#97. Care+Wear creates apparel and accessories for medical patients and providers by merging function with style. We talk with co-founder Chat Razdan about how the company was founded to give clinicians and patients a better experience, working alongside them to solve real problems during some of life’s most challenging moments. 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 97th 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 analysis of the consumer economy. Check it all out at LooseThreads.com.

Richie: [00:00:35] Joining me today is Chat Razdan, a co-founder of Care+Wear, a brand focused on delivering functional and easy apparel to both medical patients and providers. Chat started the company with co-founder Susan Jones after experiencing a number of family and friends get diagnosed with cancer and realizing that the apparel and tools they had access to during treatment were suboptimal.

Chat: [00:00:55] We work with clinicians on every product to make sure, functionality-wise, that we are medically superior to anything out there and then we bring patients in because, lo and behold, if you get a patient involved, maybe they’ll actually want to wear what you’re designing.

Richie: [00:01:09] He then set out to work with doctors and patients alike to develop new products that solve real problems and give everyone a better experience in some of the more challenging moments of their lives. Here’s my talk with Chat Razdan.

Richie: [00:01:29] So why don’t we start. Talk a bit about your background and then we can work our way up to Care+Wear existing.

Chat: [00:01:33] I joke with everyone that I’m the least relevant person for our company. I graduate from UVA, spent four years as a strategy consultant working for A.T. Kearney, was sold on the fact that I could tell CEOs what to do as a 22-year-old. First project was in Rockford, Illinois where you were really fortunate to get in a room in the Quality Inn. I was definitely not telling CEOs what to do. Rather, I was being told what to do by 25-year-olds and was like, “This is not necessarily what they sold me on,” but it was an amazing experience. Left in 2009 to go to business school, told everyone I would never move back to New York and never do banking. So, naturally, I came back and worked for Goldman doing investment banking and then came into the startup space in 2013.

Richie: [00:02:18] Was that for this?

Chat: [00:02:19] No. So I went to another startup for a year—totally unrelated—in the parking space and officially headed up partnerships, helped build the team. But this, honestly, just came accidentally. I had friends and family diagnosed with cancer and, on the side, started trying to solve that problem for them.

Richie: [00:02:41] So talk a bit about the original inkling of the idea. I assume you weren’t solving cancer as much as this problem.

Chat: [00:02:47] No. I would love to solve cancer, but unfortunately I’m not smart enough to solve that. We basically had a bunch of loved ones, friends and family, getting treatment through what’s called a PICC line. A PICC line is an IV tube. It goes in your arm, connects to your heart. So you’ll get intravenous treatment into the body: nutrition, antibiotics. [It’s] kind of a way so that you don’t have to keep getting pricked every single time you go in, but, because of that, you have a line that just sticks outside of your arm and because it’s connected through your veins into your blood flow to your heart. Basically, if it moves, it can get infected and you can have serious ramifications, including death. And so your nurses will normally give you a stretchy sock or they’ll give you a version similar to that and tell you go get the soccer socks that you used to wear growing up, cut the toe off and wear that.

Chat: [00:03:39] And so I saw a number of people wearing that and thought, “This really stinks. There’s got to be something better.” Reached out to my now co-founder. She was in the fashion industry, had had cancer impact her family directly and was just like, “Hey, can we do something here?” And she was like, “Oh, yeah this is super simple.” As you know, but as I did not know at the time, when someone in fashion says “super simple,” that means it will take at least a year to build. But coming from an Excel and PowerPoint background, I was thinking, “Great, this will be like a week.” And so I started working with nurses and doctors from Johns Hopkins and UVA to redesign the tube sock. And, as we were working with them, took a step back and realized, whenever you go to the hospital, everything that you’ve been given is focused solely on function and not on how it looks or how it makes you feel. We just felt there was an incredible need to build a brand in the healthcare space.

Chat: [00:04:34] And so, kind of how we approached [it]—honestly, it was accidental. It was just, “We don’t know what we’re doing so we want to surround ourselves by experts.” It has kind of now become our—I call it our “secret sauce.” My team tells me, “It’s not secret because you tell everyone.” But basically we work with clinicians on every product to make sure, functionality-wise, that we are medically superior to anything out there. And then we bring patients in because, lo and behold, if you get a patient involved, maybe they’ll actually want to wear what you’re designing. And then we bring in the fashion and manufacturing perspective to incorporate the latest trends and technologies and designs.

Richie: [00:05:09] So, to go back to the beginning, it started with—what was the first product called?

Chat: [00:05:12] It was called a PICC line cover.

Richie: [00:05:14] A PICC line cover. You mentioned you thinking it would take a week—it actually ended up taking a year. Talk a bit through that development process and [how] what seems like a simple, round, stretchy object, actually seems like it had a lot of complexity.

Chat: [00:05:27] Oh, it’s so complicated and you would never think that. We made the first prototype here in the States and I still remember getting it and being like, “This does not feel that comfortable. I don’t think I would want to wear it,” but still just trying to make sure we had the design down. We took it down to Baltimore for a meeting with the Hopkins nursing team and, I’ll never forget, they looked at me and they were like, “We would never use this.” And I just stared at them blankly. It probably looked like I wanted to jump out the window or something in the room. And they looked at me and they were like, “Well, that doesn’t mean we don’t want the solution. This just has problems.” And so worked with them to figure out what was the problem and the biggest problem was breathability. One of the reasons that you’re told to wear a tube sock is because the dressing that you place over the PICC line actually needs air for it to function. So 3M—and others. I guess I shouldn’t be promoting just one company, although they own the majority of the market—these companies have created an amazing dressing that keeps the PICC line in place and also keeps it clean and free of bacteria. But for that to function, you need air to get there. And so that’s why you don’t see everyone wearing LeBron James compression sleeve and things like that.

