampoline.

Guy Raz (12:46)

Wow.

Joan Barnes (12:47)

You know, and stuff.

Guy Raz (12:48)

And a pommel horse and all those things.

Joan Barnes (12:50)

All that stuff. And so they sort of improvised, improvising a way that kids could kind of play on this stuff. You know, all the moms would get around the big trampoline and somebody would, you know, it was just. And I just thought this is not really kid appropriate, but it could be. And I could just see all this stuff scaled down in bright colors to little kid size and some really wonderful upbeat music and a really lively teacher and we would have something.

Guy Raz (13:17)

All right, so you see in this concept something potentially really cool. Now you are directing the kids program at the JCC in Marin County. And so tell me what you start to think. You start to think, hey, maybe I could bring this concept and do it there.

Joan Barnes (13:34)

I did. I thought maybe we could do this at the jcc, but not this. We could have an opportunity for moms and kids to come together, but instead of having it be with full sized adult gymnastic equipment, we would develop our own equipment that would be scaled down to appropriate size with the appropriate kinds of activities to develop. Because play is how kids learn. And I knew that much.

Guy Raz (14:03)

And this would be like kid sized or toddler sized trampolines and toddler sized.

Joan Barnes (14:08)

Tunnels and bouncy things and climbing. Yeah.

Guy Raz (14:12)

And did this stuff exist? Like, did you buy it off the shelf?

Joan Barnes (14:16)

I found somebody. Well, first I had to convince the board to put up, I think it was $5,000 to buy this stuff, whatever this stuff was. But I didn't know I didn't have it priced out because it wasn't like going through catalogs and saying you have.

Guy Raz (14:30)

To get it custom made.

Joan Barnes (14:31)

Yes. Some of it was available for special needs kids. So some of it I could get some bouncy logs and things like that. And then I found somebody to make our. Our quote propriety products. And we were lucky. And I was pretty savvy because of my husband at the time. I knew how to talk to the press. So I went to the local paper in San Rafael and I got a big feature story in there.

Guy Raz (14:59)

It was even before you started. You had a story about what you. What your plan was?

Joan Barnes (15:04)

Yes. And we had pictures of the equipment we hadn't opened yet, but we had sort of a dry run and we had the. Anyway, we had a big full page features. You know, 50 years before social media or 30.

Guy Raz (15:15)

All right. I think you opened this up in 1976. It's the first you open at the JCC.

Joan Barnes (15:21)

Yep.

Guy Raz (15:22)

And originally you're calling it the kindergym.

Joan Barnes (15:24)

Yes.

Guy Raz (15:25)

Right. And how did you. Right away people were like, this is amazing.

Joan Barnes (15:32)

Like they started coming right away from that press story. We were oversold right away.

Guy Raz (15:38)

And how much did it cost? It was like five bucks for an hour or something. Like number.

Joan Barnes (15:43)

Yeah. But we would sign up for a session or you know, for 12 weeks for 50 bucks or 60 bucks and come once a week.

Guy Raz (15:51)

And this would be moms and their toddlers, sometimes dads. Dads. And you would lead them through a program or they would just kind of run around and jump around and do whatever.

Joan Barnes (16:01)

I hired preschool teachers because I wasn't, you know, I wasn't a preschool trained. I was an entrepreneur, you know, whatever. And so I developed with them what they would do and how they would set up the equipment. And you know, I was winging it, man. I didn't know because underneath all that guy was really the intent to connect with other moms. And that would happen through doing. Having the kids having fun and everybody talking.

Guy Raz (16:32)

And in that first year, do you remember starting to develop like a program where the kids would come in and sit in a circle and then they would. Or was it just a free for all?

Joan Barnes (16:43)

No, it wasn't a free flow. And we had the parachute that I had seen at the Berkeley YMCA was.

Guy Raz (16:48)

Oh, the big parachutes that the kids would hold in the corner. Okay. Yep.

Joan Barnes (16:51)

So that was an army colored parachute. And I developed a multicolored parachute Which I did have made. That was very kid friendly. And so every class ended with about 10 or 15 minutes of group time where the kids would run underneath the parachute. We had songs. Some of them became propriety songs. In the beginning, they were just songs that everybody sort of knew. You know what I mean?

Guy Raz (17:12)

Yeah.

Joan Barnes (17:13)

And so, you know, and then I was aware that parents would feel bad if their kids, you know, weren't participating or antisocial or didn't want to be in the group or didn't, like, were scared of running under the parachute or shy, all that sort of stuff. So I wanted everybody to feel positive. I wanted this to be a very uplifting experience.

Guy Raz (17:34)

How were you able to cultivate it? Because I remember taking my kids to playgroups, and it was really fun. And I was usually the only dad there because at the time, I worked Wednesday to Sunday as an anchor of a. Of a weekend program back in the day. And I. I remember the parachutes, and my kids, you know, sometimes they were just shy. They just didn't want to get in the circle. They didn't want to clap and sing and do that stuff. How would you get parents to feel? I always felt good. It was always fun. But how would you do that? How would you cultivate that feeling?

Joan Barnes (18:01)

Well, because we would have the. We'd have the teachers really be very upbeat and positive about whatever your kid's doing is all cool. Some. Some. You know, there's so much freer spirits than we are. Some days we don't feel like doing something, and we just don't go sit.

Guy Raz (18:15)

In the corner and pick your nose. That's fine.

Joan Barnes (18:17)

It's fine. And then we'd have the teacher say, hey, out there. How you doing, guy? You know what I mean? And just, you know, be.

Guy Raz (18:23)

Just tribble running down my. My mouth. That's it. You know, I love those. Those days are so fun. All right, so, Joan, you're running this program at the JCC in Marin, and it's a JCC program. You were paid five grand a year running this program, but it was successful enough that I guess at a certain point, maybe a year or so in, the president of JCC approached you, and he 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? How did that work? 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?

Joan Barnes (19:08)

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 about. 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 other things that the center was doing. And 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 Barry 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.

Guy Raz (19:58)

And just to clarify, Rick Barry was a legendary basketball player. This guy you're talking about, his name was Max Shapiro. He had run a chain of basketball camps with this guy. Rick Barry had sold them, had made some money.

Joan Barnes (20:11)

Yes.

Guy Raz (20:11)

And he was looking for something to do. And of course he had seen what you were doing at the jcc.

Joan Barnes (20:17)

Yeah, he'd seen what, he'd seen the success of kindergym. And he was like, I think we could do this commercially.

Guy Raz (20:23)

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

Joan Barnes (20:44)

Yeah, well, but I was afraid to leave my job, my, you know, my important $5,000 a year job. I just. So I skipped down to south of San Francisco to the Peninsula, we call it San Mateo, to open up the first one as a business, calling it kindergym. None of this trademark or any of that stuff is even. I think about all that stuff. And, and so I open up at the, at a temple. 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.

Guy Raz (21:21)

So that was the model. It wasn't like, I'm going a lease a space. It was, I'm going to go to A temple or synagogue or church, whatever, use their space and pay them rent. And that's where I'm going to start this. Open this up.

Joan Barnes (21:33)

Yeah. And I hired somebody who was, you know, similar to the teachers I'd hired up in Marin county in the two locations. I hired somebody with preschool background to run the program. And they ran it a little bit of a precursor as the franchisees. They put a phone in their home, they run the business part of it, and they would teach the classes, they would pick up the calls, get them, you know, And I was able to get a big story in the San Mateo paper, same as I had done in Marin, and the same thing. It completely filled up.

Guy Raz (22:06)

Wow. Okay, so you. So you start to see this thing as a lot of. There's a lot of potential here, right?

Joan Barnes (22:13)

Yes. And somewhere along the way, I bought my partner out. I realized I'm doing all the work.

Guy Raz (22:20)

Max, he was. He was a passive investor anyhow.

Joan Barnes (22:24)

And I'm working. I'm working hard. And when the, you know, the setup guy doesn't show up to put up the equipment, you know, I'm putting the toddlers in the car and driving down to San Jose and setting up the equipment myself. And I thought, this is no way to run an airline. So I make my San Mateo partner, or she was employee at the time. Now she's running like three of these up in Northern California, up in the northern part of the Peninsula. And I have another person down in San Jose who's operating another four or five of these things. And I make them both partners in the business.

