#134. STATE Bags is a mission-driven accessories brand for men, women and children. We talk with founders Scot and Jacq Tatelman about how they balance building a thriving business while still giving everything they can to others. The Loose Threads Podcast features in-depth discussions with leaders across the rapidly changing consumer economy.

Check out the full transcript below. 

Scot: [00:00:01] We’re not just going to be a company that sells stuff and gives stuff, we’re gonna be a company that has a voice, that has a platform and uses that responsibility of that platform to shed light and support these communities that we were built to do.

Richie: [00:00:15] Scot Tatelman, co-founder of State Bags, a mission-driven accessories brand for men, women and children. At the summer camp he and his wife Jacq ran for inner city kids, Scott saw firsthand the disparity between kids that could afford to carry their belongings and nice bags and others who could not. Soon after, they set out to launch a brand that created best-in-class products and gave back to communities in need at the same time.

Richie: [00:00:34] I’m Richie Siegel, the founder of Loose Threads, which analyzes and advises next-generation consumer companies, and FaceLift by Loose Threads, a retail incubator and accelerator for leading brands and retailers. For our latest analysis and insights, check out our free weekly newsletter at LooseThreads.com.

Richie: [00:00:53] 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 Scot and Jacq about their journey balancing, building their brand to thrive while still giving everything they can to others. This tension in their openness made it one of the most honest conversations we’ve ever had on the podcast. Here’s how it all began.

Scot: [00:01:15] Twelve years ago, Jacqueline and I started a nonprofit summer camp for kids all across New York City, but specifically in the underfunded boroughs. First summer, the majority of the kids were from East New York, Brooklyn and Brownsville, Brooklyn. Somehow convinced 69 kids to get on a bus, to go into the middle of the woods, and to spend a week at camp, something that they had never really been given the opportunity to do. I spent my whole life at camp. So did Jacqueline. We understood the power and the magic of camp, and we wanted to give that to kids from underfunded neighborhoods.

Scot: [00:01:46] And so, a couple of years in, we started seeing this recurring unfortunate theme of kids—either coming to camp or during the school year—carrying their things in ripped trash bags or shopping bags. And this was like blowing our minds, ’cause at the same time, there was a lot of companies that were doing great work for kids overseas, but there really wasn’t a focus on kids locally through for-profit work. So we decided that we were gonna take our passion for the kids we served through the nonprofit and adapted to create a company where we could take the energy and the spirit and the vibe and the purpose behind what we call “camp power” and bring it to our company that we now call State Bags.

Scot: [00:02:27] So, in 2013, we launched as a one-for-one company—so, for every bag we sold, we would donate a fully-stocked backpack to American children in need through our bag-drop events and all types of incredible giving moments that we do.

Richie: [00:02:40] Why did you decide this should be a for-profit versus doing this at a nonprofit capacity?

Jacq: [00:02:45] Well, we wanted to build a business. We both were excited about the idea of building a for-profit company. And, it should be said that we named it “State,” because we wanted to not only change the state of mind of the kids that we were serving in our rallies—where we bring in child development specialists and they talk to the kids about how they’ve successfully arisen from these at-risk neighborhoods and how they, you know, are standing there before them as these great role models, and that we can change and shift their perspective, their state of mind to also do the same. But we were also thinking about the people who could very well afford to buy the things that they need for themselves and for their children and change the state of mind of people of all socioeconomic backgrounds on how your purchases should be making a difference, and how the power of business can do so much to give back to the world. And we wanted to be able to do those two things as well.

Scot: [00:03:38] But, to be clear, we really didn’t have any experience starting our own for-profit. Like, we both worked, obviously. Jacq’s worked in the fashion industry for a really long time, I’ve worked in [a] variety of marketing jobs and stuff. But when we started putting this idea together and talking to advisors, it became clear that if we wanted to have this social mission and do it in a really genuine, impactful way, we needed to make beautiful product. And the original idea was like, kind of mine, that I was gonna like, run this feel-good company. And Jacq just happened to come to this meeting, and they kind of turned her and said, “Listen, if you need to make really nice product and price it a certain way, it’s gotta be kind of fashion.” And they looked at her and they were like, “So that means you’re involved.” And we were like, “No no no, we’re not doing this.” And then, the next thing you know, just kept pushing forward. And now there’s like, literally nothing in the business that she doesn’t have a part of. She is central to anything that—beyond our wildest imaginations.

Richie: [00:04:37] You knew you had to make good product. Where does one begin when you have not done that before?

Jacq: [00:04:42] We started conceptualizing what part of the bag category we can own. So we knew that we wanted to go after backpacks, because it was definitely there to serve the children that were coming to camp with their stuff in trash bags, ’cause we knew that they were living in transitional housing, foster care. And, also, we knew that it was a commodity product that people were gonna come back to year after year and buy again. At launch we knew that we were gonna try to serve a wide demo. So it was all about finding, like, what would set us apart, aside from the mission? Which we really hung our hat on at first, we really hung our hat on the mission. But then it was also about how to make product for all the demographics that we wanted to speak to.

Jacq: [00:05:24] So, we wanted to serve a high-end customer, we wanted there to be one attainable product and we wanted there to be something fun that would really speak to what the brand was all about. So that’s kind of how we decided to launch. It was more about being a simple backpack with a really great mission and something that would be eye catching and interesting. That definitely was the launch kind of perspective, and we realized that was definitely the right place to start, but it has taken on a lot of iterations since then.

