EP211 - ThirdLove Co-Founder David Spector
David Spector is the Co-Founder of ThirdLove, a digitally native direct to consumer women's intimates brand. Dave founded the company with his wife Heidi Zak.
In this interview with Dave, we discuss the origin of the company, their data driven approach to designing products, the challenges with scaling a DTC company, and the potential role of omni-channel. We also discuss their public feud with Victoria Secret.
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Episode 211 of the Jason & Scot show was recorded live from the Etail West tradeshow in Palm Desert on Wednesday, February 26th, 2020.
Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
Google Automated Transcription of the show
Jason: [0:24] Welcome to the Jason and Scott Show this episode is being recorded live from the ETail West Trade show in Sunny Palm Desert on Wednesday, February 26th 2020. I'm your host, Jason Retail G. Goldberg And unfortunately, Scott was unable to join us today. So as usual, when we have a good show, we kind of bump Scott from the agenda, and we make up for it by having a particularly awesome guest S O for today's show. Please welcome David Specter, the CEO or co CEO, an important distinction and co founder of Third Love. Dave: [1:00] It's great to be here, Jason. Thanks so much. Although. Jason: [1:01] We are thrilled to have you all, though I kind of feel it's true that you're the least important co CEO at Third Love. Dave: [1:10] I'm probably the least important person at third love. Uh, yeah, but it doesn't mean that your podcast is any more or less important just because I'm here. Yeah. Jason: [1:10] I'm probably the least important person, that makes us feel special on the podcast. [1:22] I feel like we're arguably the second best podcast in the space compared to which everyone your wife is doing today. Dave: [1:29] Fortunately for my company, she's back at home, actually running the place, adding value. And I'm here sitting with you, Jason. A detail. So which one's more important? I'm not entirely sure, but I'm still honored to be here with you. Jason: [1:29] Unfortunately for my company, adding adding, adding value. [1:39] I That's why I like the double bandwidth from a power couple is so useful for a company. Dave: [1:46] Dividing conquers what we like to say. So here I am, a detail and it's and it's an honor to be sitting with you. You've got a great podcast. Enjoy listening to you guys. So thanks so much excited Thio chat about what we're doing at their love. Jason: [1:48] Exactly. I like it. [1:53] So thanks so much excited about what? Gotcha. Uh, that's ah flattering to say. And flattery will, of course, get you, like, mostly anything you want. Dave: [2:03] Most anything you want if you want to know. Jason: [2:04] If you want me to avoid the tough questions, Uh, that's that's a smart way to play it. Dave: [2:08] But will it get me more sales online? That's the question, Jason. Jason: [2:11] Yeah, we're gonna have to talk about that. But before we jump into that, listeners are always super interested in the background of our guests and particularly if you like. We have a lot of listeners at home that aspire to be you one day. So can you share, um, sort of your your path to your current role? Dave: [2:28] So my path is is quite different than most founders. In some ways, I was at Google. Jason: [2:28] So my path is is quite different than most. So I What's that? Google. I've heard of them there. Ah ah, an up and comer and I think is there for years. Dave: [2:36] I've heard of them. They're nothing. Come, right. I was there for a couple of years. From 2007 to 2010 after business school on business school, I met my my wife and better half and business partner Heidi. Jason: [2:45] Business. Why, then my wife, arguably the best reason to go to business school. You don't s so I've been told. Yes, I actually met my wife at one of these trade shows. Dave: [2:52] And, you know, from experience, Jason. [3:00] Oh, so trade shows air a lot less expensive than going to business school, though. Jason: [3:03] And less work, frankly. Dave: [3:04] Yeah, take a lot less time. So I think you actually ended up in a better place. And I did. And that way it saved in save less money. Jason: [3:06] So I think you actually ended up in the better. Okay, I don't know. I've caused both winners. Dave: [3:13] Uh, save more money. So Well, anyway, so we, um, was a Google for a couple of years on then, while I was that Google was recruited by Sequoia Capital to join them, I never wanted to be a venture capitalist was never on my radar. I am a builder. I enjoy managing people building teams. I was never thought of myself as an investor whatsoever. And so I took the opportunity, joined them. I was based in Silicon Valley and started investing in startups in 2010 and it was really interesting time because the Internet and sort of Web to die, though three dado however you want to define it. Jason was really starting to get prevalent on was growing quickly, and so we were sort of at the beginning and forefront of that. And brands online were really just starting. Amazon existed. Prime. I'm not entirely prime did exist, but nowhere near to where it was two today, and retail was still popular that the Mullens were successful. The death of retail sort of. That narrative didn't exist then, And so when we got started in 2010 investing, nobody was really thinking about consumer brands in the same way I took it. A cz an initiative