Guy Raz (22:57)

You gave them some equity?

Joan Barnes (22:58)

I gave them some equity because they had investment in this business, and so they were running it.

Guy Raz (23:03)

So your investor, Max Shapiro, who had Originally given you $3,000, you decide he's a passive investor. I'm doing all the work. I want to try to buy him out. And he agreed to let you buy him out. I think you gave him double what he put in. I think $3,000. And from what I understand, you g6,000 back.

Joan Barnes (23:20)

I did.

Guy Raz (23:20)

All right, so he did pretty well. He doubled his investment, bought out. And these places were making money, these kindergyms.

Joan Barnes (23:31)

I mean, they were little tiny businesses, but, yeah, they were making a little bit of money. Yeah, I was making some money.

Guy Raz (23:37)

And at what point did you leave your job at the JCC to start focusing on this?

Joan Barnes (23:43)

That's a good question. I was trying to remember. I think somewhere around location five or six. I thought, you know what? This is doing well enough, and I need to Focus on really making this happen. So I left the job.

Guy Raz (23:56)

All right. So by 1979, I read just three years in, there's like, nine of these locations operating all over from, you know, Marin county all the way to Silicon Valley, where we. And. And you guys start bringing in, you know, significant revenue. Something like over $200,000 a year in revenue.

Joan Barnes (24:22)

Yeah, a little bit more than that. Yeah.

Guy Raz (24:24)

And your costs were probably relatively low because you're renting out space at churches and synagogues.

Joan Barnes (24:29)

Correct. And for them, they're happy because it's revenue they didn't even have. Yeah, sure.

Guy Raz (24:34)

And you're bringing people in.

Joan Barnes (24:35)

Yeah, everybody's happy.

Guy Raz (24:37)

Yeah. Okay. I imagine that as people start to see how cool this is, people start to approach you to say, hey, can I open one? Can I like talking to you about potentially franchising, which was not. Again, was not part of the idea that you had. Right.

Joan Barnes (24:57)

Nothing. Everything just sort of showed up. No, none of this was calculated. You know, I'll get nine locations, and then we'll start franchising. We'll be national.

Guy Raz (25:07)

That was not. It was not a.

Joan Barnes (25:08)

That was not even planned, guy. I didn't even know what the word franchise really meant.

Guy Raz (25:12)

Right.

Joan Barnes (25:13)

And I, you know, I. You know, I was. One thing I will say is that it's best to start a business when you're young and ignorant, because I just figured I could figure it out. You know, I mean, when I look back at all the things that I sort of figured out, Amazing. So I did, and I went to the Federal Trade Commission. I got the franchise papers. I was probably the first person not a corporation franchising. So I wrote up the whole thing, and I got licensed to be able to franchise in California.

Guy Raz (25:41)

All right. And so you go to the FTC office in San Francisco, I'm assuming.

Joan Barnes (25:46)

Correct.

Guy Raz (25:46)

And they give you a stack of documents to fill out in order to become a franchisor. And I'm not saying this for any other reason except for I don't think with all of the knowledge I've now gained over 10 years of doing the show that I could fill out those forms. Did you know how to fill out those forms?

Joan Barnes (26:03)

I had no idea what I was doing. I just thought, okay, I can read. I can answer these questions. I'll figure it out. And I did.

Guy Raz (26:11)

Okay, so you fill out the forms to become a franchisor, to operate a franchise business. But I guess when they asked for you the name of the business or how it would be called, you couldn't trademark kindergym.

Joan Barnes (26:25)

Well, I knew enough to know that one of the most valuable things of the franchise is the name. So I thought, okay, I better register a trademark or whatever it's called this name, Kindergym. Okay, Kinder Gym. Yeah. So I tried to do that. I didn't have a trademark attorney. I had nobody to fast, you know, make this work for me. So I'm just me filling out the diamond form for the name. And about a year later, or you know, quite a while later, year and a half, I get a rejection. It's generic.

Guy Raz (26:54)

You cannot patent that.

Joan Barnes (26:55)

You can't trademark the name, cannot trade that name. And by that time I had a few franchises operating and you had all.

Guy Raz (27:02)

This press attention about Kinder Gym, all of it.

Joan Barnes (27:05)

And we had about four years of operating as Kinder Gym, both in the company owned locations. And maybe we had, I don't know, four or five franchises at that time. And I thought, you can imagine what I thought, you know, what am I going to do? That's the end of the business. That was sort of the first big trouble.

Guy Raz (27:25)

When we come back in just a moment more big trouble. A business model that just won't work and an acquisition deal that drops off a cliff. Stay with us. I'm Guy Raz and you're listening to How I Built this. Hey, welcome back to How I Built this. I'm Guy raz. So it's 1981 and as Joan's business starts to grow across the Bay Area, she discovers she can no longer use the name Kindergym.

Joan Barnes (28:09)

So I, the then husband and I, Bill Barnes, and I sat with a, wrote down a gazillion names and things like that. And then he calls me from a phone booth where he's running around the Embarcadero and said jimboree. And I just loved it. I just loved the sound of it. I got immediately what it meant and I thought, okay, now I'm going to hire somebody to find out whether this is a good name, how we get this trademarked, how we do this properly. So I found, and so therefore did all that.

Guy Raz (28:40)

All right, so you trademarked this name, this new name, Gymboree. And now you're ready to start franchising the business in earnest. And I guess you get introduced to a guy, someone named Bud Jacob, who had experience in franchising and what, he liked your idea?

Joan Barnes (28:57)

Yeah, he did and he liked me. And he was the only, he was like a dad figure. He was the next generation. He was, you know, considerably older than me, 20, 25 years older. And Bud had worked for McDonald's in Chicago. He worked for Arby's, and then he became a franchisee, and he owned about 20 Arby's out on the West Coast.

Guy Raz (29:18)

Did you need. At that point? Because it's 1982, and now there's a bigger vision here. Did you need to raise money to do this? Okay, so how are you going to do that?

Joan Barnes (29:29)

So Bud introduces me to the guy who eventually becomes my primary investor, Stuart Muldau. And Stuart had had super success, and he was a vc. And he. I met him, and I told him what I was doing. He said, I love it. I love you. You go home and write a business plan. If it makes sense, I'll put money in to expand.

Guy Raz (29:51)

Were you at this point opening your own brick and mortar locations, or were you still renting out churches, still renting.

Joan Barnes (29:57)

Church halls and community centers?

Guy Raz (29:59)

Yeah. By the way, there was a model like that, which is Jazzercise.

Joan Barnes (30:03)

I know. Jazzercise, yes.

Guy Raz (30:04)

Yeah. Still to this day, that's their model. They, the, you know, the instructors work out of community centers. Okay, so you.

Joan Barnes (30:11)

You.

Guy Raz (30:11)

You write a business plan for this investor.

Joan Barnes (30:13)

I do. I go to him with a business plan. He says, you got it. And he just makes me an offer. He tells me he's Gonna put up $300,000 for 30% of the company. He values the company a million dollars, which is sort of ridiculous, I think, but whatever. And he put up the 300,000 and said, you go for it. And so then Bud's now working for me. We're putting up a strategy to run franchises across the country and get a hold, a foothold in the media market of New York. So we weren't labeled some crazy California phenomenon.

Guy Raz (30:46)

And $300,000, 30%. So the business is being valued at a million dollars, which in 1982 is a pretty. I mean, it's a pretty good valuation for what was at that point. You had no assets, we had nothing.

Joan Barnes (30:59)

And no leases either. I mean, I like Jazzercise. I mean, any one of these churches or synagogues or whatever could say, okay, see you later. You know?

Guy Raz (31:08)

Yeah. Okay, so let's talk about the initial plan, because from what I understand, the model that you and Bud put together was somewhat different. It wasn't like, hey, you want to own a Taco bell or a McDonald's? It was. You really wanted women actually to be the franchisees.

Joan Barnes (31:27)

Correct.

Guy Raz (31:27)

Particularly women maybe who were not working at the time. Tell me a little bit about that model that you start to develop.

