#69. Rockets of Awesome creates modern children’s clothes, conveniently delivered to busy parents. We talk with Founder and CEO Rachel Blumenthal, who started the company after running a previous business that made mothers’ lives easier, and has gone on to build a service that both mothers and kids love—a particular challenge as the buyer and the user are two different people. The Loose Threads Podcast features in-depth discussions with leaders across the rapidly changing consumer economy.

Check out the full transcript below.

Richie: [00:00:07] Welcome to the 69th episode of the Loose Threads podcast, a show about the rapidly changing consumer economy. This episode is brought to you by Loose Threads Membership, which gives you actionable analysis, insights and events that drive growth, and Loose Threads Espresso, your energizing and high-pressure filter for consumer news—in context. We also have a newsletter that features the latest open letters to CEOs, podcast with industry leaders and news from Loose Threads. Check it all out at LooseThreads.com.

Richie: [00:00:37] Joining me today is Rachel Blumenthal, the founder of Rockets of Awesome, a company creating modern children’s clothes, delivered conveniently, for busy parents. Rachel started the company after running a previous business that made mother’s lives’ easier and has gone on to build a service that both mothers and their kids love.

Rachel: [00:00:53] The power dynamic has shifted. It’s not a mom saying, “This is who I want you to be or who I think you are.” It’s a kid saying, “This is my sweatshirt. This is who I want to be. This is my identity.”

Richie: [00:01:03] This is a particular challenge where the buyer and the user are two different people. Here is my talk with Rachel Blumenthal.

Richie: [00:01:13] Why don’t we start. Just talk a bit about your background and then we can work our way up to Rockets of Awesome existing.

Rachel: [00:01:19] So I started my career in luxury fashion at Yves Saint Laurent and I was doing editorial placement and celebrity dressing. It was that moment of Tom Ford and Stefano Pilati and, really, everything you can imagine in the fashion PR world and it was amazing. I was in this incredibly creative environment but my role wasn’t that creative and I needed a creative outlet. So I went to the bead stores on 6th Avenue in Manhattan and bought materials and made myself a ring and was wearing it at work one day and the editors I worked with from Lucky magazine saw it and decided to feature me as a designer. And when you’re in that world and you know the smoke and mirrors, you just sort of play along with it and it was funny. And about a month later, the editors from DailyCandy emailed and said, “We want to feature you. What is your domain? Can we talk?” And I said, “Sure. Let me get back to you on all of that.” And I called a guy that I hadn’t seen since I was 13 that I heard did websites and he threw up a landing page with a photo and an email and that was my domain. DailyCandy launched and we had hundreds of thousands of customers and buyers and editors that wanted this brand that didn’t exist and I just sort of ran with it.

Rachel: [00:02:31] It was a real, true fake-it-till-you-make-it moment. I literally had the one ring. I had never manufactured jewelry. I was not a trained jewelry designer, so on and so forth. But I thought that it was something that I could figure out. And so I started doing trunk shows at Henri Bendel, I was picked up as a third jewelry designer at Shopbop and, ultimately, decided to leave my job, set up shop in my living room and I figured I’d go back in six months when it didn’t work out. I built that brand over the course of eight years. We were in about 500 retailers worldwide. We did private label for American Eagle, Target, J.Crew. And I licensed that business about seven years ago.

Richie: [00:03:10] Is it still going today?

Rachel: [00:03:11] It is not. The company that licensed it, ultimately, rolled the supply chain and the distribution into the other brands that they were running.

Richie: [00:03:19] So that takes us to seven years back, right?

Rachel: [00:03:21] Yes.

Richie: [00:03:21] Talk us through, from there.

Rachel: [00:03:23] Sure. So, at that point, my husband was building a company called Warby Parker and I was very deeply immersed in what [he] and his co-founders were doing and spending time thinking about the brand and the marketing strategy. I would follow them to every single conference they would go to. For the first time in a long time, I was really learning and expanding the way that I thought about businesses. We had also just had a baby and so I was living and breathing that moment. I was just fascinated with how technology could solve problems and all the innovation that was happening. I would sit at a desk every day, I would try to come up with what I was going to do next and I was just forcing it and forcing it and nothing good comes of that and I had no good ideas.

Rachel: [00:04:07] But I would also talk about this experience that I had had of being pregnant and trying to figure out what to buy and receiving endless Excel spreadsheets from friends of the Harvard Business Review of what to buy when you have a baby. And I thought it was the most insane thing I’d ever seen. They were color coded and so on and so forth. And so I was like, “This is crazy. Why isn’t there a c version for what to buy? Everyone buys the same thing.” And so I, ultimately, launched a business called Cricket’s Circle which was CliffsNotes for what to buy when you have a baby. Three great products in every category, really rich editorial content, a very, very early algorithm to deliver personalized recommendations and content and a brand that spoke to this generation of parents and the next generations of parents and really tapped into an opportunity to connect with that customer and serve them. And, as we were serving them and trying to figure out what our monetization strategy was, we were testing a number of different channels and one of them was performing the best, which was this personal shopping service. This idea that we knew all these things about you, we could put the right products in your home right before you needed them and really be a service.

