← The Foundr Podcast with Nathan Chan
The Foundr Podcast with Nathan Chan
587: She Built a $1 Billion Brand Selling Other Peoples Clothes | Julie Wainwright
01:00:31
Julie Wainwright, founder of The RealReal, reveals how she built a billion-dollar resale marketplace that transformed luxury fashion. In this exclusive Foundr Podcast interview, Julie shares how she scaled The RealReal to over $1B in revenue, reached 38 million members, and took the company public on the Nasdaq.
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- [00:02]
A
Hey, founder fam. I want to talk to you about something super exciting. We're officially partnered with Omnisend, the email marketing and SMS platform built specifically for e commerce founders. We've been recommending Omnisend to founder students for a while now because it just works. Whether you're launching your first store or you're scaling to seven figures, it really helps you automate your marketing and get real results. Did you know, on average, OMNISEND customers make $68 for every $1 they spend, which is an insanely good return. And because you're part of the founder community, you get 50% off your first three months with the code. Founder50. Just head to omnisend.com founder without the e to get started. All right, now let's jump back into the show. Welcome back to the Founder Podcast. So I want you to imagine building a billion dollar business by tackling an industry Amazon could never dominate. And that's exactly what today's guest did with the RealReal just. Julie Wainwright transformed luxury resale into a mainstream movement, scaling her company to over a billion in revenue with 38 million members. But her story isn't just about wins. She's also navigated the most infamous dot com busts with pets dot com. And she's brutally honest about the lessons that she carried forward. So in this conversation, she's going to explain how you can spot opportunities that others overlook. The scrappy tactics you can use to build supply from day one, what it really takes to scale from your kitchen table to millions of products a month, and why building on values and culture is critical if you want your company to last.
- [01:39]
B
Hear the stories, learn the proven methods, and accelerate your growth and future through entrepreneurship. Welcome to the Founder Podcast with Nathan Chan.
- [01:53]
A
All right, so, Julie, welcome to the Founder Podcast. The real, real billion dollar company. How'd you start it?
- [02:01]
B
I'll give you the short version, then I'll fill it in. But the short version is I was looking for an opportunity that Amazon could not replicate in the commerce world. I didn't want to be out Amazon, and clearly they can do almost everything. And I had identified the luxury space as a space they'll never be good at. I will. I know they keep dabbling, but I would say they're still never going to be good at. But I also thought, I'll never do a luxury brand. So then I'm like, well, what if I did? What if I did this? Or what if I did that? I was also looking at possibly developing a line of beautifully designed but eco sound Cleaning products. Because I actually started my career at Clorox in brand management. So I knew a lot about the Clousold product division, how to do it. But I thought, I'll sell it online. It'll be eco friendly and also beautiful bottles. Not looking so clinical. But I thought, okay, I don't know if I want to go backwards in my career. Maybe there's something I can do that's really more technology driven, not just leveraging the Internet. So then I had, and I had other categories. I was pretty sure Amazon would struggle, but I mean there's just not that many. They're going to struggle because they could basically throw enough money at anything. So then that was in August, September. And you know, my personality is such that I kept looking and looking and then I'm just like, you know what? You know, I have to. I'm just going to let it go for a moment here. Then I'm shopping with a girlfriend in a boutique and they had a little bit of luxury consignment in the back. It was a full price boutique. That's where she shopped. And I've shopped with her before and I didn't. I've never seen her do that before. So then I kept. Then it was like, oh my God, look. What. And by the way, this is a venture capitalist. She has a lot of money. She can pay full price. So we get out and I'm like, what happened? You just bought previously owned things. She goes, I just bought Louis vuitton, Gucci and St. Laurent at a great deal. And I go, it didn't bug you that they someone else wore them before? She goes, not at all. I go, well, how do you know they're authentic? She goes, I trust the owner. She knows who gave these to her. And then I started, have you ever shopped on ebay? She said, never would. Too many fakes. Have you ever been in a consignment store? I would never walk in one. She said, I don't like them. I don't like the experience. They're kind of gross. This is back then. And I said, have you ever consigned? She said, no. And I knew right then the light bulb went on and I'm like. I said, and why? She it's too hard. I don't have time. So right then I set up the whole tenants for the business. And then the next thing I did was size the market to see. And it's hard. It was harder to size than it is now. Size. What I thought I could find that eBay was already doing in the luxury space. And then I tested every vehicle for selling handbags, jewelry, clothing, and they were all so subpar, especially selling jewelry, because I had to walk into a pawn shop, which I describe in my book Time to Get Real, because it was so creepy. It was just so creepy. And. And one of those things where she kept trying to tell me that if I didn't agree with her price today, tomorrow it could change. And I had a Cartier watch and how it had gone out of fashion. It was two years old. And I kept thinking, it's a watch and it's Cartier. She's like, nope, no one wears these anymore. It's only two years old. And anyway. But she kept want. Basically she wanted to degrade my product so she could get a better price. And even when I left, she go, you know, this price is only good for one day. I'm like, okay. Anyway, I get. I walked out of there thinking I can kill the competition. This is a big market. The Internet will bring all the economies you need and the size. And the next day, within two months, I called the owner of the boutique and said, do you want to do this with me? Because she had been a tech entrepreneur at one point, and she said, oh, sure, let's set up a meeting. She was clearly not that interested because by the time she set up the meeting, I had a name, I'd raised money, and I was moving on. And just as the world goes, five years later, she came back and wanted to work in the company. We didn't have a job for her then where she could have. Yeah, but that happens. That's just missed opportunity. But that's it. It was like having some framework in my head having no solutions. And I had shut down that luxury idea, but clearly not all the way because there you go. Then all of a sudden I had like the app, you know, there it was when I saw it, I'm like, that's it. And then I just. Here's. I always saw this idea, which is proven to be true, at least in the VC world here, that I deal in the venture capital world, ideal. And if I got that idea, someone else was picking it up too. And then it became, I better execute as fast as I can because someone else will do this also. And I better move fast and make sure that I put a nice barrier, competitive barrier. And sure enough, in the same time frame, Poshmark, which is a company that was then sold, was started Thredup, which is sort of a low end. They do all the Work for you, but really low end, like $29 price point, started and got funding. Another company called Thread Flip, which could have competed directly with the RealReal, went out to get funding. But in my, in my observation of Thread Flip, they focused on the wrong thing. Just put that out there because we'll go back to that. And then the RealReal. So all of a sudden you had no resale businesses. And by the way, all in the clothing fashion world. By the way, no resale businesses focused in this area. And then all of a sudden you have four going out to meet with venture capitalists all overnight. It was pretty wild.