Richie: [00:06:41] Is that meant to do the opposite?

Chat: [00:06:42] That actually is meant to keep it tight, but it doesn’t really worry about airflow.

Richie: [00:06:47] Right.

Chat: [00:06:47] So, just being from Baltimore, I grew up with lacrosse sticks—as you can tell, I’m not a lacrosse player, I’m more of a tennis player—but just kind of jokingly, to be honest, was like, “Hey, how about lacrosse sticks? The mesh window there? Can we do that?” And the nurses were like, “Actually, that would work really well because, then, not only are you solving for the airflow problem, but you’re also solving for the visibility problem.” Another issue is leakage and infection can happen pretty quick. Most people, if you’re wearing something over it, aren’t looking down at your arm repeatedly to see is there any blood coming out or is there any leakage or infection? And so providing others the opportunity to see it in a dignified way was really important. And so they were like, “Yeah, that would actually work out great.”

Chat: [00:07:31] While that was a great solution, it added insane amounts of complexity because we now have a window, basically, in a normal garment, that you can no longer use a machine for. Because of the window, you’re adding a different piece onto it, so you’re basically making two different pieces. You’re making kind of a sock like you normally would and then a separate mesh that you’re applying on there. Everything of ours is actually handmade which, then, you have to worry about quality control and ensuring that everyone’s able to maintain the same quality especially as you scale up. And so that added to the complexity.

Chat: [00:08:06] And then the last part was, honestly, we didn’t really know what we were doing. Tech packs were foreign to us. We had drawn it in Adobe Photoshop and had sent it to the factory. We got really fortunate to work with an amazing factory that had a lot of patience with us. We did 12 prototypes before finalizing—and I wouldn’t even say finalizing—before coming out with our first version and learned a ton of lessons on the way. In terms of stitching, we learned that you need to double stitch the mesh. And, especially, because every arm is different, thinking about sizing and how you want to do that, we ended up deciding to alternate every 2 inches of your bicep. Another early lesson was no one really wants to ever measure your bicep. You don’t know that off the top of your head. But your arm is normally very different than your shirt size. So, initially, we used to do small through extra-large and you would have a ton of people—I, for example, I like to be super loose. I’ll wear an extra-large normally, but my arm is officially what we would sell as a medium. And so lessons like that where we learned we can’t have alpha sizing because that will cause you to just go with what you normally wear. We need to force you to change your habit and to measure your arm. And so just going through those iterations added time as well.

Richie: [00:09:29] So when was it where you finally had what you were ready to launch with?

Chat: [00:09:31] We kind of came up with the paper napkin idea in February of 2014 and then we brought it out to market in June of 2015.

Richie: [00:09:39] Gotcha.

Chat: [00:09:39] So over a year.

Richie: [00:09:40] And how did you know, not that it was finished as you said, but that you had something that you could or should or needed to launch?

Chat: [00:09:46] We got really lucky. The nursing teams from Hopkins and UVA were repeatedly testing every version for us. Their patients were the most incredible people ever in that they’re being given something, especially at the beginning, that is nowhere near ready and giving us amazing feedback, telling us what they like, what they don’t like. And then we had a lot of just being really lucky. One of the amazing things about all the nurses we work with is they always want to help. I guess that’s why you become a nurse. But they have been great about continuing to give us feedback and [at] every iteration, telling us things that they wanted.

Chat: [00:10:23] And then, honestly, our factory added a lot of value too. They would make it and say, “Well, this is what we like. This is what we don’t like and this is what you should be thinking about as you want to scale this up,” etc. My co-founder actually moved to China for the first year to build up our manufacturing and that helped dramatically because, especially out in Asia, it’s not necessarily about the size of your orders, especially at the beginning. It’s more about the relationship you have. By doing that, they saw that these two are very serious about this. This is something that they are bound to get right at some point and, more importantly, that they really care about us as a factory and they want to work with us. And so, rather than being prescriptive, saying, “This is how we want you to do X, Y and Z,” it was more, “This is what we’re thinking. Do you agree? This is what we’re trying to solve for. This is how we think about it. But do you have a better solution?” Even doing Skype calls with them used to help too because when you see someone, it’s the face to face.

Richie: [00:11:24] So in June 2015, what does launch look like? How does a company like this go to market?

Chat: [00:11:30] We got lucky to get a couple of hospitals on board pretty early on.

Richie: [00:11:33] This started as a B2B.

Chat: [00:11:35] It started as B2B. We honestly never thought that it would be a D2C business whatsoever. We honestly just put up a website so the hospitals would think that we’re real.

Richie: [00:11:45] Sounds like it worked.

Chat: [00:11:46] Yeah. We got really fortunate and got on the Katie Couric show and a few others. And so then word-of-mouth just started happening and we found, because no one was really making a PICC line cover, we started ranking really well in Google SEO and people started just coming to our website and buying. And we were like, “Wow, okay. I guess there’s a consumer side of this as well.” And so then we started working on other colors and other designs and then, ultimately, we ended up partnering with both major league baseball and the NBA, so you can wear your favorite teams on your sleeves.

