#104. M.Gemi connects Italian craftsmanship with direct-to-consumer footwear. We talk with co-founder Cheryl Kaplan about M.Gemi’s drop model and emphasis on customer feedback in building an accessible luxury shoe brand. The Loose Threads Podcast features in-depth discussions with leaders across the rapidly changing consumer economy.

Check out the full transcript below.

Cheryl: [00:00:01] It is still a challenge telling the story of M.Gemi. If you just see the price and a picture of the shoe, it may look like a $250 shoe. What we have to get across as you’re getting an $800 shoe for $250.

Richie: [00:00:19] That’s Cheryl Kaplan, co-founder of M.Gemi, a direct-to-consumer brands selling handcrafted Italian footwear at sub-luxury prices. Cheryl and her cofounder saw an opportunity to bring footwear to market at a faster speed and lower price, thanks to their time-tested relationships with factories in Italy and their understanding of the modern consumer landscape. I’m Richie Siegel, the founder of Loose Threads, which analyzes and advises next-generation consumer companies, and FaceLift by Loose Threads, which provides retail strategy and infrastructure for leading brands and retailers. For our latest analysis and insights, check out our free weekly newsletter at LooseThreads.com.

Richie: [00:00:56] I started the Loose Threads podcast to spark engaging discussions with leaders across the consumer economy. That’s why I was excited to talk with Cheryl about how they are bringing a Supreme-like drop model to a larger audience, and using all the customer feedback it generates to rapidly evolve their offering. Here’s how it all began.

Cheryl: [00:01:16] The first moment that we really thought about this direct-to-consumer model and how to create M.Gemi was when two of my co-founders and I were walking on the street and talking about Maria—the namesake of the brand—and how she had this passion and love for Italy. She was born in Sicily and goes back often, and would come back from these trips with the most amazing product. And we would look at her shoes and say, that’s what we need. Something unique and different here. Not the same that everyone has, but it looks handcrafted. The quality is obviously amazing. Made in Italy but not the same as everyone else. And also not a thousand dollars for a pair of sandals. And we realized then that there was potentially this opportunity to bring the old world of Italian craftsmanship to the U.S. in a holy modern way. And so, we set out from there to look into how realistic this idea was.

Cheryl: [00:02:18] We had an unfair advantage, in that we had relationships already in Italy, and were able to build upon that supply chain. And so we went, we visited thousands of factories to find the ones that we wanted to work with, but ultimately—

Richie: [00:02:33] Literally thousands?

Cheryl: [00:02:34] Well, we didn’t visit thousands. We looked into—there are thousands.

Richie: [00:02:37] Okay. Yeah, yeah, yeah.

Cheryl: [00:02:38] So we basically graded the different levels and then went and visited the ones that we thought would work and narrowed it down from there. We visited specialists—so, because we were building a lifestyle brand and wanted to be everything in her closet, we wanted to find the best ballet flat workshop and the best dress heel workshop. And so we went and toured the different areas of Italy to find those spots. And those family-owned workshops were thrilled because they were always looking for a way to increase their work within the U.S. and bring their amazing handcrafted work to the U.S.

Cheryl: [00:03:18] And what had happened at that point—you know, this was in 2015—a lot of the bigger brands had left Italy. And so, they were left with either the very, very high-end Italian luxury premiere brands that would do seasonal drops, or quiet time in their workshops. And so we saw that as an opportunity to say, “How do we do this differently?” And that’s where our Monday drop came from. So instead of launching new shoes at the beginning of a season, we’re launching them throughout. And for the workshops, that was a big opportunity for them to be able to maintain their business, have their work be steady. And so, we started to come up with this idea. And the more we talked about it, the more excited we got. And we realized that this wasn’t just about footwear, this was about modernizing an industry, and footwear was just the beginning.

Richie: [00:04:08] So I guess, talk about who the “we” is a little bit at this point. You’d worked with them before.

Cheryl: [00:04:13] Mhmm.

Richie: [00:04:13] And I’m curious, was it obvious that they were just going to be a part of this with you, or did it take some convincing to get kind of everyone to the table?

Cheryl: [00:04:21] So my co-founders—Ben Fischman and Maria Gangemi—and I had worked together before at Rue La La, and we had all left at various times, and were thinking about what we wanted to do next. And we had some ideas; This was the one that felt like the richest, and the one that had a way for us to take advantage of, like I said, our unfair advantage of our supply chain relationships and get it off the ground. So, again, Maria being Italian and having the footwear and relationships in Italy, Ben and I coming from the entrepreneurial direct-to-consumer, brand building and customer experience side was how we all were coming together.

Richie: [00: 05:03] This was part of a larger incubator, yes? That Ben has? Am I correct in that?

Cheryl: [00:05:07] Yeah. So M.Gemi is part of LAUNCH.

Richie: [00:05:09] Right.

Cheryl: [00:05:11] LAUNCH has a few brands under their umbrella. Uh, Rockets of Awesome is one of them. Follain, Trade Coffee, and M.Gemi is the first.

Richie: [00:05:19] Can you just briefly, I guess, talk about what the goal of that was? Cause they’re not that many out there that have actually been that successful. It seems that y’all have gotten a lot farther than most.