Rachel: [00:05:15] It was performing really well but we also were running into a number of challenges. One being that we didn’t want to compete with the Amazons of the world on hard goods. The second being that once parents built the confidence around the right stroller, the right car seat, they were more confident and, “I’ve got this, I don’t have to worry about it so much anymore and I don’t need so many resources.” But, what was obvious to us, is that kids are outgrowing their clothes. They’re outgrowing them regularly, every season. It is a need-driven purchase and there was a tremendous opportunity to leverage the business model that was working, serve the customer that we are already speaking to, in a new category. So that is really what inspired Rockets of Awesome. We, ultimately, pivoted the brand to become Rockets of Awesome because we knew that we needed to build a brand that spoke to parents and kids, boys and girls and a pretty large age range of kids.

Richie: [00:06:09] What was the journey to realizing that you needed to focus on both the buyer and the user and not one or the other? Because that seems to be one of the unique things about how it’s built.

Rachel: [00:06:18] The biggest challenges, both as what makes it so fun but also makes it so hard, is that we have two customers. So we have the parents and the kids—and really understanding their psyche, the decision matrix. At which points are you speaking to [whom] and how do you deliver experience to them is really, really challenging and really fun.

Richie: [00:06:36] Did you know that was going to happen in the beginning or was that a realization while building the company?

Richie: [00:06:41] We knew that it was a thing. I don’t think we appreciated the complexity of it and we certainly didn’t have a strong point of view, yet, of what that meant at each touch point. But, as we would start to build out each touch point—whether it was the name, it was the design of the box, it was the packaging, it was the physical product—at each of those touch points, we were making very strategic decisions of [whom] we were speaking to.

Richie: [00:07:05] And so, during the transition, when did it crystallize that, okay, this has to go into this brand. Did you ever feel it at any specific moment?

Rachel: [00:07:14] If anything, it was really driven by what does it mean to be an entrepreneur and what does it mean to be a leader and a CEO and somebody who’s taken venture capital? It was one of those moments where, to this day, I deeply believe in the mission that we were building at Cricket’s Circle and I think that, for the right business, it has a supply chain. There’s a tremendous opportunity there. It is still not filled in the market. So it was really one of those moments where you say, “I still really believe in what we’re building but, if I have to think about all of the people involved and all my constituents, the right decision is to go and do something else with all of our learnings.”

Richie: [00:07:54] Gotcha.

Rachel: [00:07:54] And the constituents were the driver. It was my team. It was my investors.

Richie: [00:07:59] Walk us through the beginning of how do you go through that transition and how does the brand start to become?

Rachel: [00:08:03] Well, first, shifting my mindset. My head had been deep in the world of Cricket’s Circle. That was a community for moms. So a community of moms is very different than an apparel brand service and a solution geared toward parents and kids. So it was taking some time to really immerse myself and well, what does this mean? What does this mean to me? Why do I care about this? Why is this important to me? What are the experiences that I have, as a parent, that are inspiring me to be able to do this? And then, once I was really able to articulate that, both with words and with images, figuring out who were the team members and the experts that I could really leverage to be able to help build it. So the first thing that I did was hire early members of the team. First, on the apparel design side of who are the childrenswear design experts, and then, on the brand building side of who are the creatives to be able to do this.

Richie: [00:08:56] And so talk a bit about where the children’s market was, from a product perspective, when you started and what was working, what you wanted to do differently and then how that would manifest.

Rachel: [00:09:06] Yeah. The opportunity we saw for the business was twofold. One was that parents are the busiest of consumers and you had all these innovations on all these great categories but nobody was serving the busiest customer, being the parents. And so there was a tremendous opportunity to build a brand and a service that would resonate with them and serve them. And then the second being that, there’s tons of kid’s apparel brands. I would argue that maybe nobody needs another one. But, what was frustrating—what we were hearing from customers—was that you couldn’t find that trifecta of style and quality and value. You could get style and quality that was very expensive or vice versa. And so, knowing how to build a supply chain, knowing manufacturing, I knew that we could be direct-to-consumer and deliver that trifecta to our customer and that was really important. It was, how do you deliver really high quality, really cool, stylish clothes at a very access price point and deliver it in a manner that made the customer’s life easier?

