#138. Jenni Kayne is a well-known California lifestyle brand. We talk with CEO Julia Hunter about her journey plotting the brand’s next chapter after a decade of existence and how her back to basics strategy fueled the company’s growth. The Loose Threads Podcast features in-depth discussions with leaders across the rapidly changing consumer economy.

Check out the full transcript below. 

Julia: [00:00:03] I hate to say it, but I think sort of nothing was working when I joined the business. It wasn’t because of any one thing. It was just a lot of different people, working    on a lot of different things with no team unity. Everybody had different visions of what they thought the brand would be.

Richie: [00:00:19] That’s Julia Hunter, CEO of Jenni Kane, the well-known California lifestyle brand. Julia joined the brand in 2014 as the company was plotting out its next chapter after already being in existence for over a decade, Julia focused the company on getting back to its roots, which meant cutting product lines left and right. Only after mastering the brand’s core did she start to grow Jenni Kane’s presence well beyond where it had been before.

Richie: [00:00:46] 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: [00:01:04] I started the Loose Threads podcast to spark engaging discussion with leaders across the consumer economy. That’s why I was excited to talk with Julie about her journey coming into a company with a decade of history, not being afraid to rewrite it and putting it on a stronger footing for the next ten years. Here’s how it all began.

Julia: [00:01:22] So Jenni had had the company for about 15 years when I started. She had begun the business when she was 19 years old, super young, really just ambitious and excited about fashion. So she started out making apparel, and focused on ready-to-wear and then layered on shoes, and was showing in New York Fashion Week and definitely doing the fashion thing. And, by the time that I joined, she had had two kids—she now has three. So her life had really changed, it had been 15 years of doing this business focused on wholesale.

Julia: [00:01:48] She did open a couple of retail stores, but had added different categories as her interests have expanded—kid’s product and jewelry and all these different categories in her retail stores—but then still kept creating a Jenni Kane collection of apparel.

Julia: [00:02:05] When I joined the company, it just felt like it hadn’t really—the business had grown up with her but the strategy for the business really hadn’t.

Richie: [00:02:13] To go deeper on that. What did you see was working? What wasn’t working? If you can put yourself back in the head of kind of walking in day-one?

Julia: [00:02:20] I hate to say it, but I think sort of nothing was working when I joined the business. It wasn’t because of any one thing. It was just a lot of different people were on a lot of different things with no team unity. Everybody had different visions of what they thought the brand would be. Some people wanted to make it beautiful, really edgy things, and that was more the fashion product. And then Jenni wanted to make these stories about entertaining, which was much more about natural foods. And, and it just felt like a lot of things had been added, added, added, and nothing had been focused. And I think you could feel that with a team, too. Kind of a lot of nastiness, I guess.

Julia: [00:02:52] So, really, no one from that team is still with the company besides TT, our amazing office manager. But, otherwise, nobody is still here. And I think… It wasn’t because anyone was not a great team player or couldn’t have been a great team player. They just weren’t in the context of the business. I think a lot of you have been with the company for a long time and had seen all these different changes. And I was the fourth in a series of CEO hires. I actually wasn’t even hired in to be the CEO. I was hired to be the number two to the then-president of the company, who was the third president that they'[d] had in a year-and-a-half-long period. And so, it was just a very tumultuous time, and the business was tiny. So, for having existed for 15 years, it was only doing three and a half million in revenue, which is quite small.

Richie: [00:03:28] I guess, at what point did you realize, like, “Oh, this is like, a rebuild scenario.”

Julia: [00:03:33] Yeah. Maybe a month or two? It probably took a little longer ’cause, I mean—and retail is kind of a tough time in general. So I didn’t really realize how much of this was the business versus the industry changing.

Richie: [00:03:42] And what time was this again? 2014?

Julia: [00:03:44] Yes. So wholesale was starting to die, but it’s still, people were heavily relying on it for their business model. And I really wanted to walk away from wholesale, ’cause I’d done it a little bit in New York and just not enjoyed the process and felt like it wasn’t the future, which it clearly isn’t. Everlane had just popped up, and so there were businesses like that who were inspiring and seemed like they were doing things differently. It was hard to know if that was the problem or if there were kind of actual problems with the team and the people and… And, there were.

Richie: [00:04:10] What was it, like a macro-structural thing? A business thing? Both?

Julia: [00:04:13] It seems like it was sort of both. But I’d say it was probably more a business thing, it was pretty unique to this situation.

Richie: [00:04:17] So what did, I guess, like the first six months look like? I guess the CEO left, you stepped up or were pushed up and…

Julia: [00:04:23] The first six months were just kind of a nightmare, ’cause there was a person in the—she was called the president of the company. And she and I just didn’t see eye to eye. It was not a good fit. And I was actually going to be let go from the company at the same time that, then, she was no longer with the business. So it was that bad. And after that changed, I wasn’t immediately put into the position.

Julia: [00:04:42] It took another six months of me really trying to work with Jenni and her dad, who is the sole investor in the company and has been a partner in the business forever. And so I got to work with the two of them, really, on looking at different options for what we could do with the business. Make it smaller, which means walk away from a wholesale, walk away from growing retail, which was part of our strategy, focus on building an ecommerce business with a single store in Los Angeles.

Julia: [00:05:05] Actually, in that business plan, I was writing myself out of the role, ’cause I didn’t think that I wanted to be in a company that was shrinking, even though I understood why Rick said that Jenni, at that time, was a little burdened by the business. And so I think she was kind of romanticizing the idea of making it small so it felt more manageable. And Jenni cared so much about people’s happiness, so the fact that this was going on was really difficult for her, that her team was struggling.