- [08:37]
A
Yeah, there you go. And how. When was this?
- [08:39]
B
That was 20. Well, I didn't start raising money to 2012 because I wanted to get the business in shape. And also I didn't. The real world was such a new concept that I didn't think it was going to be easy to raise capital. So I got the business to $10 million on seed financing before I raised venture capital. And that worked out really well. So 2012, I would say all of us are knocking on the doors, trying to get capital, and all of a sudden they're seeing no resale businesses. And now they're seeing all these new ones come out the same time.
- [09:19]
A
And you guys had over 30 million paying members.
- [09:25]
B
38 million when I left.
- [09:27]
A
Yeah, 38.
- [09:28]
B
But that was. That was, you know, 2022. So that's from 2011. So that's 11 years.
- [09:35]
A
Yeah. But still, that's pretty impressive. So talk me through, like, how did you bring this idea to life? You said you didn't raise money before. You're at 10 mil.
- [09:48]
B
But I raised. No, I raised seed money. So friends and family. And so. And this is really important, I think, for. I'm trying to make it somewhat generic because. But I think the key was I knew I had to move fast. I also knew I had to make resale cool because no one was really thinking about resale at the time. So I had to make it cool. And I knew that I wasn't cool. So I had to find someone that was a good fashion merchant that could make it. Make what we were doing appealing to someone to make a mass market. And that came down to making it look contemporary, even if things were, you know, three or four years old, making them look like you need it now and beautiful. And I hired a really good young merchant. Her name was Ranti Levesque. She's now the CEO of the company. But she had had a brick and mortar store. She was a really good merchant. She had been cited by different sites early on as being one of the people to watch in San Francisco because she was such a talented merchant. She got. She realized that being in the brick and mortar business wasn't really where she wanted to be and was young and signed on immediately and shut her store down. But she knew how to do merchandising and she was the first employee I think I paid. I could only pay her $2,000 a month and she signed on. And then we worked out of my kitchen for about six weeks. And then I got a warehouse that was 2,300 square feet before we started shipping product in a pretty dodgy part of town here up north and northern, still in Marin County. But it was pretty dodgy to the point where there were other. It was a little tiny area in an industrial area. So there were other businesses next to us. But I put. Put up black baggies on the windows to like make sure no one looked in at night and was right next to a sandwich shop run by a cop. And it smelled like bacon every morning because they'd fry up their bacon. So I was always worried the clothes would smell like bacon when we shipped. But, um, anyway, it, you know, it was. Everything was bad. Trying to recruit there was almost hilarious. People would walk in and they'd go, no, literally open the door and they'd be like, I can't do this. But you know, that's how you get started. And we were there about 18, probably 12 now, probably 14 months. And then the next place was better, but not much better because, you know, you have to pay a lot of rent and that's such a fixed cost. So when you're just getting started, it becomes. And the question is, I think it's hard when you're doing E Commerce because I really. We had to control the E commerce experience, meaning we had to pick up the goods. And I can talk about how we generated actually supply, but we had to go get the goods. We had to skew the goods so, you know, record and we had to authenticate them, take pictures, pick, pack and ship. There was absolutely no way I could outsource that because everything we did is. Had to be. Was A, a competitive barrier, but B, there was no software for this. So we had to invent our own software to support the business. No one else could handle the number of SKUs every single day that we were getting even in the early days. So that all had to be done. Which meant I was always forward planning. And it always felt scary, like the first time you go from 2,500 to 30,000 square feet to 100,000 square feet, you're like, will this even fill up? You know, am I going to be able to pay the rent on this? And when I left, we had 1.5 million square feet of office space, and we're getting in between 300 to 500,000 items every single month. So 300,000 to 500,000 unique products being created every month. And that was all systems driven by then, you know, systems and people. But by then, the software was really sophisticated.
- [14:12]
A
Yeah. So you had a pretty good run. Your first employee ended up becoming the CEO. That's. You picked very, very, very well.