Cheryl: [00:05:28] So with LAUNCH, the idea is that Ben and his co-founder Ted McNamara work with founders’—or within ourselves—new business ideas and bring them to life. And it’s not just about helping to get the business financed, but it’s truly about operating that business. So hiring the right team, leveraging cross-functional best practices throughout. And so, all customer-facing, but that’s really it. Otherwise each brand is managed and run individually. And they have their own culture and their own brand story, it’s just that there is this cohesive backbone, if you will, that is Ben and Ted.

Richie: [00:06:08] So the idea becomes clear. It sounds like the drop piece became clear pretty early on. How do you start spending your time and what are the priorities leading up to the launch of the company?

Cheryl: [00:06:17] So, as a small founding team, we split up the responsibilities. Obviously we each came in with different strengths. And so, where Maria was very focused on the supply chain and our workshop relationships, I was much more focused on setting up the brand strategy, the creative strategy, working on the site experience. We started all of that, basically, probably nine to 12 months before launch.

Richie: [00:06:45] On the brand and the creative strategy piece, where does one begin with that? I’m curious, I guess, what the primal piece of that was. And then over those nine to 12 months, how it was evolved further to the point where you said, “Okay, we actually, this is worth launching with.”

Cheryl: [00:06:58] So in my background, one of the things I learned was—which sometimes seems obvious, but—how critical it is to build a brand and not just build a business. Two businesses ago we launched a company called Smart Bargains, and ultimately evolved that into what became Rue La La. Very different brands. They both, at a business level, sold branded product off-price, but when we asked the customer from Smart Bargains where they bought it from, months later, they really couldn’t remember. They knew what they bought, it could have been from Overstock or Smart Bargains—competitors. Here at Rue La La, we knew we needed to build an emotionally-connected brand. So, when we built the Rue La La brand, that was the learning.

Richie: [00:07:41] Gotcha.

Cheryl: [00:07:41] So I took that to M.Gemi knowing that this had to be an authentically felt brand at the heart of everything we did. Hence the name “M.Gemi,” which is a shortening of Maria’s name.

Cheryl: [00:07:54] From the beginning we had a small team, so we outsourced a team to work with us on the creative. But we were all heavily involved in helping to establish that brand because it has to be your ethos. And so, the team that worked on that came to Italy with us, saw the workshops—because we needed them to feel the emotion of these mom and pop shops that were so proud of the work that they design and build and craft every day. And so, you know, even though they had heard us tell the story, when they got there with us and felt it was when it really came to life for them. And they saw within these workshops some of these premium brands being made in the same exact factories, and it really hit them that what M.Gemi was doing was so unique. That it wasn’t just like those brands, but we are in those same factories with those brands at the same quality, the same handcrafted nature, but doing it at far less of a price for the consumer.

Cheryl: [00:08:54] We did everything luxury, except the price. That’s how we were thinking about it. And from a brand perspective that meant everything from how we named the brand to the packaging. End to end, we wanted to make sure you felt that all throughout as we were building the brand.

Richie: [00:09:10] So it seemed, I guess, obvious from a distribution perspective, this would be direct-to-consumer, at least at launch. So I’m just trying to think of the time… Direct-to-consumer was well underway at this point. You know, the Warbies and the Bonobos and the Everlanes and the so-forth were kind of out there. I guess, how did the landscape play into, at that time, how you were thinking of architecting this? Either from a, we want to go the other way or we want to kind of fit within this group.

Cheryl: [00:09:34] We wanted to make sure that we never lost the touchpoint with the customer. That was the critical piece. Knowing that we had such a relationship with our workshops and the ability to learn from the customers’ behavior and react to it in the same season was critical. So the direct-to-consumer model fit that perfectly. Plus the fact we have so many SKUs and inventory, and it just makes it a much better model for us to be direct.

Cheryl: [00:10:04] So, for example, where other brands launch at the beginning of a season, the learnings that they get they may incorporate for the next time they’re designing. For us, what we’re learning this Monday, we can impact the business in a month, in 30 days. And that’s sort of very unique and different. So we wanted to take what was great about direct-to-consumer, which was that connection, but then take it a step further because we had the supply chain to support that, which we believe is a real unique identifier of the brand—

Richie: [00:10:34] Yeah.

Cheryl: [00:10:34]—and the business.

Richie: [00:10:35] It sounds like this idea of the weekly or the Monday drop came about very early on in the process. Did you realize what you’re getting into, in terms of—

Cheryl: [00:10:43] You mean from a work perspective?

Richie: [00:10:44] From a work, from an inventory, from a SKU, from a drop. I mean, it’s literally a step further and is quite accelerating. Even Supreme, which is very well known for their Thursday drops, they close down for three to six months out of the year and take a break.

Cheryl: [00:10:55] Yeah. Yeah.

Richie: [00:10:56] So going 52, or however many you get to, is significant.

Cheryl: [00:11:00] Yeah.

Richie: [00:11:00] I guess, even in just that early period, and I’m curious, what were you thinking about what that would be like to create?

Cheryl: [00:11:06] Okay. So the Monday drop was something that we came up with because we wanted to create excitement. We don’t expect our clients to come every Monday and buy a pair of shoes. It was much more about the theater that we provide and the content around the Monday drop that gave him or her something to come back and look at, and read about, and learn about and, again, be connected with the brand. But obviously 52 drops a year is a lot. The way that the inventory works is they come and they go. So, we always have a curated assortment on the site, but the drops are meant to create that excitement. So, sometimes drop sell out in a week, but we plan them to last no longer than 12 weeks.

Richie: [00:11:46] It sounds like—again, with the supply chain experience—you got a sense of what you were proposing and getting into. Did it launch with both men’s and women’s?