myself as a new investor because I thought it was something that could be big toe, actually get started on start looking at brands and where e commerce was going and so ended up investing in a company named Stella and dot. [4:39] Back when I was at Sequoia was quite involved in the business. As much as an investor on the sidelines can be, but got very interested in broadly female base commerce. [4:49] And so, in other words, women that were building brands online to serve other women. And because the percentage of women founders is so low, generally it's higher now, and we're lucky that it is higher now. But it was even lower then, and there was a lack of our dearth of the number of female focus brands that we were seeing online. And so what we decided to do is make it an initiative to actually find those businesses and brands. And in many ways, as it was at Sequoia and was thinking about what we were looking for as investors. [5:25] Hide and I were talking about the intimate apparel space, and it was a category that I had never thought of. Uh, certainly thematically, it was never on our radar again. I was thinking of sort of female based commerce, commerce, new sort of web, 2.0, base brands. DdC wasn't a term then, on sort of where the Internet was going from a commerce perspective, and she was thinking about intimate apparel, and sort of in our living room at night, just like many businesses that air started, we started conceiving of of what then was called something else. But what is now third love and we started to get really sort of excited about what we could build online and where we thought this industry was gonna go over the next decade. And that was really the beginnings of third love on our living room in our living room, on our dining room table, laying things out before we took the sort of bold leap that every entrepreneur takes in this country and quit her job. Jason: [6:22] That is awesome. And ah, I suspect a majority of our listeners are already familiar with third Love. But for those that aren't can you gonna give us the elevator pitch? About what you doing? What you're you're unique value properties. Dave: [6:36] Absolutely so we set out and and have executed on today, really three things. One was to build a brand which is authentic and highly inclusive, too. Was architect away to buy abroad that doesn't require a fitting room or visit to a store. And three was not designed and manufactured better product. Using the latest in material science and data science to absolutely nail fit and comfort two areas fit in comfort that really have never been a part of the narrative. Previously in this category you know women for the most part, which was very interesting to me as we were looking at the category. Nobody really likes their bra. Nobody has a strong attachment to the brand that they wear. It's fine. It does the job. They have to wear it. It sort of part of what they need to do every day. But they don't really enjoy the experience shopping for it, nor do they like the product very much. And so we thought there was a huge opportunity Oh, to do those three things. But look in summary, we wanted to change the status quo and how comfortable abroad can be and wanted to build a brand that was for every woman, regardless of size, shape or ethnicity. Jason: [7:41] That that is awesome. And it's it's shocking in hindsight. Ah, but But, you know, you really think about the successful players in the space prior to your entry, and it frankly feels like they were mostly focused on marketing two men, Um, so somewhat shocking that there was, like, such a white space tow both market, too, and, like focus on product attributes specifically for the users of the product. Dave: [8:07] Yeah, you know, that was really surprising to me. I I like you, Jason. Have been on the other end of that marketing as a man by this gift for your spouse or something along those lines. And I was always really surprised that the marketing, as I started to think, sort of outside the box of me as just a consumer. Why the marketing was always so focused on me when this was a category where the vast majority of purchases in it our focus on women but our focus on their needs and focus on them as, as moms, as them as business executives, as them as doctors, as nurses, et cetera. And so I was really surprised that the vast majority of marketing prior to Third Love was focused on that. And so what we set out to do, which again was quite counterintuitive given that the largest player in the space was peaked at a $30 billion market cap in 2015 I was doing very, very well with very high margins, that we would think that we wanted to do something completely opposite of what they had done. So from a sort of building a startup perspective. It seems pretty crazy on and funny enough, the investors that we pitched mostly thought we were crazy. Jason: [9:21] Yeah. Uh, you tell me This is true for you, but a in talking to female entrepreneurs, Um, there's a common story that it's really hard to pitch your business to V. C's because they the tender not have empathy and see the market opportunity for products that have, ah, value Prop two women less so than the men. So they tend to not understand a woman's problems, and therefore the opportunity is strongly. Dave: [9:49] Yeah, And you know, I had somewhat of a leg up because I sat on the other side of the table. Jason: [9:54] Yeah, I'm sure. Dave: [9:56] And the leg up, though, that I had was when I started to think about how