- [14:23]
B
Yeah, on that one, but I made a lot of other mistakes, so. And you know, because here's the thing, and people know this, and I don't know if it's. I don't know if this is a universal problem, but in the U.S. i mean, first of all, giving someone a reference is always hard because someone can sue you. So no one wants to give a legitimate reference. And then startups are hard because you need people that we'll do anything because that's what you have to do, right? You have to, like, take out the trash. And we, we. I mean, we used to put people to work at the warehouse before we'd hire them. And we were above the warehouse for many years. We're like, can you help us pick, pack, and ship? Because we won't be able to get our orders out today. And if they didn't want to do that, they weren't the right first employee. So you want someone who'll just throw it in and get the job done, but you also want them to be able to work independently and make recommendations, because especially at the beginning, you don't want to have to. You want them to. You want to be aligned, and you want to make sure they're on the same page as you. But you don't want to be managing them so tightly. You're doing their job. You've got to delegate. So you got. They got to act independently, do anything. And at some point, expertise is important in their job. But I would say at the beginning, you know, they have to. And also they have to work hard, you know, so startups are hard. And getting employees that really want to work this hard, they're like, well, what's in it for me? And I'm like, well. And, you know, we had a lot of employees that just like, I'm not going to work a weekend, or they wanted a lifestyle they wanted more balance. And I said, well, that's fine, but this isn't the job for you then. I mean, Rachi worked for two years. We were working seven days a week. And when she came in about two days, two years later, she was like, I cannot work on Sundays anymore. And I'm like, I was like thrown. I'm like, forever. Are you really? This is it on a Sunday? Are you kidding me? She's like, I'm too burnt out. And I'm like, I can do it, you know, I was like, as old as her mom. I'm like, come on. Anyway, she never worked another Sunday. And I got over it. But, you know, that's the, you know, but how many people would do that, seriously, really give all that time and energy and just make it happen. And yet that's what you need. You need all that dedication. You need people that are logical and very early on. You need people that are comfortable with data and technology regardless of the company you're running. It's gotta be, it's gotta be integral to the company. These are hard things to fill. And then just to tell you how bad I was at hiring our op center. Well, I mean, I was good mostly, I was more good than bad, but I made some doozies. I hired a guy from Walmart, a top exec in their op centers. He was the worst. He was the worst. I mean, he just sat in his office and did charts. I'm like, are you seeing what's happening? We're like, we went from having so think of product coming in every single day and consignors wondering when their product's going to be listed on the site because you have to open the box, you have to authenticate it, you have to photograph it, you have to price it, you have to. In some cases, well, all pictures are photo edited, which we are mostly for light balance and cropping, which at one time we didn't have our own software solution so we'd be sending that overseas. So that adds a couple days. So you send off something or someone picks it up, your items disappear and you don't see it on the site for maybe two weeks. Especially if you're a new business or like what do my things go? You know. Because we had to change consumer behavior too. So it took us usually 10 days. We'd try to set expectations. 10 working days, then I'll be up in the site. And this guy was not managing the team, was not staffing properly and we went from a 10 day time to an 8 week time to get your things up on the site. And the company would have died because the other thing we were doing is pricing optimally, which meant that 90% of all products will sell through in 90 days. With the idea that you can keep your op centers. You don't have to keep scaling an op center just to store product. You're actually scaling it because you have real growth and you keep the product flowing. So, so anyway, this guy had no sense of urgency, didn't understand the business, very senior guy, came with glowing reviews and I had to fire him fast. And we all jump, we all jumped in to get that product process because you know, the business was really in trouble and it doesn't take long for something to go awry in a startup. You know, it's sort of like you try to give people some autonomy. You look back in three weeks and all of a sudden like, oh, we're in trouble. We got to, we got to do a reset. Especially when you went, the company went from 10 million to 20 to 50 million. This is top line revenue to 100 million to 250 million, to 500 million to 750 million. To a billion.
- [19:42]
A
Yeah, yeah. So you hit a billion in revenue in what sub 10 years?
- [19:48]
B
Right?
- [19:50]
A
That's crazy gross.
- [19:52]
B
It is. It was crazy growth and especially given the fact that we had all that backend ops side. So our limits were really size, our physical space for processing and people, not demand or supply at one point.
- [20:10]
A
So talk me through how you got the marketplace started. Right, because a lot of our founders, I was sharing offline, while I was really excited to speak with you, is a lot of our founders, they want to create a brand like you know, you originally wanted to, you wanted to create a consumer facing brand and you know, order the product, manufacture the product, build an audience, build a community, you know, build customer relationships and they'll come back. But it took a bit of a different spin in the, I guess the physical product space. You, you know, you basically built somewhat of a general store, but it was a two sided marketplace and built a massive, massive, massive business. So how did you seed product? Like what came first, supply or demand?