Richie: [00:10:04] One of the unique qualities of this market is kids are growing really quickly. Do you see that as a challenge or opportunity or both? Or how did you approach that reality of this market, as opposed to, if you’re selling to older men, they have their size, they’ll have that size forever, generally. Maybe they’ll get a little bigger. It’s a very different dynamic.

Rachel: [00:10:21] In general, it’s the greatest opportunity, particularly as a business owner, being a need-driven category. So kids are outgrowing their clothes weekly, monthly—definitely not yearly. So it’s a great business there. But the challenge being that, also, kids’ preferences change. So today she loves pink and, tomorrow, it’s the grossest color she’s ever seen and how could you ever consider sending her a pink shirt? Both of those things really required us leaning on algorithms and building technology to be able to enable those algorithms and, really, the business, the core of everything we do is driven by the data and the algorithms that we’re building.

Richie: [00:10:58] And so do you know when their color preferences change? What does that mean, to a level you are willing to share?

Rachel: [00:11:03] Yeah. We have enough indicators that enable us to build customer experiences, and what I mean by that, [are] flows through the site, email messaging and so forth, to be able to engage with the customer and make sure that our assumptions on changing preferences or changing sizes [are] accurate and giving them the opportunity to communicate that to us as well.

Richie: [00:11:25] How long were you working on it until it launched or was publicly unveiled?

Rachel: [00:11:28] So we worked on it for nine months before we launched it. Probably, one of the harder areas was the fact that we were going to be an algorithm, data-driven business, but we had a cold start problem. We had no data whatsoever. We had this great community from Cricket’s Circle that we could lean on to capture anecdotes, but we didn’t know who our customers were going to be, which meant that we were ordering blindly. We were buying into a full size range that we knew nothing about. We didn’t know customer preferences, we didn’t know if our customers would be on the young age or the older age. We also didn’t know anything about how customers would think about our products in combination of each other, in terms of outfitting or anything like that. So a lot of it was gut instinct, some knowledge of what customer preferences look like in the market compared to other kids brands. And then we actually did this really cool thing which is our engineering team built sort of an app that was mirrored after Tinder but for outfits. We were actually teaching the algorithm, in the very early stages, which items go together to make great outfits, to start to feed the algorithm.

Richie: [00:12:36] So, in your experience, do you find that the mom or the kid is easier or harder to please?

Rachel: [00:12:41] Both.

Richie: [00:12:42] Both.

Rachel: [00:12:42] Both easy, both hard. Neither easy. It’s about those touch points. When we launched the business, we were sending 12 items in a box. We were sending it blindly to your home, only based upon the first quiz questions and comments that you would give us. A lot of parents will share Facebook pages. We can see photos of the kids but it was pretty blind and we had no data. And every time somebody keeps something or returns something, they’re also giving us feedback so we’re getting smarter. But we’ve gotten much more sophisticated, where we have much more information. We’ve since launched a number of digital product features to tailor the experience. Product was arriving in the home, all hell would break loose because you can’t get in front of a kid opening a box and the kids were keeping things they didn’t need or they were keeping everything and parents were like, “We love it all, but we don’t necessarily want to spend this much money out of the gate.”

Rachel: [00:13:34] And so we built a number of product features, one of them being a feature called Peek which gives our customers a preview of what we send before we send it. And this was an incredible unlock for the parents and the kids where it’s primarily the mom using it and she’s able to control, essentially, what we deliver into the home. And this is good for two reasons. One is that she feels a little more engaged and doesn’t feel like she’s relinquishing all control but we’re doing the curation for her so she’s not overwhelmed by it. And, at the end of the day, mom knows if she needs another pair of black leggings. The black leggings could fit perfectly into the profile and all the dynamics could say we should send them but she might know that she just bought five pairs from somewhere else. And, that way, when it arrives in the home, all hell can break loose and she feels like she’s sort of—

Richie: [00:14:20] Contained chaos.

Rachel: [00:14:20] Exactly, it’s the contained chaos. But then, what happens is really fascinating, which is that the boxes that we ship are truly tailored to the kids. No two boxes are the same. We have customers who, their profile would tell you that they’re quote unquote “all boy.” The assumptions around that you can make, whatever they are—super athletic and so forth—but, sometimes, he wants to dress like his sister and wear a tutu. We can serve all those preferences and those are the really fun ones for us. And that box arrives in the home and the kid feels like, “Finally! Mom didn’t pick the items that go in the box. Somebody knows about me and cares about me and is listening. It’s a rocket scientist, it’s an expert.” Whatever they think it is.