Joan Barnes (31:35)

That was sort Of, I think one of our brilliant moments, what we were trying to do is really replicate people like me, but a little bit younger. Now I'm in my early 30s, so we're looking for women in their mid to late twenties who were 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 because, again, this is also pre social media. We knew that the local newspapers were the next best thing to anything. I mean, paid ads, none of that was going to work like having a press endorse you and write a big story on you. So we just went about going to the local press in 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.

Guy Raz (32:34)

We ran advertorials, like editorials that looked like editorials, but they were actually advertisements.

Joan Barnes (32:40)

Correct. In the Wall Street Journal, so that daddy could read them on his commute to his real job that he had to do to pay for the family. And he'd say, oh, my God, this is perfect for. For my wife. And then. Then they would fly out to California on their own nickel. Maybe him too, but definitely her. And we would sit and we would spend the whole day with them. They would go to a center. Then we'd. All the management team and me, we'd all have lunch in my office together. And if any one of the management team of. Of the company thought that this person was not a good fit for us, that was a veto. That was very collaborative.

Guy Raz (33:16)

Yeah. And. And was there a certain energy or attitude you were looking for?

Joan Barnes (33:20)

Oh, yeah. We were looking for somebody charismatic who was bright, who understood that we were, you know, that we were. This was like a marriage, you know, the success of Gymboree was the. Was the interaction between the franchisor and the franchisee. And in addition to that, we would also discuss with them how big of a business they wanted. Some of them would have six, seven or eight locations, some would only have one or two.

Guy Raz (33:43)

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

Joan Barnes (33:57)

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 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 out the Southern California market because people who were in their classes would say, I want to do this. So that grew naturally. So the east coast was where we needed to put our energy, which is when we did the Wall Street Journal ads. I hired a PR firm. They helped us get some big stories and, you know, we're happening.

Guy Raz (34:46)

And I mean, this, like, was hot. I mean, starting in 1982, it was like you were getting all kinds of crazy attention. I mean, because it kind of coincided with this new trend around, like, child development and better understanding of, like, play. And I mean, this was becoming a thing, especially in affluent communities in the US like, right. I mean, I even at some point, People magazine wrote, move over Romper Room, all the best babies come to boogie at Joan Barnes Gymboree.

Joan Barnes (35:20)

That was a great. Yeah, wasn't it? How about that?

Guy Raz (35:23)

Yeah.

Joan Barnes (35:23)

We were in US World News Report and Time and Newsweek and I mean, it was like I just had to pinch ourselves to realize we were getting all this press.

Guy Raz (35:32)

Okay. And so. And basically tell me what kind of, you know, sort of blueprint you gave to the franchisees. Presumably you gave them, like, here's how you run a class for this age. Like, were there different classes that they would run for different ages? And was there a script?

Joan Barnes (35:48)

Exactly. So we first of all had a week long training program and all the different people on my staff trained different things. I trained them how to find a location, somebody else would train about how to set up the equipment. And we also had quality assurance people that flew out to their locations and hung out with them and, you know, made sure they were doing everything well and whether or not we could be more helpful to them. All the marketing material, everything was. That's. That's what they bought.

Guy Raz (36:15)

Yeah. All right, so you get. You're really exploding, I think. By 1986, I read you had 25 employees in your corporate office. You had about $15 million in revenue and about 400 of these franchisees about these local play centers in all across the US Even abroad in some countries. And I guess they were paying you like 20% or percentage of what they were bringing in, correct?

Joan Barnes (36:43)

Well, we had, in addition to the US franchisees, we had sold Mexico, France, and we'd done those as Master franchises. So they replicated who we were, and then they would sub franchise to things.

Guy Raz (36:57)

And all under the Gymboree brand. Okay. And I remember seeing this movie in the theaters. It was even mentioned in Baby Boom, the Diane Keaton film. She mentions Gymboree in that movie.

Joan Barnes (37:09)

I was at that movie and I heard them say that. And people pay as, you know, millions of dollars to have their airline put in there. And I started screaming, oh, my God, you know, because Diane Keaton's sitting there talking to a bunch of women in some Upper west side park and they go, you don't even know what Gymboree is. I mean, come on.

Guy Raz (37:32)

And so this really. And it sounds like you were targeting, you know, sort of affluent places, initially New York and Los Angeles and San Francisco, but you were also in Kansas City. I mean, you had. You were in.

Joan Barnes (37:45)

We were all over.

Guy Raz (37:46)

Mainly in cities, right?

Joan Barnes (37:47)

Mainly in cities, yes. Or suburban markets. We were all over. Suburban Detroit, suburban Minneapolis, Atlanta, Florida. Yeah.

Guy Raz (37:56)

All right. You get to 1986, this is now four years after you start the franchising. You've got franchisees operating all over the place. You've got 15 million coming in in revenue, which is from the outside sounds like you guys are doing great, but on the inside, you know that there's a problem that actually what seems to be a wildly out of control success had some serious underlying structural problems. What did you start to realize?

Joan Barnes (38:28)

I realized that the franchise model was flawed. That no matter how many franchises we had, it wasn't about scale. The revenues that the franchisees generated, and therefore the percent that they would give us of their revenues was never going to be sustainable.

Guy Raz (38:45)

How is that? Just because in a, you know, a franchisee might have three or three or four open three or four days a week and only bring in a certain amount. And you could see that there was just. You couldn't squeeze them for more.

Joan Barnes (38:58)

I mean, we already were doing it. So I'd seen we'd had several hundred of these things and, you know, each location would maybe pull in a good one, would maybe pull in a quarter.

Guy Raz (39:07)

Of a million, maybe a year.

Joan Barnes (39:09)

Yeah, yeah. And we get 8% of that, or whatever the percent was at the time, it was 6, who knows? Because it kept growing over and that just. And in order, because of what I said earlier, guy, that the success of the. Of the growth of the business was how well we supported the franchisees. So, yeah, we could not support them, and then we wouldn't sell anymore. And so it caught the cost of actually supporting them. And Sending out a team to be with them and run trainings for their teachers locally and all that stuff. It was all, well, well thought out and really beautiful, except that it cost too much money.

Guy Raz (39:41)

So essentially, the only way to even break even was to sell more franchises. In order to sell more franchises, you had to spend money to service those franchises and to. So it was like a. It's like a catch 22.

Joan Barnes (39:58)

Flawed. And I realized it was flawed, but I didn't know what to do about it because I couldn't figure it out because there was no way I could charge more or give less service. I mean, I thought of all the possibilities.

Guy Raz (40:12)

Now, my question, though, is, couldn't you do things like just raise the price, like, say, to all the franchisees, okay, it's no longer $5 a class. You got to charge $8 a class.

Joan Barnes (40:20)

Well, by that time, we spawned competitors, and that's. That's good news, because if you're, you know, if you don't have a real business, you won't. Competitors validate the validity of the business. So they charged about the same thing. So we really. It wasn't really sustainable for us to, you know, get to a fee where the. Our 8% was really going to make a difference to us, you know, because.

Guy Raz (40:45)

It would have been a race to the bottom. Yeah, just undercutting. It's amazing because on the one hand, publicly, you're getting national media attention. You're in baby Boom, you're in People magazine. Everyone's talking about this thing. Every mom's going to it. Everyone loves it. It's so fun for the kids, but the business is barely treading water.

Joan Barnes (41:05)

Yes. You could have. Could have said it better myself.

Guy Raz (41:08)

That must have been really, really stressful.

Joan Barnes (41:10)

It was. I mean, I. I'm usually pretty good at fighting it myself out of a paper bag, but this was. This was. The only thing I could do, was just be honest with the board and say the way we're doing things is never going to have a return on investment for you guys. We could probably move along as a. As a nice family business. I get paid. The employees would get paid the franchise, but they would never see. They'd never see a return. And they didn't go into this to fund a little family business. I knew not, of course.

Guy Raz (41:42)

Okay, so you say this to the board, and what do they say?

Joan Barnes (41:46)

They say, go figure it out. Just no more money. We're not giving you any money. Go figure out some other way. And that was like, okay, I'll figure.

Guy Raz (41:55)

Out another way So I guess you have to start thinking about, okay, maybe there's a product, maybe there's retail, maybe there's other things we could do.