we needed to pitch third love to a mostly male audience. I had been in that audience previously, so I had the opportunity to think through what we needed to do differently and what the people on the other end of the table who are not, for the most part, are not sexist at all. And the end of the day, whether it's widgets, bras or the next great you know, Social Media platform, they ultimately don't care. Veces wanted back great entrepreneurs going after large markets, building riel sustainable businesses, and so and they don't care what it could be. Uh, and so when I thought through what we needed to do differently in this category, we really needed to sort of change the narrative of what we were gonna build and how we were going to do it. Uh, and that was really what helped us get off the ground and helped us appeal to what was a mostly male audience when we were pitching. As you said earlier, a mostly female oriented business. Jason: [11:01] Um, so fast forward to today. Ah, couple weeks ago, we had wary Ingrassia on the show s o. He's the author of $1,000,000,000 brands. And as I I assume, you know, uh, you are one of the prominently featured brands that he writes about in the book. Um and so am curious. Ah, like, I assume you've at least read that chapter. Does it feel like he captured? Ah, an accurate representation of your story, Or is there any quibbles you'd like to take? Well, he's not here to defend himself. Dave: [11:34] You know, we were honored to be in Larry's book and to be sort of one of the the company's defining the direct to consumer New Age brand generation. And he did a very good job of capturing this story of Third Love and how we got to where we are today. And you know where we are today. It was, you know, it's seven years in, so we're on, sort of not even really on first base yet. We're just getting started. Uh, but how we got here to almost first base if we if we put it that way, is a story in itself and one of perseverance. Many, many, many challenges. [12:11] Lots of late nights. I and a lot of failures on a lot of mistakes to Heidi and I have always been one to admit our mistakes and to try toe try to spend time thinking about what we would have done differently. And fortunately for us, Way made numerous near fatal mistakes in the early days of the business. [12:33] Example was manufacturing in Mexico on trying to build a maid on demand supply chain the broad industry interesting Thio. Most men or women have no idea about this Broad's one of the most complex garments to produce. There's 30 components in a bra, even with automation today in manufacturing things air mostly hand cut in hand sewn and being outsiders in the industry. We looked at that, and then in the by the way to that point, the amount of time it takes to develop a new size and a new style is very, very cumbersome and laborious. It takes a long time, and so s so you need to have a large wallet and you need to have a big company to develop it. Which is in part, why the largest competitor in the space has gotten so big on the untold story of them is really supply chain. And there's a lot that they did in the supply chain that we have a tremendous amount of respect for, because getting supply chain dominance to be able to produce product at that kind of scale is really hard to dio. And so we looked at that as young founders and we said, What do we want to do? Different how we flip this pretty backwards process that's been the same for five decades? [13:45] Flip it on its head and just do things differently. How can we use technology to build something that's fundamentally different? And so we conceived of a new way of manufacturing that we that enabled us to get into the supply chain. People wouldn't have taken our call if we just said We want to make a better bra in China. [14:03] Uh, and so they took our call and, by the way, didn't take our call because we had no volume. We didn't have money to spend. And there's a lot of money required on the manufacturing side, the manufacturer side to get a new company up and running with new sizes and new styles. And so nobody wants to work with a new company because of the amount of cap access required to get them started in R and D. And so we had a pitch that was very, very unique around made on demand, and they don't demand while it didn't work, and it was a near fatal mistake. That mistake, like many things in it start up, is what enabled us to be successful today in the supply chain in a fairly short amount of time because of that learning that we had with this mate on demand supply chain, in Mexico that enabled us to get a foothold into the supply chain, that we were then able to pivot to Asia and start getting started. T get started building what is fundamentally a better bra with entirely novel raw materials. Better fit half sizes. And we're the only company in the world that offers half size bras, 34 B and 1/2 C and 1/2 et cetera. We couldn't have done that without some of those early mistakes. Jason: [15:10] That is awesome, and I wantto poke on the half sizes. But before I d'oh if I were toe grossly oversimplify, wear his breakdown Of all the companies in the book, uh, he kind of talked about. There's these these three different ways digitally native brand, um, might seek to gain advantage, right? Like there's there's companies that take cost out of the chain so they can sell a lower price product. Warby Parker, for example. There's companies that reduce the friction to acquire the product. They