Cheryl: [00:11:54] No. So when M.Gemi launched in 2015, we launched with women’s only. A year later on our first anniversary we launched men’s.

Richie: [00:12:02] Gotcha. Talk a bit through the thinking of let’s start with women. Did you know at the time you were gonna go into men’s? Or, I’m curious also, working up to the launch what that assortment evolution would be, or was going to be. Or was it just, “We’re going to start this Monday, and off to the races?”

Cheryl: [00:12:17] So we started with women’s knowing we would always go into men’s as well. We started with women’s because we knew it would take off in the sense that women love shoes. It’s an addiction, for sure, in a healthy way. And word-of-mouth is great. So, what we found is men also love shoes, and it’s a very different type of customer and the way that they shop. So that’s why we started with women’s, but we always knew, once we got women’s off the ground, that men’s would be a likely fast follow.

Richie: [00:12:50] I guess working up to the launch—again, it sounds like given everyone’s experience that there was a lot going right and a lot of competence in the room—what were you worried about, or unsure of, leading up to that point about the model as it was being created in the brand and so forth?

Cheryl: [00:13:03] I think, early on, finding the right fit was something that was really critical.

Richie: [00:13:10] As in like, shoe fit?

Cheryl: [00:13:10] Shoe fit.

Richie: [00:13:10] Okay.

Cheryl: [00:13:13] So, you know, if I think about the business operations, fit is something that’s always at the core of what we’re working to perfect. And so, learning that and—you know, where part of the team is footwear experts, like Maria—I didn’t come from a footwear background. So I very quickly learned a lot about how shoes are made, people’s feet, all the nuances, and it’s complicated, and there’s a reason why it’s a hard business. But it’s something that we knew, if we got right, women and men would love, and want to come back again and again and again. And so, that perfection of fit is something that will always be at the heart of what keeps us up at night, because we want to get it as perfect as we can. I would say on the people-side, finding the right team to execute with us was critical, early on. I think that’s always the case, but in small entrepreneurial businesses, every hire is critical. They’re helping you establish culture, they’re helping you build brands and marketing. So, for us, it was so important to find the right first team, and then to quickly make changes if we made a mistake, which happens as well.

Richie: [00:14:24] It’s interesting. I was looking at Everlane shoes last weekend and they almost advertise that their shoes run small, and so they recommend sizing a half-size up. It’s such an interesting thing, because there is no standard.

Cheryl: [00:14:35] Right.

Richie: [00:14:36] There is no sizing standard.

Cheryl: [00:14:37] Right.

Richie: [00:14:37] It’s kind of a free-for-all with, I guess, a lot of education.

Cheryl: [00:14:41] Right, exactly. I think education is key. So helping people understand the M.Gemi fit is important. Obviously, buying footwear online, that’s a hurdle, right? So we did things like free shipping, free returns. We built an exchange tool to allow people to quickly go on an exchange if, by chance, they got the wrong size. We put our label in the box to allow them to return it easily. We have our fit shops that people can go into and try things on. And then we also have a team of experts in our office that try on every shoe, that are the ones that are answering the phones, the emails, the chats, the texts, and we put our phone number everywhere on purpose. We want people to reach out and talk to us, because educating them and learning about their foot, you can make very good recommendations based on that.

Cheryl: [00:15:31] Building tools around understanding fit, those types of things are really important to the experience because, like you said, there are no standards. And even amongst some brands, depending on what website you look at, if they’re not direct-to-consumer, they advertise their size charts differently. So we’re really trying to not be that and that is unique. So we want it to be that, once you find your M.Gemi size, that’s your size. It’s not always perfect, which is, to your point why sometimes a brand like Everlane might have to say, or we say, fits a half-size too small or too big, or says if you have a wide foot, there’s sometimes fit recommendations because it’s not universal.

Richie: [00:16:10] So, I guess, leading up to the launch, was the date self-imposed of, “Hey, we’re just going to start at this point and we have to go?” Was there any goal for it, in terms of, is this going to be a really loud launch, is it gonna be more soft? And then, did you have like, a number in mind of what you expected to do on that first day or that first week, from a revenue perspective?

Cheryl: [00:16:27] So, we set a launch date because you have to. I think we ended up pushing it out a week or two, but very natural. But I think if you don’t set a date, you could iterate forever. So, better to get it out there and start learning. That was the best part, was you open the door and suddenly you’re getting real data. We did a soft launch, a private launch to start to build our customer file through friends and family, because we really were starting from scratch, and did some work with influencers early on, and then opened broadly at the end of March.

Richie: [00:17:01] This is March, 2015.

Cheryl: [00:17:02] Mhmm.

Richie: [00:17:02] So it started just with a drop, basically, on a Monday.

Cheryl: [00:17:05] Yes.

Richie: [00:17:05] What was like— the initial reaction, I guess—to this model from, I guess both, maybe the press, but also from customers as well?

Cheryl: [00:17:12] Initially it was funny. People said to us, “I can’t believe you’re going into footwear. It’s such a crowded industry.” And then, as we started to explain where this white space was that we saw—which was this beautiful handcrafted quality product at this much more attainable price point—people started to get it. And then, when we went live, they really got it. The response was really exciting. It was really fun to see how people were engaging with the brand.

Cheryl: [00:17:40] But I will say the most memorable moment for me was the first time I was in a cab in New York and I saw a woman walking on the street in our shoes. Then it became real. You know, when you start to see it in the wild and unprovoked.