Chat: [00:12:19] And then we just started getting amazing stories. For example, in our early days we had this girl who was going to her high school prom and really wanted to wear a sleeveless dress and we had just come out with what we call slate, which is basically a gray, more of a tonal color and it actually matched, conveniently, her sleeveless dress that she really wanted to wear. And so she called us and was like, “I have this dress. I really want to find something that matches it. I see this, but my size is right in between. Can I get both and send it to you? And oh, by the way, I need it overnighted.” And she was really excited because she got the CEO. I told her, “I’m also the janitor and the mailroom attendant so I’m more than happy to take care of this for you.” And we sent it to her and she sent us the most adorable pictures of her getting to go to prom. That, I think, fueled us to do even more and to say, “Okay, we want to do more colors and more designs.” Now we have nine colors. We’re coming out with a tenth. We’ve gotten amazing feedback from our customers.

Chat: [00:13:17] And then what I always like to say is we never have a final product. I call us an iterative design company, kind of like how Google Maps is still in beta even though it’s the de facto. But being able to always be iterating and always be utilizing feedback is super important. So we survey both our hospital customers as well as consumers on every purchase and continually keep trying to tinker. Most recently, we’ve actually just changed the mesh a little. From the naked eye, you can’t actually tell, but from a nursing perspective, you have a little more clarity and visibility to be able to make sure there’s no leakage or infection. So we’re really excited about that. We’ve gotten to the point where we’re making changes all the time so we don’t even announce it because, in our minds, we want to just keep making these better.

Richie: [00:14:06] Going back to 2015, with these first customers, it’s the first hospital customer—

Chat: [00:14:11] Yeah.

Richie: [00:14:11] What are they buying? How many are they buying? How does that all work?

Chat: [00:14:15] It varies pretty dramatically but, on average, most hospitals will have about 300 people that have a PICC line installed every single month per location. So at the beginning, we were selling to a very small individual hospital so they were seeing somewhere around 200 to 300. Because these are so small, they would just buy for the year because we would then give them a better price and so they would say, “Yeah, this is great.” And then we got really lucky where UVA said, “Not only do we want these for all of our patients, but we want to put our logo on there too.” And so we realized this is actually a cool marketing opportunity for hospitals too. And so, now, hospitals like UVA will put their logo on them. Other hospitals, like NYU, do their color. NYU does violet PICC line covers that they give to everyone and I think it’s just a cool differentiated approach for them and a way for them to build their brand and show patients, “Hey, we care as well.” And so when we started getting hospitals buying annually, that helped us get a little more—I don’t want to say leverage because, again, I see our factories as partners, not necessarily as combatants, which I think is a little different approach than some other companies. But it helped us build a stronger relationship with them and they saw, “Wow, this company is really growing and this is an opportunity for us to build our factories and business with them as well.”

Richie: [00:15:39] It sounds also nice from an inventory perspective that you’re shipping bulk.

Chat: [00:15:43] Yeah. For hospitals normally, actually, we will sell on spec. We can make it post-their order and we just are very up front with that with them. I guess that’s where the one positive on being a former investment banker helps, having been at Goldman and seeing so many companies struggle with inventory and lost inventory and dead inventory and things like that. Being able to predict better by not having to predict is always the best process. It allowed us for the longest time to actually do our consumer business out of our own office. We are based in a WeWork and their mailroom team knew us really well because we would go in every day with every order. It was really exciting when we had to move to a warehouse because we just are getting too many orders to handle internally now.

Chat: [00:16:33] But it’s still really important to us to interact with consumers every day and we used to write personal notes on every receipt. We still try and follow up with a lot of our customers. I think the only way you’re going to improve is if you talk to the consumers and see what they want to change and what they like, what they don’t like. I think it’s really powerful for our team also to hear just what an impact something as small as a tube sock can actually make. I think that’s what drives us every day.

Richie: [00:17:02] So, at the end of 2015, where is the business and then what are your priorities going into the following year?

Chat: [00:17:09] At the end of 2015, we had been really focused on the PICC line covers and every nurse that we interacted with was like, “Hey, we not only have PICCs, but we have ports which is basically a surgical pipe in your chest. You use it for very similar reasons for PICCs, but normally for more serious cases. There’s around 6 million people that have a PICC line installed every year. There’s at least more than double that for ports. And so people said, “Hey, we really want for you to have shirts.” And so we ended up working with Armani’s manufacturers to make a polo shirt, blouse and kid’s softball tee that opened up in the chest and allowed access.

Chat: [00:17:50] I think that is a great example of listening to the customer. We ended up having openings on only one side for the first iteration. You would have to know which side is the port going on. So if you’re buying it as a gift, honestly, normally you don’t know what kind of treatment your friend or family is getting. You just know that they have cancer and they’re fighting it. So you would, a) have to find that out and then you’d have to ask what side is the port on. And so now we have dual side openings because of that lesson.

Chat: [00:18:19] But going back to that, a lot of nurses were saying, “We have this as a problem all the time. People come in and then you have to hold down the shirt while you’re getting treatment over several hours.” It’s obviously a very dehumanizing experience or you just take your clothes off. Most cancer centers, in particular—you’re not in a private room getting your treatment. You’re sitting in a room with like ten, 20, 30, 50 others and you’re just sitting there with no shirt on. Just being able to provide a solution there was super important. Because we had this great antimicrobial treatment, we were able to maintain some of the key features that we thought differentiated it and then still make it super comfortable with the goal being, even if you’re not getting treatment, we want our clothing to feel like you could still wear it.