Julia: [00:05:26] So that was one option. And then the other one was really try and scale it up quickly. Open a bunch of retail stores, prove that it was all profitable, expand apparel and shoes, focus on those two categories, but add in home, but really stop buying third-party product. Because I think the most wasteful and probably challenging piece of the business is that when I started, we were spending all this time and money investing in designing a collection, which is extremely expensive. And so that was where a lot of the cost of the business was going. But then our retail stores, 70% of the mix that we were selling was third-party product. So we were buying all this inventory from other vendors and only 30% of the mix was Jenni Kane. So you could come into the store and nothing would really feel like it was Jenni Kane.

Julia: [00:06:07] The margin’s obviously terrible on third-party compared to it as Jenni Kane product, and we were spending all this money to develop the Jenni Kane collection. So I think a big part of that Part B or option two of the strategy was, “Let’s focus on Jenni Kane making all of our own products. Let’s walk away from things that we can’t make ourselves unless it really makes sense and then scale up from there.” And I think what Jenni settled on was kind of a combination of the two, and I think I wanted to grow it more quickly. And I think, in hindsight, we really shouldn’t have. I think what we ended up doing was the right decision because, unfortunately, it takes a long time to fix all of these different areas.

Julia: [00:06:42] Getting a team right was difficult. Walking away from wholesale was difficult. Even then, I was really trying to just, “Let’s just make it bigger. Like, we can do it!” And that’s not really the case. You gotta figure out how to make all the moving parts work. So it took a few years. Then it ended up taking longer than I would have liked, ’cause here we are five years later and now business is amazing. But it took a long time to get us here.

Richie: [00:07:01] Gotcha. Decisions made in 2015 going into 2016, like, what does the first year look like in terms of priorities and so forth?

Julia: [00:07:08] There’s not the clearest answer because, still, a team piece really hadn’t been ironed out. So I was not the president of the company. I was the senior director of strategic planning, which really didn’t mean anything. Jenni was hesitant about putting someone into kind of the leader position at the company. She and I really didn’t know each other at all. It ended up being very flat hierarchy, which the company still is today, we like it to be run like that. But I think, at the time, it was definitely like kind of a lot of chiefs running all these different areas and trying to work together. And it just wasn’t working.

Julia: [00:07:38] We were trying to. I think everyone really liked each other, but there were just different ideas on focusing on creativity and trying to really make beautiful things. Again, it’s kind of back to that same creative and business tension. The design team was really talented and they put a really nice signature with Jenni kind of together and built this really cohesive aesthetic that actually represented exactly what Jenni wanted it to. So I think we made strides on the product front, but just in terms of like, focusing on ecommerce and content and all these things versus wholesale, it was just very complicated and all very expensive.

Julia: [00:08:09] So, eventually, a lot of people turned over and the team really changed and we started hiring. And then I was promoted into this role, kind of, maybe a year and a half after that. So it took a while.

Richie: [00:08:20] How do you start to, I guess, manage shrinking a revenue line and growing the others? Because on a much larger scale, like, I think of a brand like Rimowa that was almost all wholesale and trying to become all direct, and took a huge sales hit to do that. What did you anticipate would happen? And then how did you guys start to manage that in year one of “where [do] we want this to go?”

Julia: [00:08:37] In some ways, I’m grateful that the business was so small, because when it’s a $3 million dollar business you’re not that worried about losing a million of it. I mean, I guess I could have been, but wasn’t at the time. And [it] felt like there was just so much more opportunity to make it bigger on the direct side of the business. So, wholesale wasn’t really working for us either. It’s just such a slog. You’re like, one account loves you and then the next season they’re not sure. And it was actually a relatively easy decision because we knew that we could build the retail business. We’d already had a couple of retail stores and we saw successes there, and that’s where the pieces that we were excited about were actually really performing. Wholesale tend[ed] to want things that were from our brand that were really more the way that we used to do things. And pops, and you would really stand out on a page and that was just not where we were going.

Julia: [00:09:20] So I think I was lucky that it was small. The main reason that the business actually didn’t end up declining at all, and that was just ’cause there was so much product opportunity just by—you know. When I joined the company, we would have one sweater per season, and coming from J.Crew, where I knew that we needed to look at our sales to stock and that I was the sweater’s planner and like, that was the biggest business in the company, I knew when I looked at Jenni Kane’s business that we had this one sweater and it completely outperformed sales inventory, but it wasn’t actually occurring. There were no sweaters in future seasons, and certainly not more sweaters in future seasons because that wasn’t really the aesthetic that we all were excited about.

Julia: [00:09:52] So I just started adding sweaters and the assortment, and we’ve added a million dollars the next year just in sweaters. So there is just so much low-hanging fruit on the product side that even though we changed our channel strategy we were still able to increase the sales.

Richie: [00:10:05] What other like, low-hanging fruit, I guess, did you tackle in that first year, post-strategy change?

Julia: [00:10:09] I think another thing that was really important to me was getting a handle on our inventory. Coming from J.Crew, which has inventory liability issues, being familiar with planning, calculating “Jim Roy?”, kind of knowing how risky it was to own too much inventory and especially low-margin inventory and especially inventory that had to get marked down and it was liable to sell in a certain period of time. I was just really scared that our inventory position was quite high.

Julia: [00:10:33] [We] didn’t want to do Gilt Groupe or any of those things, even though they’re great outlets, but it was not in line with the idea of building the brand in something different. That was the biggest focus, [it] was: we just did a lot of sample sales and people still wonder when Jenni Kane’s gonna do sample sales again. We will not be doing sample sales again! At least, certainly not in that capacity.