Richie: [00:17:53] Okay. So we’re in March of 2015 now. The company is live. How do you, I guess, set the priorities for the rest of the year of, you know, this is where we want to be at the end? And then, what are the focuses, I guess, for you?

Cheryl: [00:18:03] So, as I was saying earlier, we set a launch date, and we were close. But of course, that means you didn’t get everything done that you wanted to get done. And so, we then prioritized the work that wasn’t critical for launch but we knew was important to us to get going and get live. And so, the priorities for the rest of the year were really around fit and design and site experience, really. And then, beyond that was starting to kick off men’s once that all was happening. So, in order to launch men’s in March of 2016 we obviously started working on that in the fall of 2015.

Richie: [00:18:41] How did the women’s launch inform what you’d do with the men’s launch? In terms of, was it the same playbook, was it totally different, how did you think through that?

Cheryl: [00:18:49] So we did not launch a men’s shoe every Monday. We still launched newness on Mondays, but not every Monday. Just thinking about how men were shopping and [how] their behavior so different than women, where it’s so fashion-oriented, and something new every week was the excitement. We are doing more men’s drops now, because over the course of the last two and a half years we have seen that they do like the newness, and we’re finding that updates to materials and colors has really been something that, that resonates with the men that shop our site. But the other change that we made was when we first launched M.Gemi, I would say we were much more women’s dress-focused, and casual and dressy sort of swapped. And so, when we launched men’s that was a learning that we took into consideration.

Richie: [00:19:37] How did that, I guess, become apparent? That it was moving away from a dressier customer?

Cheryl: [00:19:42] Two things. One, sales, and two, the trend. I mean, you know, you see it in Italy and you see it here: most people are in sneakers or some form of casual shoes most of their day. And so, again, that’s the beauty of our model, that we weren’t so bought-out that we had to wait, so we could get right into that and make those changes. And so for M.Gemi women’s, where we came out more dress, by the fall, we were able to adjust that.

Richie: [00:20:11] From the perspective of selling online and wanting to offer luxury-level products at a more affordable price, it always presents an interesting, I guess, communications challenge, from an image perspective and a description perspective, of how do we actually convince—

Cheryl: [00:20:26] Yes.

Richie: [00:20:26]—people of that. Obviously the lower price helps, but it’s still there. I guess, how early on did you attempt to or think about tackling that problem? And then, you know, I guess, throughout the first year of the product being out in the public, did that evolve as well, of how do we convince people of the significance?

Cheryl: [00:20:41] It is still a challenge telling the story of M.Gemi. If you just see the price and a picture of the shoe, it may look like a $250 shoe. What we have to get across is you’re getting an $800 shoe for $250. And that has to be done through content, through amazing photography, through storytelling, through our storytellers, in our fit shops. Through every communication that we do, it needs to be clear that there’s so much more. We don’t shout price. We know that when she gets the shoes at home, she gets it. So how do we bring some of that to life?

Cheryl: [00:21:19] So, for example, putting customer reviews on our site—which we didn’t have initially and that we have now—really helps our conversion because it’s so believable. The content that people give about each of the shoes really helps someone understand it’s not too good to be true. Because I think sometimes when you hear the story and then you see the price, you say, “What am I missing? How could they do that?” But then when they see it or touch it or someone tells them, they try it and they believe in it.

Richie: [00:21:48] So, I guess, end of 2015, where is the business heading out of the holiday quarter? Of “here’s what’s working, here’s, going into 2016 now, that we need to really, really focus and double down on”?

Cheryl: [00:21:58] Mhmm. It all sort of blends together. But we were starting to think about how to be in the physical space. And knowing that footwear is so SKU-intensive, we were cautious about how to open in the physical world and not have so much inventory in every location. So, for example, we opened a fit shop in Soho, and we tried, and we wanted to see how it would work, the fit shop mentality, where we have one of everything for someone to try on and then we ship it to them. But we had very fast shipping. So if you bought it today, you’d have it in one to three business days. And we said, let’s see how it works. And what we found was people saw it as a luxury, actually, that they didn’t have to lug around their shopping bags with shoe boxes in them, but that they can get them home in the next few days and still have that for the weekend. So that became part of our fit shop model that, you know, of course if someone comes in and they are desperate and they have an event that night and they need that shoe, we will make sure they have it and replenish the store. But the norm is that we ship it to them and, so far, that’s been a good thing.

Richie: [00:23:07] At that point, was there skepticism that any sort of offline retail would work? Did it take convincing internally that we should deviate from being online first?

Cheryl: [00:23:15] Oh.

Richie: [00:23:16] Or digitally-native, I guess.

Cheryl: [00:23:16] We’ll always be digitally-native, but having these fit shops in the right locations has worked very well for us. What we love about that is it’s where people work, it’s where they live, it’s where they travel and visit. And that, for us, is the beauty of the right location. When we were in Soho we had clients that would come in that knew us and were loyal to us, and others that were here for a conference and were so excited to get to try their favorite brand in person. So, the direct-to-consumer model is still at the core of who we are, but we know that having a touchpoint, and a way to show the story, and have people come in and try on and experience the brand is a critical component to that. But we do it in many different ways. We also have a gelato truck that we’ve taken to locations for a weekend. So we like to be where our customers are, and that shows up in all different shapes and sizes.

Richie: [00:24:10] What’s been the biggest surprise of going offline, at that point, I guess?