- [21:00]
B
Now it was absolutely supply. And the premise was, my premise was at this early stage having a basic e commerce platform is good enough. This is, but it's also 2011, 2012 and it's all going to be about supply. So I'm going to not put that much money into technology now. I'm going to put money into generating supply. And then I, so I started an aggregator Program, which is for that business was around stylists. So that was my first big idea, let's go talk to stylists. It's given them an incentive to recommend working with us. So that was it. I did direct mail, of all things, mailing postcards into high income mailboxes through the post, through postal service, you know, just really cheap cards. They cost like I think the whole thing was less than 30 cents to get that postcard printed and mailed into a high zip. Some of these little communities have free newspapers. We're advertising in those free to the user. People just get it thrown on their doorstep. So we're taking out full page ads and something like the Beverly hills courier for $1,000. And it started to work, but it was a slow go first. The first thing we did was go to our friends and then friends of friends, hey, we're starting this business, we want to resell, we'll pick it up. We always had this idea that we'll go to your house and pick it up, don't worry. And then everything was done in the spreadsheet that we bring in. Every, every consigner needed a unique id. So that was. We had systemized that database because we had to pay someone. But for the general pickup we had the unique idea and then everything went into an Excel spreadsheet. About a year later we had an app for everyone and it was much easier. But we got started really rough and we said, we'll go pick it up. So the first sale, when we first opened the virtual doors, it was mid June. And we had enough product to put groups of 30 products together every other day for six weeks. That thinking that, you know, some products will roll over. So what happened was the first sale, everything sold out in 20 minutes. Gone. And then we're like, oh. And we were going into summer, which means getting people's attention or knocking on doors or doing any kind of market felt hard. And we really thought it was going to be bad. And by July 10th, I mean, I'm like, I don't know how we're going to get through the summer because we were. Everything was selling and you needed to make it look bigger than it was. So doing anything less than 30 products every day felt bad. And then we had a call and also I had assumed that my stylist program wasn't getting the right ears. It wasn't working. So I kept going to LA and knocking indoors. But we got a call from the stylist and said in July my client wants to clean out her warehouses. Can you send someone with a truck? And we're like, yes, we'll be there tomorrow. What size truck? And that got us through the summer. I think we picked up six or seven hundred things from that one client. Well, we didn't pick it up. Rati. Rati picked it up. I said, no, no, no, I'll stay here. And we hadn't listen, it was so bad. We had a summer intern, I had a part time cto. There was me, there was Rati. We had another person who was a just a friend who would help us with customer service and pick, pack and ship and that was it. So we had a 17 year old summer intern working with us because it was a friend of a friend and obviously we were going to pay her, but almost nothing. I had to call her mom and say, can, can she spend the night in LA and help? Because the other thing the celebrity did, she, we did get those goods, but she wanted to try everything on again one more time. So it wasn't like just load the truck and inspect, it was like try it on. And because the real world doesn't take everything, we only took certain things. Again, we were a curated luxury market. Things. Some things we rejected. And I wasn't there. But supposedly when she would try on everything, she had the ROTC and the student, student sitting in her living room. She'd come out, what do you think of this? And we're like, they would always go, it's up to you. And then she would model. And that went on for hours. I mean 600 things that went on for two days. And then we, they'd have to tell her, well, we don't take that brand. And then she would throw it back in there. So then we're like, oh God, we better just. It was so bad, but it got us through the summer. And we got shoes and handbags from her and then that stylist told other stylists and then, you know, then we just cranked up the advertising, but it really was postcards and local newspapers and then setting up an affiliate program to get people to help us do it. And the affiliates in this case were the stylists to begin with. Later on there were other people, but it was rocky. It was really rocky. But it was clear to me that first sale, if we wouldn't have sold out so quickly, maybe I would have had a demand problem, but it was clear we had a supply problem. And that's where I always focused on the supply. Now that other company that I mentioned, that was Thread Flip that probably could have given us a real run. But they weren't. They were. They did self posting and they did, we'll pick it up for you or you can send it in. They didn't have a sales team. They focused on technology and they had a better technology solution, but they had the wrong model. And, you know, at some point we just killed them. They never made it past series C, but, you know, a lot of people lost a lot of money on them.
- [27:17]
A
And when, when did you introduce the membership concept? Because I think that's really clever.
- [27:22]
B
Well, we always had the gate from day one, so you always had to sign up. And that was because we were worried about letting people know. And so we had two things from day one. Well, we had one thing from day one. We always had. You had to sign up. We always had a gate and people would grouse about it. But then we got their email and we didn't have to give an incentive. About two years later, we did something called first look, which means the people that were really dedicated would pay up to. I think it wasn't even that much. I think it was like $20 a year just to get in three days before anyone else on a sale. And that was just money going right to the bottom line. So it was pure profit. I remember we had, you know, whenever you get marketing people in, they're always got. Everyone's got an opinion, right? And sometimes they're good, but most people in marketing have an opinion. That's what they're paid for. Some of them are trained opinions. Some of them, you know, anyway, in opinion, everyone's got one. Let's just leave it at that. So whenever we get a new marketing person, like, I hate this first look. It's ridiculous. You know, there's only, I think at that time there was only like 2 million members. And, you know, this is, you know, and I'm like, okay, do me a favor, find a way to replace that money right to the bottom line. You can kill it. If you can come up with some other way that just is pure cash, then I'm happy to kill it. If you can't, then we're leaving. The first look. And of course they never did because it was, you know, we're selling access, not selling products for that. The margin was 100%.
- [29:12]
A
So it's, it's, it's, it's really clever. I have to ask, so you eventually listed the company on the nasdaq. How, how much did you make from that?