Richie: [00:05:54] It was two backpacks, or…?

Jacq: [00:05:56] It was three backpacks. They came in three different colors. We wanted to kind of be the Chuck Taylor of backpacks, so we were really looking for something simple and that wouldn’t make people really have to decide so much. It was just something that would go with everything, and they can take to and from work, or to and from school and feel good and proud wearing.

Richie: [00:06:13] In terms of, I guess, the other parts of the business, what other components had to get built? And, I guess, how long did it take you from starting to, “Okay, we’re ready to launch this thing?”

Jacq: [00:06:22] It took us about a year and a half to get everything ready, and we did not know what we were doing. Honestly. I mean, I worked for people before, and I was always exposed to the idea of business and what it took to run once the dedication of it all, but there are so many components that we were completely and totally clueless about.

Jacq: [00:06:40] So, first of all, we wanted to launch as an ecommerce business, and we didn’t know where to start with that. So, we did work with this consulting company, Launch Collective, who helped us kind of figure out what the components would be. So, first you have to start with product and build the business plan around the product, understanding what it is, and how you’re going to push it out into the market and what the differentiators are. And then it’s about, how are you gonna market it? And then also the back-end stuff—like, how do you build a financial team? What are you looking for to be your numbers? How do you understand what’s happening with the bottom line?

Jacq: [00:07:13] So, those three components were things that we were really challenged with at first, and without the help of a really strong consulting company, I don’t know how we would have gotten it off the ground. Product I can immerse myself in, and really, really like, put out something that, you know, we felt like was a strong start collection. And then Scott, of course, you know, sharing the message of what we were doing on the give-side was crucial to the launch,’cause that’s what got everyone’s attention. So all the things that were kind of happening in the background was like, us looking like we were making this big storm, but really, in the back end, we were new and green. And it took a lot of just like, rolling up our sleeves, and digging in, and experiencing things and failing to figure out what really works.

Richie: [00:07:55] What did launch look like? Was it like, “Turn the website on?” Was there other shenanigans planned?

Jacq: [00:08:00] We had a really great launch party at the Soho House, and all of our friends and family came and it was wonderful. Everybody bought bags, everyone’s really excited about it. We actually got a DailyCandy at first. We were working with a PR company, which was great. We got our first hit on DailyCandy, which at that time was pretty huge. So, for the first two weeks, I would say we sold some bags. And then it was crickets. And it was very scary for a while.

Richie: [00:08:26] Why do you think it was crickets?

Jacq: [00:08:28] Again, with as much help as you can bring on, it really is about understanding the data and the landscape, and having a very robust plan of action about how you talk about things. And building an email campaign behind it, and doing all of the other ancillary things that drive traffic to your site. Because not everybody gets DailyCandy, and not everybody gets Vogue.com, so what is the plan to go out there and hit the ground running? It really is the founder’s responsibility to build the rocket ship. And, like I said, Scott and I, we honestly didn’t know. If I knew now what I knew then, we would be a totally different business.

Richie: [00:09:11] In a better way, or…?

Jacq: [00:09:12] Oh, in a much better way.

Scot: [00:09:14] Part of the reason why there was crickets was ’cause—Jacq alluded to it before—that we were so proud and bent on making sure that our mission was front and center. We were so excited about and proud of that, to the point that we were donating bags at our bag-drop events before we had sold one. That we created this huge event in Red Hook, Brooklyn, and like, we were so excited about it, that if you went to our website, you would kind of get hit first with the messaging of the mission, and it wasn’t product-first. And then we kind of had to realign that whole strategy, because we were watching the Warby Parkers of the world, and we were watching the other successful socially conscious brands out there and taking a note from them.

Scot: [00:09:57] People care about your mission, but it’s not enough to get them to buy your product if they don’t really love your product. And that’s when we kind of realized we had to completely rebrand the business. So we changed our logo, we completely revamped our website. We created a section on the website where it’s like, you can read all about our mission, but it’s not like, the first thing you see when you land on there. And so I think that was probably part of the reason, in addition to the fact that product is—

Jacq: [00:10:23] And a lot of things happened in between the launch and the time where we were selling like two-to-three bags a week to the rebrand.

Richie: [00:10:33] How long did it take for you to realize, “Oh, we’ve gotta change this?”

Jacq: [00:10:35] Just about a year.

Scot: [00:10:37] Yeah.

Jacq: [00:10:37] We are not too proud to pivot. We are extremely proud of what we’ve built and we love it to death. But there are signs that it’s working and signs that it’s not, and you have to pay attention to them no matter what.

Richie: [00:10:50] Did you relaunch it or—how did that roll out?

Jacq: [00:10:53] How it happened was, we had an issue with the bags—they were ripping. And we had to contact every single person who bought bags in the first three months that we actually were selling and in business, and send them a shipping label and get the bags back. Then we sort of reworked the bags and put them out into the market again. And we had a few wholesale partnerships at that time, but we realized that our bags were not performing at wholesale. Despite the mission and despite the way they looked, when two people were looking at, you know, another brand versus ours, they were not choosing State.

Richie: [00:11:24] Why do you think that was?