Julia: [00:10:50] So it was exiting a lot of merchandise, taking a really big hit on our margin. I think our margin was in the low 40s and now we’re in the 60s, total company, which is great, now, and was kind of scary then. And then putting processes around how we’re going to buy and plan for inventory going forward. You know, there was no open to buy it was really just, we were excited about a new vendor and needed new products, so we’re writing checks without a total budget for any planning. So that was putting in best practices, which honestly took until—I think our team now is amazingly talented at that, but that took a few years to get really right.

Richie: [00:11:22] Okay. So it’s kind of like, get the ducks in a row and rebuild the foundation. In year one into 2017, I guess, how did focus goals, your own priorities, start to evolve off of that work.

Julia: [00:11:31] 2017 is when we really did start to focus on ecommerce. So the ecommerce website that we have today is from 2018, but [in]  2017 at least we had a Shopify, which we’re not on any longer. So we did end up re-platforming anyway.

Richie: [00:11:43] Was there no website before?

Julia: [00:11:44] There was a website that was used as a vehicle for sample sales.

Richie: [00:11:48] Okay. So nothing shoppable.

Julia: [00:11:48] No, no, the website wasn’t nothing to the business, besides, you could see that JenniKane.com existed. So that was when we really started focusing on the website at all, and really just hired two people, I think, to work on website with me. I was making all the email newsletters myself in Mailchimp for a while.

Julia: [00:12:05] So, ecomm infrastructure. And one of the things that we did kind of inherit from the past of the brand—which is a positive for sure—is Jenni’s blog Rip & Tan, which is something that she’d started organically, I think, over the years as the business was maybe getting away from what she really wanted it to be a little bit. She started this blog, which was meant to be a place where she could just list everything that she liked. Everyone who knows Jenni wants to know Jenni’s recommendation for every single thing in life, whether that’s the food to eat, the restaurant to go to, where to get flowers, what flowers to get. And so she put this on Rip & Tan.

Julia: [00:12:35] So we had a WordPress site that was her blog. And, you know, she would actually sit there and like, have someone on our team would print out all of the images, and then she would cut and paste them into the layouts that she wanted. And so it was just really authentic. Like, this person is spending a lot of hours making this really trusted resource because it’s coming from Jenni. And so we had this content that was really strong and had been built organically over time. And I think finding out how to integrate that with the business, when I joined the company, the blog would redirect everyone off the page. We were always promoting other designers, which is not the right thing to be doing. If you have traffic people coming to look at your website, ideally you could sell them something while you’re on the website. So it just really, kind of refocusing those efforts to be more integrated with the product assortment.

Julia: [00:13:17] Today, the blog gets, a couple hundred thousand unique visitors per month come to our blog. The website itself gets a couple of million page views a month now. It’s really a good website today. And I think the reason that people are loyal and come back to the website, even when they’re not necessarily looking to shop, is because we have the blog.

Richie: [00:13:34] You mentioned before that you saw retail working and performing kind of when you joined. What were some of those bright spots that gave you the confidence to say like, “Sure, there’s stuff to fix, but there’s a solid foundation here.”

Julia: [00:13:44] I think the Brentwood Country Mart store was kind of our baby and still is. It’s the top performing door in the company. I don’t know how much longer that will be the case, since we’re scaling up to a lot of new locations next year, but it’s always been a place where we can really test and see. You know, when I joined, that store was doing a million dollars or close to it. It’s small. So it was, it’s, you know, roughly a thousand dollars a square foot, which is good. And then when you, when I went into that store, you could just feel how much opportunity there was if we were kind of changing up the product mix. So I do think Brentwood was actually really instrumental in figuring out what was gonna work.

Julia: [00:14:14] Same with the other locations. They were all performing relatively well for their size and now they’re doing three times the volume that they were then. But the retail stores at least had places where you could see, oh, if we had more of this inventory or if we gave the customers and the store teams this category, which they’d need more of, there will be upside to that. And if we take away some of these things that they really don’t want, we would see, you know, huge pops.

Julia: [00:14:37] There were a couple of programs that we launched that first year in sweaters. We just actually, the first time we ever had ten styles in a season instead of really one to two before that. And they just all blew out and everyone was so excited. And then we did a flannel program where we introduced four different flannel plaid shirts for the holidays, and those blew out. And I think that was really us trying to figure out how we could do product in a way that wasn’t the old school way and it wasn’t all these different fabric groups. It was just, “Let’s pick a category and let’s do it really well. Let’s do really great marketing assets.” And so it was just kind of figuring out ways that we could drive key items without having it be like the whole new season is here. Look at all of our Fall and Holiday merchandise or whatever.

Richie: [00:15:14] Kind of “unseasoning the business,” so to speak.

Julia: [00:15:15] Exactly. Yes, exactly. Yeah.

Richie: [00:15:18] Did any new stores or anything open? Or not till 2018?

Julia: [00:15:21] Palo Alto and Newport. I think those happen[ed] actually towards the end of 2017, we probably opened those, which was maybe too early to have done that. In hindsight I think I just spent too much opening those stores. I’ll take that to my grave. The cost of buildout at Palo Alto is something that I think about every time I see Rick, Jenni’s dad. We don’t have to talk about how much I spend in Palo Alto! So I think we weren’t totally ready to be building out stores, especially in a mall environment where you just don’t really know what you’re doing.

Richie: [00:15:45] And at this time, is it predominately a California-based brand? Were there surprises when you opened ecomm up about where actually orders were coming from? And how did that, I guess, also map with where wholesale was, too?