make the buying process easier. So bed in a box versus having to go to a traditional mattress store, which could be a miserable experience on. There's companies with, like, unique product innovation that in some way, uh, invent a better mousetrap. And most of the companies he talks about 10 to primarily have one of those three. Advantage is one of the things that ah, as an outsider I admire about your company, is, it seems like you're really leveraging all three advantages, so it feels like you focused on a unique product that's better than what was available. You have, ah, lower friction way of acquiring it, and because you're direct um I'm not sure you're necessary competing directly on price, but you're able to offer Ah. Ah, very strong value proposition. Dave: [16:32] Yeah, And again, I This is, I think, in order to build a successful director consumer business and by no means every successful we have so much more work to D'oh! Jason: [16:32] Yeah, And again, I I in order to build a successful, I don't mean to be successful. Dave: [16:44] You have Thio Well said Jason. Jason: [16:45] You're 13 years away from being overnight success. Dave: [16:51] Um, yeah. I mean, look, we I don't think that having just one of those things allows you to be successful having just lower price, and the website doesn't work because everybody does that. An Amazon does that Amazon does that and can compete with you all day long and get it to you a lot faster with better customer service and way more selection. So you have to have a combination of many, many things. [17:21] Our category is one where price is important, but it's not one of the most important factors to it. Uh, and what we said was, we don't want to compete on that, because what we offer is fundamentally better. Now we may not be an overnight success and grow to $100 million in a year because we offer something for $35 right? Or the same prices. You could buy it at Wal Mart or target even lower in some cases. [17:48] No, what we said was, Let's just fundamentally focus on the core differentiations for the category, which is much better product more sizes, better brand that resonates with women of all sizes, shapes and sit in shades and then, lastly, await a shop that you don't have to go into a retail store on. That was a key differentiation for us in something uniquely unique to our category. Women don't enjoy shopping for this product in store. It's not something I do socially with their friends. It's not a fun experience and what we want. And also there's women everywhere eyes, women all over the country and in states that don't have any crossed yours, Uh, and so in small towns that are, you know, 500 miles from the closest mall. And we want to be able to reach all those women and offer them something just as great as the woman in New York City or San Francisco. And so the way we do that today is through a great website experience that's highly personalized and through something called fish Finder that we conceived of Fit Finder. [18:53] Through a variety of questions allows you to get, you know, for the most part the perfect fit down to the half cup size to date. We're very proud and sort of another kind of pinch me moment. Given that, you know, we still view ourselves a start up. 17 million women have taken Fit finder. Jason: [19:10] That's amazing. Uh, one of the things I really like about your story is it's always interesting to look at someone's original hypothesis for their business and how it has to evolve. Um, and I feel like you've had a bunch of evolution, like so as I understand it, when you originally launched the company, you had this hypothesis that, like the original broad buying experience, sucked, um, and that you know, this some version of this fit finder could be, ah, much more enjoyable way to find the perfect fit bra. But in the process of building that, you found out that bras in general don't tend to fit a significant segment of women. And so the half size thing was less your original hypothesis. But something that you discovered is you got to know customers in your space. Um, you found a great a great white space to address. Dave: [20:02] Well and 25% of our sales we have 80 plus size is 25% of our sales are in half sizes, on we estimate through our data, and we have one of the most comprehensive data sets in the world on this because of what we do and how we fit people. [20:22] 30% of women are should be in half cup size, right? And so it's that data. It's it's it's the holes in the data that we saw where our machine learning our other algorithms would say to us recommend to this woman, machine Learning would say this recommend to this woman 1/2 size. We kept seeing that over and over and over again before we came up with half sizes. And again, this was data that nobody had ever seen before. If you shopped him all, um, there is no data. I mean, maybe there's your credit card data and some some foot traffic data, but that's it. You don't data on her preferences in her size and body type etcetera. So we have this massive data set that kept growing. We kept seeing the holes in the data and kept scratching her head because the the algorithms would spit out errors and save us. We don't know what size to recommend to this customer. Help us train me. And we kept seeing this pattern over and over again and we said, Wow, there is as you said, a white space here. There's a large percentage of at least our customers which, as it grew, we started to realize was