Rachel: [00:15:03] That is a moment where the kids really engage and feel like they have the ability to choose. The power dynamic has shifted. It’s not mom saying, “This is who I want you to be or who I think you are.” It’s a kid saying, “This is my sweatshirt. This is who I want to be, what I think I am. This is my identity.” And that shift in power dynamic is, in many ways, like a Jedi mind trick on both sides. They both feel like they won. But engaging the kid in a way that they’re building their identity around the brand is really powerful for us.

Rachel: [00:15:33] I’ve had parents come up to me and tell me that we’ve actually changed their relationship with their children because they don’t fight anymore. We had this amazing, amazing story from a 10-year-old in Tennessee a couple of weeks ago who told us that, now that she gets Rockets of Awesome, she’s not bullied anymore because she doesn’t “have stupid clothes.” And, actually, the lead bully and her are now friends because they both have Rockets and they’re part of this really cool club that they’ve created at school. It sounds like something that you make up and it sounds like just one little story, but those are the powerful stories that make it worth it to us and make us want to continue to deliver these experiences.

Richie: [00:16:12] What’s the tradeoff or interaction between people driving the recommendations versus the data or the algorithms? Is it a Stitch Fix model, where there are stylists? Is it, purely, more data? How did it develop and then where is it today?

Rachel: [00:16:24] It developed where it was very rules-based and it was very, very high touch to, today, when it is almost entirely algorithm driven. That being said, there are edge cases where we have a very trained team that jumps in and will support those hand-touched elements. But I think there are two nuances around a business like Stitch Fix versus ours, which is that, first of all, the precision around kids isn’t as robust as women. We don’t have to make them look skinnier. We don’t make their butts look small. So there’s less precision. But the second being is that, the model is created so that we are a real solution for parents. We are orienting it around being for the savvy parent who has cracked the code on dressing their kids. They get this service, this solution, this great product and it doesn’t cost them more money. If anything, they’re saving money. Having a stylist for their kids feels very frivolous and so we really err away from that and enable the algorithm to be able to deliver the experience.

Richie: [00:17:23] So, given that backbone, what sort of company do you consider this? Do you consider it a brand?

Rachel: [00:17:28] We consider it a brand. We are 100% a lifestyle brand that is powered by a vertical apparel label, as well as technology and data science.

Richie: [00:17:40] So talk about how the launch went and what was the goal for you and then what was the reality that developed?

Rachel: [00:17:47] So you only get one chance to launch.

Richie: [00:17:50] Do you think that’s true?

Rachel: [00:17:50] I do.

Richie: [00:17:51] There are the Airbnb stories of, like, they launched 19 times or whatever.

Rachel: [00:17:55] I think you have one chance to launch. That doesn’t mean that you can’t tell your story again or get a second chance. But the second, third, fourth chance, you always have the hurdles of the people that remember you from the first time. And so anything that you don’t still stand for the first time is always going to be a hurdle that you’re going to have to consider in your strategy. I also think that there is only one time to say, “We’ve launched. We’re here. This is the first time you’re ever hearing about it.” And so, what that means is that it just gives you greater opportunities for press, really. And so, for us, it was how do we launch into a very noisy space, a very competitive space? How do we launch with a very strong point of view so that people pay attention?

Rachel: [00:18:39] And we also wanted to make sure that we weren’t just considered another kid’s clothing brand. For good or for bad, our instinct was that had connotations to it that wouldn’t be taken that seriously and we were more than that. And so we had a very strategic multi-prong approach to our marketing strategy. It wasn’t rocket science. It was press in lifestyle and fashion and tech and business and family. It was leveraging influencers and celebrities that were friends of the company. It was leveraging like-minded brands that we were friends with that had similar customer bases. It was a gifting strategy, partnerships. Pretty much anywhere we could touch.

Richie: [00:19:23] The whole thing.

Rachel: [00:19:24] It was sexy and it was colorful and it was over the top and it was very aligned with who our brand was and consistent imagery and messaging, and so forth. And it was awesome. It was so much fun. It was so exciting. We probably had 100 press stories around launch it was really exciting. I think a lot of that was driven by the fact that we had really built a brand and we had a strong point of view and a defined vision for what we were building. And there were so many elements to talk about because we were a tech company and we were a data driven company and we were vertical and we were direct-to-consumer and all this stuff—sexy jargon. And we weren’t the sexy jargon because we wanted to check the boxes—it was really core to where we thought the opportunity was.

Richie: [00:20:06] And did you find that, by and large, people understood it?

Rachel: [00:20:10] We did. And I think that that was, probably, one of the bigger learnings that we’ve had over the last year and a half or so is that we haven’t had to educate the consumer as much about the shopping behavior as we thought. In this day and age, customers are pretty familiar with the personalization model, shopping services, subscriptions. I think we’ve had to educate around why we are different and why we’re not a traditional subscription and how we’re building a community around this customer that really hasn’t been served.

