#82. Kidbox personalizes shopping for kids. We talk with CEO Miki Berardelli about how the company is improving kids’ and parents’ lives with its try-before-you-buy model, evolving offerings and social mission. 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 82nd 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 and insights 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, podcasts with industry leaders and news from Loose Threads. Check it all out loud at LooseThreads.com.

Richie: [00:00:35] Joining me today is Miki Berardelli, the CEO of Kidbox, a company that offers personalized shopping for kids. Miki joined the company early in its founding as it sought to bring a wider range of clothing options to kids of all backgrounds and styles.

Miki: [00:00:49] At the heart of our company is a social mission of helping children in need and we are in the business of children and parents and making their lives easier.

Richie: [00:01:02] Now the company is designing and producing its own products as it puts its data and feedback loops to work. Here’s my talk with Miki Berardelli.

Richie: [00:01:15] So why don’t we start. Just talk a bit about your background and then we can work our way up to Kidbox existing.

Miki: [00:01:19] So I went to school thinking I was going to be a broadcast journalist at University of Iowa—I grew up in the Midwest outside of Chicago—and during my tenure there, became very distracted with marketing and communications so that set me off on a very different path. I worked on the agency side in Chicago, worked for a small boutique agency. Had the amazing pleasure of working on Rare Air, the first coffee table style book for Michael Jordan, and really learned the creative side of marketing, the beauty of an image, the telling of a story.

Miki: [00:01:57] Then I switched to the science of marketing and worked for a company called Direct Marketing Technology that was later acquired by Experian North America. Most people know Experian because of credit checks and things but they do have this huge marketing division. I worked with all the great catalogers back in the day, so the Eddie Bauers and Crate & Barrel and Lands’ End and J.Crew, and learned the science of marketing and direct response.

Miki: [00:02:21] I then moved to the brand side and moved to Columbus, Ohio and worked for Limited Too, which was the hottest brand for girls nine to 12 or seven to 12, I guess. Built their direct-to-consumer business from the ground up. So started with a catalog and then a marketing website. This is the very early days of digital.

Richie: [00:02:41] It’s so interesting to hear the word direct-to-consumer with catalog. Because most people would not associate those as the same thing.

Miki: [00:02:47] And it’s interesting because those that were in the catalog business made—other than the pure plays—made the quickest leap to ecommerce because the difficult part, the backend, fulfillment and all the operations and logistics were already set up to fulfill for catalogs. So it was an easier jump. From a marketing perspective, all the rules were the same. I didn’t see it as different. I saw it as a new medium. And so built the direct-to-consumer business starting with a catalog and then website and then fully fledged ecommerce site. We were way ahead of our time. We had virtual models and digital paper dolls for girls and they could create their own looks and so forth.

Miki: [00:03:23] I then moved to New York City and landed a job at Polo Ralph Lauren and started in the digital division heading marketing and then grew up, over the next eight years, and moved into more of an omnichannel or what they call an omnichannel role. So, by the time I was done there, after eight years, I was senior vice president of marketing for Polo Retail Group which comprised 65 full-price stores, 135 outlet stores, RalphLauren.com. That grew from $14 million to $350 million during my time there. Rugby, rest in peace, great brand—ten stores for Rugby and Rugby.com and I oversaw database marketing globally for the company.

Miki: [00:04:04] From there, I moved to Tory Burch in a newly created position of chief marketing officer. The business, at large, was just shy of $200 million in annual sales and the ecomm business, which I inherited as part of my responsibility—I oversaw marketing, public relations and ecommerce, globally—grew from $14 million to over $230 million over the five years that I was there. The brand grew to a billion dollar brand in 2014. I was there from 2009 to ’14 and it was the first American fashion brand to hit a billion dollars in less than ten years. So it was a wild ride. That’s where I really figured out that I loved this high growth theme and building a team and building a business and seeing progress and moving things exponentially.

Miki: [00:04:50] I then moved to Chico’s FAS. I moved my family to Florida for two years and worked under an industry veteran named Dave Dyer who is a seven-time retail CEO. I was really training to be CEO of a company and I learned very quickly that I did not have a keen interest in being CEO of a publicly traded, $2.3 billion dollar company with all the answering to Wall Street and managing quarter to quarter. During my tenure there, I met Haim Dabah who is the founder of Kidbox. He was launching this concept that I connected to very authentically because I was a working mom. I have two boys and had been in the digital space for a long time. Truly understood what was happening with consumer preference and on-demand retail and the movement of mobile that really pushed the industry, retail into a new paradigm. We continued conversation over several months and, long story short, some things changed at Chico’s and I decided I wanted to move my family back to the Tri-State area and started as CEO of Kidbox in September of 2016. So I’m coming up on my two year anniversary. It’s been really exciting and really fun to run a startup.

Richie: [00:06:04] So, when you meet him for the first time and you hear this idea for the first time, how would you describe it at that time? And then we can talk later about how it’s evolved since then—but what is the original inkling of the idea?