- [29:23]
B
Well, you know, all right, I'm plugging my book here in my book, time to get real. I talk about which is true. I mean, you're, you're blocked from selling for six months. And then because we all have insider information, then we can sell in an open window and that's it. But you sell with. You just put your sales forward. And anyone, anyone can sell, including me. But there's anyone in the executive team had to actually six months ahead say how much you were going to sell. And you had to do it every, you know how, how often you're going to do it, when you're going to do it. And you had to give it out and it had to be filed with the sec. So consequently you never. I mean, I don't think I ever sold on a good day. How's that? So, but on paper, I was worth a lot. In actuality, I did great. So on paper at day one, which caused some problems in my relationship, but it was paper. On paper, I was worth more than a hundred million. Yeah. But then in reality, it was better than half that at the end of the day. But still it wasn't a hundred million. And, you know, and I didn't exactly take a big salary for 11 years either. So, you know, it was. But on paper, it felt like a lot. But, you know, it's funny money. It's funny money till you have it in the bank. It's the same way I feel about all when people are like, this company's worth $10 billion, and you're like, okay, well, let's see what happens.
- [31:13]
A
So it hasn't been an easy run. Like, you've had a lot of ups and downs in your journey. I know you talk about in your book. We, we talked about it. Talk to me about shutting down pets.com. what happened?
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B
Well, I really. So pets.com was. Let's just give a little background because I'm not even sure how many people that listen were born when pets.com was there because it was in 22, the year 1999 when it was formed. Actually, it was formed two years before that. I took it over. I was asked by a venture capital firm to come in as a CEO and they were doing 400,000 a year when I took it over. And it was a crazy time. It really was. People call it the dot com bubble. It certainly was a dot com bubble. But if you look at something like Webfam that raised $1.2 billion and shut down, they really were the precursor to Instacart or DoorDash. Any delivery system more instacart but it doesn't matter. They were setting up to be your grocery. Basically your grocery stores, your groceries delivered all the time. Too early, too early. Pets.com was. There's chewy.com and, you know, 15 years later, I think is when they introduced. And pets.com really was the precursor to selling all pet supplies online. And we were too early. And really, the interesting thing is that's also when Netflix got started. And the difference between Netflix and what we were doing is at that time, Amazon was a light competitor, but not a real competitor. So when Amazon announced they lost almost a billion dollars in their last quarter in 1999, the markets just said, we're not going to. That's it. We're not funding. That's it. If they can't make money, and they lost a billion dollars in one quarter, the door shut. The. The window of funding shut. And I was running pets.com and I barely got. I was the last company to go public with that company. I had just taken it public and all the money dried up. We didn't have a great public offering. Then this. The stock didn't bounce. It went down. We barely got the deal out. Um, so when I went back to corporate, I laid off people, put together a plan and decided in September that I didn't think I could raise more money. And we needed more money was the business of scale. We were going to do a secondary, and it looked grim. And I thought, well, I can either run it to bankruptcy or maybe the window will open up and it will. I can raise money or I can shut the company down and give money back to shareholders now. So I chose the latter, and it was the wrong choice. And I'll tell you why. Because my premise was the financing window would stay shut for the next two years and I wouldn't be able to cross it and the company would end up in bankruptcy. Well, okay, that turned out to be right, but it could have turned out to be wrong. And I should have just kept going and really just tried a way to make it work. Because I could have been wrong. It felt sound. The board members are like, we agree. But you know what that was. No one has a view in the future. So when I look at it, it was acting on imperfect information, which every entrepreneur does, and drawing a conclusion that felt wise at the time, but actually I think was pretty stupid. Now. I did turn. That turned out to be right. The funding window shut for a long, long time. But who knows? I might have been able to make it through the. You don't know. That doesn't mean companies were still getting funded. Who knows? So I think that was a mistake. And that's, you know, it's not, it was, it was a well informed mistake, but it was still a mistake.
- [35:39]
A
It's a crazy, it's a crazy, crazy, crazy thought that you had to let go of. How many people would have been in.
- [35:44]
B
The hundreds, couple hundred, then the only, the value of shutting the company down from there, I don't even know if they recognized it, but we did job fairs for them and we could pay them a severance. So in that sense they weren't just one day they woke up and they didn't have a paycheck. They had time to plan, they had time to move on. Most companies, I think there are 1100 companies that shut down during that time going forward, and most of them just like one day couldn't make payroll. So that's a harsher thing to do to an employee.
- [36:23]
A
Yeah, I think as a founder, that's probably when you're running a business, probably one of your biggest fears in many ways, you can't make payroll.
- [36:31]
B
Oh, it's that. Yeah, absolutely. Well, that, that fear, I didn't have that fear with the real real, but I did have the fear that I was taking on this fixed cost of the warehouse that I would never fill. I mean, when you walk into a warehouse the first time I did in at Perth Amboyne, New Jersey, it's 550,000 square feet and the one before it was only 150,000 and you're like, can we do this? You know, because that, is that the right number? And it feels daunting and you know, the rent's expensive. Then you think of all the people that need to be there and even though, you know, it was built to plan, that scared me more than the payroll because I got a little hardened on the payroll. Like, well, I could like, I light people up, I can pay them half price. You know what I mean? You just, I got, as time went on, I'm like, okay, I, I know I can treat that as variable. This other thing, I can't. It's a fixed cost.
- [37:34]
A
It says a lot about somebody's character. Not because you, you ha. You decided to, to let all these people go, but you were able to endure that. I never forget one of my mentors, I was interviewing an executive that had to do something similar. Where they had to, you know, was I was looking to interview an exec listed company and they needed to make their targets and you know, Even though he was hitting his targets from a top line perspective, it come from the, you know, from the very top. You need to let go a decent proportion of your team to, to get, to get the profits and to make the margin. And he, you know, he didn't plan for it. He let go of really good people because it was a decision top down. I never forget one of my mentors said when we were interviewing, he said, you know, I have a lot of respect for somebody that has to do something like that, to endure something like that. It's, it's, it's one of the worst things to, to have to front up, convince people to come and join you and then to let them go out of the blue.