Richie: [00:20:40] Talk us through some of the developments, up to the present.

Rachel: [00:20:43] We launched for Back to School 2016. Back to school is basically our Christmas and so really, really important for us.

Richie: [00:20:51] Talk a little more about that in terms of what does that mean and what’s the activity that happens in that period?

Rachel: [00:20:56] Yeah. So, Back to School shopping is, probably as you remember as a kid, the moment where it’s this big family activity where you go shopping and you’re stocking up for the year and the season. And I think it’s really a rite of passage for families, also. It’s a time where our customers are purchasing the most throughout the year and they’re really stocking up on the basics and getting the specialty items for first day of school photos, and so forth. So that’s really fun for us. It is also a funny time because it starts in summer when people are at the beach, on vacation, at summer camp.

Richie: [00:21:30] Right.

Rachel: [00:21:30] Kids also go to school at different periods of time throughout the year, based on where you are in the U.S. So being able to hit that right is always challenging but, basically, sometime in the middle of July through September is our Back to School season. So we launched with a bang in Back to School. We had a very early response and excitement around the brand, a lot of attention and we were growing really quickly. I think, at the time, we were like, “Oh my god, this is amazing, product-market fit. This is great. Let’s just keep cranking.” And it was at that point where we realized that there were a number of elements to the foundation of the business that, as a business, we really had to pause and hone in on and make sure that we were going to operate a profitable business and a healthy business before we kept growing. And so we really pulled back on a lot of the sexiness and the focus on growth last year to build a sustainable business. That was very strategic for us.

Rachel: [00:22:28] I think that you often find that you have startups that, either, go “growth at all costs and we’ll figure out the economics later,” or you have the businesses that really pause and focus on the economics—and that was really important to us. We built a number of digital product initiatives last year. We adjusted our product line, the customer experience, to really make sure that we were serving the customer in an effective manner. And it was hard. It was super hard. We worked really hard. The team just killed themselves over it and I think that’s what makes it so gratifying to have hit the end of the year—last year, 2017—in a greater position of performance than ever before, than we could have ever imagined, setting ourselves up for great success around growth this year. It’s so gratifying for me, watching the team be able to do that, because it was tremendously hard and such a great accomplishment.

Richie: [00:23:25] So talk about some of those changes or developments that a lot of that energy went into and why and what they did for the business.

Rachel: [00:23:32] We launch a service fee and that was really important for making sure that the customers that were coming in and trying our service had intent to purchase. The beauty of our brand is that it’s really fun and looks exciting and “I want to try it” and “that looks cool.” But, when we’re paying for the shipping both directions, and sending out product without our customers paying for it, that’s really scary and very risky. And we needed to make sure that we could deliver the best experience to our customer, but it didn’t have to be everybody. It could be the people that really wanted to purchase.

Rachel: [00:24:06] And then delivering the feature called Peek—so giving people a preview of what we were going to send them really enabled them more control and enabled us to be able to deliver a better assortment.

Rachel: [00:24:17] And then we launched an incentive to keep everything in the box. That really, not only, obviously, drove up how much people were keeping and how they were shopping with us, but [also] gave the customer[s] a reason to really engage more and make sure that what we were sending them were the right things for them. It was what they needed. It really helped us develop the data that we had so we could deliver better assortments, helped us learn more about the type of products that our customers really wanted to buy so that we could improve the actual physical product that we were creating. And it helped us to get to know our customers better and deliver a better experience to a more engaged customer.

Richie: [00:24:53] What was the evolution of focusing on the incentives and that? Because it’s very psychologically driven, and so forth.

Rachel: [00:25:00] We’re not a business that discounts, so we’re never on sale. But that doesn’t mean that we don’t want to give our customer—who is highly engaged, who loves our business, who’s an evangelist—great benefits. And it’s really important for us that our product is at a very accessible price point and that we’re delivering enough assortment that you can make great outfits with. For us, it was the toggles of all of those things and making sure the number of items in the box was enough that you had enough choice, that you can make enough outfits, that it could be a solution for you, that we could get the price point right, that it was very digestible and reasonable for what our customer looked like. Ultimately, our view was that, if we were going to be a solution, ideally, the eight items we sent you [a box] were the eight items that you needed, that you wanted, so you would keep them. Because if they’re not, then we’re not really a solution yet. And finding that balance was sort of the magic for us.

Richie: [00:25:59] Talk a bit more about price point in terms of, when you came in, how was the market architected and then how did you figure out where you wanted to sit in that paradigm?