more, uh, you know, mapped closely to the United States who are 1/2 size who are in between cup that we should address in sort of one of our tag lines. Now his shoes of half sizes. Why shouldn't bras? And that just boils down the fundamental problem. [21:49] Why shouldn't we give customers what they want? Well, the reason why nobody had before and the reason why nobody else has been able to do it. It's twofold. One. You can't develop 1/2 cup size without the data set that we have. It's not about just splitting a B and A C in half. There's more nuances to it, and you need a fit model to be able to fit it on and develop product off of. We don't you know, for the most part, we don't use fit models at third Love. Secondly, in a retail base business you already constrained by footprint, you're already constrained by a stock room, right? Where for our category, there is a lot of inventory already. Let's say you have 30 sizes. You have 30 sizes in every style color variant, which requires a large stock room just to stock that in retail because you don't want somebody to walk out, you don't have their style, style or size preference. Um, in our case, reused warehouses. We have the Internet, so we can stock, you know, depending upon inventory costs, in holding costs and in warehouse space, we can stock almost an unlimited number of sizes. If we needed to, we won't. But we could, and so is your supplier exactly. Jason: [22:54] In case your supply chain guys are listening, You can relax now. Dave: [22:58] But the point is, we can do things that are important and are requested whether she's requesting it directly or indirectly by her data for the customer, we could give her what she wants. Instead of pushing her into a size that we have in a retail store, we could give her what we want and developed product way, way faster and new sizes because of that data set, and so that ability to do that with the Internet. The ability to use data in a really, really smart, powerful way is really what has allowed us to address a much larger portion of the market as an example. One of the largest companies out there, they only go up Thio. I think maybe a double D cup in store, right. That's because they're constrained by that by the shore we can offer. And so they can't go after a larger woman. They can't go after a larger and a larger part of the market, the larger part of the total addressable market or the TAM we can because of the Internet, because of warehousing because of our ability to use data. Jason: [23:55] I love it. And so that that customer intimacy in that direct customer data, um, enabled you to discover this opportunity and half sizes. Conversely, it sounds like when you started the company, you have a hypothesis that the camera, phone and computer vision would be, ah, revolutionary way for women to help fit themselves. Um, and it seems like today the fit guide is working phenomenally, but it's it's largely not a computer. Vision based was I'm curious. Like, Was there a learning that that that wasn't the right approach for women? Is that still the future? And it's just too early in the technology curve. What? You're your p O V on that? Dave: [24:37] Yeah. I mean, so you're right. I mean, we, uh That record. Jason: [24:37] Yeah. So, right, E let the record show I'm right. Dave: [24:47] Computervision and using a smartphone app to get fit was very, very novel for when we did it, we were operating off of a chipset. I phoned 45 That was probably 1/4 of the speed of what we operate today. Maybe even 1/10. And I don't know exactly with a with a camera camera optics that are far, far, far less powerful. Furthermore, open TV, which is an open source library for computer vision that we were also utilizing was nowhere near as advances it is. Now. We're building all of this in house again. We wanted toe always find a way to bridge the gap. So a woman didn't have to go into a store so we could reach a woman in Barrow, Alaska. For all those Barrow Alaska fans that are listening to this. Jason: [25:33] It's a big audience for us. Dave: [25:35] Barrow, Alaska is on the north slope of Alaska. And that's an example because there are, of course, amazing, amazing women that are there, and we want to be able to reach them. We want to be able to reach women everywhere in this country and prior to third love you needed to go into a store to do that. And, of course, all women over a certain age need to be wearing a bra or should be wearing a broad for the most part. So, um, we want to be able t o reach everyone that we possibly could. And so this smartphone app that we developed and a lot of technology, and today we have a number of patents on it, all of which have been granted on. The technology that we developed was really, really novel. But the problem was, the conversion process wasn't as simple as it needed to be. You couldn't be sitting on a bus to work and using the APP you couldn't be laying on the couch watching TV. Using that you could be laying in bed, doing it to be in front of a mirror, wearing wearing a tight fitting tank top, pulling your hair, pull your hair back, take your smart take the smartphone cover off, and then through the use of two photos and the smartphone itself was the reference object into the mirror. [26:42] We use the gyroscope for calibration. We use the flash. Recalibration was really, really novel we had hundreds of thousands of people that use it. We were Editor's choice in the APP store way. Want a lot of accolades and awards for