Richie: [00:19:06] When you’re selling to hospitals, are they reselling it to customers?

Chat: [00:19:10] No.

Richie: [00:19:11] So they’re just buying them.

Chat: [00:19:12] They buy and give them to the patients.

Richie: [00:19:13] So it’s not like wholesale. Really they’re the final sale basically.

Chat: [00:19:16] Exactly. The shirts are more of a wholesale play. A hospital will buy shirts and then put them in their gift shops, but the PICC line covers are normally just handed out to the patients.

Richie: [00:19:26] So they’re selling to them. Is it the same margin fee whether you sell to a customer or to a hospital? I assume they get some sort of discount at some point.

Chat: [00:19:33] Yeah, the hospital gets a discount.

Richie: [00:19:35] But not a place of they’re going to double the price to retail or so forth.

Chat: [00:19:39] Exactly. So it’s not your traditional wholesale relationship.

Richie: [00:19:42] Right.

Chat: [00:19:43] We do sell in some retail. So we’re in a few Walgreens for example. Walgreens really wanted us to go put it in every Walgreens and my thought is, if you have a PICC line, you’re probably not walking into the Walgreens in Times Square looking for a PICC line cover. And so [we’re] just trying to maintain the right channels and avenues for it.

Richie: [00:20:04] What do those gift shops at hospitals look like before you come along and what is the array of product in there?

Chat: [00:20:12] There’s two types of gift shops in the hospital.

Richie: [00:20:14] “Gift shop”—the name even sounds terrible.

Chat: [00:20:16] Yeah, exactly. Now they’re starting to call them boutiques.

Richie: [00:20:20] Okay.

Chat: [00:20:20] But the gift shop is still more of a Snickers bar, a balloon, a flowers type of place. And so, for those, we are pretty adamant that our products don’t make sense. Because, when you think about it, when you’re in a hospital, you’re not really wanting to stick around and go shopping. You’re there. You’re getting your treatment and then you’re getting the heck out of there and so we don’t see gift shops as a big business. Boutiques are a little different. Especially cancer centers will have stores focused on the patients. They’ll have mastectomy bras, they’ll have wigs. They’ll have more of a focus on the patient and, there, you are getting more loved ones coming [in]. There, our shirts make a lot of sense. We recently launched a hoodie in collaboration with Oscar de la Renta and so especially for the higher-end cancer centers, something like that will translate pretty well. But the traffic is still pretty low in those types of stores.

Richie: [00:21:14] So the shirt comes along in 2016.

Chat: [00:21:16] Yeah.

Richie: [00:21:16] Talk a bit about pricing and how you think about that and who should be able to afford these and so forth.

Chat: [00:21:22] It’s a really, really important question. I know it’s something we spend a lot of time on because you can never really increase prices. You don’t want to put it too low, but you also—especially for our population, we were very adamant that we did this for our loved ones and we wanted everyone to be able to afford it. What we shot for was always, “What’s the price that you pay for a shirt right now or whatever product that you’re wearing right now and how do we get it to be the same price?” And that also helps from a hospital standpoint because our goal is we’re never going to make something more expensive than what they’re paying already. For everyone [who] reads about hospitals, they’re all losing money, they’re all shutting down, struggling a lot and so adding an extra financial burden is just going to increase the amount of time it takes to get the product into the hospital. It’s been really important for us to always go after what is a realistic price.

Chat: [00:22:17] For example, our polo shirts now are $50 dollars. Thinking about [it], it’s better quality than your traditional polo shirt, but it’s got more functionality and it’s something that a consumer can feel like, “Oh, I can wear this even without needing treatment, etc.” And that was super, super important. In fact, our Oscar de la Renta collaboration—Oscar is amazing. They have the most amazing products ever. Their price range is not the day-to-day, standard, everyday wear for most people. What was incredible about them is they were willing to work with us on the pricing to do something that is affordable for every patient. So that’s our most expensive item. That’s a hoodie and it’s $85 dollars which is still what a normal hoodie these days actually costs around. And so that’s always been super, super important to us.

Richie: [00:23:10] Where is the business end of 2016?

Chat: [00:23:13] 2016, it’s still two of us. We are still fulfilling everything ourselves. We’ve got a few hospitals on board. We’re starting to kind of get a name for ourselves. We’ve built up a good presence on Amazon.

Richie: [00:23:25] Talk about that.

Chat: [00:23:26] Yeah. Amazon had created this program called the Launchpad program focused on helping startups and, to their credit, they’re not necessarily the easiest to work with, but they really went above and beyond. What is great is any time you had an issue, you would just email Jeff@Amazon.com and it got resolved within a couple of hours. I guess they probably don’t want me sharing that with everyone, but it was pretty incredible in terms of just the—

Richie: [00:23:52] Is that really what they told you to do?

Chat: [00:23:53] No, they didn’t tell me to do it.

Richie: [00:23:55] But you just did it.

Chat: [00:23:55] Yeah. When in doubt, just email someone senior and ask for help.

Richie: [00:24:00] Email the person at the top.