Cheryl: [00:24:15] The biggest surprise for me when we went into the fit shop model was how long clients stayed in the shop. I always thought of shopping, you know, you go in, you get what you wanted and you leave. And what would happen is they started to get creative. And so, they’d try on maybe shoes that they wouldn’t necessarily have bought and had shipped home, but because they could try on there risk-free, they were getting a little bit more expressive in the things that they would try. And so they’d end up coming with a friend and having, you know, an espresso and sitting and talking with our shop team. And that, to me, was the moment, you know. It’s like, this is an experiential thing. This isn’t a transactional thing.

Richie: [00:24:56] Were they spending more time than people would, like, on the website—

Cheryl: [00:24:58] Yes.

Richie: [00:24:59] —dwelling in the store?

Cheryl: [00:24:59] So, they were spending, you know, like 20, 25 minutes sitting and talking, on average. You know, we also had the opportunity for people to make appointments and come in with friends, do little events. But regardless, you know, most people would come in and enjoy it. We try to make our experience not feel like a store, that it’s much more about coming in and sitting down and being relaxed. The team that we hire is obviously so critical. They’re a brand extension of who we are. So they’re telling that story that we were talking about, and how they tell it and how authentic it feels, being at the heart of our brand, is really an important component to that.

Richie: [00:25:35] So at this point, I guess, throughout 2016, had you started doing other collaborations with the product? Or was it mostly focused on your own, kind of, internal designs?

Cheryl: [00:25:44] Yeah, we’ve done a couple of collaborations, actually. We did one with Goop, and then did one with Marianna Hewitt. And we actually did a collaboration with—

Richie: [00:25:54] Draper James. Yeah.

Cheryl: [00:25:54] —Draper James and Reese. Yeah.

Richie: [00:25:56] So I guess, in terms of the collaboration, it would seem a lot of the speed of the model requires you all to do all the design work, and to own that and kind of work on that internally. When the idea of a collaboration came about—I don’t know if they came to you or vice versa—how does one start to think about that, and how did it go, I guess?

Cheryl: [00:26:14]  So, they’ve all been different. With Gwyneth at Goop, she actually inspired the design of the shoes, and so we work together collaboratively on the design side. Our designer sat with her, we sketched, we heard what she liked and worked with that. With Marianna Hewitt, it was all about color. She loved M.Gemi prior to us working with her. So, really going after styles and skin tones. She’s, you know, a beauty influencer, and so she thinks a lot about different skin tones, and so we took that to footwear. And then, most recently with Draper James, she took styles that have been bestsellers for us, and we worked in new materials and color blocking, and making them sort of a cross-section of her southern charm with our Italian design.

Richie: [00:27:02] Do you see the cadence of those increasing? Or are they more kind of things you sprinkle in every so often?

Cheryl: [00:27:08] I mean, I think that as long as they’re authentic, we love doing them because, obviously, if they have a like-minded customer, that’s good for us and good for them. But what we wouldn’t do was something that didn’t feel at the heart of each of our brands just for the sake of a collaboration.

Richie: [00:27:24] In terms of advertising, growth, etc., you launch a company. I’m sure press comes, word-of-mouth starts to go, you’re now a year or two in. What is the marketing engine start to look like? Where are you spending time? What’s working, what isn’t, and how are you, I guess, thinking about how do we keep this all going?

Cheryl: [00:27:41] So through some micro influencers and then some collaborations, we then moved into more of the social media, Facebook especially, which has now evolved a little bit more into Instagram. Obviously the beauty and the content is so great with Instagram for us that they’re a critical partner of how we showcase our brands. And that’s through product, but also through Italy. We know that people love to be taken back. So either they’ve been there and it just pulls at a heart string, or they want to be there and so they love seeing the imagery. But the combination of showing our product, showing women and men in the product, and then in the setting, is really important to us.

Cheryl: [00:28:23] And so, those have been some of the channels, but also working to diversify those channels. And how to get word-of-mouth, you know, we have a very loyal customer. She repeats on average four times a year. That word of mouth is obviously something that you always want to enable.

Richie: [00:28:41] What does holiday look like for you all? You kind of predicated it on a somewhat anti-seasonal, weekly drop model. Do you still have a holiday, like a brand has a holiday, or what does that look like?

Cheryl: [00:28:52] Retail still has seasonality for sure. So even though we drop new shoes every Monday, the seasonality still exists of how people buy, when the biggest months are. For us, holiday is not as big as the months leading up to holiday, because it’s much more about holiday dressing. Shoes are not a traditional gift, though we have put some programs in place where we allow her to drop a hint. Programs like that, that try to get her to tell her significant other, her mother, her friends, what she wants to have them buy it, but obviously shoes are not the most typical holiday gift. So, for us, we see a big lead up into holiday. We launch our holiday center early, we show how to wear it and start early and wear it throughout the season. So it’s much more about for yourself.

Richie: [00:29:43] It seems like GiftNow and some of those other tools would be helpful as well.

Cheryl: [00:29:47] Mhmm. Yeah. Yeah.

Richie: [00:29:48] Of, “Please don’t get me the size but just—”

Cheryl: [00:29:50] Correct. Correct.

Richie: [00:29:50] Yeah. “Give me the money.”

Cheryl: [00:29:50] Yeah. And also gift cards.

Richie: [00:29:52] Yes.