Jacq: [00:11:25] I think that it was at the wave of where people were not just looking at backpacks, especially backpacks that were not super-cheap, as just quick pick-up items. People were starting to really embrace this hands-free life and they were wearing their backpacks all day long as like, little mobile offices. And so people really wanted things that had water bottle pockets, laptop sleeves, pockets for their phones, etc. So the utility of the product was super-important. Ours was cotton canvas, which we thought would be a differentiator, but it wasn’t. People want the synthetics, they want there to be able to be durability, wipe-ability, all of that stuff.

Jacq: [00:12:00] And so, I called a meeting with us and our consultants at the time and I was like, “Guys, the product is not working, and we need to completely pivot. We need to look at this business holistically, and understand exactly what it is that is wrong right now and address it.” So, we changed our branding. We completely redid all the product—none of the product that we launched with is in existence anymore. And we created State as you know it now. So that involved going to a creative agency, redoing our entire website, and we actually relaunched, in a way, with the announcement that we were gonna be collaborating with Beyoncé for a giving initiative that would take the East Coast, right before back-to-school, and donate around 10,000 bags with her and her Be Good organization. So that was kind of our relaunch out into the market. And it was all about redoing our Instagram, and our Facebook page, and just kind of like pushing the new logo out there that showed a more elevated appearance and also new elevated functional product.

Scot: [00:13:06] But this is kind of where that like, roller coaster ride is, because I just said that, like, we needed to make sure that the mission wasn’t too in everybody’s face, and kind of use it as like, a cherry-on-top kind of thing. But like, the partnership with Beyoncé was fully because of what we do on the giving side.

Richie: [00:13:23] Beyoncé came to you? Or their organization. It was just pretty chill.

Scot: [00:13:26] It is a really long story.

Richie: [00:13:28] Tell the story, please.

Scot: [00:13:29] I’m in the gym. One day, very early morning, I get an email from Life and Times magazine, which was Jay-Z’s website, and they want to do a feature on us. Super exciting.

Jacq: [00:13:39] The old State, too. This is when we first launched.

Scot: [00:13:41] Right. So, they write up this huge piece on us, you know, not long after launch. We saw it as an opportunity after it went live to say thank you to Jay-Z, Beyoncé and Blue Ivy, but in a very unique way, in a way that they had never really been thanked before. So we shot a video in Brooklyn proposing to them that they take part in one of our bag-drop programs, and we loaded it into an empty iPad. We put it in this beautiful branded box. We put three bags in there, one for Jay, one for Beyoncé, one for Blue Ivy who, at the time, was like, eight months old. Like, couldn’t even wear a backpack, probably. And set the iPad on top.

Scot: [00:14:22] And we emailed our contact at Life and Times, who then connected us to the Shawn Carter Foundation, said, “You guys should connect. This is State Bags.” And he said, “Oh, why don’t you come to Roc Nation and you can drop off the gift there?” And we were like, “Okay.” So we showed up, and next thing you know, we’re sitting in the office with the head of the foundation and present this box. They open it, they watch the video and they’re like, “Oh, my God. This is incredible. I can’t wait to show this to Jay.” Feeling great. We walk out there, we’re like, “We’re probably having dinner with Jay-Z and Beyoncé.” We’re like, riding high. You know, I’m thinking, “Nothing can stop us!”

Scot: [00:14:55] I want to say, like, a year goes by, and we don’t hear anything. So, I’m a, kind of a gentle stalker, it’s one of my skills at work, is I just follow up and follow up and follow up until I get the response I’m looking for or I’ll leave you alone if you tell me to. And they reached out and said, “We have an opportunity. Can you come to this office at a certain time?” Not the same address that we went to before. We show up. Had no clue.

Jacq: [00:15:21] I’m a million months pregnant.

Scot: [00:15:21] Jacq is eight months pregnant with our second child. And we sit down in this boardroom and we sign an NDA. And we, we’re looking around—

Richie: [00:15:32] You just signed it.

Scot: [00:15:33] Yeah. We didn’t even read the words, we just signed our life away. And then, innocently, just kind of turn to everybody, there was like six people in the room, and we were like, “Uh, can we just ask, like, where are we right now?” And they were like, “Oh, you don’t know? You’re at Parkwood Entertainment. You’re at Beyoncé’s headquarters.” And we were like, “Beyoncé? Like, we didn’t know that Beyoncé was in play here. We’ve just always been talking to Jay. We’re buddies with Jay, you know?”

Scot: [00:15:56] So, they told us, in secrecy at the time, that Jay and Beyoncé were gonna go on tour together for their first on-the-run tour. And they had the idea of, for every ticket sold, they would donate a backpack in the cities that the tour was happening. So we’re talking around 500,000 backpacks. And it’s July, and they want to do this in August, and we are this tiny, tiny company. We spent the entire day there strategizing on what we were gonna do, how we’re gonna do these bag-drops in all these cities. Produce 500,000 bags. Our manufacturer is freaking out.

Richie: [00:16:31] Yeah, how’d that happen?

Scot: [00:16:32] It didn’t. So, fast-forward. But we’re this tiny company and we can’t tell our manufacturer who this is for, ’cause we signed our life away. So we leave the office again and we’re like, “Oh, my god. Like, our lives are changed. We went out to lunch that day with the head of the foundation.” So, again, crickets for about five days. We don’t hear anything.