it. We were very proud of but didn't work because the conversion process was too long and when it worked for people, it worked incredibly well, and women loved the experience. But we weren't growing as quickly as we needed Thio. We learned a lesson about conversion. Now that Data said, without those early mistakes, without building that app, we couldn't have used that initial data set to then Pivot and I talked about pivots earlier because they've been really important in our on our history and in our growth. We couldn't have pivoted into fit finder today. So those initial learnings about conversion, that initial data that we had, went into powering what is fit finder today, we never would have able to get those algorithms off the ground without that initial data set. Jason: [27:34] No, I totally see that. The, uh I am a hypothesis. Usually I'm wrong. Um, but the a lot of the smartphones now have actual distance measuring capability. Like, you know, it was on the front camera for facial I D. And so I keep waiting for the the version of that to be built into the back of the cameras. And I think when we get that, we'll get hyper accurate measurement, and I feel like for a lot of fit mint categories, that's gonna be a game changer. Dave: [28:02] Yeah, Jason, you're right. It's the true depth camera on the front of of of the latest versions of the iPhone is coming to the back. I had the technologists and very, very excited about that. And what we need to do as retailers or retailers is find ways to make it easy for her to shop from home and to not have to return a product. Our return rate is is incredibly low for the industry, but it's still hi, um uh, and higher than we would like it to be. And at the end of the day, for us, putting customers first is our is our most important core value internally at the company. And if we think of it through that lens, putting customers first, nobody likes have to return. Nobody likes to get a product that doesn't that doesn't work for them. Fit Finder while, while it is very accurate, doesn't work for everybody. And so someday we will take some of those new advancements on smartphones, pivot R i. P, including our patents, and build out what will be the next version of being able to get fit from home using a smartphone. It's very exciting. Jason: [29:03] Very cool. I will be looking forward to that. I do want to touch on the date a little bit. You referenced it a lot. And to me, it's one of the most important competitive advantages of the D to C model. Is that direct customer intimacy and the the competitive data you can gather about how your meeting customer needs air? Not so you know, you mentioned that that the first versions of that fit finder gave you a data set that taught you that the standard sizes didn't fit. I advise a lot of big established brands and a super calmer common conversation is should we have a direct to consumer model and my my general advices, your issue is less about whether you sell direct to consumers versus cell through wholesale. You're your problem is you need the customer data that those direct to consumer companies air generating. So if you're a traditional bra manufacturer, you sell. You brought a walmart and WalMart sells it to a consumer. You have no idea whether that customer was happy with the bra or ah, whether that that bra particularly well fit. And so the fact that you do have that data gives you ah, huge, defensible advantage versus the traditional apparel manufacturers. Dave: [30:15] Yeah, and I and I think, Look, everybody is in the data arms rates race today. Whether you're a traditional retailer, whether you sell car parts, everybody is focused on data on the one thing that we did differently. 1/3 love is we built this company from the ground up with a focus on data. Right. So we had the advantage that we had while we didn't have the resources, We don't have the capital of a large company. We had the start of hustle, and we had the foundation that we started from the ground up, which would be very hard to change if we were a well established business that was focused on using zeros and ones to our advantage. Jason: [30:50] Yeah. So let's let's pivot a little bit and talk about one of the big challenges I generally see with digitally native brands. So, um, in the modern era, uh, particularly with the advent of Facebook and Google and digital marketing, it's become much easier and cheaper to launch a company and have some initial success. So we look out there and there's a ton of of digital native brands, Um, that get out of the gate fast and, you know, grow to some size by cost, effectively advertising on Facebook. But in general ah, bunch of those D d C company's sort of plateau like they're they're hits a point where the next of eyeballs on Facebook or even more expensive than the ones you bought, um, and it becomes hard to profitably grow. So when we look at all the the D to see companies that get talked about a lot, a lot of them kind of hit this plateau, and it's been really hard for them to continue to grow. And I'm curious if a if you're worried about that at Third Love. If you've hit that plateau, um, if you have ah strategy to continue to get new customers and grow, you know, even as the the ad buying on Facebook gets more expensive and more competitive. Dave: [32:05] Sure. Well, we're always thinking about the challenges of scaling acquisition marketing on. We have a really great leader on our team now that spends all over time thinking about that.
