Money Rehab with Nicole Lapin
Julie Wainwright (Founder, The RealReal) on Facing the Competition and Taking Companies Public
Thu, 05 Dec 2024
This week, Money Rehab is guest-hosted by investor and entrepreneur Tracy DiNunzio, who built and sold the peer to peer luxury resale company Tradesy. Today, Tracy talks to her former competitor Julie Wainwright, who founded the luxury resale marketplace The RealReal. Tracy and Julie reflect on what it was like competing against each other, and share advice for any entrepreneurs building in a high-growth category. Plus, Julie talks about the pro’s and con’s of taking a company public and her newest venture, Ahara, a personalized nutrition company. Keep up with Julie here, and learn more about Ahara here.
Chapter 1: Who is Julie Wainwright and what is her background?
Her amazing career included stints at Clorox, Real.com, and a rollercoaster ride as the CEO of Pets.com during the dot-com crash. After that, she started The RealReal, a luxury resale marketplace where you probably buy discounted Louis Vuitton and hopefully also sell things from your closet. And you're probably thinking, wow, that's an impressive resume.
I'd hate to have to be the guy who goes up against her. And well, I was that guy. My company, Tradesy, was in the exact same category and was a competitor to The RealReal. So today, Julie and I have some real talk about what it was like competing in a high growth category. We give advice for entrepreneurs starting companies and building in a competitive space.
Chapter 2: What was it like competing in the luxury resale market?
Julie talks about the pros and cons of taking a company public and the future of fashion. And we get a very special guest appearance from Nicole at the very end, making sure that money rehabbers get all their questions answered. So you'll hear that at the end, but let's start at the beginning. Julie Wainwright, welcome to Money Rehab.
Oh, hi, Tracy. It's good to see you.
It's fun being here. So, Julie, you've had an incredible career with many acts, and we're going to talk about all of them, including your latest business, Ahara Med. But I want to start by saying you're one of the most successful women in tech. Full stop.
I don't know if that's true. I think so. It depends on how you measure it. But yes, I've had success.
You have had a lot of success. You've run multiple public companies. You've been a founder, not just a CEO, but a founder. What do you think makes a great entrepreneur great?
I could ask you the same thing, but I honestly think it's first of all, you have to propensity to take risks. You have to be able to operate in gray areas. You have to come in with a very strong point of view and execute and then right away iterate if it's not going to work. So you have to come in strong and hot and then say, okay, I was wrong moving over this way.
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Chapter 3: What are the pros and cons of taking a company public?
I think you have to recognize what talent is in other people because no one does it by themselves. You have to have the ability to raise capital if you're in the venture capital world. And certainly that's the world I know, which means taking a lot of rejections and not taking it personally and learning from the interactions.
Even if you learn, I never want to be that person who you just talked to. You have to have a lot of energy. Yes. You also have to decide that's what you want to do. And what I mean by that is there is no work life balance when you're an entrepreneur. If you're doing it, you're doing it. You have to be in. You have to be committed. And you have to see it through.
And what I find fascinating, because I'm just talking to entrepreneurs all the time, if they bring up, I want to work-life balance, I'm just like, why would I give you my money to make your life better? I'm going to give you my money to make more money. So you also have to recognize if you take money, you have an obligation to the investors. Right.
Yeah, I think you're right. And as much as we would all love work-life balance, I think we both know from experience, you start a company, you owe it to your employees, your investors, and your customers to do everything in your power to make the company better all the time. So you don't really get balance during those years.
What do you think it was about your life or your personality that made you feel like that kind of life without balance with, you know, What made you suited to it?
Sure. I think the first thing is I started my career. I'm going to go way back. So I started my career in brand management at Clorox and I was the second undergraduate they ever hired. And I was there three years and I got promoted to Once about ready to get promoted again. And when I looked above me, I didn't want to be those people.
You weren't after the big corporate job.
It wasn't even that. I don't think I was that savvy. I was young. I think it was more about every woman in the brand organization tended to go into HR when they left brand. So none of them were general managers. They just looked like old... grumpy men to me. Think of it, though. I'm like 25 years old, not even 25, because I started early. Remember, I'm the second undergraduate they ever hired.
I'm living in California. In the meantime, my former boss's wife, former boss at Clorox's wife, calls me and says, why don't you join the tech world? I'm I know this is the future because the guy in finance had smuggled in an Apple II and run VisiCalc, the predecessor to all spreadsheets, and did what I was doing by hand in seconds. I'm like, this is the world. This is where I should be.
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Chapter 4: How did The RealReal differentiate itself from competitors?
Just think about this. You're starting a job and every time you say, oh, I'm going to get promoted to that, but then they're going to want me to go here, but I'm really this person. Do you think it's changed since then?
No.
Oh, I think Clorox is better, but do I think it's changed? Look, the numbers say it has. Let's just talk about change. It's not linear, all right? It's not linear, but I would say that there is a positive arc, and I'm not at Clorox now, but I would say, in general, change in corporations, change in our laws. Big changes are not a linear thing, but there's more laws to protect women.
There's more laws to protect women's wages. When I was there, there wasn't even a sexual harassment law yet. It was a long time ago and women were getting sexually harassed and we talked to each other about it and knew who to avoid. But if you went to H.R., nothing was going to happen.
You had that experience of being sexually harassed at work early.
Well, not just me.
Yes. Everyone. I would say. Yes.
But we knew who the problem people were and we knew how to stay away from them. And we also knew that H.R. wouldn't do anything. So if you just think about the world I entered into, it hasn't changed. Yes, I think it has. Has it been linear? No, it has not.
It stays the same and stagnates for a while and then there's a movement. It goes backwards.