Jacq: [00:16:56] But the funniest thing is that a New York Post article drops that someone had leaked the Mr. and Mrs. Carter tour, and they thought it was us.

Scot: [00:17:04] That’s why we weren’t hearing from them. So we were freaking out, like, “Oh, god, we’re blackballed from the entire family.” And so, finally they got back to us and said, “The logistics are too tough. The costs are too high. We can’t pull this off.” And we didn’t talk to each other for four days. We were devastated. And like, two weeks later—

Richie: [00:17:21] Did you disagree, though? Was it physically impossible, or you think you could have actually happened?

Jacq: [00:17:25] We called our manufacturer and told them what the kind of parameters were. We didn’t tell them who it was for. Then we got them in the next day, and they were like, “We can stack four factories, each doing like, a hundred thousand bags in that time frame.”

Richie: [00:17:40] It could have happened.

Scot: [00:17:41] Yeah.

Jacq: [00:17:42] It could have happened. Yeah.

Scot: [00:17:43] A couple of weeks later, after this devastation kind of started subsiding, they reached back out and said, “We have another opportunity.” And the both of us, you know, we looked at each other, we were like, “No, no, no, no, we can’t go through this again.” And so they called us in and said, “We’re gonna do this back-to-school activation for Beyoncé’s movement, the Be Good movement.” And, you know, we started putting a plan together. And we announced the partnership on August 11th, 2014, which was the same day that our second child was born. So I was literally holding my newborn son as relatives were coming in the room to meet him on the phone with press, like, talking about the initiative. It was a wild story that really helped put us on the map in a variety of ways.

Jacq: [00:18:28] Oh yes, for sure.

Richie: [00:18:29] So where do you go from there?

Scot: [00:18:30] Oh, my god.

Jacq: [00:18:31] Well, it was really interesting how many collaborations came after Beyoncé, because it was really, like, she’d done the vetting for everybody. At that time, too, we were actually selling product that we felt was competitive and strong and we were super-proud of. So, the timing for it all was great, because of then, we worked with Jessica Alba’s Honest Company. We had had this really great new kids line and they took notice of that, and so that was the next big collaboration. And that was a product collaboration that we sold both through their channel and ours, that people still wear to this day and tell us, “I found out about you through Honest Company.” And when that happened, actually, I would say that that is probably one of the most successful collaborations that we have done to date, because the people who we were looking to talk to were exactly who she was talking to. And a lot of those people that we got at that time, in 2014, are our repeat customers to this day, which is really great. So it led to Jessica Alba’s Honest Company, it led to a partnership with Crew Cuts, which was really great for us also. And I think that that whole thing just put us on the map.

Richie: [00:19:43] At what point did you realize, like, “Oh, we can keep doing this, but also we can’t just do this every week?” How did you figure out the speed and the cadence of like, this working, versus we’re too reliant on other people to tell our story and the brand loses resonance?

Jacq: [00:19:59] I think that after that back-to-school, which was 2014, we felt like we really had a company. We really felt like we had a business, again, to be proud of. We had the right product out there for the small collection we were offering. And that’s actually when we built our own team. We hired a CEO, we had a production person, we had a designer, we brought on someone to handle ecommerce. And I think that that year of 2015 was really about laying the foundation of Beyoncé, and with Jessica Alba’s Honest Company and some of the other collaborations that happened in that time frame. And it’s like, so, now what do we do?

Jacq: [00:20:34] We put a little bit more cash into the business and we left it with the CEO with our help to sort of say, “Okay, now you have this money, how are you gonna allocate it and what does it mean?” Honestly speaking, in most cases, I think when you’re not talking about a company that’s selling a product like backpacks, a collaboration with Beyoncé would put you into the stratosphere. If you’re selling T-shirts and dresses and other things that people buy several of, it takes you to another level. That actually didn’t happen with Beyoncé and that whole kind of moment in time.

Jacq: [00:21:08] It did put us on the map. It did make us a brand that people knew, but we had to do a lot of hustling from that point on. And we didn’t have endless funds to then chug into marketing. And it was about, who are we talking to now? Because we didn’t really know our customer. So instead of being like, “Let’s just throw a lot of money at it and see what happens on the marketing side,” we had to really take a step back and be like, “Who are we talking to? What kind of product are we making?” In 2015, we built a really robust wholesale business, and that was what we put a lot of effort into, because we decided at that time that marketing for our type of business was wholesale. And it was successful for the short term.

Scot: [00:21:51] And this is also where we started analyzing the types of partnerships, like Jacq was saying, is that following Honest, we partnered with American Eagle. And it was Teach for America, which was a huge partnership that kind of got our name out. But again, it was mission-focused. So we donated 30,000 bags across the country. And then, following that, it was President Obama and My Brother’s Keeper initiative and Roc Nation. So we hit the cities that My Brother’s Keeper initiative was focused on, and went to the White House, made the announcement with Kevin Durant. And like, we were so amped and excited about these moments, but also started realizing that, like, it doesn’t move the needle in terms of like, selling stuff. So you put a lot of energy—

Richie: [00:22:35] You’re giving it away.