Julia: [00:15:54] So wholesale was really a small part of the business. I don’t know that it really connected. Our wholesale accounts were really shop-bop and then specialty stores. There wasn’t anybody else.

Richie: [00:16:03] Kind of national, but then super-local.

Julia: [00:16:04] Yeah, exactly. And Bloomingdale’s carried it for a couple of seasons. That is where I got some revenue. The business was definitely California-focused, and it still is today, but now, because of ecommerce, we have such a much bigger mix on ecomm. All of the stores that we wanted to expand into, we’re in California, ’cause I think we felt like, that would be, first of all, geographically, just easier to expand and close to home, and be able to visit the stores. But also, it’s just who we are. The brand is very much a California aesthetic. And so it felt like that’s a place where we could start to build. And we’d seen companies like Restoration Hardware had really built a business on being focused on the West Coast. So there was models that made sense that way.

Julia: [00:16:39] And because the ecommerce business didn’t exist, we were almost all-California. And today, now, New York is a huge part of our business, and actually every city kind of touches it. So I think when we finally got into 2018, 2019, when we started scaling up ecomm and spending on ads, really, it made it possible for us to kind of introduce ourselves to new markets. Yeah.

Richie: [00:16:57] Moving into 2018, I guess you’re now kind of two years under the belt, so to speak. What do priorities and focus look like across that year?

Julia: [00:17:03] So 2018 was the first year that I think we had our whole solid team in place. So the people who are with us today all were in place by the beginning of 2018. And so we started focusing on just making everything better. The website started to get really strong by the end of 2018. Last year we were starting to see the kind of business that we knew we could do, so Q4 was kind of the first time that we’d ever actually partnered with a digital agency. We’d had a digital agency in the past, but people who were really ready to help us grow.

Richie: [00:17:30] What does that look like? What does it take to do better, I guess, in a year? I’m sure it’s a lot of little things.

Julia: [00:17:34] It is a lot of little things working together. You know, even just going from having stills before and now it’s just, every image on our website is a beautiful lifestyle image, so you can actually see how the clothes look on a model, but in an organic natural way. In context, not just against a white wall. So there were changes like that that we made, the way that we market, and that’s been a shift that’s kind of ongoing, but trying to make more punchy content and things that are actually kind of relatable, and help people understand how to get the look and how to wear things. Those changes ended up touching the copy on the product descriptions, in our email, in the way we did Instagram. And so I think that was a big piece of what we were working on in 2018 to make the ecommerce business better. The product strategy just kind of continued to make sure that we were actually designing into things that were working was really important. And then, lastly, I mean, the big thing was just that we actually started spending on digital ad.

Julia: [00:18:22] So we went from spending, I want to say $10,000 a month to $60,000 a month to $100,000 dollars a month to a few hundred thousand dollars a month to a million. So that’s been like, kind of the biggest change, which is true for most brands, I think we just did it much later. And the thing that’s actually good for us is that we’re so ready for it because our product strategy is so dialed in.

Julia: [00:18:41] I think we were really ready to have a loyal customer, not just start acquiring customers and have them come to us one time for a pair of sneakers. It was definitely, we had an entire wardrobe that we could offer to people. We had different categories and we just had good enough content that it was a much more compelling experience. And so I think once we started spending on digital, it was easy to make people convert when they came to the website, and to come back.

Richie: [00:19:03] What were your thoughts on taking a big step in a digital—at a time where costs are rising and you hear kind of all those things that started in 2016, 2017, you’re in kind of 2018 now, starting to spend a lot of money. I guess, what did you see at a high level and did strategy evolve at all because of that?

Julia: [00:19:18] Honestly, I feel like I was not paying enough attention to what was going on. I missed the memo that digital advertising was expensive. We never thought of ourselves as a direct-to-customer business until last year. Then when we started thinking about being a direct-to-customer business, I realized like, “Oh, we should have an Instagram advertising strategy.” And I didn’t really know what that meant. That’s not where I had come from. So I’m not like the other digital brands who are Instagram ads first. I was pretty isolated from that worry until now, when we are really trying to make sure that our repeat rate is healthy and that our customer lifetime value is high. And we are fortunate that we did all this work previously to make sure that that was the case. So I guess I wasn’t as scared as I probably should have been.

Julia: [00:19:55] And there was just so much opportunity. I mean, we were spending—our AOV on our website’s $325 now, and we were spending $15 on customer acquisition. So there was— we had a long way for it to become risky. We were lucky to work with our agency because they have been so careful about managing our ROAS, they haven’t wanted us to spend more than we need to, which is not the case with most of them. So we’re just trying to be really cautious about it. But I certainly didn’t realize, which I do today, that this is exactly why every brand is not profitable and scales and then blows ups. So um, yeah. Didn’t have the foresight to worry about that then.

Richie: [00:20:28] But, I guess, might as well make it work as long as you, as you can at that point.

Julia: [00:20:30] Yes, yes, yes.

Richie: [00:20:31] You mentioned a bit before about kind of new retail stores. What did that look like in terms of going from the few you had across 2018?

Julia: [00:20:38] There’s been a lot of work to make sure that the stores are really memorable, really special experiences that are actually part of the community. And I feel like there’s so many buzzwords around all of this now, “experiential retail.” But Jenni Kane really does that. All of our stores are quite profitable now, between 20% and 30%. We have a healthy gross margin. We knew that if we made the store experience as good as it could be, we were gonna really see results at the top line and the bottom line of the company. We have an affluent customer, we’re trying to be more broad and approachable, but our customer just really wants our product in a lot of different categories. So we knew that if we made it easy for people to come back into the store, not necessarily ’cause they want to shop, but because we have, now, Wellness Wednesdays, where every Wednesday at every location, customers know they can come to our store for a free beauty treatment. Changes every week.