Rachel: [00:26:07] We really looked at how do customers shop? If you look at parents who are shopping for their kids, we serve sizes 3 to 12 which is, usually, a two-and-a-half-year-old to a 10-year-old. Parents are really looking for sort of the hack. What is the hack? And the hack is, you identify the two to three brands that you are going to shop for your kids, almost indefinitely. Basically until they have a strong enough opinion. And what are those two to three brands that are your go-to? It means that the style is right, the fit is right, the quality and the price point. And our goal was always being one of those two to three. How can we be in that sweet spot so that [we’re] always going to serve you? And that meant that we wanted to really compete in the roles of Old Navy, Gap, H&M, Zara, [The] Children’s Place, Justice, Abercrombie, Cat & Jack from Target.

Richie: [00:27:01] Right.

Rachel: [00:27:01] And so that really helped us hone in on what the price point was. It was also really important for us that we could deliver better style and better quality than any of those retailers. And so, what was that happy medium to be able to make sure that we were also, as a business, hitting good margin? And that helped us really hone in on where our price point was going to be. We’re $16 to $38. Our average price point is $18. So it’s a very competitive price point, really, really exceptional quality and value that you’re getting.

Richie: [00:27:34] Talk more about the quality you need because I feel like, at the surface level, it’s just kids clothes, they can just be kind of cheap, but I feel like it’s definitely the opposite.

Rachel: [00:27:42] It’s a funny rub because it’s just kids clothes. They will rip the knee the minute they wear them. They will stay in the shirt in the first art class they wear it to. Your quality can be the best thing in the world and there’s nothing you can do about it. It’s ruined. And so, in many ways, it’s very disposable. But, at the same time, parents want to feel like they’re getting value. I want to feel like I’m getting value. And kids are very sensitive to fabrics and so it’s the importance of the high-quality fabrics that feel magical to the touch, the softest thing you’ve ever felt, stretchy. But, at the same time, the perception of something being quality to parents means that it feels heavier and heavy isn’t necessarily soft and stretchy. And so finding that balance in the fabrics that we work with to make sure that we can find that fine line of it feels special, it feels different, it feels like it’s going to last a decent amount of time, whatever that means to parents—it’s usually several months—but it’s soft enough with limited structure that kids want to wear it.

Richie: [00:28:44] What’s the fit model process like?

Rachel: [00:28:46] So figuring out what is our fit, what do we stand for. We’re definitely a slimmer fit, though our clothes are really—we say that the price and the style is for most. So, for us, while we have this really cool brand that resonates with urban customers, it also really resonates with customers in the middle the country who are tuned into social media and tuned into just culture and don’t have access to product and making sure that the fit really served a wide range of customers while still having a point of view. And so we tend to fall between Gap and J.Crew, where Gap tends to be boxier, J.Crew tends to be super, super slim and we fall right in the middle.

Richie: [00:29:32] And then are there just kids running around the office with the design team? How does that work?

Rachel: [00:29:36] Yeah, so we have fit models who come in. We also leverage our kids when our kids are a fit model size. I think the hardest thing about kid fit models is that they grow.

Richie: [00:29:45] Right.

Rachel: [00:29:45] And so the minute you find your fit model, they’ve grown. So it’s really frustrating for us, as a business. But we also always have kids in, more for testing out comfort and wear testing, as well as giving us feedback on product.

Richie: [00:30:00] I feel like you could run a daycare.

Rachel: [00:30:02] We basically do. But it’s the best part. When kids are in our office, that is the spirit and the energy of why we exist.

Richie: [00:30:08] Right. So, a lot of the companies you mentioned before are very much retail-based competitors. How did you think about both the opportunity and the challenge, knowing that, I’m sure parents are often out and about, and know those places and frequent them? And when or what does it look like for this brand to exist offline as well?

Rachel: [00:30:26] We really started with the fact that so much of the purchasing was really moving toward online. And parents are busy and so they need to be able to transact on their phones or on their computers and nobody wants me dragging their kid to the mall because it’s a nightmare and it’s meltdown central. How did we deliver experience that mirrored the existing behavior but do it in a way that was a better experience? And that was, first, putting the product in the home. So the idea that we go shopping for you, we put it in your home and you can shop from the comfort of your home. You can also text us and, for our members, you have an ecommerce experience where you can purchase à la carte, between boxes, whenever you want.

Rachel: [00:31:05] That being said, I really believe that the future of retail and commerce is meeting your customer where they want to be met—and so the critical importance of understanding who your customer is and how they want to engage and how they want to purchase. For our brand, I do think that there is a brick-and-mortar experience there. I think it’s much more interactive than just racks of clothes, but we also know, and we’ve learned [in] selling our clothes to our customers that the clothes are insane. They are the most incredible quality and they are what customers fall in love with and what retain our customers and why they keep coming back for more. Beyond what does commerce and what does retail and purchasing look like for our customer, more now than ever, we just want to get our product physically in front of people to touch it. Because when they touch it, they melt and they freak out and they buy it and they retain with us. Thinking about, can we get it into more homes? Can we get our customers into experiential retail? It is something that we are very actively working on and something that we are really excited about because we’ve always had a strong point of view on what that will be and it won’t be the modern day Gap.