Scot: [00:22:35] Yeah, exactly. But you do get the press and you get some attention and stuff like that. But like, I think it was just kind of a portfolio builder for us where we could—I hate to use this, but like, we could name-drop to wholesale partners and to future partners that we wanted to work with in different ways, and say, “These people vetted us. They gave us the cred. And here’s how we could work together selling product.” And so it’s always been that balance, because I think what we’ve done on the giving side with those high-level people has been incredible, but there’s still a lot of people out there that don’t know who we are.

Jacq: [00:23:12] And I think in that time frame, too, what was really interesting was that we were always chugging along with the mission. We will never stop doing what we do on the mission side. That is what makes us so unbelievably special. And we talk about these polarizing topics or these really important topics, all the things, whether they’re good, bad, ugly. We talk about them all the time and we will never stop. But we had to understand then how we communicate that to our customer and our community. Because people come to us thinking we’re a nonprofit all the time. We have to sell stuff, so we have to be able to tell people, “Come to us, engage with us. Learn to be a part of our community, love what we’re doing…and buy our product.”

Richie: [00:23:54] How does a giving just work, economically? When you say you donate 30,000 bags, is someone else paying at cost for those? Are you straight-up giving them away? How does that work?

Scot: [00:24:02] Well, for about five years, we were a one-for-one brand. So we had to sell those bags to give those bags.

Richie: [00:24:09] So you’re straight up just, giving it away?

Scot: [00:24:11] Mm-hmm.

Jacq: [00:24:12] Yep. It was adding—

Scot: [00:24:13] It was baked into the cost.

Jacq: [00:24:13] Yeah, it was baked into the cost of the goods, and it was adding quite a large number to the bottom line. Yeah.

Richie: [00:24:20] Amazing, but also very challenging.

Jacq: [00:24:21] Also ’cause we were not gonna give away a crappy bag to these students. They were school-ready backpacks.

Scot: [00:24:26] Yeah.

Richie: [00:24:26] Were they the same models?

Jacq: [00:24:28] It was the same model, but like, a stripped-down version. I hate to use that term, but truly we took out the guts of the inside and it was of the same quality.

Richie: [00:24:38] You mentioned the wholesale was a short-term kind of thing. At what point did you realize there wasn’t as much promise in that, maybe, as you expected?

Jacq: [00:24:46] Well, we still have a nice, robust wholesale business and we truly believe in the channels, still. But we were banking a lot of our business on that channel, and that’s where I meant it worked for the short term. So we had a situation, we were in a lot of stores, you know, and then, as their businesses changed and what we were offering changed, in some cases we were in less stores. In some cases, you know, we weren’t a right fit, or our price point was too high. And so I don’t want to make it sound like wholesale has not been wonderful for us—it has been wonderful for us. But we didn’t pay enough attention to our direct-to-consumer business. Which, I think, in hindsight, we should have been paying equal attention to both, because the margin-rich side of direct-to-consumer is better to make a very healthy, profitable business, especially with a mission like ours.

Richie: [00:25:36] You mentioned around this time you brought a CEO in. What is that like? ‘Cause there are two types of founders: ones that kind of have an iron grip and don’t want to give up anything, and there are others that, I think, like, no one to get out of their way. And how did that go for both of you?

Scot: [00:25:49] Jacq said it before, but like, we are not too proud to say that we don’t have all the answers, and that we aren’t these seasoned entrepreneurs who have started five different businesses and been successful at all of them. Like, we started this business with a bleeding heart. And, because of that, there was a lot of times when we would just want to say yes, and we would give too much. I mean, like I said before, we were giving bags before we were selling bags. Like, that alone says a lot to the fact that like, we needed people to kind of reel us in and understand like, where the parameters should be so that we could become a sustainable, successful brand. And so, we came to a point in the business where we saw a lot of success happening, but could see more success if we let go of certain things, and kind of realize that somebody else could drive them in another direction, in a better direction.

Richie: [00:26:44] Coming into 2016 now, you have a good amount of collaborations behind you, you’re starting to build the team out. What’s kind of the focus for that year. And, I guess, I assume as you started to put more focus on direct a little bit, too.

Scot: [00:26:56] I always looked at 2016 as a turning point for us from a mission-side, because we started doing things that I know for a fact no other for-profit companies were doing. So, in the fall of 2016 we launched our first What Do We Tell the Kids project, which is our platform that sheds light on social injustice issues. The reason why we did it was because there was conversations happening at Camp Power between campers and counselors about Black Lives Matter, because that was the summer of Ferguson. There was protests happening all across the country. It was Tamir Rice, it was Trayvon. It was bad. And kids were asking their counselors, “Why don’t I matter? Did I ever matter?” And I watched trained teachers, child development specialists, social workers, fumbling on their words. They didn’t know what to say. And I just thought that that was something that needed to be shared. And we had this business where we always said, like, “We’re going to take risks, we’re going to shed light, even if it’s not popular, even if we lose followers and not gain followers, because we built this company to support in however that means.”

Scot: [00:28:02] So, that fall we launched what we called the What We Tell the Kids Black Lives Matter project, which highlighted educators working in these underfunded communities most impacted by Black Lives Matter, and started asking them questions about these conversations that they’re having with kids. And it was one of the most moving, intense experiences that I’ve ever had. And it was also incredibly daunting, because we sent an email about it, we posted on Instagram about it like 12 times. Like, we took the entire block on the feed to profile these people and to share their stories. And we got a lot of push-back from our customers. Like, “All lives matter, blue lives matter.” And this is where we kind of held hands and said, “Who are we? What did we start this business for? Did we start a business to just make a gajillion dollars and sell a bunch of shit? Like…no.”