Chat: [00:24:01] At one point, our consumer business became really reliant on Amazon which makes sense because, when you think about it, you’re going to Amazon to buy whereas normally, especially with our patient population, you’re going to Google to learn, “What am I getting into? I don’t even know what I’m going to have yet.” And so Amazon is a really amazing business especially for people like us. And then the sponsored ads on Amazon do very well. The ROI on that makes a lot of sense. What’s cool about Launchpad is they would just give you an all-inclusive price. It would be a little bit of a discount, but they would include warehousing, shipping, etc. Unfortunately, they no longer have that deal because I bet they were losing a lot of money on it, but they’re still a really valuable partner for us.

Chat: [00:24:45] And now we’ve taken lessons from Amazon and applied that. Zappos has actually become an incredible partner for us and they’re building up an adaptive site. What’s great about them is they take the same customer service approach that we do and so it’s a great, great fit with us. Their team, from top down, is really adamant about promoting us and helping us build our business from PR to marketing. We have a call with the head literally every Friday, which is just insane to me, and he is so embedded into our business and helping us and just after our mission, which has been incredible.

Richie: [00:25:21] So I’m curious to talk a bit about—obviously, a lot of fashion, apparel, consumer brands tend to be very scared of selling on Amazon and [because of] commoditization and so forth. How do you think about that for you? Because obviously there is a functional piece that is there, but also you have a brand to build and defend and so forth.

Chat: [00:25:37] I get it completely. We have a couple of competitors out there that have seen what we’ve done and want to emulate it and one of them did an attack on us on our reviews. Quite frankly still, our reviews are not great on Amazon and it’s because they—I mean, brilliant tactic, I guess, from a business side. Not necessarily the right ethical approach.

Richie: [00:26:00] Especially in this product category.

Chat: [00:26:01] I would never do this, but they came to us and just had all their friends “buy one,” give terrible reviews and then return them. We noticed it because all of a sudden we went from five stars to, I think, three or two even.

Richie: [00:26:15] That’s so shitty.

Chat: [00:26:16] Yeah, it wasn’t great. We reached out to Amazon and they removed some of them but they said, “Well, technically these ones haven’t been returned so we can’t get rid of it, etc.” But what I found is, as much as the reviews do hurt, for sure, and it hurts me to see anyone having a “negative experience.” [But] more importantly, people recognize, because of the functionality and because of the fact that we are the only EPA-approved antimicrobial treatment, we’re going above and beyond in a lot of areas and people are recognizing that and still buying. And so our business on Amazon continues to grow. It’s still been important. It’s a great way to drive awareness, especially at the beginning. I think ultimately—and we’ve already started to do this—we don’t necessarily sell everything on Amazon. So we’ll have some products that just will never be on Amazon. Our Oscar hoodies are not on Amazon. I don’t see them going on Amazon anytime soon. And then some of our colored PICC line covers aren’t on there and then none of our league stuff is on there. We use it as a way to build up awareness. On all of our packaging we include direct links to our website and things like that to try and get people to come to us.

Chat: [00:27:27] But thinking about it from a consumer standpoint, do I want to buy from a startup or do I want to buy from Amazon? Amazon is a trusted retailer. You know if there’s a problem, they will help you. The startups, a lot of times you don’t know: Are they real, etc.? And especially back then, when our team was pictures of two people. We’ve been always very transparent about who’s on the team, how many, etc. I can totally understand why you’re hesitant to come to us. I think it’s one of those [things where] you need to have a relationship with Amazon. Amazon actually has come to us and asked us if we can private label for them and that we’re not doing because that doesn’t make sense for our brand. But I think that’s a testament to what we’re building and I think everyone always says competition is the greatest form of flattery out there. I think as long as we focus on being innovative and improving and continuing to build out great products, that’s what I care about the most. At the end of the day, if others are going to copy us and help even more patients, that’s great.

Richie: [00:28:24] When did the sports team licenses come along?

Chat: [00:28:27] Major League Baseball was the first one. They started, I believe, in early 2016 and then the NBA we added last season in 2017.

Richie: [00:28:37] Gotcha. Talk about how those came together. Generally, that’s a big thing to pull off for a startup.

Chat: [00:28:42] Yeah. A big component of our company is social mission, giving back. When we started the company, we said, “Hey, we really want to be focused on helping others.” Especially at the beginning, we were like, “We don’t know how many of these will sell but we want this to have a bigger impact than just more PICC lines.” We started with 10% of net sales goes back to non-profit philosophy on every sale. And so when we approached the leagues, they were blown away by that model and said, “Instead of paying us a royalty, can we work with you to do the give back for various foundations that we work with that you all are working with as well?” And I was like, “Yeah, of course. That’s kind of how I want to do it.” So 10% goes back to Stand Up To Cancer and [for] the MBA, it’s the American Cancer Society. Going forward, all of our partnerships are kind of like that. With Oscar de la Renta, our partnership is to the University of Miami because that’s who we worked with to design it, etc.

Chat: [00:29:39] And so how we approached it was, honestly, just asking. I think so many entrepreneurs are so scared to ask. I joke with people, “What do you have to lose by sending another email? Worst case scenario someone ignores you. You’re used to that.” Thankfully, in my life, I’m really used to getting rejected by everyone and anything. I have no shame and I think that was really important. Major League Baseball came about through their CFO at the time. [He] was really excited about what we were building, introduced us to their Head of Licensing and Head of Consumer Products and they were really excited about what we were building and so we built up a great relationship there.