Richie: [00:32:16] Given the busyness of this customer and the fragmented places that moms spend their time and attention, what have been some of the marketing things you all have done to try and stand out or build that affinity or grab that attention, in ways that are different from the rest?

Rachel: [00:32:29] I’d say the customer experience that we control, end-to-end, has been core to that. Every single customer that writes a review talks about some of the touch points of the customer experience. So, from how easy it is to onboard, the box is just really special, it has a handle so it’s easy to carry into your house. You don’t need a knife or a scissor to open it. It has the return label and the return bag and our customer experience team is like the [superhero] of the company. Everybody falls in love with them and wants to be their best friend. So I think the end-to-end customer experience is just really special and really magical and that creates that early evangelism.

Rachel: [00:33:05] But the clothes really do overtime for us. They are what kids build their identity around. They’re choosing in their dress over other brands. It’s this really happy medium between colorful and comfortable and the graphics that kids respond to, but polished and sophisticated enough that the parents say, “Alright, you’re wearing athletic shorts but you’re actually kind of cool. I feel good with the way that you look.” And that was a really hard nut to crack and one that I don’t think most brands have been able to do at an accessible price point, something that we’re really proud of. We definitely do a lot on the social channels, whether it be Facebook or Instagram, via email, text message, anywhere that we can tap into where moms and kids are ready, primarily moms, and how do we inspire them.

Richie: [00:33:54] What’s been the cheapest and most expensive lesson you’ve learned, Building the company?

Rachel: [00:33:58] The cheapest, in the big scheme of things, has been the investment we made in the brand.

Richie: [00:34:04] Meaning the fuzzy brand?

Rachel: [00:34:07] The fuzzy. The visuals, the messaging, the fuzzy way that we make you feel, the magic that we make you feel. It’s so intangible and it feels funny to say that has value, but it is the greatest value that a business ever builds and one that I, wholeheartedly, believe is worth investing in and one that just pays back again and again.

Rachel: [00:34:28] The most expensive is, probably, we made a brand video in the beginning that has never really seen the light of day. It was one of those moments where we had such a big vision and we had no budget and nothing good comes of trying to make those two things work in creating content.

Richie: [00:34:47] Especially visually.

Rachel: [00:34:46] It was very cool. Video is really hard and, if you’re just the slightest bit off, it doesn’t work. Thankfully, we’ve been able to resurrect pieces of it, but the end-to-end vision of it really never came to be the way we wanted it to.

Richie: [00:35:03] We talked before about taking last year to really focus on the economics and make sure [the] ducks were in a row, so to speak. As you look to the future, what keeps you up at night, from the business perspective? What do you think could go wrong that will take effort and intention to mitigate against?

Rachel: [00:35:19] For us, we are super focused on growth right now, now that the performance of the businesses in a really, really solid place. What I’m constantly thinking about is how do we build the business and how do we build this brand to get to the middle of the country as quickly as possible? Those customers are the Holy Grail to me. We try to learn so much from them. In many ways, while I grew up on Cape Cod and it is coastal, it’s a very similar customer. What is the balance of building marketing strategies that speak to the coasts and continue to build aspiration? Well, really speaking to your core customer and I think that that’s a tough nut to crack. We’ll always look at how do we continue to build a supply chain to be more flexible? Because we’re still designing many seasons out and we have data every single day that we can react to. So how do we build that to be more flexible? And how do we build our data richer and richer and smarter to be able to drive those decisions?

Richie: [00:36:21] It’s interesting talking because there are certain parts of this where it sounds like you partially run, at least on the back end, a fast fashion business. Trends still exist, and so forth. But it sounds like there are still opportunities, or wishes even, that the lead times would slowly compress and compress.

Rachel: [00:36:36] They can always be faster. We are way faster than traditional vertical brands but we’ll never be fast enough. I think we’re starting to figure out some of those tactics to give us as much flexibility as possible. And it’s really fun to be able to see and to be able to get into some of those tactics. But, I think, until we’re running and operating our own manufacturing plant, we’ll never have the level of flexibility and control that we want.

Richie: [00:37:01] It sounds like it, maybe from the beginning, that you had a very clear definition of, you said two, two and a half, to ten was kind of the age range. How do you, both think about, and then actually focus on that? Because, on the one hand, it would seem amazing to own that section. On the other hand, I’m sure, at some point at the back of your mind, you’re always like, well, they’re always growing and growing, and how far can you push this affinity from an age and residence perspective? How does that get debated or thought about, from your side?