Scot: [00:28:50] You know, not to get political, but like, then the election happened, and there were populations of people that were terrified. So we kept going in on this platform. And we talked about issues around language impacting the LGBTQ community, and people with mental disabilities and how the word “retarded” is still being used. And it’s like, “Why? People are so hurt by this word.” And the word “faggot” and “that’s so gay” [maybe add a sensitivity warning or censor out these words] is like, still just casually thrown out there. And we profiled people in these communities who were like, “Please stop.” And we, again, pushed it out there. And then we’ve done more and more about mass incarceration, and the Flint water crisis and Colin Kaepernick’s anthem stance and, you know, stuff like that. And so, for me, the business took a real turn because we started to say, “We’re not just gonna be a company that sells stuff and gives stuff. We’re gonna be a company that has a voice, that has a platform, and uses that responsibility of that platform to use it to shed light and support these communities and people and families that we were built to do.”

Richie: [00:29:53] And where did that all live? You mentioned Instagram a bit before, but is it—

Scot: [00:29:57] There’s a whole landing page on our site for the What We Tell the Kids projects. I think we’re on, we’re about to launch our ninth, I think, about my trip to El Paso in August. I booked a trip with filmmakers to document border issues. And two days before I left, the shooting happened, and the scope of the whole trip changed. And so, I still went. I spent three days there across the border. And so, we’re asking for the first time, with a launch of this type of project, we are asking fellow companies and brands to stand with us in supporting specific organizations in El Paso and border communities in the ways they need it most. And so, we’re hoping that people stand with us in doing what we’ve done for a long time, which is block out the noise, the political noise, the everything noise, and just understand that there’s a lot of people out there that could use some help. And businesses can provide that.

Richie: [00:30:55] You talked a little bit before about how some customers perceived the entry into this arena as like, stay in your lane, or just sell shit or so forth. In terms of the work itself, like, how do you think about the spectrum between journalism, nonprofit work, where this company sits—not in terms of like, ethics or anything, but just in terms of standard and, I guess, impact. And like, how do you fit it into that puzzle?

Scot: [00:31:22] I feel like we’re in such a moment right now where everything feels very intense and scary. And I think in New York City we live a little bit in a bubble. And like, it’s charged, for sure, but when you start going into other communities like El Paso or like Brownsville, Brooklyn, where kids are getting shot left and right on the street and immigrants are being targeted, you just start to feel like, what are we doing here? We’re all put on this earth to do something and hopefully you do something great and hopefully your footprint is everlasting. But like, you know, we have 50,000 Instagram followers or whatever. That’s 50,000 people right there that you can talk to in a way that they can listen to you in a different way than just like, one person’s personal account can, right?

Scot: [00:32:12] And so I see it as, we are in this moment. And if you have this platform, that is a responsibility. And, however you use it, as long as you’re figuring out a way to like, support something or people or communities that hits home for you, good on you. But like, it just feels like there’s so much going on out there that, to just continue to sell shit and to promote your stuff into sales and this and that, it’s like, that’s fine, if that’s what you want to do. But my whole thing is like, we have this focus of being impactful, but more importantly, we listen and we’re genuine about it. So like, there’s a lot of big companies out there that write checks, and they do this and that, and that’s great, ’cause those organizations and those causes need it.

Scot: [00:33:02] But I always come back to this story where like, this big corporation came into this school in the Bronx, and they spent the whole day there planting trees. Right? And, at the end of the day, the head of the company came into the auditorium and, filled with kids, and there was kind of like, a lackluster like, applause. And the CEO went up to the principal and was like, “You know, it kind of felt like nobody was really that excited about the trees that we planted.” And the principal turned to him and was like, “Because we don’t need trees. We need books, we need resources.” And like, that is where I feel like we’re different, because we get on the phone, we go into these communities, we talk to these people and we’re like, “How can we help? What do you need? Do you need a voice to shed light on the causes that you’re fighting so hard to curb, or just to give people a voice? Or do you need funds to help fuel your mission so you can hire more people and do the work that you’re doing? Or do you need bags? Like, do your kids need bags, ’cause we can do that.”

Scot: [00:34:08] So we did shift our mission on January 1st, 2019, so that we can be evolving with the needs of this country, and we can be seen as a pioneer in this business world. Because, you know, there’s a lot of good stuff happening in the socially-conscious world, but there’s also a lot of noise and there’s a lot of doing it because it’s popular. And we’ve never done it ’cause it’s popular, we do it because it’s who we are.

Richie: [00:34:34] So talk about, I guess, 2017, 2018, then we can work our way to the present.

Jacq: [00:34:37] So, a lot of the focus in those times was obviously for brand-awareness and to communicate with our customer. Who we are, and what we offer and what we offer it for. And that was a lot about building our line at that time. A lot of it was also identifying what the brand look was. So again, we mentioned how people came to the site because they thought we were a nonprofit, and so there was a real level of imagery that was talking to our person and really showcasing how you wear the bags and where you wear the bags and stuff like that. And so there was a lot of build in that respect of creating brand. We obviously were fueling sales through that as well. And we were still chugging along with wholesale and we were building our direct-to-consumer business as well, but a lot of that focus for that time frame was building the brand and the brand identity. And that included the What Do We Tell the Kids and our whole give-side. Like, what is that going to look like?