Chat: [00:30:19] The MBA—I actually had worked for the old CFO and we worked on a lot of stuff together in our time at Goldman and so he knew me really well and was like, “We want to help,” and introduced me to his team, his social responsibility team and his licensing team. They, from the get go, have been all about it and said, “As long as you’re not selling a product that directly competes with one of our huge companies, we not only want to help, but we want to get our teams to get involved and help as well.” For example, the Chicago Bulls and L.A. Lakers bought a bunch of product and donated them to their local hospitals. It’s been great to have them along for the ride.

Richie: [00:31:00] So their logo basically goes on.

Chat: [00:31:02] Yeah.

Richie: [00:31:03] Have you thought of ever going down to the player level of jerseys and so forth?

Chat: [00:31:07] We have. Actually a bunch of our investors are NFL players so we definitely have plans in the future to do cool stuff with players.

Richie: [00:31:14] How has the capital piece gone? What have you looked at and set your expectations on the fundraising side?

Chat: [00:31:20] It’s been interesting because we are building a business that’s really, at the end of the day, not necessarily focused on maximizing revenue and profit and so finding investors [who] are really along for the ride and want the mission. We’ve raised a little under $3 million to date, trying to keep it capital efficient, but finding people [who] really are behind what we’re building. For example, at the beginning, we were doing a really tiny friends and family round and we had an amazing valuation from a top tier Silicon Valley VC fund and they said, “We have two things that we want from you before we give you this money. One, we need you to get rid of the “give back” because you’re a tiny startup that has no money. It’s silly for you to be giving 10% away. And, two, we want you to be a wearable tech company from the get go.”

Chat: [00:32:10] To the wearable tech piece: I had spoken to the team at the Cleveland Clinic and they had informed me that the guy on the phone was like, “Look, if you’re a wearable tech company, I’m going to hang up and jump out the window right now. I’m getting pitched this too much. We don’t know what to do with it.” I later learned that he’s on the first floor so it wouldn’t have been that far of a jump, but at the time I was like, “Wow.” We heard that similar feedback from everyone and so I was like I can’t do that because the customer doesn’t want that. My counter was, we do build everything thinking about wearable tech and thinking about where it would go, how it would be implemented once the customer is ready for that but we’re not going to shove it down their throats.

Chat: [00:32:46] And then the give back. I was just like, “Look, at the end of the day, we’re a company that’s focused on helping the community and making an impact and, to me, having a give back is core to our DNA and if that’s going to be a deal breaker for you, we’re the wrong company.” I guess jury’s still out [on] whether they were right or I was right. But, to us, we said, “We’re willing to walk away if we can’t have an impact.” We’ve been really fortunate to get a lot of—I worry less about the name brand. I worry more about, what’s the impact people can have for us? We have a lot of healthcare- and fashion-related funds and people and family offices involved and they’ve been great because they’re extra sounding boards for us.

Richie: [00:33:29] Talk a bit about how you got to the 10% because I think you look out and most companies do a 1% or they’ll do 1% of profit. They’re just very hesitant to actually make the money have a difference.

Chat: [00:33:40] So that, exactly to your question, that is why I did not want it to be just 1%. I felt like most people that do 1% are doing it as a marketing gimmick, saying, “Oh yeah, we give back,” but not really giving back. [I] really spoke to a number of people [about] what’s meaningful, what can make a difference. But also I call us a for-purpose company. We’re really focused on making a difference but, at the end of the day, we are making a profit. So what’s something that’s not going to scare everyone away and what’s also going to allow us to keep the lights on? Ten percent might not be the right number long term. At some point, hopefully we will be able to build our own foundation and do more product-related givebacks and stuff like that, but we just felt like that was the right way.

Chat: [00:34:24] We initially talked a lot to Dave Gilboa at Warby Parker, talked to the Toms team and stuff like that, thinking about their models. Our thing was, especially for a PICC line cover, it is 6 million people and it’s really important to us to help each and every one of the 6 million, but if we do buy one, give one, we’re limiting ourselves to impacting 6 million people. And so it was important to us to think about something broader that could excite others and get them as passionate about what we’re building as we are. And it also allows us to do really cool things. The patient gown that we created was actually a class that we taught at Parsons School of Design focused on redesigning the patient experience and redefining it and that ‘give back’ actually has created a scholarship focused on healthcare and innovation at Parsons. We selfishly were creating the next generation of designers [whom] we can hopefully hire. But unselfishly, we’re creating a whole new track and a whole new pathway at Parsons to allow students to realize you don’t just need to design for the runway. You can really have a profound impact on saving lives. I think that’s been really exciting to have that kind of an impact as a tiny, nine-person startup.

Richie: [00:35:36] Yeah. There’s probably more money in this even than there is on the runway is the irony of it all.

Chat: [00:35:41] Yeah.

Richie: [00:35:41] So working into 2018, again [I’m] curious what you were focused on, the priorities and then how the Oscar de la Renta collaboration came along.

Chat: [00:35:48] 2018, we finally had a team. We were in a warehouse and our real focus was on launching a number of products. I’ll never forget, the Mayo Clinic came on board really early on in 2015 and their feedback was, “You’re the first company we’ve ever worked with that only sells one product. We need you to have another product within the next three months, otherwise we can’t work with you.” And luckily we were launching the shirts two months later so we were like, “Oh, this is actually really good timing because we’re launching these two months later.” But 2018 was: We want to become more of that brand.

Chat: [00:36:23] One of the other things that we had heard from a lot of people is, “Are you guys a cancer company are you a healthwear company?” And we always have said we’re healthwear and we were like, “We need to show people that we really care about all people, not just”—I don’t even want to say patients anymore because our ultimate goal is to bring a smile [to] everyone’s face, not just someone sitting in a hospital.