Miki: [00:06:15] Well, I did a little bit of research on who Haim was. He founded Gitano jeans back in the day. So when the premium denim market hit in the early ’80s, Calvin Klein and Gloria Vanderbilt and Jordache and Sergio Valente jeans were hitting and girls were flocking to the malls to wear premium denim, he brought Gitano jeans to the masses and was able to reach people of all socioeconomic means and built that business and later sold it to Fruit of the Loom. He later launched a company called Regatta which was also very ahead of its time, brought Vera Wang to Kohl’s, brought Karl Lagerfeld to Macy’s and Missoni to Target. So this idea of bringing luxury to the masses through accessible retail was his brainchild and he had this amazing track record of success. He sold Regatta to Li & Fung and ended up working at Li & Fung for seven years. And then he “retired”—and I use “retired”—to launch a family fund known as HDS capital and Kidbox was his first baby, if you will, in terms of backing from an investment perspective and wanting to launch this company.

Miki: [00:07:28] Now, he had grown up in wholesale so he had no interest in being CEO. Hence why he was looking for a CEO. In terms of our interpersonal relationship, we had each other at hello. His vision and his brain, what he brought to the table in the wholesale, which is a huge part of the Kidbox business, background was very beneficial for me to learn from. And I brought to him this idea of vertical retail and direct-to-consumer, all things digital, ecomm and mobile. So it was a really nice mixing of experience and passion. We met a year prior to when I started as CEO but continued the dialogue and after I moved back to the Tri-State area, I was looking at other opportunities in the market but they all felt a little bit like rewind and replay to me and I didn’t want to go and do what I’ve already done. I really wanted to turn the page and start something new and have a new challenge. The idea of starting a company at its inception as CEO is a gift. It’s a once-in-a-lifetime opportunity. The concept of being able to build a company culture from the ground up, to be behind every hire and seek the talent and best-in-class team and understand every decision and why it was made at a certain point in time and building block of the company was an opportunity that I saw as being very valuable and that has certainly proven out over the last two years.

Richie: [00:08:54] Was the idea fully formed when you started talking the year before you joined? What was the concept if you were to re-pitch it then?

Miki: [00:08:59] I laugh about it now because Haim had this beautiful ten-page deck that seemed so simple. When I read about the Kidbox concept, it seemed like something I could do easily and what I later learned is that it’s a very complex business model. We’re really pushing into a new frontier of consumer-preferred way of shopping and higher level of expectation. And so the ability to deliver on customer experience end to end is unlike anything I’ve ever seen in business and we’re faced with new challenges every day.

Miki: [00:09:30] We have a try-before-you-buy model. Parents and children go to Kidbox and they complete a very easy style profile and all of the questions that they answer are fed into a proprietary algorithm. So it’s this idea of data science being the fuel and the fire to the business. And that algorithm hits up against our product catalog, every product that we have available in our assortment at any point in time, and serves up the perfect box to our styling team. We focus on four different personalities. First of all, we carry sizes newborn to size 14 so we have the most broad assortment of sizes for both boys and girls and our style personalities range from classic prep to sporty, modern casual and city cool. So, based on how customers answer those questions, we put them into one of those personalities or a combination of two. The data science is a huge part of it. It serves up the box our styling team. But the human element is equally important if not more important. The styling team looks at what the algorithm served up and then tweaks it, makes it perfect, puts that personal touch to the box and then it’s sent to the distribution center for fulfillment.

Richie: [00:10:37] Was all that there in that deck, originally?

Miki: [00:10:39] It was, in theory, but the actual execution—

Richie: [00:10:43] Of course.

Miki: [00:10:43] I like to use the term, “vision without execution is hallucination.” So there was a little bit of vision without execution not fully formed yet but we were able to bring that vision to play. And so there were a lot of things that needed to be worked out. We learned very early on that the logistics and the fulfillment of this business are very complicated. When you look at traditional ecommerce businesses, most consumer-facing ecommerce businesses ship about 1.5, 1.75 units per transaction. So that’s the average. We’re shipping seven items in a box. So the velocity at which the business moves and the complexity of fulfillment and the need for automation and sortation and all the cool technical stuff that happens on the back end was paramount and, quite frankly, table stakes for Kidbox. So that was an early learning curve. That’s what used to keep me up at night in the early days. And now I’m onto new things that keep me up at night in the business.

Richie: [00:11:38] So you agree this is a thing. It doesn’t exist yet, right? What exists when you join is my question.

Miki: [00:11:43] Well, the company had launched. Even though I met Haim in fall of 2015, they were off to the races.

Richie: [00:11:49] So there was a team already. This was in progress.

Miki: [00:11:51] Exactly. And so the alpha model launched in spring of ’16, the beta model in summer of ’16 and the first true consumer-facing season was Back to School of 2016 which happened to coincide exactly when I started.

Richie: [00:12:05] So were there any learnings that you were aware of from those alpha and beta stages that became very instrumental or were really important to get out at that stage before doing something larger?