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Chapter 5: What challenges did The RealReal face during COVID-19?
I want to know why we did that. Why? Well, all right. Another skill for an entrepreneur, you're always solving the most important problems. And one of the things we wanted to see happen were sales. No kidding. And people were hoarding. So literally, they would put – someone would get on the site early, and they would put 60 or 80 things on their cart. That makes sense.
And they would leave them in the cart for hours. And we're like – and especially – so it's still a problem. You still don't want that to happen, obviously. But in the beginning – we were running sales three times a week with only 60 or 70 products.
I remember this. You were like the first to do a drop. Now that's a whole thing. But I remember when the RealReal was like, oh, it's a RealReal day.
That was by necessity, not by design, because we didn't have enough product. We wanted to aggregate the product under themes and make sure that we actually had enough product to execute on that theme. And so if people come to the site, and there's no product to buy, everything's on hold, then you don't have customers.
So right away, literally within one day of doing it, I'm like, we got to put a timer on that cart. And it never changed.
I would have written a script that just said, sweep everything into my cart and leave it there. Something was going, people were doing that. Yeah.
So we're like, we will never have a sale. But then they hoard everything. Then the customers were gone and they buy one thing. We're like, oh, this is not good.
Okay, so I have a fun question for you, considering that we spent the better part of a decade as leaders of organizations in the same category and as competitors. How did you think about the competition? I didn't.
Never worried about you guys at all. And there's so many reasons for it because everyone thought they were a competitor. No one was doing what we were doing. So no one was taking possession. No one, the company at one point, I don't know where they are now, under me, we had 450 people in the field picking up products. No one had the capability to open stores because you didn't take up possession.
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Chapter 6: What important lessons did Julie learn as an entrepreneur?
Oh, I think you're going to have to wait for the book. The book's coming out in June. The book is coming out in June of next year. It's called Time to Get Real.
Okay.
And it's right now, it's with a publisher in their legal department. And let me tell you, my focus was a little different writing this. I wanted to walk people through this. how the RealReal was built year on year. So it has this sense of urgency. And then I did have to weave in lessons, but I wove in those lessons as I was learning that. So I walked through it, and it's a fast-paced read.
My favorite book of all times for business is Shoe Dog. And the reason I love Shoe Dog is... I love it. I love it for multiple reasons. One is I thought I knew the story. I didn't.
I don't know why I thought I did.
And you felt the struggle of getting Nike to become Nike. And I felt like I was along the ride. I was in the car.
So that's what we can expect.
I hope so. And not until June of next year. It is coming out. There are a lot of stories. I can tell you a fun one because remember we were talking about doing drops. We were doing drops because we didn't have enough products. In the early days, we were in a strip mall that was really a bad strip mall. But I needed to rent a warehouse and I got a railroad card style warehouse.
So you walk in and this crunchy brown carpet that was really gross crunched when you walked on it. into the area where we process goods. And then the middle was the photography area. There were little storage alcoves off of that.
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Chapter 7: What is Julie's new venture, Ahara?
We weren't getting calls. We'd be checking in. What year was this? Around 2011. So no product. And then we're running the sales. It's going into the summer. And I'm like, we are so screwed because everyone we knew had given this product. I tried, we tried some direct card marketing that was percolating in through the post office, literally a postcard. Oh, like explaining the service.
Did you choose zip codes with like ultra high net worth people?
Well, we did, but we didn't, if someone in LA, we didn't have a team down here yet. We had to fly someone down to get it and drive a U-Haul back. All right. So we're really, it's been scrappy early days. And we get a call from stylists. And I don't think I can mention the celebrity.
Oh, come on, Julie.
I don't think I can because she did not want the sale public when she did it. She subsequently did do public sales on the RealReal. But we get a call. X person wants to clean out her warehouses.
Warehouses. Yes. Was it Celine Dion?
I'm not. We're not going to go through. Did you see the documentary about Celine Dion where she has warehouses of costumes? It turns out. It's a thing in fashion, all right? Not just celebrities. And can you, this literally got the call at three o'clock in the afternoon. Can you be there tomorrow morning? I'll text you the address.
The answer's always yes. Always yes. It has to be yes.
Employee number one, Rati Levesque. At that time, Rati's not. Oh, Rati's now the issue. She's now the president.
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Chapter 8: What can we expect from Julie's upcoming book?
Really? So on that particular stock exchange, was that the one that had 23 women? No, that was overall. It was anybody taking a company public. Wow.
But then there's been women since then. So that's good.
It does seem like more women's companies are getting to IPO, even though, like you said.
Not lately, but you're right. We had Bumble come out, I think, right after that, and that did well. But before me was Katrina Lake with Stitch Fix.
Yep, and then also my friends over at Figs had a great IPO. Figs is a great product. Yeah, that's wonderful. So we're seeing it more and more. A little bit. Yeah. Yeah, a little bit, little cracks, little cracks. Yeah, and so you took the company public. It is the greatest victory for a founder to do that. It's fabulous. From zero to IP.
Well, all right, let's just take a step back. If you take money from people, which I took a lot of money, you have to have a vehicle for them to get it out. Totally. It's as simple as that. You either have to sell the company or take it public. That's it. You only have two paths. Or if you shut it down, you're sort of in hot water for a long time.
Yeah, that's not the pathway.
That's a bad end. So I find founders, they don't always understand that you are obligated to actually return money. Once you take it in. So no one was going to buy the real, real. So our path was going public. And my goal was when the company got to at least a billion dollars in top line sales, we should be ready because it was becoming highly predictable. And we were that year.
We had a billion 2019 with a billion in top line sales. It was predictable.
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