Chat: [00:36:45] We started it with launching our patient gown in January, which got amazing pickup, was an incredible class. We ended up doing 11 amazing students from Parsons who are literally going to change the world and are already changing the world with their amazing work. Nine hospitals were involved, so [we] had different hospitals come into the classroom, talk about it, had them actually host us at their hospitals and talk about the various issues they have. A lot of hospitals have up to nine patient gowns right now so [we’re] figuring out how we can combine those all into one to make it more efficient for the hospital, but also add dignity for the patient. Learning Just how important the laundry process is to a gown. This is why gowns haven’t changed, is because they need to survive the laundry that will go up [to about] 450 degrees.

Chat: [00:37:33] And then launched mobility gloves in collaboration with Lucy Jones who, actually, separately had been the Parsons Designer of the Year a few years ago and has won pretty much any award you can win. She had won for what’s called the seated collection. So, when you think about it, the clothing that you and I are wearing—well, I always look bad, but look even worse when I’m sitting and not just because I slouch, but because the clothing is designed for me to be standing. So she’s creating clothing for people [who] are sitting and we were just blown away by her work and wanted to collaborate and so created gloves that are designed for a wheelchair or crutches or walkers and that also are designed with the thought of, what if you don’t have strong dexterity in your finger? Can you still get your gloves on? And so we have a patented zipper that opens up that you can actually get the glove on with just one hand and then use your teeth to tighten it up. For people [who] have limited dexterity, thinking about them as well. And then thinking about the regular consumer too. They’re iPhone conductive because everyone wants to use their smartphone now at all times. Really trying to take it to the next level.

Chat: [00:38:41] And then, with Oscar—Oscar had actually passed away from cancer and so it was something super personal to their company. Their CEO was a former investment banker and, I didn’t realize this when I first reached out to him, but he’s the son-in-law of Oscar and so [he] and his wife are running the company and were just so amazing. I’m that jerk that reached out. They replied and I didn’t see it because it was in my spam folder so then they replied again and it’s just been an amazing collaboration where they are involved in every single meeting and every single thing. They personally are reaching out to people for us. It’s really cool to work with amazing designers and people that have built such an incredible business and just being able to learn from them. It’s cool because they still reply to every email. They reach out to me saying, “Hey, we’re thinking of this. What do you think?” So it’s very, very collaborative and I think that was really powerful because then, when we go to others and say, “This is how we work,” we can say [it] with a straight face because this is how we have worked.

Chat: [00:39:44] We’ve just launched preemie outfit in collaboration with March of Dimes and a corporate sponsor where we’ve created a onesie for babies in the NICU. There’s over 15 million babies [who] are born prematurely every year and right now you’re given a blanket. No parent ever plans for a premature baby and when you do, you don’t get to treat them like you would another baby. Being able to create an outfit designed specifically for them that has all the required accessibility so the baby can still wear it in the NICU was something that we were really excited about and just an incredible opportunity to do. So that is launching with 12-plus hospitals, which is super exciting.

Chat: [00:40:26] And then we are currently working on a post-reconstructive surgery bra with a hospital system in the mid-Atlantic, designing a better bra for mastectomies and any sort of plastic surgery because right now the plastic surgeon had come to us saying, “Hey, today the bras that we use actually destroy the nipples that I’m reconstructing. Can you make something that won’t have that issue?” And so we worked with him to create that and that’s gotten great feedback through the testing and we’re now just waiting for it to come.

Richie: [00:40:57] I was going to ask about the word-of-mouth among this. How did you see that early on and how has that been a propelling force over the course of the business?

Chat: [00:41:06] It’s one of those things that you don’t really realize at the beginning and honestly we haven’t done a great job with it because a lot of the people are using our products are in life-altering situations. We have always been hesitant to ask people.

Richie: [00:41:22] It’s kind of a paradox.

Chat: [00:41:24] And so people now have more adamantly been reaching out to us saying, “We love this. How can we help?” And so we’re working on figuring out what’s the right way to get more people involved. Especially with the proliferation of Instagram, that’s definitely helped with a lot of people just posting about us and starting to tag us. That makes us realize we could probably do this more and so starting to feature more testimonials feature people, etc. We also have a lot of nurses [who] call themselves our unofficial ambassadors and are always promoting us and so we’re starting to do more there in terms of interacting with them and creating this community. I always used to say, and I still say, we ultimately want to have a strong community where you’re not just coming to us to buy, but rather you’re coming to get support. When we started the company, we didn’t know what our loved ones were going through. We hadn’t gone through it ourselves. I know it’s painful. I know it’s scary. I’ve seen it firsthand but I’ve never experienced it myself. Wanting to create a platform where people can come to and get feedback and support from others that have been in their shoes because I can only do so much. People would be like, “Yeah, but you’ve never actually gone through it.” Being able to provide others that have gone through it and have them say, “Look, it actually is going to get worse for the next couple of weeks, but then I promise that will get better. It’ll look up and you just got to hang in there and this is how I coped, etc.”

Chat: [00:42:53] And so that’s kind of what our focus is over the next couple of years is starting to build that community aspect more. I think that’s where it’s a really exciting opportunity because no one’s really done that super well. There’s a lot of foundations that do amazing work and try and create message boards. The Reddit message boards are great but, at the end of the day, the platforms aren’t that great behind it. Leveraging better technology to create better platforms is kind of the way to go.