Miki: [00:12:15] Sure. One of the things that we launched the company very committed to was listening to the customer and customer-centricity is one of our core values. We always make sure that the customer is sitting at the table, figuratively, when we make decisions. Without including the customer, what are you doing in business today when the consumer is truly in charge and in command? So there were quite a few learnings from those alpha and beta stages of things that we needed to tweak, whether it was shortening the profile so that the customer can move more quickly through it. We launched the company with a social mission at our core. So, for every box kept by customers, we provide brand new clothing to children in need. So there is a social mission. There is a heartbeat to the company and the opportunity to convey that and share that in a better way became very clear early on. We partner with an organization called Delivering Good, which Haim Dabah, our founder, has actually sat on the board of directors for for nearly 15 years, and they have a network of hundreds of charities that bring together product from retailers of all different categories. Everything from toys and books to apparel. Through their network, they send these goods to children and families in need. So, for Kidbox, these can be children living in—all situations are distressed situations for these children. But examples include children living in military families, children living in foster care, children who one or both parents are incarcerated, children who lost their home in a fire or a flood or hurricane, which all three happened in 2017, for example.

Miki: [00:13:57] And so the ability to really convey that the purchase of a Kidbox at an amazing value for these seven items was also the opportunity to do good. The amazing thing that we heard back from our customers, early on and we continue to and it makes everyone very proud at the company, is that the parents are telling us that they’re having the conversation with their children about the importance of giving back and helping other children earlier in their life than they would have otherwise because of the Kidbox shopping experience. So we find that emotional currency be very powerful.

Richie: [00:14:29] So you’re now going to go launch into Back to School season, basically. I’m curious to talk about both that season broadly, as it sounds kind of like the Super Bowl of kid shopping.

Miki: [00:14:37] Absolutely. It’s our Christmas. It’s our holiday.

Richie: [00:14:39] There you go. And then I’m curious how the launch went as well.

Miki: [00:14:42] So, in 2016, our first official launch was in the Super Bowl of our cadence which is Back to School and it went pretty seamlessly. We were surprised and excited about the results and the consumer told us that this is what they’re looking for. And, when you think about it, dragging children to the mall in the flurry of Back to School and having them dress up in dressing rooms and try different things and the parent and the child are weighing in on whether that style is appropriate or not and whether the value is worth it or not is a very daunting thing. So Kidbox was able to break through that mindset with the Back to School season and we heard very quickly that this is answering a need that the consumer has. One thing that all busy parents share is this idea of being time-starved and this need for convenience in their lives. So the ability for us to style boxes that are personalized to the child. No two boxes are the same unless a parent, for example, of twins likes to dress their twins the same. Then we will fulfill that for them. But this idea of personalization and style authority and cutting out the decision making and being able to provide premier brands like Diesel, Roxy, kensie, Jessica Simpson, 7 For All Mankind at this amazing value of about $14 per item was something that truly resonated.

Miki: [00:16:01] I think about it and that first Back to School season was very clarifying for me that this is what we are offering to the marketplace. It’s truly the new face of retail and it provided us with a backdrop of thinking of the front door of every U.S. household as the new door of retail and the living room as the new dressing room. We learned from that Back to School season that the parents and children are waiting together for the box and, when the box arrives, they’re opening it together. So it’s truly delivering an experience during this era of being time-starved that is special and unique and personalized to the child. I refer to it as an opening ceremony and then these mini fashion shows take place in the living rooms all over the U.S. and it lends itself beautifully to social media. We see the evidence through the posts.

Richie: [00:16:54] And so I’m curious to talk a bit more about the multibrand model in terms of was this ever envisioned as just a mono-brand or was it clear that, from an assortment perspective, you wanted to have access to everything and so forth?

Miki: [00:17:04] There’s something unique about startups which is you have to start somewhere and you cannot let perfect get in the way of good enough. Because if you wait for perfect, you’ll never launch. And we had an insatiable appetite to be the market leader in the children’s space in the box business. We are commonly lumped into the subscription box business sector even though we’re technically not a subscription; we allow customers to opt in and opt out as they please. I did not want to create a psychological albatross, if you will, for consumers to be roped into something and then attrit or leave, churn through the business. So, at launch, this was very much a multi-brand business that was not only going out to compete against any forthcoming children’s box business but truly competing against the Macy’s and the Kohl’s and the J.C. Penney’s and the Nordstroms of the world.

Miki: [00:17:57] Is that where most of the shopping was taking place?

Miki: [00:17:59] Absolutely. For that very reason. Because no child wears head-to-toe one brand. No parent wants their closet full of one brand. That is where we started and we had strategic relationships with a lot of the manufacturers of children’s clothing. One thing that’s not commonly known about children’s apparel is that most brands do not manufacture their own children’s apparel because their supply chain is optimized for creating things that fit you and I, not for things that fit young children. So they have licensing relationships with many of the manufacturers and many of those manufacturers were early investors in Kidbox and gave us access to their product at a great price point that allowed us to pass that savings on to customers. So, yes, we started with multi-brands. We started with a portfolio of 35 brands. We’ve since grown that to 120 brands, our current portfolio. And, concurrently, I was very bullish about creating our own exclusive brands because, when you check the boxes—no pun intended—of differentiating yourself in the marketplace, offering something new, unique and exclusive to customers is very important.