Jacq: [00:35:28] And then shortly after that, I think it was 2018, Star Wars came to us for a collaboration, which was one of our biggest license collaborations and was a really exciting moment for us as well. Which, again, fell into the collaboration bucket, but it was really about product that time. And we put bags out there that we were super, super, super proud of. And that created a lot of noise as well.

Richie: [00:35:51] Is it crazy to you to have all these names come to you?

Jacq: [00:35:54] It is crazy.

Scot: [00:35:55] Yeah.

Jacq: [00:35:56] Yeah. Collaboration does not equal business, and that’s something that you can say out there. Collaboration does not equal revenue all the time. It’s definitely something to talk about. But you have to be primed and ready to market those collaborations. You have to know what you’re doing when you get into those deals. You can’t just say like, “Oh, well, we’re partnering with Star Wars, now we’re huge. Partner with Beyoncé, now we’re huge.” It’s like, listen. What is the product you’re selling? How are you going to market it? What funds are allocated to market those bags? You have to be so super-concise and have such a robust plan built around how you then re-market that stuff, and how you continually use it as part of your brand story to fuel sales. You can’t just say “collaboration” and then wooo! It does work for certain businesses, there’s no question about it, but that’s why you have to be honest about what you’re selling.

Scot: [00:36:43] I also think it’s been helpful to be able to drop all these names, because now if something comes to us, we aren’t as like, “Oh my god, this is it.” We look at it with a more analytical eye. ‘Cause like, when Star Wars came to us, we were like, “Well, guess we’re gonna be a billion-dollar brand.” You know? And like, we just had this kind of matter-of-fact—we saw what happened with Stance, and we saw what happened with other brands that did licensing with them. And so, when opportunities come our way, we analyze them in a more experienced way.

Jacq: [00:37:15] That’s why I said, “If I knew now what I knew when we launched, we would be a totally different business.” Everything that has happened to us has been really, really good. It’s just a matter of knowing what you’re doing, essentially.

Richie: [00:37:30] Have there been points where, like, you wish you were more selfish about the business? Versus, either giving to others or being shaped by others?

Jacq: [00:37:40] Well, there are so many ways that I feel like Scot and I are selfless in this business. We are always concerned with how the team feels, that’s first and foremost to us. We want our team to be happy and feel good about what they’re doing, and sometimes that’s at the expense of us. In addition to partnerships, we want every partner to walk away, both on the give-side and on the product-side being like, “I loved that brand. I loved working with them. They were really accommodating and they understood me and they understood what I wanted to get out there.” If we were more selfish in certain cases, we would demand a little bit differently.

Scot: [00:38:14] I think on the giving side, it’s hard to answer that. Because like, we’re proud of the fact that we’ve donated hundreds of thousands of bags across the country, and we’ve, you know, had all these like incredible moments. But, you know, I think if we were to do some of those partnerships or moments over again, we would ask for more in return, because part of the process of like, landing those partnerships is to wow with the number that we present that we can donate and what we can do.

Scot: [00:38:45] And we’ll fly across the country, we’ll send our team and we’ll do this. And we just go so above and beyond, ’cause we want to make the moments for the kids and the brands that we’re partnering with to feel like, “This was like nothing we’ve ever done before.” But a lot of times they lived in vacuums, because we didn’t say, “Can you like, tag us on your Instagram post instead of just like showing a picture of yourself handing out a bag, like in a bag-drop.” Putting more things in writing or just kind of demanding more. It’s hard on the giving side when you’re presenting yourself as like, this bleeding heart company that’s like, excited and willing to do everything just to support these communities. But then, it’s also hard to walk that line of like, “But we want this, too.” I’m not good at that. I don’t want to look like I have a hidden agenda, ever. That’s hard.

Richie: [00:39:36] Into 2019. So you changed January 1, the mission statement, with almost a year kind of under your belt of that. Where did you focus? How did it affect the bag side in the business? And, kind of, what’s the outlook into kind of 2020?

Jacq: [00:39:48] 2019 has been a really great year. Again, really reinforcing the idea that our kid’s bags are our bread and butter. We had a ridiculous back-to-school. We put out this gorgeous collection and it sold out in July. We had nothing left to sell in August. We had a 4,000 person waitlist for the bags, which is like, when we were talking about 2019 and building collections for 2019 it was like, “Well, what’s gonna be the bag that makes a waitlist?” And even though we know how good we are at the kid’s stuff, we always look to the adult stuff that’s gonna say, “Well, what’s gonna create a waitlist here? What’s the bag that’s gonna create a waitlist?” And it was the kid’s stuff that did that. And that is so cool, because that’s who we are.

Jacq: [00:40:32] You know, we started as a brand that was gonna support kids. And, you know, initially, the bags that we put out there were really talking to a younger audience. And 2019 was about really going back to the roots and saying, “Yeah. Like, let’s blow this up.” And so, we are. We are gonna launch in 2020 a brand new category for kids that is ridiculous. And a lot of the talk in 2019 was about setting us up for that purpose, and also building collections for 2020 that were much more data-centric. So 2019 was about really analyzing the data, and who we’re talking to, and really trying to grow the e-commerce business, which we successfully did. We grew 75% on ecomm this year, and that was huge for us. And we had some really big wins. And we’ve, you know, had some really great partnerships along the way. And we’re so excited for 2020. It’s gonna be an incredible year for us.