Richie: [00:43:22] So that’ll manifest as a technical solution.

Chat: [00:43:25] Yeah, exactly.

Richie: [00:43:26] Gotcha. So I guess it kind of brings up the question of—you said before the goal is not to just maximize revenue. Maybe the goal would then be to maximize impact and seemingly there’s a ton of runway. How do you think about size and scale and then also focus within that triangle?

Chat: [00:43:43] My co-founder and I always like to joke that I’m the vision guy, she’s the doer or executioner. Some founder said that and we both looked at each other and immediately said, “Yep, great partnership right here.” Our ultimate goal is to be the provider for every situation. I grew up in Baltimore, got to see Under Armour take off. I think that’s what we aspire to do in healthcare. Today we have a lot of products out there. This is only the start. I want it to get to it so that every time you go in the hospital, you are given a Care+Wear branded product. But also any time you—like I play tennis. Tennis elbow, tendonitis, arthritis, things like that. Every time you’re going through it, you will get our products and our solutions and over time, they’ll be in the designs you want and the colors you want and being able to just make that kind of an impact. When we think about what’s the end state, a), there’s no end state and no end goal, but it’s building this movement. Especially with technology because ten, 20 years ago, if you were diagnosed with cancer that was probably it. And now, because of technology, you have three-, four-, five-times cancer survivors who are thriving. Not just cancer, but diabetes, so many conditions. Being able to be a part of that and help them feel like themselves is just such an incredible opportunity and need. I think it’s only going to get better and better as medicine improves and as others, much smarter than me, are solving for, how do we eliminate this disease or make sure that we can keep people living longer? I think the need for this kind of thing is going to only grow.

Richie: [00:45:22] What’s been the cheapest and most expensive lesson you’ve learned building the business?

Chat: [00:45:26] Cheapest lesson is probably ask everyone for favors. For our first two years, we got a lot of stuff for free. We didn’t pay for office space at WeWork. We still have all these credits for servers that we’ll never use probably, but it’s just nice getting them. I think the most expensive is on the hiring front. Just thinking about how you hire and making sure you’re hiring the right people for the right roles. It’s very, very difficult. I always believe the best in what everyone tells me. So someone will tell me, “Oh yeah, I’m really good at X, Y and Z.” I’ll be like, “Great. They clearly are.” Testing people a little more [is important]. So now, as part of our hiring process, we make people do a homework assignment, which basically is what they’re going to be doing [on the job]. I give them a week, so if you come back to me with just two bullet points, I know you’re probably not the right person. If you come back to me with like 40,000 pages, you’re also probably not the right person. And so it’s finding that happy medium and finding people [who] I think are really committed to what we’re doing, etc.

Richie: [00:46:28] What do you think is the most misunderstood thing about the company that you would want to change?

Chat: [00:46:32] I think we’re still kind of looped in as a cancer company and I think that now that we have patient gowns, I think investors finally realize like, “Oh wow, they’re doing all of healthcare.” But I think from a sales standpoint, a lot of people are immediately drawn by our PICC line covers because that’s what we’re the most well-known for. And so it’s just letting people know that we’re more of a movement rather than just one type of product.

Richie: [00:46:54] Is it important for you that the company stays independent and isn’t bought by like a single hospital or something? Because it would seemingly preclude the breadth of distribution depending on what the exit would be, no?

Chat: [00:47:06] So I get asked about that all the time in terms of, “What’s your exit strategy? When are you selling, etc?” We’ve had a few people [who have wanted] to buy us. We will do whatever is best for patients and making an impact on a grander scale. As a former Goldman banker, I have a massive ego, [so] clearly I would love to be able to take the company public and build up a great business. If someone came along and was an amazing opportunity for us to really change the level and quantity of our impact, we would have to consider it. But we never started the company wanting to be billionaires and so that’s never been the driving force for us.

Richie: [00:47:44] And then, as you look forward, one, three years what are you most excited about and what’s on the horizon?

Chat: [00:47:49] I’m really excited that we have a team now, so I get to do the cool stuff like this while they’re busy executing. No, I think it’s exciting to be able to, from the ground floor, build it up and start to celebrate the successes that they have and hire really smart people [who] are way better at what they’re doing than what Susan and I were and to be able to support them and help motivate them. I think what I’m really excited about [are] some of our more product launches, some of our really grand-scale enterprise side deals with hospitals that are starting to take off and as we build that—what that’s going to mean from the consumer side and the end consumer, not just in the hospitals, but also for our ecommerce business. I think it’s also just solving more and more problems. We’re starting to get a lot more hospitals [reaching] out to us saying, “Hey, we want to solve this problem,” and patients also saying, “Hey, we want to solve this problem.” We get a lot of brands now saying, “Hey, we’d love to co-develop a product with you.” It’s cool to no longer just always be the guy [who] has to randomly cold-email people.

Richie: [00:48:53] Begging for it.

Chat: [00:48:53] Yeah, exactly. But now get to be a little more choosy and selective about what makes sense for the brand and who could be a valuable partner.

Richie: [00:49:02] Awesome. Thanks so much for talking.

Chat: [00:49:03] Yeah. Thanks for having me.

Richie: [00:49:08] 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 a 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 Billy Price of BILLY Footwear and Ming Zhao of Proven Beauty. Thanks for listening and talk to you soon.