Joan Barnes (42:04)

Well, the first thing I thought about was, what can we do that doesn't cost any money? Because they're not giving us any money. And I'm not gonna be able to go out and raise money when our board is all invested in this thing and they're not putting up any more money. So I thought licensing. I was sophisticated enough to know licensing. You know, Gymboree had a really great name, as you said. We've been.

Guy Raz (42:23)

And a brand and a logo. Right.

Joan Barnes (42:25)

Everything. And we had a great press and we were in. We were.

Guy Raz (42:28)

Everybody knew it by this point.

Joan Barnes (42:29)

Everybody knew it.

Guy Raz (42:30)

You would go someplace and say, what do you do? I run Gibber. Gymboree. I love Gymboree.

Joan Barnes (42:34)

If you were a parent and didn't know what Gymboree was, you were like.

Guy Raz (42:37)

Really living on Mars.

Joan Barnes (42:38)

Yeah, exactly. And so we were able to secure some very, very prestigious licenses. We had Random House doing our books, health techs, which was kind of a cool brand for clothing. They did a clothing line for us. We also had Connor Toys, did some really, like a big climbing gym that you'd put in your.

Guy Raz (43:00)

Oh. That you could buy like a bit. Your own climbing gym for your house.

Joan Barnes (43:03)

Your own climbing.

Guy Raz (43:04)

Oh, cool.

Joan Barnes (43:04)

And really colorful and nice looking. And it was sold in Toys R Us. I mean, it was like, wow, we really struck gold. It appeared.

Guy Raz (43:12)

And you didn't need any cash to do this because you were just licensing your name.

Joan Barnes (43:15)

Exactly.

Guy Raz (43:16)

But from the consumer's perspective, it appeared that Gymboree was even bigger. Like, wow, look what Gymboree is making.

Joan Barnes (43:22)

Yeah. But probably a year later, maybe a year and a half later, we were dropped by all of them because. Because we didn't have the sales. We weren't Snoopy, we weren't Garfield, we weren't Little Princess or whoever the cool, you know, product was who. We didn't have a TV show. We didn't have nothing. We just had this live, living, breathing program and it wasn't big enough.

Guy Raz (43:43)

So even though parents were clamoring to come to the classes, they weren't walking into Toys R Us and going, oh, Gymboree Toys, I'm gonna buy them.

Joan Barnes (43:51)

Yeah, well, they obviously were buying some, but not enough. Because these licensing companies really want you to be the next gazillion dollar baby.

Guy Raz (44:00)

And if you're not, they drop you.

Joan Barnes (44:01)

They drop you. Because there's always a million more TV shows. That are. With a new. With a new. So we were dropped. And so now. Now licensing doesn't work. The franchising. We're still. We're still operating. I'm not, you know, but. But we're not making any money. We're making. We're doing fine. We're supporting our staff, but we're never going to pay them back. The same problem exists.

Guy Raz (44:22)

All right, so this is 1986. You've got this major problem with the business, but then it suddenly looks like you might get a lifeline. Right? I guess you get introduced to someone from Hasbro, which is one of the biggest toy companies in the world. Right. And what. I guess they want to make, like an investment, maybe even acquire you. What's the story? What happened?

Joan Barnes (44:43)

Yeah. So first they just thought they were going to do a corporate investment, and then they thought they would buy the company.

Guy Raz (44:48)

Do you remember how much they were offering?

Joan Barnes (44:49)

I don't. I think they had an option. Maybe it was the first they put in an investment, and then if we hit certain benchmarks, they would buy it.

Guy Raz (45:00)

And so with that, you started to get some confidence that you could at the very least pay back your investors or give them a return.

Joan Barnes (45:05)

I just felt like we had been bailed out of hell.

Guy Raz (45:09)

Yeah.

Joan Barnes (45:10)

And I.

Guy Raz (45:10)

It's crazy, by the way, can we just posit how crazy that is? Because everyone who knew you was like, there's Joan Barnes. She runs Gymboree. It's the most amazing company. And you're, like, freaking out.

Joan Barnes (45:23)

I'm freaking out. And I'm trying to act like I have it together. And I don't want the franchisees to be panicking that we're going under because this is their business, too now. You know what I mean? And so I get this offer. I'm so stoked. I get the lawyer. They. You know, they. They and their lawyers, they're going back and forth forth on these documents. And I go to New York to sign the deal. One of the investors is on the plane. The lawyer, you know, whatever. They're all coming for this big celebration for us to be partnering, slash, being bought by eventually, with luck, Hasbro.

Guy Raz (45:55)

Wow.

Joan Barnes (45:55)

I get a call that afternoon. I'm sitting in the hotel room, and she says, hello, my name is Carol Anderson. I'm the senior vice president of something at Hasbro. You don't know me. And I said, oh, hi, Carol. I'll probably meet you tomorrow. She says, actually, you won't. The deal is off. We're not coming.

Guy Raz (46:12)

What?

Joan Barnes (46:13)

That's what I Thought what? I said, I'm sorry. I said, we have our lawyer and our other investors coming. Everything was set. Your lawyers. I'm confused. She said, well, I'm going to straighten you out. She was really kind of a not very lovely person. It's over. We're not coming.

Guy Raz (46:31)

And. And you were like, sorry, can you give me any more information?

Joan Barnes (46:34)

She was not forthcoming. Just. That's all I needed to know was that it was off.

Guy Raz (46:38)

Was there anyone else you could call?

Joan Barnes (46:40)

That was it. She was the kind. I said, should I call whatever the marketing guy's name who I really originally connected with? I said, would I be able to speak to. She said, nobody is going to speak to you. I am the. I am the ombudsman telling you the news.

Guy Raz (46:54)

Wow.

Joan Barnes (46:55)

I'm sitting all by myself. These people are on the plane. I'm humiliated. I mean, I thought, okay, this is the end. I can't imagine what we can do from here. I mean, to me, this was the bailout. And the board was thrilled. They loved Hasbro. Hasbro was a big deal in those years. Still a pretty big deal.

Guy Raz (47:12)

Still is, yeah.

Joan Barnes (47:13)

And so I left a message in the room for the woman investor who came from Montgomery securities, who became kind of a friend. And I said, please come to my room.

Guy Raz (47:24)

This is one of your investors who came out.

Joan Barnes (47:26)

One of my investors who was coming out for the closing. And she had been fantastic. You know, she was with Montgomery securities, and she was a peer my age. And so she came to the room, and I just burst out crying. I said, I'm so embarrassed, Linda. I don't know what to do. You know the law. All these hotshots are coming. Our lawyer, you know, another investor. And she said, we'll deal with it. We'll figure it out. And. And I don't even really remember. I just.

Guy Raz (47:51)

I just remember it's a blur, probably.

Joan Barnes (47:53)

It's a blur. And I remember finally flying home and going to the Gymboree office and telling everybody that this had happened. And I said, you guys, I know there's an answer, but I don't have it. And I'm completely spent. I'm gonna go to my little cabin in the Sierra to restore. And I would like it if you guys would take the weekend to get together without me so I won't inhibit you and come up with the winning strategy.

Guy Raz (48:18)

You basically, you come back and you say to your team, figure it out.

Joan Barnes (48:22)

I'm done.

Guy Raz (48:24)

I'm done. Or I'm taking some time off.

Joan Barnes (48:26)

No, I'm not done. I just can't. I don't have any. I would be a drag on a creative meeting for what's next. Because I was the one that come up with all of it. You know what I mean? I was the one, the big leader. And with the insult of Hasbro walking away from the deal, I just felt leveled. I had nothing left. I knew I would, but I needed some time to go be in nature and, you know, whatever.

Guy Raz (48:48)

I read that you guys, that Gymboree was down to $50,000 in cash.

Joan Barnes (48:51)

Yeah. I think it was even less than that. My CFO came up to the cabin and we sat there at my little kitchen table, figuring out how long we had to live.

Guy Raz (49:00)

You probably had to lay people off.

Joan Barnes (49:02)

We laid people off. And those of us who remained in. I called it the life raft. We all took 50% pay cuts. I took a 75% pay cut, and everybody hung in there.

Guy Raz (49:12)

But this was all quiet. This was not in the papers. It was not publicly known.

