Thinx Almost Imploded. Meet the Woman Who Rescued It and Wants to Turn It Into a $300 Million Underwear Empire
After Thinx’s founder dramatically left her company amid sexual harassment allegations, Maria Molland came in to save it.
Thinx CEO Maria Molland. CREDIT: Thinx
In March 2017, a former Thinx employee filed a complaint with the New York City Commission on Human Rights alleging that the period-panty company's chief executive, Miki Agrawal--a self-styled bohemian socialite whose brash, say-anything behavior had garnered the startup a lot of boisterous press--had propositioned employees, touched their breasts, exposed herself, shared nude photographs of herself and others, and routinely video-conferenced from her bed and her toilet.
The next week, New York magazine's The Cut ran a long exposé on the company, and before long, headlines were all over the tech and fashion press. Maria Molland, an experienced executive who'd launched Fab Europe after starting her career at Yahoo and Dow Jones, watched the scandal unfold from home, with her newborn daughter on her lap.
"I was completely shocked," Molland says. "Can you imagine? I didn't want to touch this with a 10-foot pole."
It just so happened that Molland was searching for her next executive role and, over the previous couple of months, had been speaking to Thinx's investors and board members. One of them--a friend of a former colleague at Yahoo--had called her two days after her daughter was born. Molland began interviewing for an executive position at the company weeks later, in mid-January 2017. Throughout the interview process, they let Molland know that Thinx was having "leadership issues." It was cryptic, but not disconcerting at the time.
The allegations--which had already led Agrawal, the company's self-declared "She-E-O," to step away from the company--were a high-profile mess that Molland decided she wanted no part of. She stopped speaking with Thinx.
Stepping Into a Scandal
Thinx was founded in 2013 after a successful Kickstarter campaign raised $65,000 to make "a more thoughtful pair of underwear." It rose to notoriety in Silicon Alley for nailing a convergence of trends--edgy feminist advertising, the direct-to-consumer business model, an innovative product, female founders. Despite meager funding, Thinx grew in a hyper-specific niche of the $38 billion global lingerie market with its new concept: underwear that absorbs menstruation. (It also has a sister product line, Icon, that absorbs urine leaks.)
By early 2017, it had made Molland's short list of companies she was interested in working with. She'd recently co-founded an event-space upstart called Splacer, and liked young companies. Her personal life influenced her desires, too: To become pregnant with her daughter, Inga, she'd weathered more than four years of fertility treatments. Her list of companies centered on those that might change the world of reproductive health. Thinx, the maker of period undies that can replace bleach- or toxin-filled tampons, was fascinating to her.
Weeks passed after the bombshell, and in May, Molland took another call from Thinx. The board, which was all-male and based primarily in Sri Lanka (most were also board members of the company's manufacturer, MAS holdings, which was in Sri Lanka and had invested $1.4 million in Thinx) convinced Molland to meet with their scrappy, leaderless team in New York City.
Molland met with the remaining members of team and saw the company's financials. "What I found was that the unit economics were amazing, the business had really solid footing, the team was just amazing--completely passionate about the mission," she says. The company had an unusually small amount of outside investment, and had managed to grow itself to a projected $40 million in revenue the following year. Plus, it was profitable. She left impressed that months after Agrawal's departure, the tiny team had managed to keep the business running without their founder. Molland stepped in as CEO in July 2017.
A number of employees had left since Agrawal's departure, and Molland discovered that the remaining 30-person team was tight, but overworked. They were vastly under-resourced and, as a result, they delayed in expanding the company's product lines. She recognized that attracting talent would be a significant challenge given the company's reputation.
Molland did the obvious: She hired two human resources employees, after there had been none, and focused much of her time on building out the company's scattershot org chart, instituting rigorous 90-day goals and accountability for departments. With HR in place, Molland bolstered the company's benefits package, installing what she calls "deeply human benefits," such as a child-care stipend, and tacking four weeks onto the family leave policy, for a total of 12 weeks. (She hopes to add four more soon, and improve paternity leave duration.) She also "rightsized" existing employees' salaries to match the market and help retention. She has since doubled the staff, to 66.
She moved Thinx out of its cramped co-working space in the Starlett Lehigh Building on the western edge of Manhattan and into its own 5,000-foot space on a higher floor in the same building. The dog-friendly office is sparsely decorated, punctuated by mannequins wearing Thinx underwear and an in-house photography and videography studio. Conference rooms are named for feminist icons--"Notorious RBG" and "Eve Ensler"--and an employee-lounge doubles as a playroom for Inga, who's now 2 years old and a frequent fixture in the office.