Julia: [00:21:22] We do floral pickups where people get free flowers if they’re a customer of ours. And anyone can come in and do a crafting. They don’t have to shop, you can just, we have a little seasonal craft at every store. So we started trying to make these really memorable moments. And I think they just did actually increase the lifetime value very quickly of the customers that we had in our retail stores. So now we know that the repeat rate—I mean, a customer is ten times more likely to shop with us multiple times if they visit a retail store, so it just became very obvious that that was our path, at least one channel, as we were building what—we knew that ecommerce needed to be as good and as memorable as a retail store. So I think the retail stores were sort of guiding what we wanted our website to look like, which is different from other people. Other people start with the website first, and we just had this really beautiful brand in-store in a very physical environment that we needed to figure out how to create online.

Richie: [00:22:08] So when did you start to, I guess, add categories back after closing some of them down.

Julia: [00:22:12] Kids, we walked away from. Home got really small. This is third-party: jewelry, we walked away from. These businesses that were contributing significant revenue, but just not at a healthy margin. And so I think home was the first really big launch and it just made the most sense. Jenni had been featured in Architectural Digest, her home was on the cover of Domino. We all felt like that was the most tangible, and the way that we had been the most directly inspired by working with her. Everyone on my team now cares so much about the way that their home looks and I think Jenni kind of introduced us to that. So that felt like the most authentic and kind of obvious extension of the brand. And it helped to have a lifestyle story, especially because so much of the home product that we launched with was in the same textiles and materials that we work with in the apparel. So, you know, cozy knits made from the same alpaca yarns and things like that.

Julia: [00:22:56] So home was our first big launch and we just kind of went after that in 2017. That was the first category, Q4. We launched it for Holiday. We knew it was gonna be a big part of the business and had potential to be great. So that’s the first category that we added back. And since then, we’ve been really slow to kind of expand. We’ve done things in very small ways. So if we say we’re launching a men’s collection, that does not mean we’re launching a men’s collection. It means we have our best-selling fisherman’s sweater is now in a men’s body, it looks great on men. Kids, we do the same thing, where it’s the fisherman’s sweater again and the kids’ sizes. We like the newness of entering new categories, but not because we want to get into that category more, because it’s just kind of something that we know our customer already wants, and she wants one now for her husband or for her baby. That’s kind of the way that we’ve approached all of the new categories, is just small moments, not big, huge launches—except for home, which is a pretty big category now.

Richie: [00:23:45] There’s definitely what I’ll just call like, “the lifestyle trap.” Just blow it out, and we can do everything, we have brand promotion everywhere. Having, I guess, been there a little bit, how do you modulate what you do that’s new, to not get back to that place? ‘Cause serving a kid and a man and a woman, that can get so complicated so quickly is—I’m preaching to the choir, probably. But how do you figure that out?

Julia: [00:24:05] That’s been my biggest challenge at Jenni Kane, and it still continues to be. So, our customer at Jenni Kane is a woman, and she’s the woman who might have kids, might have a husband, might not, might be single, but we always think of that first. So when we introduce men’s sweaters, we think a woman wants to buy this for the holidays.

Richie: [00:24:21] So she’s still the buyer.

Julia: [00:24:22] Yes, for sure. I mean, hopefully, maybe some men want to buy it from themselves, but that’s not how we’re thinking about it. We launched men’s this holiday season because we knew it would be a good gift for our woman customer to buy for her husband. We’ve been trying to keep that in mind, to not go backwards. The thing that’s challenging with Jenni—and it’s her biggest strength, but it’s a challenge business-wise—is that she really cares about the details of everything in life. So everything that she carries, even the little bags her vitamins come in, like, that actually matters to her in her day. It needs to be a nice experience. She’s not like the rest of us. That’s the beauty of Jenni, is that she’s relentlessly focused on details in everything. And it is very inspiring, but it’s also challenging, because we don’t need to make every single thing in life…

Richie: [00:25:04] Vitamin cases. Yeah.

Julia: [00:25:04] Yes. Yes, exactly. I mean, maybe we do. I don’t know, but, but we don’t! But one could convince me that we do, and I think that’s been the challenge, is trying to know when to go for it. And we’ve made some mistakes. I think the home collection has been really successful in core items. That’s really the strategy of the brand, is to find those pieces that are items that can be franchised businesses themselves, and we can really build business around single styles that everybody loves. But with home, we’ve kind of over-expanded. So, you know, we have too many things that kind of fit with the tabletop, and maybe you need all these things, but you don’t need all of them from Jenni Kane. We should do dinnerware and the things that are really statements, but don’t need to have the entire kitchen assortment.

Julia: [00:25:39] So it is a challenge. But then at the end of the day, like, really, this is what’s unique to Jenni, is that she actually does have an opinion on every single thing that she would ever have in her house. I think we figured out how to manage that from a business perspective now, and a product perspective in what we’re carrying, but then when we started to look at media opportunities—we’re thinking about doing a TV show next year, more books, and that’s when it starts to then go back to like, it’s better if we focus on a single thing than it is if we try to do everything, because people don’t understand that much. When we say the brand’s mission is “living well,” and we’re thinking about doing a TV show about living well and touching all these different categories, that’s a little bit overwhelming for a customer. It’s overwhelming for me. And I’ve had it been, you know, introduced to me over time. I think we do always try to go back to making things more digestible for people, but it is such a challenge.