[32:18] We have a couple, uh, advantages, though one. We have very high gross margins. Uh, and it didn't used to be that way. In fact, our course Martin just be a lot lower. And we've been able to scale gross margins dramatically through improvements in our supply chain. And again. Supply chain is a huge differentiator in our category. It's the untold story of the large, successful businesses in the space is their dominance and supply chain. And so we've done a great job of scaling that which allow us A you know of the you know, when you buy a bra were able to spend that money, on the Delta from in gross margin of profit on things like marketing on things like data science and data engineering. So we can create a better experience, and that really provides us an advantage. Furthermore, the other advantage, which is an advantage for everybody in this space on no different for us is this is a highly recurring high repeat business. When a woman finds a bra that fits, even if she doesn't even like the brand, uh, she tends to stick with it for a long time. Jason: [33:21] And so from Analects standpoint, do you guys tend to look a customer lifetime value, like is that important? Dave: [33:22] You guys value customer. LTV is incredibly important to our business. We measure that, uh, it's unlike some of these other categories that you mentioned. It's not a one time purchase, right? If we do our job, and I'd like to think that we do our job 90 plus percent of the time I delivering a great product that fits in a really phenomenal customer experience, she will be our customer. I hope for a decade or more on that's inherent to the category, right? It just There's no reason to switch if you find something that fits, especially 1/2 size, obviously we have a distinct advantage of half sizes to nobody else offers that outside of half sizes. If we provide something that really is phenomenal, that exceeds all expectations that she loves, we provide a brand that she that resonates with her that speaks to her, not that speaks to her husband. We can really, hopefully keep her for a very long time, and that's our job, and that's what we're focused on. Eso. There's two sides, really our marketing strategy. One is acquiring new customers and having purchased us purchased with us before, and the second half is providing a great experience to our repeat recurring revenue customers. Jason: [34:34] That's awesome. Ah, I also I noticed that you want to pop up store, brick and mortar store in New York this year, and I think you also have a partnership with Bloomingdale's. If I'm not mistaken is, ah, brick and mortar, part of the the expansion strategy. Dave: [34:48] Well, we we haven't had a partnership with any other retailers in two years, so we don't the only place to buy third. Love is through third love, so we're we're fully direct in terms of our retail store. [35:02] We, uh, unlike other director consumer players that built stores very quickly after they got started. We waited almost seven years before we launch our first store, and we wanted to prove a number of things out before we went into retail one. We operate in a category that women don't want to shop in a retail store for generally right. It's unlike other county, unlike apparel. Unlike a number of other direct markets where the experience just is better, you know you're dealing with the fit of pants or the fit of a blouse. These are things that, frankly, it's a lot easier to try and a couple sizes in a couple outfits and figure out what works for you in store. I have to deal with the return. We operate in a category that's not that way. So we really wanted to prove out a great customer experience to put all of our resources, all of our energy into creating that customer experience. The challenge with retail is it is very, very labor intensive and very time intensive. It requires an entirely new skill set, and we're in the early days for learning that skill Set 1/3 love. But so far, the learnings in our one concept store in Soho haven't really successful. We're really, really happy with what we've learned in that store, and that will prove on that will be a part of our strategy going forward what we've built out there. But it's not gonna be the strategy of blanketing the entire country with as many stories as we can. We want to create an experience that is a creative to the overall online business. That's our objective. Jason: [36:24] That is faring well before the watching the continue evolution of that strategy. Um, I want to pivot for a second and and, ah, talk about the controversial topic from this week. So you you referenced your big competitor a number of times and we're all friends here. That's l brands Victoria Secret. And if I have the story right, you guys sort of ended up inadvertently in a feud with Victoria's Secret. I feel like, ah, one time CMO. They're sort of like shockingly called you guys out and you got into a little bit of a public dialogue. Fast forward to this week. I feel like you guys definitively one that because I L brands is selling Victoria Secret at evaluation much lower than their peak. And the narrative about this decline of Victoria's Secret is largely that they lost their audience and weren't weren't appealing to customers. And when brands like third Love that talk directly to women emerge that it became impossible for them to compete. So congrats on crushing Ah ah, formidable competitors. Do I have that story right? Dave: [37:35] Well, you know, Jason, you said earlier that we've definitively one that, and I don't agree. We will when? When every woman in America is wearing something that fits her and wears a brand that resonates with her and speaks to her, and that she's not ashamed of wearing or receiving the catalog from a brand that her six year old daughter I have a six and 1/2 year old daughter, or her 12 year old teenager who's getting into her first bra isn't ashamed to be shopping on in, or wearing Ah, brand that she doesn't hide the catalog or hide the pretty pink sparkly bag because she's too embarrasses. Have anybody at work see that she was shopping