While the many new systems and structures are considered the dreaded "bureaucracy" to some employees, others describe their careers evolving under Molland, with a new sense of accountability.
Dani Berkowitz went from customer service representative to "period specialist" and is best known for her explainers of women's health issues on Instagram. (To much of the company's online audience, her round face and pixie-cut hair is the face of Thinx.) She even created her own job title, "edu-tainer," which she explains just caught on. "Now all of a sudden, my boss is using that term and even Maria has introduced me as that--which is really cool ... considering I created that."
A DTC Grows Up
A year and a half later, Thinx has doubled in size, is expanding globally, and is searching for fresh funding to grow. It was also the fastest-growing women-led company on the 2018 Inc. 5000, with $39.6 million in 2017 revenue.
Inga's head rested on the crook of Molland's knees one afternoon in October 2018 as her mother explained a few of the challenges Thinx faces as it expands, and shifts away from its solely direct-to-consumer model in 2019.
While reconstructing the company over the past year, Thinx has made progress internally, but its revenue didn't continue to climb as dramatically in 2018. (It had, by November, grown just 20 percent over the previous year. By the end of 2018, revenue was $50 million, a 25 percent growth rate.) Online marketing, Molland admits, is no longer the goldmine for direct-to-consumer brands that it once was. Facebook, the platform that jet-fueled the early growth of so many direct-to-consumer brands, has especially fallen out of favor with Thinx and its peers, because of new limits on customer data paired with higher ad prices. (Thinx's budget for Facebook has increased, despite the increase in cost to acquire a new consumer there.)
Molland is bullish that there are other, more traditional, places for Thinx to play. Over the past year, it has dabbled in television ads, home mailers, outdoor and print advertising, and Pinterest, which has done well. To market Icon, the urine-leak-absorbing line of underwear that accounts for 25 percent of Thinx's revenue, the company "took over" Manhattan's 42nd Street/Bryant Park subway station with an ad campaign that flaunts the brand's feminist swagger: "Piss off" reads one poster with a photograph of a pregnant pole-dancer.
Thinx itself has new challenges--in the form of competitors. Brands such as Dear Kate and Knix have cut into the emerging market. Sustain, the all-natural condom company created by Seventh Generation co-founder Jeffrey Hollender and his daughter, Meika Hollender, launched in August with its own leak-proof underwear line.
Molland is convinced some customers who've never tried Thinx need to feel and see the underwear in person before they buy--and that's why she's getting into retail. As other direct-to-consumer companies have found customer-acquisition costs climbing, everyone from Glossier to Parachute is finding storefront homes. Thinx products are already in Selfridge's in London, and the customer base there has grown 50 percent in the past year. London is Thinx's second-largest market, behind New York City. Molland hinted that a department-store partnership may be slated for 2019 in the U.S., while longer-term pop-ups also seem likely.
Molland also wants to take Thinx global. Aside from the United Kingdom, the company's current international reach is limited to a few pop-ups it has experimented with in Canada and Sydney. It's eyeing other parts of Europe, and is in tests with distributors who can help it enter the Asian market through South Korea.
But all of this, says Molland, will require raising more money. While Thinx appears to be on track to book $55 million in revenue this year, so far it has attracted very little in the way of outside funding, when compared with similarly-aged direct-to-consumer companies. Thinx raised $1.4 million from its own manufacturer, MAS holdings in Sri Lanka, while other undergarment upstarts, such as ThirdLove and Lively, have raised more than 10 times that amount. There's also been a recent flurry of M&A activity in the category: Combe (the maker of placeholderVagisil) made a majority stake investment in Thinx competitor Sustain Natural in January, only a week before P&G announced it acquired sexual wellness startup, This Is L, for $100 million.
Late last year, Molland began meeting with potential investors, with the eventual goal of building a $300 million company. "We need to supercharge our growth," she says.
The timing coincides with the unapologetic redemption tour of Miki Agrawal, the company's ousted co-founder. She began a book tour in January for Disrupt-her, which bills itself as a "a rallying cry for women to radically question the status quo."
But infusing a little bit of "status quo" into Thinx isn't such a bad thing, says Molland, who in January spoke to Agrawal for the first time on a shareholder call. "She and the other co-founders are part of our history and we're proud of what they were able to create," she said, unflapped by a question about the woman she replaced and whose company she's steering into the future. "We don't really think about it anymore. We are working on unit economics and global expansion. We have to stay super focused."