Miki: [00:19:11] So we are launching exclusive brands with this Back to School season in 2018 and we were able to design into our style personality. So we’ve designed into modern casual. We’ve designed into classic prep. We’ve designed into city cool. That was born out of several learnings. One of which was our merchant team would go to market and they would place their buys and they would see what was in the marketplace and they would commonly walk away from that buy or that showroom experience feeling like something was missing and they would report back to the business. We also heard from our customers, again going back to being very customer-centric, that they were looking for product, in addition to what they were receiving in Kidbox, that was more in tune with what their child’s fashion sensibility was. So our exclusive brands we were able to design into these style personalities that these children are relating to and we’re bringing that to market for the Back to School season.

Richie: [00:20:09] If you look forward on that, what’s the goal in terms of your own brands versus multi-brand in terms of where do you expect that to be? Because I think if you look at the department store landscape more broadly, one of the best and maybe only things they are doing right now to distinguish product that is infinitely available everywhere is starting to do exclusives and more private label and so forth. It seems like one of the best tools any multi-brand retailer can have.

Miki: [00:20:32] That’s correct. So our multi-brand approach will not stop. We currently have this portfolio of 120 brands and we do not see an end in sight in terms of expanding that portfolio to meet our consumer needs. We’re also fielding as much as we’re pitching brands and retailers are looking for new channels of distribution as they see their channels, their historical, traditional channels of distribution drying up. So in 2017 alone, we saw nearly 7,000 retail doors close. We’re already in the multi-thousand count year to date in 2018. That said, some new retail concepts are opening and you’re seeing some openings of retail concepts, brick-and-mortar concepts being born out of purely digital concepts which I think is really exciting for the consumer. So the multi-brand thing will continue to grow for Kidbox. Exclusive brands will be launched in a way where we will feature an exclusive brand product, at least one, in every box. That’s where we are going to start.

Miki: [00:21:35] What we have added to the business since we launched are two new programs. One is called KIDSENTIALS. So that’s more of a socks and underwear replenishment. Very high value, $30 price point. It’s more of a replenishment because parents are constantly losing socks and needing new supplies of socks and underwear and underpinnings for their children. So that’s been a very successful launch and that’s separate from our core seasonal boxes, but additive and complementary. We’ve also launched what we are calling limited-edition or moment-based boxes. So we launched our Summer Splash box last week and that’s a go-to-pool, go-to-beach box that features swimwear, goggles, beach towels, some other accessories that are very additive to our assortment. Things that we don’t currently put in the apparel fashion boxes but things that our customer is asking for. So, when I think about exclusive brands, I know that there will be customers [who] will establish an affinity for our exclusive brands and they will ask, I’m predicting, for limited-edition boxes that are exclusive brands, start to finish. And so we are poised to be able to provide that to them. I really see that the exclusive brands for Kidbox, because our product design and development team is amazing and they are parents and they saw a void in the marketplace in terms of prints, fabrications, the price value equation and that’s what they’re bringing to the market, exclusive to Kidbox. So we’re truly excited about how we see that growing.

Richie: [00:23:08] It sounds like the frequency at which customers are accepting new clothes is high. It sounds like maybe part of that is driven by kids [who are] are growing, [whose] preferences are changing and so forth. But it almost seems like an adult trend level of the speed at which—maybe it’s even faster actually than fashion actually moves. Were you at all surprised about the frequency at which people or the appetite at which they wanted new stuff? Because there are six seasonal boxes a year, you said, and the moment boxes are in addition to that.

Miki: [00:23:35] Right. The moment boxes are peppered in between the core seasonal boxes.

Richie: [00:23:38] Right. So the frequency is super high at which stuff is, at least, available. Have you been surprised or have there any been any interesting learnings about that piece of the business?

Miki: [00:23:46] It’s a great question and one of the things that intrigued me about running the business, having been a mom for several years—my boys are now 14 and 12.

Richie: [00:23:54] They’re on the edge of offering.

Miki: [00:23:56] My 14[-year-old] has sized out and styled out because he’s too cool for school. But my 12-year-old is sporty and he’s still very much in the mix and he loves Adidas and Puma and Reebok and the brands that we’re able to provide. But when I think about it, I would have loved to have had Kidbox [when] my children were young because of that need. It’s a necessity. And when I looked at it as a business person, this is not a luxury concept. This is a necessity concept. First of all, we may see cars driving themselves and mobile replacing remote controls, if you will, in the world but we’re never going to see children or adults, for that matter, walking around without clothing. So it’s a necessity play in terms of clothing is essential and children are constantly growing. Our six core seasonal boxes are by design. That is the rate at which children grow. They tend to be messy little creatures so they soil clothing and that adds to the necessity play and so there’s a natural replenishment built in that truly intrigued me in terms of running this business. And I was very delighted to get back to children’s apparel because it’s not as serious and it’s more forgiving than the fashion sector.

Richie: [00:25:07] Yeah. Do you think rental will ever work for kids?

Miki: [00:25:10] I don’t. I would love to see a business establish that. I have no interest in going into that business for Kidbox. We have not heard that request from our customers. But you see models like Rent the Runway really working for women. I believe—I don’t have the inside scoop on Rent the Runway—but those are very event-based, designer-based things that are somewhat disposable. Women are not in a place and, especially the millennial consumer, is very shrewd in that they don’t see the need to spend thousands of dollars for a gown for an event so they turn to Rent the Runway to be able to do that and still show up and feel special and that they found something unique. So I understand why it works for that market. I think the children’s market would be pretty tough. There’s a lot of wear and tear on children’s apparel and the business side of refurbishment, having to receive gently worn product and refurbish it to the level at which it would be consumed or purchased by another consumer—that’s a very expensive scenario.