there? That's when we'll win. So again, we're really just at the beginning. We've got so much more work to do In order to do that, I wouldn't necessarily say that we are in a feud with that company. [38:36] We are building something that's really different. We're building something that really is the antithesis of what they built in every way. Online verse offline. The brand is very, very different. Everyone knows that. Who is familiar with with what we're doing. The number of sizes we offer is 2 to 3 acts larger than theirs. So inherently we can go after a much larger portion of the market I. [38:59] And we offer a a really data based experience that that enables me to shop from the comfort of home so sort of securely uncomfortably, and that's that's very different. And so we have so much more work to do there. I think that L brands has created there many of their own problems on, and I don't think that we deserve the credit for it. Actually, we deserve credit for changing the narrative out there, but we don't deserve credit for their downfall. And, um, you know, I hope that, you know, competition's a good thing, and that's what makes America great on. I look forward to hopefully that them emerging as a stronger competitors because having some competition is good and them changing their narrative, changing their brand, changing the types of models that they show is a really good thing for the world on. They have a large voice, so I'm hopeful that they can and I look forward to competing with them in the future. I think they've got a lot of work to do. They were bought by private equity for those that don't know and bought by a private equity firm known for sort of taking a cleaver knife and chopping things apart. I hope for all of the amazing women that work there, and I'm sure there are. I know there are many amazing women that work there that too many jobs aren't lost, so I'm hopeful of that. But third, love is hiring so well stated, very magnanimous of you. Jason: [40:18] Very cool. Well, that's ah. Very well. Say, did. In very magnanimous of you, I do know that we can both agree to the extent that third love does deserve credit. Is Heidi and not you. Dave: [40:21] I do know that we can both agree to extend that love does. It's not, you know, 100%. Jason: [40:29] In case she's listening. I just wanted to make sure. Um So listen, we're coming up on time. I do want to get one other question before we do one at a time. Um, if you and I get in that time traveling DeLorean and fire up the flux capacitor and jump sort of five years in the future from today, do you have a vision for how the shopping experience might change? I mean, is our store's gonna be gone, and we're all gonna be buying her stuff from direct to consumer. Like what? What's the consumer landscape looked like five years from now? Mr. Fancy MBA xvc successful entrepreneur. Dave: [41:07] Well, I unfortunately, based upon inexpensive education, that probably wasn't really worth very much. I still can't predict the future. Uh, so I think that where we're headed is a world that is truly on the channel, where there is a lot less retail, and the retail that wins is retail, that is differentiated. That looks very different from it. It looks today that has a digital experience built into the retail store. Experiences are what people want. They are looking for more than just product. They can get that same product online, the exact same product you can buy in a store today you can always buy online. I don't know of any examples that you can't are very few examples. And so I think that the world in the world of commerce online in the future doesn't look all that different than it looks today. I think we will see sort of the evolution of the smartphones that we all carry around as processing power grows and optics get a lot smarter and the camera on the front. [42:16] Those sorts of things will enable technology companies like ours to actually be able to create really great at home experiences to bridge the gap. But retail still won't go anywhere. And the retail that wins the retail that would be highly differentiated and creates a great experience in store that again is a creative to that online experience. But the Allman Experience has to lead because that's what consumers want. Jason: [42:37] That is a great advice, and that's gonna be a great place to leave it, because it's happened again. We've used up our allotted time. Dave: [42:38] Great advice, a great place to be because it's happening. We've used up our A lot of times. Jason: [42:44] Um, you did mention that you were hiring It turns out there's a bunch of great e commerce pros and digital marketers that was in the podcast. Is that a particular geography that you're looking for talent in our. Dave: [42:45] You did mention that you were hiring It turns out there's a bunch of great commerce frozen digital marketers. Listen, podcast, is that a particular geography that you're looking for? Third love is we're about 300 people, and we're headquartered in San Francisco. We are hiring mostly in San Francisco for the digital marketing pros that you mentioned, so please reach out to us. We're at careers dot third love dot com on dhe. Let us know kind of what you're looking for. If you see any jobs that sparked your interest, whether you're in the Bay Area or somewhere else, we're certainly open to having people relocate to the barrier. Jason: [43:23] Awesome. We will put that link in the show notes. So no need to write that down of your driving. David's been a real pleasure. I've really enjoyed our conversation. Thanks very much. Dave: [43:30] Thistles. Superfund, Jason, thanks so much. And thank you to all the listeners out there and thank you to all the customers of Third Love and the future customers. Jason: [43:35] The customers and the future. Absolute. Look forward to having human down. Thank you so much for your support of our business. Dave: [43:38] So we look forward to having you and thank you so much for your support of our business. We are just getting started. Jason: [43:45] That is awesome. And until next time, happy commercing.