The Next Stage: How to Grow a Successful Omni-Channel Activewear Company
My conversation with Vuori founder Joe Kudla about growing the thriving activewear company: expanding the leadership team, building a stronger culture … and staying true to the company’s ethos.
CREDIT: Courtesy Company
Plenty of stories (including many I've written) describe startup launches, that entrepreneurial period when resources are in scant supply and it feels like the fate of the company hangs on every decision.
But what you don't see are stories about the middle stages of a company's life, a period that in many ways is more difficult than the startup phase: Expanding a team, maintaining growth, building a sustainable infrastructure, maintaining the right culture... for many entrepreneurs, that's when the leadership and business skill rubber really hits the road.
This time it's Joe Kudla, the founder of Vuori, the activewear and performance clothing startup that makes casual shorts and t-shirts that look like everyday apparel... but are made to withstand the rigors of constant activity.
Last year we talked about starting the company; this time we talked about the next stage -- and achieving 140 percent growth in 2017.
You're well past the startup phase. How have your priorities changed?
You're right. We ended last year really strongly, and we're on pace for 160 percent growth this year. We're growing extremely fast and are definitely exceeding expectations.
While our priorities haven't shifted away from marketing and sales, it's been fun to take a step back and look at the things that really define us as a business: What our culture stands for, what we want to offer employees...
The brand our customers interact with is an extension of our internal culture, so we've put a lot of focus it.
What does that look like in practice?
We've introduced flex-time to our work force. We have an open vacation policy. We offer free yoga classes for all of our employees at a studio near our office. We hold free boot camp workouts on the beach on Saturday. We set up a company library where everyone has a budget to buy books.
We're working to define what Vuori stand for beyond making and selling products.
How did you decide what cultural initiatives to put in place?
We know we can't do everything. But the beauty of being a small team is that we can get together and find out what things are important to our team.
Being a company that stands for health and wellness, offering health and wellness is an obvious choice. So we provide 100 percent paid health insurance for our team... and we did even when our budget didn't necessarily justify the expense. (Laughs.)
Another thing is yoga. Yoga has really helped reduce pain in my back and has made me more flexible, but it's also helped me mentally. Yoga has helped me be a better professional, a better husband, a better father... so I wanted to give that to our employees. Our team can go hit a yoga class during the day and then come back to work.
We believe that flexibility is a requirement for employers. You can do your job just about anywhere -- so we don't want to be a culture that says you have to be sitting in this chair, at this time, to do this work. We want to empower people. We want them to let them be accountable, and hold themselves accountable.
Some people say we give people too much rope. (Laughs.) I don't agree. We want to facilitate a culture where there's accountability... but where our people have the flexibility to balance their lives.
Let's talk operations. As the company has grown, what changed?
We've hired a lot of people. We hired a director of operations, a director of production, a merchandising director... we've really rounded out our team and feel like we're in a great place to scale the business and meet growing demand.
Hiring people smarter than you is great in theory but really hard to do in practice, especially when you're the person that started the company. In effect I'm putting someone in a role they can do 10 times better than me. (Laughs.)
Once you get past that and see the benefit, you embrace the concept really quickly.
The value great people add is second to none.
Still, interviewing is hardly an exact science.
True. So we just try to make the best decisions we can.
Our brand has built a lot of awareness in the past few years. And with the action sports industry struggling, with the challenges in that industry... we've built relationships with a lot of really smart people who may be looking to make a change.
But it hasn't been so much about finding the right talent as it is making sure we find the right cultural fit.
We have an extensive interview process: Meetings with all of our senior leaders, then mid-level and even newer employees... and then we get in a room and we talk about it. Who is the best fit culturally? Who is the right fit technically?
And then we rely heavily on references. Checking references sounds really obvious, but you'd be surprised by how many people convince themselves before they've done their due diligence. We're very disciplined about that.
You learn a lot when you talk to the two most recent direct supervisors... and if you can't connect with those references it might be a sign there is a deeper issue.
You've expanded your brick-and-mortar retail footprint. That's somewhat against industry trends.
Our flagship store is in Encinitas. We recently opened the doors to our Manhattan Beach store. We're gearing up and -- fingers crossed -- will iron out the details for a store in San Francisco in the fourth quarter.
We're really excited about that. We built our stores around community involvement. We have an internal methodology for how we engage with our community. We're excited to see how that plan rolls out when we're not in our backyard.
Beyond that, things continue to go great in the wholesale channel. We had a partnership with Nordstrom this spring, a men's- focused 5-store test, and it went really well. We're growing that to 20 stores. We're excited to partner with Nordstrom on our women's line that will launch in spring of 2019.
And we're partnering with Equinox. We'll be in over 35 locations starting this fall.
With all the avenues for growth -- plus internal changes -- how do you personally determine what to focus on?
I've had to learn prioritizing the hard way. I'm learning when to let go and trust. But it's a work in progress. (Laughs.)
Vuori is a product driven-company. It all starts with the product. Marketing only works well when you have great product. The digital marketing landscape is incredibly competitive. You often rely on that second purchase to build a healthy ecosystem. If a customer doesn't come back, that ruins everything we're working on.
So I spend a lot of my time on the product team. I get involved at a higher level with things like operations, sales, marketing, etc., but I really live in the product world.
Great product is everything. With the transparency that's exists via product reviews in just about every channel... you better be great.
That raises an interesting point. Direct-to-consumer is increasingly popular, yet you're expanding your wholesale presence.
That's an ongoing debate in many industries. There's been a huge influx of capital into D2C brands... but we really believe in the omni-channel business. We believe in touching the customer wherever they are shopping -- as long as you filter it through the question of "Why?"
Why do business with this wholesale partner? Will they present your brand in an environment that effectively showcases who you are?
When you're omni-channel, when you're selective about wholesale distribution... you can expedite the introduction of the brand to a lot more people.
Ultimately we want to be where our customers are. Take our partnership with Core and our upcoming partnership with Equinox; our customers are shopping where they're working out.
We want to be where our customers are.
If we talk again this time next year, what do you like to be able to say?
We look to brands like Patagonia as examples of companies that have effectively broadened their products outside of core outdoor and into other activities.
Our DNA is product that is built to move and styled for life. Everything has to have a functional purpose for activity... but also be able to transition to being worn in multiple active disciplines or in everyday life. Take our rip-stop climbing pants; they're really durable and can be used for rock climbing... or for everyday pants. We can hardly keep those pants in stock.
We plan to bring that esthetic to multiple categories. We want to create more products that are unique and special and serve a functional purpose -- because when you hit that jackpot, customers really respond.
What challenges do you see ahead?
We're in a really fun phase. We're extremely profitable. But cash flow will continue to be a challenge simply because of our growth. We'll double again next year. Those are big jumps.
That's why we need people onboard that have been through this kind of growth before.
But still: It's a fun time to be in the business. We're opening new stores. We're expanding into Canada. Now that we've really defined our core customer base, our goal is to do more of what we're good at.
Maybe some entrepreneurs are so confident they don't have any doubts. But if you touch base with how you truly feel... when you put together a bunch of projections on a deck and present it... in the back of our minds we all sometimes wondered, "Wow. How will we actually do this?"
Look back at where I told our investors we would be, and we're exceeding those projections. And it's not just numbers.
We love seeing how this incredible community of people use our products.
That result far exceeds what my expectations were going in.