Richie: [00:26:26] In terms of price point, did anything change throughout this journey, or was that one of the things that was kind of on par?

Julia: [00:26:32] The price point when I started was really high, ’cause it was just set up like a wholesale business. So we were selling $795 sweaters and dresses that were $695 dollars. And so we’ve really reduced the retail prices. We knew that we didn’t want to sit at this high price point that very few people shop at, because so much of that is markdown-driven, and it’s really a specific customer that you’re working with. So we did try to reduce the prices and we made pretty dramatic changes quickly. So that’s something that happened early on. Like, I want to say, 2016, the prices came down 30% or 40% at retail, which was huge. But because we were focusing on retail, the margin actually increased on the business, which was great.

Julia: [00:27:07] But then I think we tried again to make some price adjustments over the last year because we really do believe in inclusivity and trying to make the brand more accessible to more people. And Jenni’s certainly was perceived as a very niche brand before, and kind of high-end, and a little bit alienating; some of that was the silhouettes were really meant for really skinny people. And now we try to make things just work for everybody.

Julia: [00:27:27] But still, the product is more expensive, and that’s probably the comment that we get the most from people who are critical of the brand, is the price points. And we are really doing what we can to try and still make really good product, but at an accessible price point. It’s a challenge. We’ve tried to reprice items that are best-sellers down considerably and really haven’t seen an increase that we kind of expected that we would, in units. There have been small increases, but not jarring numbers. And so I think our strategy now with price point is that we do have something for everyone at this point. So the category fisherman is an expensive sweater, it’s $395, you’ll have it for the rest of your life, it’s a beautiful sale. But this past fall, we launched something that we’re calling the “everyday sweater,” and it’s $145 retail. It’s a lighter weight yarn so it costs less to make, and that sweater actually did sell four times the unit that the cashmere fisherman does in a week. So, because, we just were able to open new audiences.

Richie: [00:28:17] It’s interesting. I guess I feel like some companies will just defend the price point. “Oh, the quality, oh, like, blah-blah-blah,” versus, it seems there is more of an open-mindedness.

Julia: [00:28:25] So, we try to be, because I think we’re customers of the brand, too, and like, I don’t want to not be able to afford the product. So it’s just important. I don’t think that people should have to shop at Zara if they’re not making several hundred thousand dollars a year. I think people should be able to get good product. I know that it’s changed my life being introduced to the materials that we work with, and I wouldn’t be able to afford them if we were charging really expensive prices. So I think we just actually do believe that that’s the right thing to do, even though it’s still too expensive for a lot of people. And some of our customers might think that the quality has been compromised because our prices have come down. I know that it hasn’t, but retail store customers have noticed that the prices have come down and have asked, “Are you using cheaper yarns?” The answer is no, we just shifted our business model, but not everyone understands that. So, you can’t win, but.

Richie: [00:29:06] Right. You can lose less.

Julia: [00:29:08] Yes, exactly. Yes. That’s the goal.

Richie: [00:29:12] Coming into 2019 then, I guess, talk about kind of what the focus was for this year.

Julia: [00:29:16] So I shared that the company was doing roughly $3 million when I joined. We got up to $8 million over those first several years. So growth, but not great growth.

Richie: [00:29:24] Why do you say that?

Julia: [00:29:25] I mean, I’m just used to hearing people talk about doubling and doubling and doubling. I think it felt like we shouldn’t be adding a million dollars a year. We should be adding like, three and then six and then nine and then ten and then 12. Like, every year should be doubling. And I’ve had people be surprised that it was growing so slowly, even though it was growing. And the company wasn’t profitable, so I think that’s been a challenge, too. Still working on that. We’re very close.

Julia: [00:29:46] But I think this year so many things just really started working together. So we did $8 million last year and we’re on track for $25 [million] this year. So this is the year that it’s blowing out.

Richie: [00:29:57] There’s your triple.

Julia: [00:29:57] Yes, we got our triple. I’m very pleased. Now of course I’m just focused on how we’re gonna double again next year. But this year is the year that everything started working. And it’s not just ecommerce, although ecommerce is up from two to $12 million, and that’s awesome. But the retail stores are up 80% this year. All of the comp doors, and, and everything is just clicking. And a lot of that is the digital ads are just being shown to so many more people, and people are coming back to the stores, but so much of it is that our social strategy is really strong.

Julia: [00:30:20] We have really good content. We are kind of activating in all these different ways. We’ve done a lot of experiences this year. We did our first ever Jenni Kane home that launched earlier this summer. We purchased a house in Lake Arrowhead, which is about an hour and a half outside of Los Angeles. It’s a beautiful kind of mountain area with a lake, and it’s definitely a vacation property, but close enough to Los Angeles. It’s easy for people to get to. And so we got it and made it look like a Jenni Kane home, and turned it into this beautiful representation of the brand. That before and after content is amazing. You can really see the transformation. They can help people understand the power of the brand because it’s all Jenni Kane product in the house, mostly—we filled in with partners on things that we don’t make ourselves—but it had ended up being a very beautiful home that is also shoppable and then we used it for experiences.

Julia: [00:31:03] So we hosted Camp Kane at the house where we invited 50 influencers to come and spend a day at the lake, and we did a bonfire, and cooked on the bonfire, and people got to go swimming and did a scavenger hunt and I got to take pictures of the house. And so we’ve been using the home in activation for these different experiences. We did a giveaway on social and let a follower come stay with friends at the house and they got to stay for a couple of nights and kind of experience the Jenni Kane lifestyle. So I think where you’ve been trying to be innovative in that way.