Richie: [00:26:12] Do you find that kids actually, from a frequency perspective or from a purchase count perspective, actually could be more consuming than many adults are, in terms of just how much stuff they’re buying and the frequency at which they buy it?

Miki: [00:26:23] So the kids apparel and accessories market is a $6 billion dollar industry in the U.S. alone, which is not as large as the industry of men’s and women’s apparel. But, if you look at the last five years, men’s and women’s apparel has grown at a relatively flat rate where children’s apparel and accessories has grown year over year at an increase. So there is a momentum and a fast growing element to it. The other thing that I think factors into children’s apparel versus men’s and women’s apparel and accessories and things that are additive to their wardrobe or their life is that parents are willing to forego purchases for themselves to allow for purchases for their children. So it’s somewhat recession-proof. It’s somewhat more emotional for the consumer to be selfless in their own needs and purchase for their children which is something that benefits Kidbox greatly because we’re fulfilling that need for them and adding this whole experiential element to it.

Richie: [00:27:24] And so talk through some of the highlights of 2017 and then we can work our way up to this year in terms of, you’re in the wild now, Back to School happened. How do you grow from there?

Miki: [00:27:34] 2017 was really our first full year. So the calendar year we were in full-fledged and we started in spring and moved to summer and hit Back to School. I can tell you, I won’t go into specific numbers, but we had to reforecast our business in the upward direction three times during that year and Back to School was unlike anything we had ever seen and we were able to exceed our financial forecast, which was truly exciting. We learned a lot from the consumer. We learned a lot about customer acquisition. We learned a lot about where our customers are hanging out, if you will, and we need to reach them. We learned a lot about opportunities to offer, for example, payment method differences.

Miki: [00:28:16] Because we have this try-before-you-buy and we’re shipping boxes and we do not charge the customer at the time of checkout, unlike most ecommerce businesses, we do not receive payment for the goods when the goods have already left the distribution center. So it’s a very risky proposition. So when I talk about that ten-page deck that Haim showed me and thinking how simple it was, “I got this,” that was something that was a huge learning for me to see what happens when you actually release the goods and you haven’t received payment yet and the business logic that you have to build in to make sure that you recover those goods or receive the payment.

Richie: [00:28:52] Which is more like a normal brand in wholesale environments, in payment terms, than it would be of actually the retailer.

Miki: [00:28:57] Exactly.

Richie: [00:28:57] Yeah.

Miki: [00:28:58] So it was an exciting year. We had season-over-season growth. That is where we learned that we had a need for essentials, for the socks and underwear replenishment program. That is where we learned from customers what other categories they’re interested in receiving. That is where I started thinking more about Kidbox as, not a curated box of style that is what it is today for children, but truly a vehicle of delivering experiences for children and parents at an amazing value. I think about Intel Inside, Powered by Intel. What is the powered by Kidbox opportunity, from a vision perspective, for our business? The possibilities are unlimited. We have no shortage of ideas. It’s just prioritization and listening to our customer and and what is most relevant, what will be most successful. So 2017 represented a new shift in the vision of the business and what the future could hold.

Miki: [00:29:54] We also started our process of fundraising and moved through that process at the end of 2017, beginning of 2018 and closed our series B-funding which was really exciting, but incredibly hard work. People warned me—especially CEOs of startups warned me—about the whole venture capital world.

Richie: [00:30:13] This was the first time you had done it, right?

Miki: [00:30:15] First time I had done it and, actually, one of the most important things that drew me to the opportunity because it was going to be a new landscape for me to learn. To learn to refine the business story and the elevator pitch and truly understand every element of the business and be able to answer every question. So there was a ton of pressure. And then also I joke that I probably spent more time selecting my first VC partner that sits on my Board of Directors of Kidbox than I did my own husband. I have a great husband. That all worked out. But having an amazing VC partner that is going to help you grow and help you move into your vision, your future vision of the company and help you make decisions faster and move obstacles out of your way and connect you to the right people is very important. So it’s not an easy or quick process nor should it be and closing it was an exciting day at Kidbox, for sure.

Richie: [00:31:08] Were there any surprises throughout 2017?

Miki: [00:31:10] Yeah. We had some surprises. For this Back to School, we’ll be launching a limited-edition box that is uniform-based. We learned from our customers that they have school uniforms and, while we’re not going to be creating the specific emblem school uniforms, we are going to be providing the underpinnings. So the khaki pants or the skirts or the shirts and so forth. There’s a huge demand for that.

Richie: [00:31:35] Those are huge businesses, from what I’ve heard.

Miki: [00:31:37] Huge business.

Richie: [00:31:37] That no one ever knows about.

Miki: [00:31:38] Exactly.

Richie: [00:31:39] I’m forgetting what it was, but I think one of those companies just sold $4 billion dollars or something.

Miki: [00:31:42] It’s a gigantic industry and that was a huge learning. For me, it was a new sector to dive into and has been fascinating and we’re excited to add it to our mix. That, too, transcends all socio-economic sectors. The idea of uniform is universal and we’re playing in that space for 2018.