Richie: [00:41:33] Have you raised any institutional capital for the business, or, like, shunned that?

Jacq: [00:41:38] No. Not yet.

Scot: [00:41:38] Not yet.

Jacq: [00:41:38] We haven’t shunned it. We are gonna go out for fundraising in the New Year. We are actively working on that. We have an incredible CEO who’s working alongside us. We’re super proud for the three of us to go out there and, you know, show these people what we got cooking. I think that it’s gonna be great.

Richie: [00:41:55] I think a lot of founders that probably raised a ton of money too early would wish that they could raise it when they knew what they were doing.

Jacq: [00:42:02] I feel very confident in it now. When we had soft-pedaled a little bit in the past, and I always—I mean, I love this business so much, so it’s like, get me to talk about it and I can convince you that it is something incredible, also. But I do feel more confident than ever. Because we are, again, really honed in on who we’re talking to, but we’re also making a lot less. And I think that that says a lot—

Richie: [00:42:31] From a breadth perspective.

Jacq: [00:42:32] From a breadth perspective, we’re making a lot less. And, you know, we’re talking about so many other things. Like, how we protect the environment, what does sustainability mean to us? You know, what does our give-back mean to us? And having that much more targeted approach. It’s like, that’s right on, you know? And I think that that is something that makes people excited and interested in the business.

Richie: [00:42:52] What’s the cheapest and most expensive lesson you each have learned, building the business?

Jacq: [00:42:57] I would say that the most expensive lesson that we learned is that building a brand is incredibly challenging. And building the brand identity is a huge part of the success of the business, but it is not the entire business. You have to have all of your branding, what you put customer-facing. Your photos, your—all the messaging that goes around, you know, what State Bags looks like to the customer. But the back end is the most important part of creating a successful business, and understanding the data behind the business is crucial. It does not matter how much fluff you put out there.

Scot: [00:43:40] I would say the cheapest lesson I’ve learned is, when we were doing our big Flint initiative where we donated 10,000 bags to the community during back-to-school, we did a big bag-drop event. We highlighted some of the city’s most unsung heroes. I was kind of laying out that vision for an educator that was based in the community, and she stopped me and was like, “This is really incredible, and we’re excited about it, but what we really need is for people to know that our water is still poisoned, five years after this crisis started.” And that was a lesson of humility and authenticity, in that, we could continue doing what we were doing, our bag drops, What Do We Tell the Kids, you know, across the country and all that. But that’s where that humility comes in of like, “We’re proud of what we do, but we could be way, way better. And we could be listening way, way better.” So that conversation right there triggered us to change our whole mission to, “For every bag we sell, we support American kids, families and communities in the ways they need it most.” So it allows us to listen. That conversation right there was probably ten cents on my phone bill and changed my life.

Richie: [00:44:53] It’s interesting, I guess, as you focused narrower and narrower on the business side and the product side, but broadened out on the mission side. Because I guess there is a ton of self-imposed rigidity in a lot of these models of like, “What if I don’t need glasses? What if I don’t need a new pair of shoes?” And I guess there really aren’t that many others that have blown up their own model intentionally. Like Warby still gives glasses, Tom still gives shoes…

Scot: [00:45:16] Yeah. It’s just, we view our impact a little bit differently. I think what they do with their mission is like, mind blowing. It’s so great. We would never have thought of a one-for-one if it wasn’t for Blake. And I wouldn’t have potentially thought of this business if I wasn’t reading Blake’s book Start Something That Matters in 2012 or whatever was. So, you’ve gotta give credit where credit’s due. But they serve as inspiration for us to keep pushing forward.

Jacq: [00:45:42] Yeah. And we also encourage other businesses to do good. You know, if you have the platform, use it. It shouldn’t just be the ones that are there now. You know, that’s what the new wave should be, and it should come from a genuine place, something that you really believe in, and you can talk about and are passionate about.

Richie: [00:45:55] What are you most excited about that’s on the horizon for the business?

Jacq: [00:45:59] I am so excited for this new category that we’re gonna launch.

Richie: [00:46:03] Any hint?

Jacq: [00:46:05] It’s for kids. Um, it’s going to make your lives easier with your children. That is definitely something. But that’s all that I’m going to share. And I’m also excited that we are going to begin our sustainability journey, that’s been hugely important to us. We’ve been working on it for a while, and we’ll be launching portions of our bags in the next two collections are made of sustainable materials, and that is definitely very exciting.

Scot: [00:46:30] I’m really excited to launch this El Paso video. I’m excited for other brands to kind of get behind us. I think it’s a moment a lot of companies like, are searching for, but don’t know that they need until a company like us comes to them and says, “Hey, just post on social about this on this day, or donate to these organizations.” And it’s a good excuse for them to activate their hearts if they haven’t been. And so, yeah, we’ll see how that goes.

Richie: [00:46:56] Awesome. Thank you both.

Jacq: [00:46:57] Thank you.

Scot: [00:46:57] Thanks for having us.

Richie: [00:47:03] 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.