Julia: [00:31:28] We launched the book earlier this year as well, which is called Pacific Natural, and Rizzoli was the publisher. Martha Stewart wrote the foreword for the book. She’s a big fan of the brand and a friend of Jenni’s. And so we’ve just been trying to do things that are a little bit outside of the box that tell the living-well story in a more holistic way that I think is relevant for today, so not just being focused on Instagram and social media, but going back into print in a way that makes sense for the brand. Going into video because we’re—with Arrowhead House we really wanted to get before-and-after video footage since that’s something that people love. So we’ve been doing things like that and I think really just trying to set up for next year where we are going to try and do a show, something that kind of reaches a much bigger audience.

Julia: [00:32:05] We’re looking at doing a hotel, so we’ve done a few of these different experiences where people could come and stay at a retreat for a week and actually live the Jenni Kane life from the food to the different wellness treatments they can get, and workshops on flower arranging and things like that. We’re really trying to create these experiences that tell the living well story. And we’ve been doing it in small ways this year to test and see what resonates. And then next year we’re going to make them much bigger and hopefully get them a platform that can reach more people besides influencers and things like that, but really just go big with it.

Richie: [00:32:35] Would that hotel be like, a partnership, or would you literally go operate your own hotel?

Julia: [00:32:38] We’ve been looking at different options. I know that we need to be careful about going into hotel by ourselves. So we have talked to a bunch of different partners who will be operators and investors in the business who do hotels. I think if it was small, we could maybe do it ourselves. We’re not looking at doing a 50 to 100 room hotel, it’s something that would be like ten to 30 keys. It might not be crazy profitable. It will pay its own way, but it will be more of the experience and part of the brand. So I believe, maybe naively, definitely naively, that we could figure out a way to do it ourselves. But there are partners that are interested, it just comes with strings. So I think, of course, we’ll figure out what the right way is to do it.

Richie: [00:33:09] What’s been the cheapest and most expensive lesson you’ve learned building in the business?

Julia: [00:33:13] Most expensive lesson I certainly touched on: Palo Alto. That was a, phew…

Richie: [00:33:17] What was it specifically? Just straight up buildout costs?

Julia: [00:33:20] Yeah. And it was like, almost a million dollars. That was hard to say out loud. So that was just not understanding that we could push back on the landlord about—you know, we had to have bird-safe glass, cause it’s Palo Alto, which is great. But like, why are we importing window glass for a hundred thousand dollars from Germany to help birds not fly into the windows? Like, could I try to have that waived? And at the time I didn’t know that I could. And those are things that we didn’t know going into.

Richie: [00:33:44] Just lease stuff. Yeah.

Julia: [00:33:44] Yeah. Stupid lease stuff that I really messed up on, thinking that I could handle it all myself. That was Palo Alto, and like, truly will go with me to my grave. The cheapest lesson…I guess, the brand ambassador program. That’s a good one. So we just launched something. You know, everybody’s talking about brand ambassadors. We’ve had a really hard time with influencers over the past this year. It’s been very successful ’cause I think we figured out how to do it.

Richie: [00:34:05] Why do you think that was?

Julia: [00:34:06] We used to think that you really need to work with big people and it would be a one-off partnership and you just pay a lot of money. I’d always be disappointed in the results, and they wouldn’t really actually even want to support the brand. They’d really just want their fee. So it wasn’t like an honest relationship, and we only did a couple of them, ’cause I think in general we were skeptical, but we did try to see if things would work and really didn’t find any traction. So then, this year we really tried to work with people with a smaller following who really actually made sense with the brand, aesthetically, which inevitably meant that they didn’t have hundreds of thousands of followers. They might have 20,000 or they might have 5,000.

Julia: [00:34:38] And so I think we’ve found that there’s just such greater level of engagement. The content they make is much more authentic, and it’s consistent. They’re not just gonna post one time. So the influencer events we’ve done this year in general have been with people who are not necessarily as high profile as other people we would work with. But, specifically, this brand ambassador program that we launched earlier this fall. We worked with 20 ambassadors who we kind of handpicked based off of who we had relationships with, and a lot of these people we didn’t know except that they’d started posting about us.

Julia: [00:35:06] So it was very organic and we weren’t really looking for them. We just saw that they were popping up in our UGC feed over and over and over again. So we reached out to them and kind of put together this proposal where we would give them a couple pieces of clothes. We, I think we only require one post the things, knowing that that actually fosters like, more of a friendly relationship if we’re not being ridiculous with the requirements, but we pay them a commission on the sales. And, I guess it’s obvious, but we didn’t know if we would be able to manage the process, if the system was gonna work, what it was gonna be like with returns. There are all these complications, logistically, but it actually has been immensely successful. The ROAS is higher than anything we’ve done, because the quality of these posts are actually really good. It’s the best content that we have. It’s coming from these influencers. I mean, our content is great too, but it’s not the same thing as when you’re having somebody who really doesn’t fit the brand ethos, trying to wear a pair of mules and saying she loves her mules. That’s great. But it’s not the same thing as someone who really actually loves the Jenni Kane lifestyle and will talk about the sweater that, it’s the sweater that she lives in every day. Like, that’s much more emotionally connective for customers. And so we’re just seeing so much more success with that.

Richie: [00:36:12] Did you open more stores this year as well?

Julia: [00:36:14] We didn’t. We were really careful about that. So we wanted to actually prove out everything. But we are opening seven new stores next year, so doubling the store count. I think there’s like four leases signed.