Joan Barnes (49:16)

Nobody knows nothing. The franchise. Nobody knows anything except for me and that. And my. My people that work for me. The board does. The board knows. But I said, we're coming up with a. We're coming up with the final and winning solution, you guys. I just. I kept being. Putting on the happy face.

Guy Raz (49:31)

I mean, it's, It's. It's kind of this classic dilemma. You had an amazing brand, but you didn't really have a retail product.

Joan Barnes (49:40)

We did not have a money making business. And you know, I always say to my franchisees, the price of admission into the play yard of building a business is making money. You can do it for a little while. It's, you know, social venture and it's fun, but if you can't make money, you can't stay there.

Guy Raz (49:57)

Yeah.

Joan Barnes (49:58)

So when I got back from my cabin, you know, trying to figure out how long their 50 or 25 grand was going to last and who was going to get laid off and who was going to take pay cuts and all that stuff. On my desk was a picture of a play center next to a retail store.

Guy Raz (50:14)

A photograph, A sketch.

Joan Barnes (50:15)

No, it was a sketch. Somebody had some. This is what they'd come up with, our play centers. Instead of being in church halls, we'd rent a space. We'd open a retail store, Gymboree branded stuff. And then in the back of the retail store would be the Play program. So we'd rent one space and then all together. And I thought, well, retail stores, wow, that's a big deal. You know what we'd have to manufacture our own clothes and sell them in our own. Blah, blah, blah. I thought, okay, let's put this together.

Guy Raz (50:47)

So just to be clear, the idea was, let's have retail stores. We'll sell all of our stuff and we'll have the Gymboree place that are inside.

Joan Barnes (50:54)

Yeah. In the back of the. Walk through the store. At the back of the store. But the store would be a new creation. We would. We would design and manufacture our own apparel, and we'd also put some play equipment in. We'd have, you know, some. It would pretty much be all branded. Maybe in the beginning we'd have to bring in some other people's toys and things like that. But it would be a thing. So.

Guy Raz (51:16)

So the idea would be, hey, they're coming in for the classes anyway, but let's make them walk to the gift shop first. Right?

Joan Barnes (51:22)

Yeah, exactly.

Guy Raz (51:22)

You walk to the gift shop, then you go to the class and you got to walk back out the gift shop. So.

Joan Barnes (51:26)

Right.

Guy Raz (51:27)

The gift shop was going to be the business.

Joan Barnes (51:29)

Yes, exactly.

Guy Raz (51:30)

But the classes are going to draw people into the stores.

Joan Barnes (51:33)

Right.

Guy Raz (51:34)

And you like this idea right away?

Joan Barnes (51:36)

I did. I thought it was. Yeah. But I realized it was going to be. We'd have to really come up with the whole plan. We'd have to do a model of what the store looked like, some prototypes of the clothing. You know, we'd have to do a whole thing and then sell it to the board. But again, I'm young and dumb and, you know, just. I'm. The business was not dying under my watch. That's what I can say, guy. It just was not going down.

Guy Raz (51:59)

Okay. The board previously, like less than a year earlier, had said, go figure this out. No money and 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?

Joan Barnes (52:14)

Yeah. I said, I think we really have come up with a winner 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, beautiful mock up of the store, which is pretty much how it ended up looking like a gym and then some clothing. 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. 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, 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 gave all the reasons why they should not invest.

Guy Raz (53:32)

And by the way, the other question he must have asked was, haven't they already tried products with licensing that didn't work? Why is this going to work?

Joan Barnes (53:38)

I think that question came up, but that one, I had an answer for that. In our own environment, housed in our own world that we created, you know, and also the products that we were going to create were going to be really kid friendly. These were 3 inch cuffs and you know, unisex. And unisex was kind of a thing.

Guy Raz (53:55)

Then I guess the argument you could also make was our customer base is affluent, they've got money, they're educated.

Joan Barnes (54:02)

Yep, all of that. Anyway, so they said, well, they would think about it and let me know. And the next day, the lead investor called me, the guy that put in the first $300,000. And he would, he said, joan, I always believed in you. We'll give you a bridge loan, get over to Hong Kong, produce the line, and when you get back, you'll find a location. We'll open up a test store.

Guy Raz (54:23)

Wow.

Joan Barnes (54:24)

I said, okay, Stu, just as an.

Guy Raz (54:26)

Aside, you were based in the Bay Area. There happens to be two massive apparel brands based in San Francisco, Gap and Levi's. And I think at the time, Gap was starting to work on a kid's line as well. Like, did you ever approach them or try to.

Joan Barnes (54:44)

You're gonna laugh. Stuart Muldau, my lead investor, was on the board of the Gap. He was quite close friends with Don Fisher. And he said, joan, I'm going to get you in a meeting with Don Fisher. I think maybe this was before I made the presentation about the retail to them. And he said, I'm going to get you a Meeting with him. And I think if you present it to him, maybe they would take it and they would develop your whole retail thing. So we talked about retail. So I did. I went to Don Fisher's office amongst all the artwork that's now at moma and stuff like that. And he said, it's a great idea, Joan, but you need to know we're opening Gap Kids in six months. Oh. And I'm thinking, great, even if we ever get this started, we're going to go up against the most formidable retailer in the world. This is great news.

Guy Raz (55:28)

When we come back in just a moment, the clothing line goes forward, but Joan has to step back and leave the company for good. Stay with us. I'm Guy Raz and you're listening to How I Built this. Hey, welcome back to How I Built this. I'm Guy raz. So it's 1986, and just as Gymboree is about to launch its own line of kids clothing, the Gap says it's gonna do the same thing. But despite the threat, Joan doesn't back down and she takes off to Asia to visit a clothing factory.

Joan Barnes (56:16)

Yeah, me and my, me and the woman who was being my designer, you know, were in the back of the bus of the airplane, you know, one of us sitting lying on the floor, the other on the two seats, you know, and we go, and then they say they can't make that few quantity because of what we need for one store. So I called Stuart and I say, Stuart, they won't make, they won't make this few of quantity.

Guy Raz (56:37)

The factory needed a bigger order.

Joan Barnes (56:39)

Yeah, they needed. And he said, I double it, you'll open two stores. So I did, I doubled the order. I come home, I get rolling, I look around, I find a location in San Jose and one in San.

Guy Raz (56:51)

Are these in shopping malls or are these in Macy's?

Joan Barnes (56:54)

Shopping malls? Yeah, top level malls between the Nordstrom's and the Macy's.

Guy Raz (56:57)

And these are what, 10 year leases that you had to sign or three year leases or what?

Joan Barnes (57:02)

10 year leases. And they were at that time with only a thousand square feet. They were small stores. And we were ready to roll in the holiday season of 86, going into 87. All this had happened within a few months.

Guy Raz (57:15)

Wow, okay, so you get the clothes are being made, you get the leases in shopping malls, which is a little scary because a 10 year lease, man, that's. You are locked in. And the shopping malls, of course, this is the 80s. I mean, today shopping malls are in crisis, but this is like Boom times.

Joan Barnes (57:32)

This was the top of the line. And also the fact that everybody's tried to get in, and we don't have any history of any retail stores.

Guy Raz (57:38)

How did you get in?

Joan Barnes (57:39)

I got in telling them that we have, you know, 10 franchise locations in the area. These people know the brand. I implored them with all the statistics that I was aware of, and that those people, you know, and they're going to bring other business to the mall, they come anyway to walk their kid, you know, just something to do. They'll come to the classes, they'll come to the store, and then they'll spend money at the rest of the places. They'll go to lunch. They'll. And they bought it, and it turned out to be true.

Guy Raz (58:07)

Okay, and tell me about the openings of these places.

Joan Barnes (58:11)

They were on fire. People were lined up. We did the highest dollars per square foot in both malls of any other store during that holiday season.

Guy Raz (58:21)

What were people buying? Clothing.

Joan Barnes (58:22)

I mean, they were buying clothing. Yeah. And actually, I'm looking at my wall here. I'm looking at a picture of the first store because we were voted the best new design in 1986 or 1987, as well as doing the greatest dollars per square foot.

Guy Raz (58:35)

It's incredible. It must have been such a validation for you.