Cheryl: [00:29:52] So we’ve done things throughout the years like a year of shoes, where you can buy someone, basically, a shoe a month. And then we’ve done other things where if you buy a gift card, you get a shoe box full of candies and a calendar and pencils and—so making it like, something to give, other than just giving a gift card.

Richie: [00:30:12] Mhmm. Two years in, I guess, what is a priority going into that year? I assume growth is always a priority, but in terms of, what are the few focus areas for that year?

Cheryl: [00:30:21] Mhmm. The last probably year and a half, we’ve been focused on figuring out how to use our data in a way that takes advantage of our supply chain. So we have a data science team that built a model that helps us predict how many of a certain style we should make, based on 20 to 40 attributes per shoe. That helps us, because obviously we’re changing our shoes all the time, so there’s not this core that you have history on, so it looks at what was the heel, what was the pattern, what construction was it made on; a whole host of attributes. And then gives us a sense of, okay, here’s how many you should make.

Cheryl: [00:31:00] The beauty of that is if it’s wrong, or if it outperforms, we can then get right back into it within 30 days. But what it helps us do is take a lot less risk up front. We pair that learning with our merchandise planning tools and together come up with the quantities by size, by color, etc. But that data science tool has been a focus for us, because we are unique in the sense that we can really affect today based on what it tells us. And then we also—on the flip side, by Monday afternoon—so we’d launch at ten o’clock on a Monday. By Monday afternoon, we can then run the numbers to see, okay, based on the first two hours of selling, do we have enough, do we have too much? What should we do? Should we start looking into making more? Should we add new colors? Etc.

Richie: [00:31:44] Do you use that in the design process as well? Or is it more, the creative team has the leeway to say, “We’re gonna make this shoe,” and then it’s controlling that with those tools?

Cheryl: [00:31:55] Mhmm. So, right now, the merchandising and planning teams obviously use a lot of data to come up with what we should make. Within those parameters, obviously, our designer has to be thinking about trends and what’s happening in the market and what our aesthetic is. But ultimately, all of those things come together to make that recommendation.

Richie: [00:32:15] So on a limited weekly-draw model, how do you think about replenishment, in the sense of not, I guess, defeating the purpose of that, but also not annoying customers to the point where they just are always fed up that they missed something, or so forth?

Cheryl: [00:32:29] Yeah, so when we launched M.Gemi, no style was going to stay on the site for more than 12 weeks. And over time what we found was our client voted, and they had some favorites, and they wanted them again and again. And they, they were just essentials that needed to be in her closet. And yes, we reinvent them in new materials and colors, but those became core. There’s a limited number of core, I would say, styles that are essentials for her and for him. And then the drops are constant. But that is an evolution that came for that reason, because sometimes you’d see a shoe on someone, you’d want it, and, although, some of that is exciting, when it’s sold out and you say, “Oh, next time I better get there sooner,” there also is that level of frustration that you mentioned. And if you frustrate someone too many times, they’ll get frustrated to the point of leaving.

Richie: [00:33:17] Right.

Cheryl: [00:33:18] So we have a set of essentials. For example, we invested in making the perfect black pump. That’s that. You need one in your closet. And every man needs an Italian loafer, you know? So there are certain styles that are core and essential to us.

Richie: [00:33:34] In terms of the weekly drops, what is the depth of them? Is it a single style in one or two colors? What is it, I guess, and has it at all evolved as the business has grown?

Cheryl: [00:33:43] So the depth for each drop is very product-specific. So you can imagine if you have our driving shoe—which is a bestseller for us—it lends itself to being done in beautiful colors and materials, and we launch a whole color array. If it’s a sandal that, you know, has a block heel on it, maybe we launch it in three colors. So it really varies. Certainly in men’s there are less colors, but it’s product by product.

Richie: [00:34:12] So, I guess, what was behind the question is, as a business grows, as you attract more customers that have different interest styles, etc., do you feel that you have the structure within that weekly model to continue offering, I guess, the range of products that you want? Or is there something, I guess, also focusing or constricting about the fact that “Hey, we have to really make a decision on what the style is, what the limited color assortment is, and that’s kind of who we are?”

Cheryl: [00:34:37] Well, I think every brand needs to have those filters, but our filters are around being a modern Italian contemporary brand, and we think about how she or he is going to wear it. So, our filters are around, can you pair it with denim and a skirt, or a black pair of pants? And can you dress it up, can you dress it down? And so those are some of the things that we’re thinking about all the time. That tied to what our aesthetic is is how we’re designing. I don’t find it limiting. It’s actually really helpful when you have those guardrails, cause otherwise you can design anything and pretty much sell anything. So we keep those filters in line to make sure that they’re like guardrails more than anything.

Richie: [00:35:19] Yeah. Are there like one or two products that you or the team was convinced would be kind of more art projects than commercial successes that you’ve been just kind of wildly disproven on? Or things that you thought would be really good that maybe didn’t take off to the degree that you hoped?

Cheryl: [00:35:32] We had a hiker boot in the fall that we thought would be good but it was beyond good. It sold out too fast. We actually ended up bringing it back in, just in time for Christmas, in the same colors and then two additional colors because it did so well. We know we sell casual well, but this was the first true hiker look we had done, and I think it just hit on all of the things she was looking for. It was on trend, but it was still feminine. You know, it had a little bit of a rugged look but you could wear it all day. And so it was that type of thing where we said, “Let’s try it.” And then, because of the supply chain opportunity, we were able to get back into it.