Richie: [00:36:24] Talk about what’s on the horizon, what you’re looking forward to [in the] next 12 to 24 months.

Julia: [00:36:28] Now that the product strategy’s pretty dialed-in, the ad strategy marketing, our calendar’s all really dialed-in, it’s mostly just about making the brand more of a household name at this point. And we didn’t keep doing that through paid channels, but I think the show to me feels like the biggest, most exciting thing that we’re working on. First of all, there’s no customer acquisition costs, right? We don’t pay for anything. The partners are just, “We’ll do it.” We’ll, of course, put in the time and the hours and the design aesthetic and everything else. But that’s really big. I think the hotels and the experiences going deeper into that is huge opportunity for us. I think a lot of brands are starting to talk about doing it, but I think Jenni Kane, because of this really rich, consistent aesthetic that it is, goes across categories. And Jenni has been doing this for a long time, so she’s pretty trusted. I think that that feels like a huge opportunity for us to just work in hospitality and introduce people to the lifestyle in a real way.

Julia: [00:37:18] So it’s not just about the sweaters and the clothes. It’s really about caring about yourself and taking care of yourself, and believing that you deserve good things in all these different areas. Those initiatives that are kind of beyond the business but will drive the business is what we’re really excited about. And then just data. That’s not something that’s been a focus. Since I started my career in investment banking I’ve always been kind of looking at numbers and using spreadsheets to tell us what product to design into and how to spend on ads. But I don’t have facility with running regressions or building tools in-house. We’ve just hired our first ever data scientist. I’m very excited about this hire ’cause I think she’s gonna actually help us with personalization and recommendations and to make the experience. Because our customer is so loyal, I think they’re more willing to give us information about their preferences and, and engage with us more regularly than they might be with other brands. So we’re really gonna try and build in some data-driven tools that are basically recommendation engines to help optimize the customer experience.

Julia: [00:38:12] And we’re launching an app as well that will go in tandem with the show most likely, which will really be content more than it is shopping, although, of course, you’ll be able to shop on it. That’s where we feel like we can really get real estate on people’s phones and have them interacting with the brand. We’ll do tips of the day on living well and just kind of little sound bite things that people will wake up hopefully and want to listen to. More video content around styling your home or styling your wardrobe. So that feels like a really big, exciting push for us.

Richie: [00:38:40] How big do you want this to get? And I guess, does anything hold you back in terms of wanting to manifest that at a certain kind of level of speed? ‘Cause I believe, I guess, there’s certain hurdles of like zero to one million, one to ten, ten to 25, 25 to 50. And you’re getting like, exponentially harder to get there and be profitable and so forth in all those metrics, I would say, like, you’re getting to what some brands consider like, the danger zone a little bit. How are you thinking about all that and time and speed?

Julia: [00:39:06] It’s funny. I’ve heard so many people recently have been telling me, “Oh, going from 25 to a hundred’s easy.” So I’ve decided that it’s easy and it just has to happen. So I’m not considering it to be the danger zone. We’re not trying to make this into a billion-dollar business in the next couple of years. I think we want to be thoughtful about how we grow the business as we have over time. That said, and this is probably the naive reaction, is that I think we’ve really set the company up to scale cleanly. I think we have really good infrastructure, both in terms of our ops processes and our customer service experience, from the way we buy product to the planning and inventory processes. We just have always been kind of systems-first in that way. So I don’t think we’re going to run into technical issues as we scale.

Julia: [00:39:46] And I also believe now that we kind of have established a pretty clear, cohesive aesthetic that is gonna guide the company as we grow, from a product perspective. So I’m not really worried about anything besides figuring out how to make sure we do this profitably. And I do believe that—and this is just sort of TBD—as we’ve scaled, last year, 30% of our business was repeat customers. This year, 35% of our business is repeat customers. So even as we’re scaling we’re still seeing pretty healthy return. Repeat customer rates, we have a very high customer lifetime value: $1,500, roughly. I think there’s a lot of promising indicators that show that this could be a business that, actually, people shop at multiple times, so the customer acquisition cost becomes not as relevant, but that is very TBD and that’s sort of a hypothesis more than it is something that I’ve proven to be a fact. So I just believe that we have something people will kind of come back to us, time and again.

Richie: [00:40:35] When you joined the company did you think, running the company, being at this point, did that seem like a possibility or was that not really in the cards?

Julia: [00:40:43] I’m sort of crazy. So even on my first day of J. Crew, when I was like 25 years old and the planning assistant or something, my first day I was like, “I’m gonna be the CEO of this company.” So there’s delusions of grandeur or something. It’s certainly a common thread in my career path. So I wouldn’t say that I would have thought it was out of the question, but I didn’t think it would end up like this. I thought being a CEO when I started in this role was a lot more about numbers than it is about strategy. And when I say “strategy,” I don’t just mean business strategy. I mean how you work with people and what makes people actually want to be passionate and committing to build the business with you. Like all these things that I just literally had never even thought about before, because I was so focused on myself, and just growing in my career and needing promotions and things like that. I think that’s the change that’s made. So, yes, I probably did think that I could be the CEO of this business. I certainly did, but not in the way that I actually am running the company now.

Richie: [00:41:35] Awesome. Thanks so much for talking.

Julia: [00:41:36] Thank you, Richie.

Richie: [00:41:43] Thanks for listening to the Loose Threads Podcast. You can read full transcripts of the podcast and join the newsletter at LooseThreads.com. Feel free to leave review on iTunes, we always appreciate it, and thanks to George Drake, Jr. for editing this episode. We have a great roster of upcoming guests and we hope you tune in next week.