- [38:47]
B
Oh, it's horrible. Look, it's horrible. But also the press was really personally mean to me and pretty horrific.
- [38:55]
A
Yeah. Pets.com like a historic.com boom.
- [38:59]
B
I know and I still get calls about it and I usually have to say, and I'm sort of a rude question, but I'll ask the person interviewing me what their age is. I just did it for Bloomberg and he said he was 40. I'm like, okay, so when pets.com was going, you were 15. Let's just talk about the world when you were 15. You know, it would, the world's changed quite a bit and it was too early, but it was, it's a horrible, it was horrible. And personally it. One of the reasons I knew I couldn't go out and raise capital again easily was the realreal was such a novel concept that I knew I couldn't take something like even if I had 500k, the combination I had pets.com in my background as the failure and the fact that it was so novel, I knew I had to get it to a revenue size. In my case it was 10 million. That someone couldn't say, oh, it's a fluke, you know, word. And that 10 million. I had a good, I understood my repeat cohorts. I understood the impact of adding a new, I understood a lot the impact of adding a new category. The cost of a salesperson out in the field to pick up the goods. We had not even entered New York City then, you know, so I could actually give a really good financial outlook going forward with some cohort information that was valid. And I knew that it was a combination of a hard concept selling in a concept that mostly women were using into men who didn't get it at all. Silicon Valley didn't get it. The only. On the early days, only women got it and luckily, there are a few good women VCs then, still are. One of them was Maha Ibrahim. The other one was Dana Settle. And then I had a European investor, Matthias Schilling, who understood luxury, because luxury in Silicon Valley means technology. Doesn't mean Louis Vuitton or Chanel or Prada. So, you know, it was sort of a really tough sell, but having pets.com in the background made it twice as hard.
- [41:23]
A
Yeah, but they say in Silicon Valley, you're more likely to raise money if you failed.
- [41:29]
B
Yeah. Tell me who says that and who does that?
- [41:32]
A
That's what they say.
- [41:33]
B
I want to meet them. I know, I've heard it all. I want to meet those people. And also tell me someone who likes losing money. Come on.
- [41:43]
A
But it does make sense. If someone's got a chip on their shoulder, it does make sense versus they're green. You know what I mean?
- [41:52]
B
Yes, but you're not talking about people who make sense. You're talking the frontline. People at Silicon Valley are young men tend to be young men between the age of 26 and 30 that want to be a partner someday. And they haven't had enough worldly experience to know anything about people or entrepreneurs. What they know is sectors, data analysis, someone they want to hang out with, but they don't have life experience. And hopefully the partners have life experience. And, you know, many of them do. And they've seen a lot of companies, so the best firms have seen a lot of companies, and they can evaluate the entrepreneur along with the idea. But if you don't get to those people, because they all, you know, they always put out, we used to say, a flake detector. So they put out human flake detectors. But, you know, when we were selling, when I was started my career at Cross Clorox, but then I went to software publishing, and we were selling, was one of the first software companies. And we had a product called Harvard Graphics, which was the first presentation graphics program. And we were selling into a lot of large corporations. PowerPoint annihilated it, but it was the precursor to PowerPoint. And it got up to, I don't know, over $600 million in sales. So it was. It wasn't nothing. It was a real company with real products, and that was the biggest one. And if. And if this person would like, say, oh, no, I'm a hot lead, we'd give them a sales sheet. We'd call it the Flake detector. If they followed up, great. If they didn't, then, you know, because they. Because we didn't Recognize it. So in a vc, they have human flake detectors. You know, they're like, they're paying these young guys to interview people. They all know their sectors. I mean, they're not unconscious. They're, you know, they're smart people. They're just not deeply experienced people. And that's how they learned. But you can't get past those guys. And so they don't have a. They know. They may know history, but they didn't live it. And honestly, quite a few of them are on the spectrum. So they're not always good reads of people. They're good reads of ideas, maybe, and technology.
- [44:12]
A
So I want to work towards a different narrative.
- [44:19]
B
You wrote this book Time to Get Real?
- [44:21]
A
Yeah. Why?