Richie: [00:36:12] So, I guess, moving into 2018 and then kind of working our way up to the present, the business is now three years old. The models, it sounds like it’s going at a very fast pace. Retail’s expanding a little bit. Where did you want to end up, I guess, at the end of 2018 from a goals and kind of priority perspective?

Cheryl: [00:36:27] Continuing to evolve the brand was a big focus for 2018. We knew that, at that point, storytelling was in a place where it needed to be even more at the forefront of what we were doing. And so it’s been a big focus for us, even currently.

Richie: [00:36:42] Say more about what that means, exactly. In terms of, is it more content, is it more clarity around message, is it all of those things?

Cheryl: [00:36:48] All of those things. Because you know, again, if you just see a shoe on a shelf, you would not understand the story of M.Gemi. So, bringing that to life is something that we’re continually evolving and figuring out. And you have to stay ahead of that. You know, at one point, maybe it was pictures of the owners of the workshops, but now maybe a video of how it’s being made or, you know, our team there actually sketching and bringing it to life. But bringing all of that to the forefront is a focus. And it has been for the last year.

Cheryl: [00:37:21] You know, we’ve been thinking a lot about physical. So, last year we opened our first shop-in-shop, in Bloomingdale’s on 59th Street. And that is not a wholesale model. It is, you know, the manager.

Richie: [00:37:34] Concession.

Cheryl: [00:37:34] Yeah. So the manager is an M.Gemi employee. We have a shop-in-shop. It was very important to us that we did not lose that touchpoint with the customer. So again, you know, making sure that the story was being told throughout.

Richie: [00:37:47] There’s always this interesting question, I guess, of looking at these brands. Again, taking Everlane for example, [it] very much built themselves on this transparent pricing situation. And then, as it gets older, you get into present times. Time often can diminish, I guess, the impact of a value prop of a brand, right? Early on, when no one else is doing that, they’re the one that is offering that thing. And then it, as more competitors pop up and so forth, one has to change and evolve. How have you felt about the general value prop of what you’re doing over the four years you’ve been in existence, and have there been certain things where you’ve had to kind of tweak or evolve what the leading piece of it is, to continue differentiating, both in the market and also for customers?

Cheryl: [00:38:28] So I think the value proposition is at the heart of what we do, in the sense that, I always say to myself, “If I didn’t work here, would I still buy this product?” And I would. No one’s doing what we do at the quality that we do it at. We need to make sure people know that and get that. In terms of design, it’s easy for designers and merchants to have the price creep up, up, up, cause there’s always something beautiful and more intricate and different materials. Like, you could just see the creep.

Richie: [00:38:59] Yeah. “What we could do is…”

Cheryl: [00:39:01] Yeah!

Richie: [00:39:01] And the price goes up and up and up.

Cheryl: [00:39:02] Right. Right. And so for us it’s really important that we keep ourselves in check, of always making sure that value is there. Our average is about $248, but if we’re going to sell something for $298 or $328, the value really has to be there. And so, that’s always at the heart of our decision-making. If we can’t show true value then we shouldn’t be in that line of product.

Richie: [00:39:23] We even talked about price at all, but it sounds like it was clear in the beginning that there was this gap between what you can make these for, what you could tell them for, that was not at this luxury price. How did you get to the place that you actually did, in terms of having your average at around $240, $250? Were there pricing experiments that you ran to get there, or to figure out, you know, “Here we can still make what we want to make? It is clear to customers, but also it makes, like, there’s scalability and elasticity behind it?”

Cheryl: [00:39:49] I mean certainly we’ve done testing along the way, but we started knowing that we wanted to be about 60% less than our competitors. We know there has to be a big enough difference because, obviously, if we’re too close to that price, a brand that people know and aspire to own, that’s where they would choose. So what we’re trying to build is a brand that they become in love with, but that the price is so unique that they’re willing to try it.

Richie: [00:40:15] Mhmm. Did you think you could go too low at a certain point?

Cheryl: [00:40:18] Mhmm, yes, absolutely. I think too low would make clients feel like (a) it’s too good to be true, or they wouldn’t even understand the story. It’s almost unbelievable. There are other shoe brands in our price point. They’re not made in Italy, and they’re not at the quality level that we’re making, so we don’t necessarily want to be compared to them.

Richie: [00:40:38] Right. ’Cause even “made in Italy” has levels, right?

Cheryl: [00:40:40] Yes, absolutely.

Richie: [00:40:41] Which seems also one of the harder—

Cheryl: [00:40:42] Yes

Richie: [00:40:42]—a challenge of communicating.

Cheryl: [00:40:44] Which is why when we chose the, the workshops that we chose, it was so critical to understand who else was making shoes with them, so that we could really learn about the quality and the craftsmanship and the hand. All of that was so critical to choosing the right people to work with.

Richie: [00:41:02] Yeah. So you had the fit shop kind of relatively early on. There was a second store before Hudson Yards, right?

Cheryl: [00:41:07] Yes. So, so far we have had the Soho store on Wooster street. Then we opened in Boston in the Prudential Center. We’re now on Newbury Street. We also had a couple of quick-fit shops. We had won a Derby Street in Hingham, Massachusetts and then in Chestnut Hill. And then we also had Columbus Circle here in New York.

Richie: [00:41:29] Right.

Cheryl: [00:41:30] And then obviously Hudson Yards.

Richie: [00:41:31] And then the gelato truck.

Cheryl: [00:41:32] And the gelato truck. Yes.