Joan Barnes (58:39)

It was such a validation. And we did it all on our own. I didn't have to go to the board, and I hired all the people, all of our staff, went down and merchandised the stores. We opened up the boxes all damn night, and we greeted the customers the next day. And it was just a blowout.

Guy Raz (58:55)

And you must have been on cloud nine.

Joan Barnes (58:57)

I was so ecstatic. And then, of course, the board, just like all businesses, they saw it as a winner. And now that we were to go out and raise money. So within the next year, we raised $6 million.

Guy Raz (59:07)

People were coming to you to give you cash.

Joan Barnes (59:11)

Yeah. And because Stewart knew all these people, so he went to Harvard Endowment, Chemical, bank of New York, and they all came in.

Guy Raz (59:18)

Wow. And so now you're on fire. You've got something really hot. You've got a hot brand, but you're also making money.

Joan Barnes (59:26)

We're making money. We're doing well. And I also realize that I'm in over my head.

Guy Raz (59:31)

Hmm. And I'm assuming the board is like, expand, expand, expand. Let's go, let's go, let's go, let's go.

Joan Barnes (59:36)

Let's put down a business plan. I want 50 stores by, you know, year three or something. And now they're telling me, I'm aware that I had my. My. What I call my origin team, the people who've been with me from the beginning, which we wore every hat. Okay, put your marketing on. Okay, put your. This hat on. Because that's what you do when you're building, as you well know, you're building something. And now we needed the specialists. We needed someone who did this and someone who did that. And so I. My main investor said, John, Joan, and I knew, too, it's time to let.

Guy Raz (60:04)

Go of those people, start hiring people.

Joan Barnes (60:06)

Start letting go of firing. The people that. The generalists that have been with you forever took the pay cuts, did everything. And I thought, I can't do this.

Guy Raz (60:17)

They wanted you to professionalize, basically, quote, unquote.

Joan Barnes (60:21)

Yeah. They wanted me to do, like, run a real business. And I thought, you know what? I should go, too. I'm over. Not only should the origin team be cut, I should be cut because I. I don't know what I'm doing either. We need somebody that really knows how to. Who's done this before. It's one thing. I'm a visionary. I. I could conceive what the store would look like. I can get it operating, but I'm not going to be the right person to replicate this in, you know, up to hundreds of these things. I'm just not.

Guy Raz (60:47)

Okay. This is 1988.

Joan Barnes (60:50)

Yeah.

Guy Raz (60:50)

And again, from the outside, you are just a. One of the most successful female founders in America. You've got this incredible brand. It's expanding like crazy. All this money is coming in. The board wants a hundred stores in the future, and you yourself are, like, crumbling inside, like you are actually physically unhealthy.

Joan Barnes (61:16)

Yeah.

Guy Raz (61:17)

And also. And you've talked about this, about, written about it, you had an eating disorder that was serious.

Joan Barnes (61:23)

I did. And I managed it by building a gym in the Gymboree headquarters and making everybody come at lunchtime to an aerobics class so I could settle myself down. It was just not a good time for me. Everything looked great on the outside, and on the inside, I felt like I couldn't do this anymore.

Guy Raz (61:40)

And you were exercising, like, hours a day just to cope with the stress.

Joan Barnes (61:46)

I was an exercise addict, huh? Yeah.

Guy Raz (61:50)

Were you talking to anybody about this, or were you keeping this all in at that point?

Joan Barnes (61:54)

I think I was still keeping it in. I was just embarrassed. And I. I knew that I had all these franchisees that depending on me, and I wanted to keep it together for them. And I said to the board or said to my Main investor. I am going to let these people go as you, as we both know, they need to. Do you think it. Maybe it's that you want to replace me too? Because I'd be down for this. No, the press loves you. Everybody thinks you can. You're going to run it all the way. And I'm thinking, okay, I'll do my best.

Guy Raz (62:24)

Meantime, Joan, you were working like crazy, right?

Joan Barnes (62:28)

Yeah.

Guy Raz (62:29)

And you also had a family. I think you had two kids, right?

Joan Barnes (62:33)

I had two kids.

Guy Raz (62:34)

And your husband was busy. Tell me about your relationship at home with your husband and. And with your family. How. I mean.

Joan Barnes (62:42)

Well, I had hired au pairs from the time my kids were little because I was working so much. And you know, I would come home late and I'd be like, well, what's for dinner? You know, I mean, I just, you know, and yeah, so I was, you know, basically hired someone to kind of raise my kids. Except on the weekends and we. And the vacations. I was there and my husband was, you know, he was now, you know, major. He'd moved.

Guy Raz (63:04)

He was a big time editor.

Joan Barnes (63:05)

He was a big time editor, but he morphed from that to running campaigns, running Bill Bradley's campaign and Jerry Brown's campaign.

Guy Raz (63:12)

He became presidential campaigns.

Joan Barnes (63:14)

Yeah. Or Mayor Oriole. Like Bradley in la, he morphed into another business where he parlayed all his know how into that. So he was running his. And so neither one of us were manning the store. You know, he was more involved than I was.

Guy Raz (63:29)

And you had two kids.

Joan Barnes (63:30)

And we had two kids and. And we were both very much committed to our professional lives. And, you know, we were drifting apart because, you know, I didn't have the energy to hear him about his day to day shit and he didn't have the interest of mine. And you know, so, I don't know, just. I could tell that this wasn't going well. You.

Guy Raz (63:51)

You around this time were hospitalized. You had a panic attack. I can understand. I mean, it's so crazy because on the one hand, the business is really succeeding. You're under a lot of pressure from your board to fire people, to run new people, and also to double down on how much you're working. Your marriage is crumbling and you are feeling overwhelmed.

Joan Barnes (64:16)

Yeah. And so one of my employees who became a friend took me to the hospital and they said, yeah, you're having a panic attack. You know, gave me whatever they give you for that stuff. And. And it just wouldn't go away. Then I decided to talk to somebody. Then I hired A therapist. And I told them about my eating disorder and they said, oh, we'll solve it here in the thing. And, and, you know, it was. It's not solvable that way when it's as extreme as what I was doing. You know, I was, you know, I was a bulimic and I was an exercise addict, and it was just not. And I was, you know, just. I was not in a good place, let's just put it that way. And I decided I was going to go to a treatment center.

Guy Raz (64:56)

You were going to need to step away from, obviously from the business.

Joan Barnes (64:59)

Yeah. So I told the investor that I was going away for 30 days and would he, you know, would he cover me? I had hired. I think by that time they'd already kicked me upstairs. I was chairman of the board.

Guy Raz (65:10)

So you weren't operationally.

Joan Barnes (65:12)

I was already hired somebody who was operational. But, you know, from the press's point of view, I'm chairman of the board, you know what I mean? And I went away and they told me at the treatment center that I would never recover if I went home after 30 days. And I needed to go to a long term.

Guy Raz (65:26)

Where was this treatment center?

Joan Barnes (65:28)

Georgia. I was up in the blue Hills of Georgia. It was one of the one and only eating disorder, 30 day programs. There was millions of alcoholic programs, but this was for eating disorders.

Guy Raz (65:38)

So you basically go. It's kind of a place where you go and you live on this campus and they have a structured program for you. But really, 30 days is not going to be enough.

Joan Barnes (65:50)

Not enough. They said you're going to need to go to long term because it's not like you plug the jug like an alcoholic. You have to create a whole new relationship with food because you need to eat. You just need to do it in a different way. But the thing that I really learned about it was that you cover because you're with like minded people and that it's not the therapist thing, it's your other, quote, colleagues that are also suffering from eating disorder are going to bust you, you know. And eventually when I did get home, I went to that therapist. I said, if you ever have anybody like me in your office again, get them to treatment because that's where, that's where it happens.

Guy Raz (66:23)

Joan, did you feel like. So, I mean, you know, on the one hand you're this role model and you're strong and you've run this business and all these things. On the other hand, you're doing something very vulnerable. Right. And people had to know about it because they needed to know, where's Joan going?

Joan Barnes (66:39)

I told Stuart I was going. And then I called him.

Guy Raz (66:41)

He's your main lead investor.