- [44:22]
B
Well, well, first I had a publisher bugging me for a long time to write it, and I thought, well, it'll be good. It'll be a nice catharsis. There's another weird thing that was going on at the time when I was at a decision point, should I read the write a book or not? And that was. Someone was telling. People were telling my story, and it wasn't. They weren't talking to me. And that's a weird thing, you know, it's like, not. And there's nothing you can do about it because I, in theory, I'm a public person, but I'm not like a public person. You know, I'm not that well known, but I'm well known enough that I can't stop people from telling my story. And I thought, no, I should tell my own story and not let other people tell my story. I mean, someone on LinkedIn was trending with 1.5 million views telling my story. And I'm like, I don't know this person. I don't. You know, I read it and I'm like, well, most of this is true, but it's not all true, and it's not me telling it. So that's what got me going. And then, even then, I wrote it. And it's very honest. It has a lot of lessons. It talks about what I did right, what I did wrong. I think it's a really good handbook. I wish I would have had it before I started the real Real. I wouldn't have made those mistakes. I would have made other ones, but I wouldn't have made those. But I thought, okay, but I do call out people in it, so I do have names in it. And the publisher knew I was going to do that, and they wanted to publish the book. But then when it came time to It. They got a little worried and they're like, well, we're going to. If, you know, if our lawyers don't feel comfortable with this, all these names get taken out and all this. We'll just cut out this section. I'm like, well, that's not the book I wrote. And look, I'm not throwing anyone on the bus. I'm telling the story. Some people thought I did, but I don't. I mean, I just, like, this is what happened, and I'll tell who it happened with. Anyway, so I thought, you know what? I don't need it published. Because it was all this, like. And I understood. They. All of a sudden, they became Risk Adverse. And that's fine. The publishing industry is weird. I'm like, I don't need to write it. Then I'm in England visiting. I was going to Wimbledon. I felt very lucky. I like tennis, so I was going to Wimbledon. And this young porter at the hotel I was staying at, the second day, he said, Ms. Wainwright, I know who you are, and you've been a real inspiration to me. I hope you write a book someday. I never saw him again. And I thought, I have to write it. So if you want to know, I wrote it. I wrote it originally because I had pressure to write it. Then I wrote it for myself. And then I decided to move forward in publishing because I wish I would have had it. And I think some people will find it inspiring, and some people won't make the same mistakes that I made. So that's why I wrote it. And also, the last great business book I read was Shoe Dog. And I love Shoe Dog. You know, if people don't know it's the story of how Nike was created, I thought it was. I was really, you know. You know, the end of the story. But I'm like, oh, my God, is he gonna make it? And of course, like, your head's going, oh, he's gonna make it. But it. It walked you through the trials of being an entrepreneur. And. And when you're reading that an entrepreneur is a hard job in many ways, because you're. It's lonely. It's a lonely job. You're out there doing it by yourself. You've gotta rely on yourself. You gotta. You may have great people around you, you may have a good board, you may not. But at the end of the day, it's you. Or, you know, it's your idea, it's your vision, and it can be really lonely. And when you read about other people, and it's never easy it always looks easy in retrospect. It's never easy. I don't know. I feel like it's inspired. It was inspiring for me to read that book. And then I read a couple other entrepreneur stories in an aggregate book and I thought, oh, you know what I wish, because sometimes you just feel alone. You got the weight, you know, get. Especially if you take money. You've got, you know, you've got that responsibility of the employee's responsibility. And you really want to succeed at it because that's what you're doing every day. You don't want to fail. You want to go out there, you want to kill it. Working with consumers is hard, but you want to kill it. So you've got your own ambition. You don't want to fail yourself, you don't want to fail your employees, you don't want to fail your investors. And, you know, all kinds of stuff happen. I mean, look, the real world was heading toward $1 billion. It was growing 40% year on year that we had to shut it down because of COVID and we weren't a self posting site. And all of a sudden we were going 40% and then we were public, and then all of a sudden we're down 40%. I mean, who could have predicted that? We had an 80 point swing in one month and we spent the next two years digging out of that hole. But all I'm saying is it's so important, I think, for entrepreneurs to help each other and tell their stories. And it's such a hard but great job when you create a company that works and when you take the risk and it's lonely, you know, and when people read, I mean, look, I used to fall asleep. Well, I used to take Ambien. I used to take sleeping pills for a while until a doctor's like, are you nuts? You know this. I'm like, what? And I just said, okay. I'm like cold turkey. But I would fall asleep answering customer emails. I'd wake up, I'd have like a pin stuck at my face and have that dent on my face for about four hours the next day, you know, and it's like, that's just the way it rolls. My relationships fell apart and I was sort of okay with that. Oddly, like, okay, you know, but it happens. If you do that, if you focus on your career, it happened. If people aren't on board and, you know, you only have so much you can give, sometimes things happen.
- [50:27]
A
Look, it's. The highs are high and the lows are low. That's what I say. So we have to work towards wrapping up and telling. I could talk to you all day, Julie. This is a ton of fun, but I'm conscious of time, so talk me through that, like, real, real Covid. What happened?
- [50:47]
B
Well, I mean, we ended up. Well, the company couldn't collect product, obviously, so. And. Well, wait, let me back up. New York City was the number one market over time, and so. And the eastern seaboard was. And so was the West Coast. And the middle was not as important. There were some states that didn't really treat Covid as valid. Florida and Arizona and pockets of California down south. But it wasn't enough to sustain us. It opened up a little. We did things like we would run. People were trapped in their homes. Some people wanted to clean out their closets. Legally, we couldn't clean out. We couldn't run our business. But we would run vans that didn't have our logo on it, and just people would run out to the curb. And we started picking things up that we had to strip our logo because we got stopped by the police. We moved. I moved warehouses out of California because they were so onerous that we would have lost our business. We were going to move anyway. We needed to expand again. But we hastened that process and got in Arizona. We would process products in our office building, in stores with paper on the windows because the stores were shut down. So we did some things that were bending the rules at best, probably against the law, those weird laws that went on. But we did what we did. And then we ended up buying overstock. It really wasn't overstock. It was product that never made it to the marketplace because they, you know, every luxury brand had the same. Every brand, brand. Everybody had the same issue that we did. You couldn't get your products on the shelf. So we ended up buying products that created margin problems. It was just a bad time. So we did what we had to do to get through the business. Ended up that year about 7% down versus year ago, 5 to 7, not 40. The next year was a little bit of growth. I think maybe 10, 10 to 12% growth. But to go from going 40% to 10 and the stock was. Went from like 25 to 7 when I was there. So that, you know, that's. And I think it's at 5 now. So it really needed to recover. So it was a very hard time to maneuver. And I would say, for the most part, employees just stepped up and did it. But it was hard on everyone. You know, it's hard on Families. It was hard on. We had a lot of women. I think the workforce was mostly 60% women. So then that sort of schooling their kids at home, it sort of wore people out. But we maneuvered. It's a, it had a long tail. I don't know other, I mean most businesses in the US had about a two year recovery. It had about, you know, it's, it's fascinating how fast it is to shut something down, how slow it is to get it going again in a way that was healthy. And then the incentives that both Trump and Biden put in the market also hurt us because they were paying people about $22 to stay an hour to stay home and we were paying people $20 to go into work. And they're like, well, I'm going to wait till my, they used to call it the Biden Bunks bucks. I'm going to wait till my Biden bucks get out. And we're like, oh God. But Trump did it too. So, you know, you have a lot of stuff going on that you have to manage.