Rachel: [00:37:27] Well, even ages two to ten is such a broad age range—and so much changes and so much happens in that range and taste levels and preferences and cultural references and who the customer is, mom versus kids. We very much geared our focus and our strategies to the older kid. We think about the eight year old, with the idea that, if it is cool enough for the eight and ten year old, it will be appropriate and cool for the younger kid. I think what we’ve seen, because we’ve been successful there, is that, now, the parents of the 12-year-olds are like, “Can you please do juniors? The junior market is rough and can you please fix it?”

Richie: [00:38:03] Is it the same problems or different?

Rachel: [00:38:05] It’s slightly different in that juniors, the kids, want to be more sophisticated than their parents are comfortable with them being. They’re sort of somewhere between the kid’s market and adult market. Both the fit, as well as the aesthetic, is not necessarily appropriate. So there is opportunity there, but it is such a tiny, tiny, tiny segment that we don’t look at that as a massive opportunity. We, actually, think much more about how do you get in front of the mom before she’s making her buying decisions for her children? And can you start younger with her? And I always say, “mom” because we’re 97% moms. We certainly have some dads and we wish that we had more. But how do we start to build that relationship, whether we’re selling at that age or we’re just creating content at that age, where we can engage her so that she knows we’re her brand, when the time is right?

Richie: [00:38:53] How much does that, then, overlap with parenting itself?

Rachel: [00:38:56] A ton. I think that it’s such a broad age range. There are so many different topics around parenting that that age range is thinking about and engaged with, which makes it hard to create content because you’re sort of all over the map. And so we have to be really focused on where do we lean in? And we tend to lean into going back to our core mission of being a service and a solution. So, more service, solution, “life hack”-oriented than the broad content space. But, thinking about, also, appealing to mom. She is smart, she’s educated, she’s savvy, she’s the same consumer that she was before she got pregnant and all of a sudden people put the mom stamp on her. And so how do we just engage her and talk to her? And I think that’s been fortunate unlock for us because we are that customer and we were pissed that nobody was talking to us.

Richie: [00:39:46] And it also brings you back, full circle, to the original business in a way.

Rachel: [00:39:49] Yeah.

Richie: [00:39:50] Was there any point where you almost walked away from the company? Or was like, “I don’t want to keep pushing this farther?”

Rachel: [00:39:55] Hell, no. I am the biggest fighter you will ever meet and everybody will tell me, “no.” And they will tell me, “You’re crazy and this can never work and the party’s over, you’re running out of time.” And I’ll be like, “Get out of my way. I’m going to that goal over there and, if you’re not on the boat with me, get off.” I’m very goal-oriented and will fight and fight and fight. At the same time, I wouldn’t describe myself as competitive, which is strange, but I’m a very team-oriented person who likes to rally the troops and get everyone going to the same goal.

Richie: [00:40:33] Is there any doubt ever?

Rachel: [00:40:34] There’s always doubt, but there’s so much naivete that it sort of clouds the doubt because I, often, don’t know enough so I’m in many ways really powerful. I think that naivete enables me to continue to take these risks and not be afraid.

Richie: [00:40:53] And so, as you look forward, what’s on the horizon? What are you most excited about? Where do you want to be in three to five years?

Rachel: [00:40:59] So, in three to five years, we want to be one of those two to three brands that mom is going to. We want to be a household brand that’s really a brand that families are rallying around, that stands for more than just selling clothes. We have a big, big campaign that we’re launching for Back to School that we’re very excited about. Really that go-to brand for services and solutions and amazing, amazing product. I imagine, over time, that product line will evolve. It’ll grow. The way that we talk to our customers and really dimensionalize the experience will change. We’ll be able to deliver different retail experiences along the way. Today, our focus is really continuing to listen to our customer. Listening to our customer, engaging with our customer, literally, on the phone, via email, via focus groups, is what has driven all of our awareness of all of the things that we have changed and evolved and grown. They’re our eyes and ears.

Richie: [00:41:53] Awesome. Thanks so much for talking.

Rachel: [00:41:54] Thank you.

Richie: [00:42:02] Thanks for listening to the Loose Threads Podcast. You can read full transcripts of the podcast and join the newsletter at LooseThreads.com. Also feel free to leave  a review on iTunes. We always appreciate it. Thanks to George Drake Jr. for editing this episode. We have a great roster of upcoming guests, including Fran Dunaway of TomboyX, Tony King of King & Partners and Eleanor Turner of Argent. Thanks for listening and talk to you soon.