Richie: [00:32:01] Working up into this year in terms of highlights or bigger moments in the first half of the year, it sounds like the fundraising was one, launching the private labels was another. Any other pieces that fill in there?

Miki: [00:32:14] Absolutely. So, in 2017, we launched our Kids Board of Directors. We established a board comprised of children before we established a Board of Directors comprised of adults, which was very on-brand and exciting for us. 2017 was really our trial run. What we did is we solicited videos and applications from children all over the country and the ask was for them to share what they are doing in their local communities or otherwise to make a difference in the world. We had these amazing kids as part of our first Board of Directors that was comprised of ten children from all over the country. We had children from California, Kansas City, Chicago, the Tri-State area and so forth. These kids came to New York City in July of 2017 and we put them to work. We did not want it to be a gimmick. We wanted to put them to work and have them influence and have their fingerprints all over Kidbox decision-making. So we have a Surprise and Delight program, our gift with purchase program, where we add something fun that the child and parent are not expecting in the box. The kids were able to look at the assortment of things that we were considering and tell us which ones were cool and which ones would not go over well. And so that’s an example of how they shaped the execution of Kidbox in the future months.

Richie: [00:33:34] Was there something that they suggested that you were like, “We can’t do that.”

Miki: [00:33:38] Oh, they wanted things like silly string, which is a nightmare to every parent and that’s when we have to remember, at least in the household, because we are brand that the opening ceremony tends to happen inside the doors.

Richie: [00:33:50] You have power there to create or destroy the home.

Miki: [00:33:53] Right. We don’t want the opening ceremony to turn into a cleanup task for the parent. So that was funny because we always have to consider it. The other thing that’s really unique about this business is, every household, we have a twofold situation where we’re marketing to the parents and fulfilling a need for the parents but we’re also taking care of that child and so considerations of both need to factor into every decision that we make. So silly string did not make it into the boxes as a surprise and delight because that would be a surprise and horrify for many parents.

Richie: [00:34:24] Do you find that it’s ever mutually exclusive and that you have to pick, in this scenario, we have to optimize for the kid or for the mom? How do you balance because that is a very unique piece of this business?

Miki: [00:34:34] One of the important things about Kidbox is that it’s truly put the child in the driver’s seat of weighing in. Again, this varies by age. Newborns are not weighing in heavily on what the parent is keeping in their baby box. But once you hit three, four, five and all the way up to the rest of our ages, our age range, the child is truly deciding what they want to keep out of the box because we’ve already delivered it. So it’s a different dynamic than shopping in a brick-and-mortar store and pulling things off the rack and putting them back on if the parent doesn’t like it. If the child’s already tried it on and loves it, all of a sudden they have a very significant vote in what’s being kept and what’s being stylized for them and this sense of connection to the product. So that’s been my biggest learning in terms of balancing the two constituencies and the shift or the sharing of power in decision-making.

Miki: [00:35:28] Getting back to the Board of Directors, last year we had a child named Danica. She spent the first several months of her life in a neonatal ICU unit and her parents went through a lot of challenging moments and decision-making during her early days of life. She is a fully-fledged, amazing child now and lives in Kansas City and spends all of her free time raising funds—everything from a lemonade stand to putting on a parade—raising money to give back to that neonatal unit, specifically for the purpose of making it easier for parents and children, families who are dealing with challenges around childbirth. She calls herself a warrior princess.

Miki: [00:36:13] We had another young girl, [a] ten-year-old girl named Anya from Chicago, who suffers from cerebral palsy, and she’s wheelchair-bound and she’s partnering with Northwestern University to create a sewing machine without pedals that will allow her to pursue her dream of becoming a fashion designer. She’s ten-years-old. That was very inspiring for us, our first run through for the Children’s Board of Directors. We are welcoming our new board in 2018 to our offices in New York and hosting a big event and really celebrating them and making sure that children are the heartbeat of the company and that we are showing up in ways as a brand that puts that at the front and center of building a brand and welcomes them and garners their ideas on what we can do with this brand and what’s important to them and what isn’t.

Richie: [00:37:04] How does the term influencer apply to this demographic?

Miki: [00:37:08] Huge.

Richie: [00:37:08] And then, now that you have the private label or the exclusive brand piece going, do you foresee a point where you would actually start building brands with or for specific kids on the board or something like that?

Miki: [00:37:18] Oh, that’s interesting. I hadn’t thought about that. We certainly see opportunities for collaborating with designers and doing “Exclusively for Kidbox by such and such designer or such and such influencer or celebrity or otherwise.” So that is very much in the works. Influencers—they’re very important to the brand. This is an interesting area where we need to understand who influences the parent and who influences the child.

Miki: [00:37:44] So we have a twofold approach to a lot of the mommy bloggers, if you will, [who] have unbelievable power and influence in the consumer space and they are all approaching their work with an eye on how they make the lives of moms easier. How can they curate the world and show them products that are meaningful and have made a difference in their own lives? And that’s, essentially, what we’re doing for children with apparel, specifically. But they do that for all types of things for moms. So there’s certainly a target list of influencers, some of whom we’ve already worked with and many of whom we strive to work with in the future.