- [54:18]
A
So you've got a new startup now, Ahara?
- [54:21]
B
I do.
- [54:22]
A
And it's really built on some of your lessons that you learned with the real, real.
- [54:28]
B
Well, it is, it's. But it is pure software. It's an algorithm. We do pick, pack and ship and ship supplements. But it really is a much simpler business. In a hard space though, it's a harder space because yeah, nutrition seems to be one of those things that everyone should be aware of. You should be eating things that balance your micro and macronutrients. You should have personalized nutrition because what you need is different than what I need for my body at this point. But I would say it's hard because people really pay attention to the food they ate when they get sick, when I, and I'm talking about some disease. So they, and then they're like, well, maybe I should. So either they, they have an obesity driven disease or they have kidney failure or they have cancer and they do tend to change their diet when forced. I'm talking about American consumers. Some other countries are more enlightened. But the algorithm works. It's super cool. It's for people that want to take their health seriously and we just recommend good food to eat and supplements in case you don't eat the right foods. I mean, I personally have a problem digesting omega, so I can't eat a salmon for instance, but I can take fish oil without a problem. And omegas are really important for heart health and brain health. So It's. I didn't know that. I knew I couldn't eat salmon, but I didn't know the impact of the not being able to. Not getting enough fat, that kind of fat in my diet till later. And I'm like, okay, better get with it. I better get with it. Is it never too late? It might be too late, but I'm going to act like it's never too late. And. And seeds and nuts. I mean, there's a lot of things that, like, are easy. Just throw some chia seeds in your, you know, smoothie in the morning. You're like, okay. No, seriously, though, my blood. Everything. All my blood work got better. It was good, and now it's considered very good, so. Including a cholesterol decline, which I was surprised because I was border. I've always been borderline, borderline high, you know, and I've never taken drugs, like, since the beginning of. I started doing blood tests, and now I. It's fine. So just diet changes.
- [56:52]
A
Yeah. Food is fuel. So I want to work towards wrapping up. One last question. What's the one lesson from your journey that you think every founder needs to hear?
- [57:07]
B
There is no one lesson. You know that. There's no one lesson. I would say, honestly, the most important thing either on your board or the people you hire are value alignment. Make sure your values are aligned. And you don't really ask that on the interview schedule, but make sure you value the same things and they're at the right place. So you don't want people on your board that lie. You want people that have integrity and proven integrity over time. You don't want employees that value their free time more than their career, because that's not going to serve you or serve them in this kind of business. It's not the right business. You want to make sure that they value. If you value integrity and honesty, that they're the same. So you really have to do a value check. And I'd say every bad hire, it was a valued misalignment, and that's a hard thing to hire for, but bad board members, complete value misalignment. Complete misalignment, you know, and you have choices like that. It's. And even. And I. And that's not something I've even read about till I experienced it.
- [58:24]
A
Yeah. And I think it's. Yeah, it's one of those things where in your early days, you just look for the talent, but you, at the end of the day, you spend a lot of your life working. You want to work with great people.
- [58:38]
B
Yes, always. And they. And yes, it's really important. And you know, I would just say integrity for me is a key value. And you know, believe it or not, that's a limited. That's a limited trait in some people. So yeah, that's it. It's all about the people. Just make sure your values are aligned. And I would also say if you have a co founder, a lot of those haven't worked either. So be careful about your co founder. Get your Just like if you're going to get married, get a prenup. If you're going to have a co founder, get a prenup. Just have your separation cleared up before you go into it because it may work, but there haven't been that many cases where it's work looks good for a year or so and then it blows apart.
- [59:30]
A
Awesome. Well, Julie, thank you so much for your time. You've been fantastic. Like I said, I could talk with you all day. I had a lot of fun. And thank you for sharing all of your lessons, the ups, the downs, and really giving back to our community. This is an awesome interview. Thank you.
- [59:45]
B
Thank you. Thanks.
- [59:47]
A
Hey founder fam. Thank you so much for tuning in today and if you enjoyed this episode, like, please take the time to leave us a review and let us know what you think. This podcast is 100% free. We work so hard to go out and find the most successful entrepreneurs and founders in the world. Your feedback helps us grow, improve, and even bring on more incredible guests and insights. So if you have a second, please take a moment, leave us a review. It really makes a difference. Thanks again for listening and I'll catch you on the next show.