Joan Barnes (66:42)

Stuart, my investor. And I called him because I thought my marriage wasn't gonna make it either. And I told him that I wanted him if he would because it wasn't public company or anything at that point. I wanted him to buy some of my stock or all of it, because I wanted to have some financial security. Cause I didn't think my marriage would make it. And he said, joan, this is your business. You made this all happen. I don't want you to ever think I took advantage of you when you were vulnerable. You go away. I will definitely buy you some of it or all of it, whatever you want. But I want you to really think about this. He was such a great guy. And I said, okay, I will. He paid me the whole time I was gone. I got my salary. And I called him halfway through that time and I said, stuart, I need to sell. He said, how much do you want? How much would you be willing to sell? I said, stuart, I'm like any other entrepreneur. I want a million dollars. And he said, okay, well, there is no public market for it. I'm gonna leave you with 30% and I'll take 70%.

Guy Raz (67:38)

So you get a million dollars for 70% and you keep 30%. But you're really focused on your recovery at this point. And you would stay there for Almost a year, 10 months, I read.

Joan Barnes (67:52)

Yeah.

Guy Raz (67:53)

And I guess after you left that rehab facility, you didn't come back to California right away. You actually spent quite a bit of time on the east coast. And then eventually you moved back in 1993. But by then you'd been away for quite some time. Like almost three years, right?

Joan Barnes (68:10)

Yeah, about three years. Uh huh.

Guy Raz (68:12)

And you moved back and I guess and now your daughters are grown up. I mean, I think they're close to my age. So they're in college. And you would come back to try and. And you say this, you've written about this to kind of repair your relationship with him. There were some challenges.

Joan Barnes (68:29)

Yeah. Well, I mean, I left them when they were. One was a freshman in college and one was in high school. And I left and I never came back. I mean, they thought I was gone for 30 days and I was gone for almost three years. I mean, I came back periodically, but I wasn't living with them. You know, fortunately, their peer groups and their friends were much more important to them at that time than their mother. But I definitely needed to do some repair work. And we did.

Guy Raz (68:54)

Did that take some time? Yeah, yeah. So you come back to California in 1993 and that year Gymboree announces it's going to go public. Were you even involved? Like, were you. Did they, did they communicate with you? Did you have any connection with them when you came back?

Joan Barnes (69:17)

I was. I'd gone to a restaurant in Los Gatos where I went to move.

Guy Raz (69:22)

This is like around again. In the Bay Area?

Joan Barnes (69:24)

Yeah, yeah, the Bay Area. This is in the South Bay. 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. I think it's Gymboree. And I overhear this and I thought, what? Gymboree went public. And I'm sort of half ass interested, really interested. And I go up to where they're, you know, and I see a bunch of New York Times sitting on the 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 Gymboree was going public.

Guy Raz (70:06)

Wait, how, how were you not informed of this? I mean, as a shareholder, nobody told me. But as a shareholder, I think they have to find out if you're going to sell your shares before they're going to go public. Like, I don't understand how you were not made aware of that.

Joan Barnes (70:17)

I was not. Maybe I had signed something originally. I don't even remember that. When I sold my shares to the investor, maybe I signed something that if there was ever an event that I would agree to, you know, I was sort of still out of it whenever, whenever that was happening. So I did not know they IPO.

Guy Raz (70:35)

I think I looked it up there. IPO price was $20. At the end of the day, I think it closed like $38 a share.

Joan Barnes (70:41)

It went up 58% on the first day of trading.

Guy Raz (70:44)

And so you had 30% of your shares remained. So you probably still had some considerable number of shares.

Joan Barnes (70:51)

I had some money, yeah. I mean, it was nothing like what I would have had and I didn't even care.

Guy Raz (70:56)

But did you. So when you found out about this, what did you. Did you want to liquidate your shares right away?

Joan Barnes (71:00)

Well, you. No, I did not. I just. I was so focused, guy, on maintaining my recovery. That was the most important thing to me was that I could do that. But the company, I kept my Stock because it was like, this was my baby. I can't sell this stuff. And the company went split a number of times. So it was kind of smart that I kept onto. It was not smart knowingly, but it turned out well for me.

Guy Raz (71:24)

Right. Okay, so the company IPOs, and that's really. I mean, you'd already kind of been out of it, but that's really kind of your end with Gymboree. Meantime, you are now back and you are divorced.

Joan Barnes (71:40)

Right. Got divorced that same year. Big year. The year the company went public. I got divorced.

Guy Raz (71:45)

And you are fully recovered.

Joan Barnes (71:49)

Yeah. Although some of us like to think that you're, you know, they're always doing push ups in the background, so you need to be vigilant. So. But I was really committed and I've been in full abstinence for 35 years. So I feel like it's, you know, it's behind me now.

Guy Raz (72:04)

And fitness was always part of your life anyway.

Joan Barnes (72:08)

Yeah.

Guy Raz (72:08)

You were a big fitness person and still are. And I guess you were never really into yoga, but this is when you start to get exposed to yoga.

Joan Barnes (72:16)

In the mid-90s, that friend of mine that I had that was in the dance company with that we shared the job at the Jewish Community center, we stayed friends this whole time. And she called me, she said, come do a yoga class with me. And I said, I'm not a yogi. I'm a mountain biker. I'm a this, I'm a that. You know, that's seems silly, but okay, friendship trumps. I'll go. And my first class, I fell in love. I just, it just something cracked in me. I was able to access my emotions. It was just the way those poses were put together. I just loved it. And I became a yogi right from the get go. And then people came up to me and said, oh, you're the Gymboree lady. We should, you should open up a chain of yoga studios.

Guy Raz (72:56)

Of course they would say that because you already did. You already proved what you could do.

Joan Barnes (72:59)

I've already done this. Right. And I said, you know, I don't think I can do this again. I just kind of. And they said, well, how about just a Bay Area chain?

Guy Raz (73:07)

Who, who were these people saying this to you?

Joan Barnes (73:09)

These were students in the class that I had known and people I had been fellow students with me or people I'd known from the community and stuff like that. And I thought, you know what? I guess I'm gonna, you know, I just, I softened to the idea because I am an entrepreneur. I love the idea of growing. I love service businesses. I love, you know, a business where you go in one way and an hour later you come out another way. And I thought, okay, we'll do this.

Guy Raz (73:32)

So you basically decide that your next act was going to be yoga studios. It's amazing because it's basically Gymboree for grown ups, right?

Joan Barnes (73:40)

Exactly that. That's what I would say to myself. I'd say, here you go. Because I start businesses for the phase of life I'm in and I still want to do like a senior living center because I'm. That's the stage of life I'm headed towards, but I'm not fully there yet. You know, I don't want to go live in one of those places, but if I do, I want to start it, you know.

Guy Raz (73:59)

And this was going to be a chain of yoga studios only in the San Francisco Bay area. That was the idea.

Joan Barnes (74:05)

That's what I thought. I can't do this nationally. I can't do that. I can't do a big rollout again. But maybe I could do a little, a little Bay Area chain.

Guy Raz (74:12)

And so where did you open the first location?

Joan Barnes (74:14)

I opened the one in Mill Valley where I lived. And I thought, gee, I want to be just like a little franchisee. Want to have a little location, go home, have this thing, you know, blah, blah, blah. And then I opened one in, in another area of Marin County, Larkspur, and then I opened one in the city. And then I realized I can't. I'm. The same stuff is coming up for me again. I'm.

Guy Raz (74:33)

What, like what?

Joan Barnes (74:34)

I'm feeling completely obsessed with this business. I can't think about anything else. I don't want to see my kids, I don't want to talk to people. I just. I just want to make this business work. I don't have that ubiquitous thing called called Balance. I don't know how to do that. I just don't. And I didn't want to have another breakdown. I just. So I said, I'm going to sell the business, which I did, to Yoga Works, which was a national chain. They had at the time when they bought me, they had about 25 locations. They were in LA, but they'd buy other studios like me and change the branding. So now it went from the name I called it to Yoga Works.

Guy Raz (75:09)

Your business was called the Yoga Studio, right?

Joan Barnes (75:12)

Yes.

Guy Raz (75:12)

And you had. How many locations did you have?