Miki: [00:38:23] And then the children influencer with YouTube and musical.ly and Instagram is huge. These are the celebrities of the children today. We are partnering with Brooklynn Prince, who was in the movie “The Florida Project.”

Richie: [00:38:40] Yeah, yeah.

Miki: [00:38:40] And she will help us shape Kidbox and make sure that we have a relevant message that resonates with our customers because she is our customer. She’s on the verge of who knows what in her celebrity-dom but she’s a very amazing little actor and I see a bright future for her, so she was definitely somebody who made sense for us to partner with.

Richie: [00:39:03] What’s been the cheapest most expensive lesson you’ve learned building Kidbox?

Miki: [00:39:07] The cheapest lesson I’ve learned is how the social mission resonates with customers. That was really an unintended consequence to hear back from customers that they are starting the conversation with their children and raising the awareness of their children of the importance of giving. This idea of children in need are very accustomed to receiving hand-me-down or gently worn [clothes]. In fact, that’s the majority of the goods that they receive if they receive anything at all. It is not new for them. It is handed down to them. What we are able to do, through our relationship with Delivering Good, is deliver brand new product with the tags still on that’s never been worn. The impact that this has on these children’s dignity and sense of self is unbelievable and extremely moving and the fact that that’s resonating with our customer was one of the cheapest, if you will, examples of learning.

Miki: [00:40:03] The most expensive was certainly the shifts we had to make in our backend fulfillment in logistics and supply chain which isn’t as exciting but we learned a lot about the velocity of our business. We had to switch distribution centers of what’s called a third-party logistics provider that is the place where the items are picked, packed and shipped to customers three times in our first year of growth.

Richie: [00:40:24] That seems terrible.

Miki: [00:40:25] That was terrible, painful and expensive but certainly not our problem today. We’re poised for meteoric growth and we’re excited about that.

Richie: [00:40:33] Did you ever think you had to build your own?

Miki: [00:40:35] We’re asked that often and I think there will come a day where, from a business perspective, it makes sense to fulfill ourselves. That’s a decision that most ecommerce and direct-to-consumer businesses face at some point in time because the numbers start to make sense. But that is not today and that is not in the next three years for Kidbox.

Richie: [00:40:52] So I think one of the most interesting questions and I was thinking about this yesterday is, you’ve spent your almost entire career in this industry and watched, basically, the shifts that people are much more familiar with now from online and so forth, direct to consumer and have heard all the proclamations of “Wholesale’s dead, retail is dead”, all these things that are somewhat not true. Where do you think that experience matters today? Because there are a lot of younger people who come in very greenfield and are like, “Everything they did is wrong in the past. This is useless. Let me go start this with people that are blank slate mentality.” And there, obviously, are benefits to that and not having some of those expectations but there’s also a ton of stuff where it’s like, no, this is actually very helpful if you’ve done this before. So, I’m curious, how do you look at the lens of experience today given the somewhat tornado of change happening? And how maybe in ways it’s essential and a blessing and maybe in other ways it’s like, “Actually, I wish I never learned to do it this way because I have to now unlearn that and then learn to do it this way.”

Miki: [00:41:52] I’ve been very fortunate in that I had a very instinctive nature about myself and I made the jump to digital very early. I couldn’t tell you exactly what was going to happen with mobile but I felt it coming. I was very early to looking at data and that’s why I talked about the blend of art and science in my early career. It was a great foundation to build my thought leadership for later in my career and that both are important and the magic happens when you strike down the middle between art and science. There’s a lot of instinct that goes in this business and there’s a lot of data that needs to inform and balancing that is truly a balancing act but has been very beneficial and served me very well. So I’ve never been afraid of the changes. At the same time, I’ve been heavily involved in the retail industry and obviously it’s built my career and I’m very thankful for it and it’s one of the largest employers of people in the United States. So, even with everything going on, it’s providing jobs. I like to say—I’m on the Board of Directors of the National Retail Federation. Prior to that, I served on the Board of Directors of Shop.org, which was the digital division of the National Retail Federation. I served eight years on the board and the last years as chairman and shifted to National Retail Federation, which some would see as a backward move, but the truth is is that retail is evolving and changing and I find it to be very exciting.

Miki: [00:43:15] Yes, there’s been a lot of talk about retail apocalypse and retail as we know it is over and brick-and-mortar is over. I don’t think that’s true. I think what’s happening is that retail as we’ve known it is being forced to evolve and change and there will be those that survive and fill needs and experiences for consumers. Because, at the end of the day, they’re human beings and they do want to go to places and they do want to discover new product and they do want to have experiences that matter to them, that excite them and they are willing to pay money for things that fulfill needs or make their lives easier and that will remain a universal concept and continue.