Richie: [00:41:33] Yes. So I’m curious to talk a bit about, I guess, what you’ve seen work so far in that, as we did a little bit before. And then, kind of going forward, what do you expect to see from a retail kind of roll-out and expansion perspective?

Cheryl: [00:41:45] Mhmm. I think like everything else, brick-and-mortar retail needs to be thought of differently. And what’s interesting as you walk Hudson Yards is every store looks a little bit different. There is something in each one that’s a little bit unique and experiential. They’ve been thinking about how to be at the heart of changing and innovating retail. The old-school mall, people go there maybe if they need something that day, but otherwise the assortment’s better online, the inventory’s better online. Everything about it is you have more options. So I think that for retail it’s critical that people are continuing to evolve the experience into something that people want. Not just cool for cool’s sake, but that actually answers what clients are looking for.

Richie: [00:42:32] And so as it relates to M.Gemi itself, do you expect to do more going forward? Or how are you thinking about, I guess, the expansion from what you have to what it could become?

Cheryl: [00:42:41] So, every fit shop we’ve opened, we’ve learned something from, and, obviously, then moved that into the next one. And so I think with Hudson Yards’ opening, we’ll learn a lot. We’ll evaluate that and figure out what’s next. We’re doing events in some cities. You know, that was the beauty of the gelato truck Andiamo because we could test different locations quickly. So there are obvious other cities that we’re interested in for expansion and something that we’re looking at. But, for us, location is everything, and the flexibility of lease. So there’s a lot of factors that come into it. We’re not going to expand just to expand, but when and if we find the right spot, that would be an element.

Richie: [00:43:20] Gotcha. Have you found it valuable to pay for foot traffic, effectively, and be in the best locations versus trying to be more of a destination, and use, you know, digital marketing and so forth to drive people there?

Cheryl: [00:43:29] I think foot traffic is everything. When we were in the Prudential Center, our adjacencies were perfect. Again, it was like a lifestyle center. So people live there, they work there, they play there, they eat, sleep, everything. And so, there were conferences. People were constantly walking through there. So we had such a great mix of our loyalists who loved us, and, as well as people walking by saying, “Oh, what is that? That’s something unique and different. I gotta go check it out.”

Richie: [00:43:55] What’s been the cheapest and most expensive lesson you’ve learned building the business?

Cheryl: [00:43:59] The most important lesson that we’ve learned is hiring the right team is everything. And I’ve learned that throughout my career. But then the learning of, if you’ve made a bad decision, you made a mistake. Acting on that as quickly and swiftly as possible, I think, is also really critical, because of the culture you’re building.

Cheryl: [00:44:18] So, throughout my career I’ve hired lots of people. They haven’t all been right. It’s just that the fit may not have been right. And I think figuring that out and making that change, although at the time feels really hard—like, how are we going to get that done, what are we going to do? It’s so much better for the company and the brand and the culture, and you figure it out.

Richie: [00:44:38] What about cheapest lesson?

Cheryl: [00:44:40] I think they’re all expensive lessons! Um…

Richie: [00:44:43] Why do you say that?

Cheryl: [00:44:44] Well, for a few reasons. I think it’s important to take risks and it’s important to make mistakes but, for me, it’s how you recover from them. And any mistake you make has an impact. It’s really about how you make up. Like, we have clients that call us. They have an issue. When they speak with our customer service team, they then, when we track them for future, become that much more loyal. And so, I’m fine with the making of mistakes. It’s all about the recovery.

Richie: [00:45:16] As you think about—you know, again being four years into the business, and kind of where it goes from here—how do you think about, I guess, scale, and how big you want to get, and over what period of time you want to get that big, I guess?

Cheryl: [00:45:28] So obviously growth is really important to us. I believe we can be a huge business. How huge and how and when? I think we have to still figure that out. I think there’s a lot of opportunity in front of us in what we’re doing and how we’re doing it and where we’re doing it. So, four years in, I feel like there’s still a lot of low-hanging fruit that we’re working on and excited about.

Richie: [00:45:51] Have there been points where you felt, “We’re going a little too fast,” or “We’re pushing on levers that we need to pull back”?

Cheryl: [00:45:56] I never feel like we’re going too fast. And that’s why I think the years blend together so much. We’re moving fast, we push each other to never sort of sit back and say, “That’s working. That’s great.” It’s much more about when things aren’t working, how do we make them work. And what are the levers we can pull to improve upon what we’re building on.

Richie: [00:46:16] And I guess looking just into the next one or two years, what is on the horizon that you’re kind of excited about, heading into the future?

Cheryl: [00:46:22] So obviously for us, physical retail expansion is something that we’re excited about. Also looking into how international can impact the business. And, most importantly, figuring out how to continue to evolve our product to be what our clients are looking for, both in men’s and women’s and beyond.

Richie: [00:46:43] Do you ship to Europe right now, or no?

Cheryl: [00:46:45] No.

Richie: [00:46:46] Do you foresee that, if you were to expand to Europe, for example, the perception of an Italian-made product would be received differently there than it would be here?

Cheryl: [00:46:54] Yeah, so for international expansion, as we think about that, which countries we would go to, obviously that would be a critical component to making those decisions, to being in places that are like-minded. When we think about Italian made footwear, and that it has to be perceived as we perceive it, which is the best of the best.

Richie: [00:47:15] Awesome. Thanks so much for talking.

Cheryl: [00:47:16] Thank you.

Richie: [00:47:21] 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 and we hope you tune in next week.