Joan Barnes (75:15)

I had three locations. But they were really, they were really significant because they weren't like these old School places that were upstairs with purple walls, they were in. They were in real malls and we had like three studios and we had retail thing. And, you know, it was. They were. They were significant businesses.

Guy Raz (75:30)

Was it breaking even?

Joan Barnes (75:32)

It was not.

Guy Raz (75:33)

Yeah. It's a tough business.

Joan Barnes (75:35)

It was another Gymboree franchise business. These service business. Even though the classes are packed and everybody thinks it's super successful, it's just not.

Guy Raz (75:43)

That's the thing. It's like restaurants. You go to a restaurant, it might be packed, but the margins are thin. And you go to a yoga studio, and it might be packed, but it's just the capacity is limited. You can only fit a certain number of people in. And they're really hard businesses. Unless it's a super efficient model, they're really hard businesses to make profitable.

Joan Barnes (76:06)

Right. And here I had been selling my teachers all these years, and we're partners, so I would give them 50% of the revenue. That was never going to fly. And the truth is, I was not going to be able to make it work because unless I changed the way they got paid, which was too scary for me, I wasn't going to do it. So I sold it to Yoga Works.

Guy Raz (76:27)

Yeah. And Yoga Works eventually would go on.

Joan Barnes (76:30)

During COVID It went under Covid. Yeah.

Guy Raz (76:32)

And so this really begins the next chapter in your life to start focusing on just different things. I mean, tell me a little. I mean, here you are, it's 2008 time period. You're in your 50s, right, at this point.

Joan Barnes (76:50)

Early 50s, yep.

Guy Raz (76:52)

And I mean, were you done with entrepreneurial ventures? What did you think you wanted to do at that point?

Joan Barnes (76:59)

Well, Gymoree now had a new chapter. And first of all, YogaWorks, I consulted to them for about a year and a half after they bought me. And then I decided that while I had lost my privilege to be an entrepreneur, it didn't mean that I didn't love the whole idea of other women building their businesses. So I became a mentor, consultant or whatever to other women who were running their businesses. And then I went on the speaking tour. I became a keynote speaker and was flown all over the place to speak to women's conferences.

Guy Raz (77:30)

But you didn't like that?

Joan Barnes (77:32)

I. Well, I liked the fact that I would tell my story pretty unvarnished, as I'm telling you, about the whole eating disorder thing. And women would come up to me afterwards and say, I've never told anybody, but I have an eating disorder, too. It feels so good to know that, you know, that there's someone like you who I looked up to and thought I wanted to live your life. And I always say, well, wait till you hear the story before you want to be me. You know what I mean? And so that felt good. But it was lonely. It was even more lonely to fly across the country and then lead a workshop and then fly home. I just. I didn't love it.

Guy Raz (78:03)

Meantime, the Gymboree world, I mean, it went public. It was public in the 90s, and by 2010, it was acquired by Bain.

Joan Barnes (78:16)

Yep.

Guy Raz (78:17)

For 1.8 billion, which is incredible. I mean, the shareholders, I'm sure, did very well out of that. And you're certainly. You were nervous about paying your investors back, but of course they did very well.

Joan Barnes (78:29)

Yeah. Many millionaires, many multi millionaires.

Guy Raz (78:32)

But this really begins, or maybe was in the midst of a decline, a significant decline for Gymboree. I mean, that was sort of its high. Probably its high watermark in terms of its value, because then, you know, eventually I think Bain then buys it for 1.8 billion and then sells it six years later for 127 million. And then recently, the brand name was bought for 75 million. Clearly, people still see value in it because someone paid 75 million bucks for it a couple years ago just for the name.

Joan Barnes (79:04)

Exactly. And there's still franchise. There's a few. I have friends that live in Oakland, and there's still a franchise on Oakland on Lakeshore Drive and kind of the kind of hot area over there. I mean, there's still a. Around.

Guy Raz (79:16)

Joan, you are in your 70s.

Joan Barnes (79:19)

Yep. Late 70s.

Guy Raz (79:21)

And you're very. People can't see you, but you're very vibrant and clearly very fit. Tell me a little bit about your. Your sort of regimen. How do you. What do you do?

Joan Barnes (79:32)

I. I pretty much go to yoga every day or maybe four times a week now, and I hike every day and. Well, it's not like I haven't had my fair share of things. I'm a cancer survivor. I mean, I've had my stuff too. But I just.

Guy Raz (79:44)

When did that happen?

Joan Barnes (79:46)

I was. I got my first cancer. My first and only cancer, actually. Six years ago. I'm six years in remission. So when I was 72.

Guy Raz (79:53)

Wow.

Joan Barnes (79:54)

I had major ovarian cancer. And, you know, it comes on very quickly. I figured it out quickly, and they put me into surgery, and it was heavy duty for a lot of years.

Guy Raz (80:06)

Wow.

Joan Barnes (80:07)

Yeah. But I think I'm a little bit naive guy, to be honest with you. I just never occurred to me that I would really die from this thing. So I just, just kept keeping on. And then I, I knew that because the oncologist kept telling me, you know, it's good, there's going to be life before cancer and there'll be life after.

Guy Raz (80:25)

And, and what did that mean for you?

Joan Barnes (80:27)

Well, I thought she meant like, don't expect to come back to your old self. You know what I mean? And it was like, okay, well, I'll deal with that when I deal with that. But I pretty much have. I mean, you know, I'm older, so, you know, I've got regular aging issues, but I'm pretty much myself.

Guy Raz (80:45)

I wonder when you think about, you know, starting at the Jewish community centers, just with, you know, part time job and then turning it into a really, a big cultural thing. Right? It was People magazine, baby boom. It was centers all over the country, eventually bought for $1.8 billion from Bain. When I put it in those terms, do you reflect on it and think that's a lot to be proud of?

Joan Barnes (81:09)

Yeah, I'm proud of it. I mean, it's not my defining, actually my recovery from cancer. I'm more proud of that and how I came through that.

Guy Raz (81:18)

I hear you. Yep.

Joan Barnes (81:20)

Yeah.

Guy Raz (81:23)

I mean, I guess I asked this question everybody because of the show, and it's more of a chance to kind of reflect. But do you think that your success came from all the work you put in the grind, or do you think some of it had to do with luck and just the timing of all this?

Joan Barnes (81:40)

The both and. Absolutely the both. And I think you have to definitely be on the right street corner at the right time when the bus comes by and know which one to get on. And there were many of those moments. But I also think that if I had given up, where many people would have, and probably I would have too, if I was a little smarter, different periods of time, you know, just walked away like, oh God, the franchisee doesn't work. Oh God, the licensing is crumbled. Oh, God, Hasbro's killed us. You know what I mean? Just a million, A million exits should have happened. But I was, I was, as I mentioned earlier, I refused to let the damn business die. I let my marriage go, I'd let my kids falter. I mean, and I still don't know, 25 years of therapy later, I still do not know why I put that kind of effort into it. It wasn't like I had a lot of money into it. It's $6,000, you know, I mean, that was the total sum of my investment in this thing. I mean, I it's part of me, and I love building that business until it was just over my head. But I really love the camaraderie of the team and the women I built it with. And I I feel like what a privilege it was to be able to, you know, dream up something and have the right people at the right time and get the right investors to make to be able to make this a reality.

Guy Raz (82:57)

That's Joan Barnes, founder of Gymboree. By the way, even though Gymboree is nowhere nearly as big as it once was, it's still doing pretty well overseas, especially in China, where there are hundreds of play centers. As for the clothing line, the retail stores closed down in 2019, but the brand still exists. It's owned by a company called the Children's Place, which recently reopened its first Gymboree brick and mortar store at a mall in New Jersey. Hey, thanks so much for listening to the show this week. Please make sure to click the Follow button on your podcast app so you never miss a new episode of the show. And as always, it's totally free. And if you're interested in insights, ideas and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter@guyraraz.com or on substack. This episode was produced by Chris Masini, with music composed by Ramtin Arablouei. It was edited by Neva Grant with research by Rommel Wood. Our audio engineers are Patrick Murray and Jimmy Keeley. Our production staff also includes Alex chung, Casey Herman, J.C. howard, Sam Paulson, Katherine Cipher, Kerry Thompson, John Isabella, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built this.