Miki: [00:43:49] I like to say that there’s a new buzz word. When I see retail apocalypse and gloom and doom and retail, I use the word “shoptimism.” There an optimism happening with shopping and I find it extremely exciting because, when you strip down everything that’s happened in terms of retail doors closing and traditional retailers having managed growth through store count and now having to right size their fleet to make sure that the economics make sense in their real estate deals and footprint, what’s happening is the consumer is more in charge than ever. So the art of listening to the consumer and drawing from that because, going back to maybe what Steve Jobs was known for doing, if you ask the consumer what [she wants], [she doesn’t] necessarily know. You need to deliver an experience, but you can pick up from consumers what they’re inching towards. Consumer preference is at the forefront today. So that’s really the shift that’s happened is that the control is no longer if you build it they will come. You need to build something that the consumer decides whether they want to engage or not. And everything from consuming news to consuming media to consuming television is all on-demand today and that’s no different in the retail sector. It’s on-demand retail. But I find it to be really exciting.

Miki: [00:45:05] So, in terms of how that’s influenced my career, I never shied away from adding new dimensions. It wasn’t always easy. I was often the person [who] people looked at like I was talking crazy about what was coming. And, again, I’m not saying that I knew exactly what was coming but I knew something was coming and I knew this idea of customers moving between online and offline was going to become more and more fluid over time. Traditional retailers, many of them, did not want to hear that. And so it was a journey, for sure, and I wasn’t always popular in meetings and I just persevered because I knew that I had my ear on the ground and was listening to the customer. It served me well and, like anyone’s career, there’s been a lot of luck, a lot of good timing, a lot of mistakes that I’ve learned from quickly and course-corrected and all roads have led me here. It’s really exciting but I think it’s really important from a leadership perspective to have a high self-awareness of what your appetite is and what you’re willing to do. It goes back to the Darwinian phrase, I’m not going to quote it exactly, but, “It’s not about strength and intelligence, it’s about the ability to adapt to change that allows you to succeed and survive.” And that’s been more true than ever in retail.

Richie: [00:46:15] I want to ask about Stitch Fix a little bit just because they have started to move into the space and what the Kidbox perspective is on that and how you see that all rolling out. And then I’ll have one more to wrap up.

Miki: [00:46:24] So Stitch Fix is a business that I have rooted for and watched and learned a lot from. They went public over the last several months and seem to be doing pretty well in that space and answering to Wall Street, which was something that I was very intrigued to watch and learn from.

Richie: [00:46:39] Do you like that you can go read all their statements and everything?

Miki: [00:46:42] I do.

Richie: [00:46:42] Yeah.

Miki: [00:46:42] Because I am a student.

Richie: [00:46:43] Right.

Miki: [00:46:44] To me, they are the trendsetter. They are leading the pack in terms of validating this business model, answering to consumer preferences of this idea of curation and personalization and leveraging data science and algorithms to make a business smarter and an experience better and they’re doing an amazing job. They launched with women. They expanded into men’s. They expanded into special sizing with plus-sizes and petites and so forth. They’ve added exclusive brands to their mix and now they’ve added children’s. Many people asked me if I was concerned about that. I’m not concerned about that because I truly see this as the new landscape of retail and there’s going to be space for many players. The bar is set high and I’m certainly not shy of hitting that bar and striving for that ultimate customer experience. We are in the business of children. This is all we do. I met Pleasant Rowland, who is the founder of American Girl, many years ago when I was very early to my career. She pulled me aside and showed me a couple videos of little girls opening their American Girl dolls under the Christmas tree and the reactions that they had and the emotional currency that was going on and she said to me, “People often mistake that I’m in the doll business. I’m not in the business. I’m in the business of little girls.” And I think about that everyday at Kidbox and that’s a differentiator for Kidbox. The heartbeat of our company is a social mission of helping children in need and we are in the business of children and parents and making their lives easier and their connection to one another. So that’s different.

Richie: [00:48:19] Right.

Miki: [00:48:19] We are differentiated from Stitch Fix and, at the same time, cheering for them because we share a place in the new mall of retail where the front door is really the door of retail.

Richie: [00:48:30] And then, as you look forward, one, two, three years, what is on the horizon and what are you most excited about going forward?

Miki: [00:48:36] On the horizon for Kidbox is the expansion of brands. We look forward to the expansion of our exclusive brands and making sure that we are hitting every style personality with amazing efficacy and customer experience. We are thinking about new categories of business from listening to our customers. So, for example, things like books and toys seem like a natural extension of Kidbox. We are excited to have already donated $6 million dollars in brand new product to children in need and to growing that number over time and sharing that news with our customers. With the Kids Board of Directors, the vision is really to—yes, we’re inviting them to New York and we’re holding a meeting and we’re allowing them to put their fingerprints all over our brand. But what we’re doing, from a vision perspective, is creating a movement of children talking about the importance of giving back earlier in their lives and mobilizing and doing things that matter and growing up as amazing, socially responsible citizens and being, humbly, as a brand, part of that movement and helping to drive it forward.

Richie: [00:49:43] Thanks so much for talking.

Miki: [00:49:44] Thank you.

Richie: [00:49:49] Thanks for listening to the Loose Threads Podcast. You can read full transcripts of the podcast and join the newsletter at LooseThreads.com. Feel free to leave review on iTunes—we always appreciate it. And thanks to George Drake Jr. for editing this episode. We have a great roster of upcoming guests including Barry Beck of Bluemercury, Bouchra Ezzahraoui of AUrate and Rachel Winard of Soapwalla. Thanks For listening and talk to you soon.