On the road to building a successful startup, founders face a whole range of unique and interesting challenges. In our Building a Consumer Startuppanel at the 2020 Table Stakes Summit, Lightspeed Ventures partner Mercedes Bent sat down with four of today’s most exciting startup founders – Reshma Chattaram Chamberlin (Founder and Chief Brand & Digital Officer, SUMMERSALT), Piersten Gaines (Founder & CEO, Pressed Roots), and Rachel Drori (Founder & CEO, Daily Harvest) – for an honest discussion of the failures, victories, and never-ending challenges of running a growing startup.
Representation in the founder community
Mercedes:I want to start off talking a little bit about what this year’s Table Stakes Report shows, which is that this year, there are more female founders of consumer companies than they’ve seen in prior years. Why do you think that is?
Reshma:Necessity is the mother of all innovation. In a year where everything has been flipped on its head completely — whether that’s homeschooling, or the way we eat breakfast, or the way we dress ourselves — everything has completely changed. What that does is allow people to solve interesting problems that were never apparent before.
Women make over 80% of the household purchasing decisions in the U.S., yet only 4.8% of Fortune 500 companies are run by women. When you think about this disparity, it’s led to generations of men creating products and services for women. Frankly, sometimes they miss the mark.
That’s probably why we see so much innovation happen during the most difficult times in history. Women are multitasking more than ever. People are managing homeschooling with work, with really being able to identify those problems. It gets exciting when we’re able to solve problems that haven’t been solved before, or that didn’t exist before, and will continue to now exist in the world.
Rachel:Women make over 80% of the household purchasing decisions in the U.S., yet only 4.8% of Fortune 500 companies are run by women. When you think about this disparity, it’s led to generations of men creating products and services for women. Frankly, sometimes they miss the mark. It’s really through this disconnect that Daily Harvest [was born].
It only makes sense that as women gain more access to resources and capital, they’re solving for the fact that they’re underserved.
What started off as a solution to a personal problem has grown into a business that really changes how we take care of ourselves. I have such a strong belief that women, when given the opportunity, can make the world a healthier, happier place. That’s why we’re starting to see that gap close. There are more women getting opportunities to make products that meet the needs of women. We’re seeing the problems in ourselves, and we’re coming to the table with solutions.
Piersten:Everyone knows that women control spending in most categories of consumer goods and services. It only makes sense that as women gain more access to resources and capital, they’re solving for the fact that they’re underserved.
Mercedes:Totally hear you guys on that. It’s a really personal element that’s driving people to do this — no one knows the problem as well as you do, or at least you have the empathy to understand that problem, and figure out if there are other people who have it as well.
Deciding to start a business
Mercedes:What drew each of you to start your own businesses? How did you come to your concepts?
Piersten:I had a lifetime of terrible hair experiences. I had trouble finding quality hair care. I even lost my hair on two separate occasions. Once I got to business school, I started learning that it wasn’t just a problem that I was having; a lot of pot people with hair like mine had similar issues finding places to get their hair done. Fifty percent of black women experience hair loss, because they don’t teach ethnic hair care in cosmetology schools.
Once I started talking to my friends and family about it, it just resonated so well. I was like, “I’ve got to do this.”
It became clear that this was a super underserved market. This demographic spends nine times more on their hair than any other group of people. It became glaringly obvious that there was a gap that needed to be filled. I started learning about some of the popular solutions that other groups had — solutions that I wasn’t able to access — and basically took that model, and made it for this demographic.
Mercedes:Rachel, when did the inspiration strike you? When did you say, “I’ve got to do this?”
Rachel:I really was a moment of “hanger” (hunger + anger). I was working at Gilt Group at the time, burning the candle at both ends, and I was hungry. I knew what I should be eating. I was a rower growing up. I knew a lot about health, wellness and nutrition…but realities of life got in the way, time and time again.
I would end up grabbing trail mix from the pantry in between meetings, or birthday cake from three days ago, just because I was really hungry. But ultimately, I knew better. Once I started talking to my friends and family about it, it just resonated so well. I was like, “I’ve got to do this.”
Mercedes:Reshma, what drew you to your company?
As someone who is Indian, I literally never saw an Indian woman in swimwear in any ads in my entire life… We realized that women like us wanted to be sexy on our own terms. Sexy didn’t mean size two — it included a size two, but it also included a size twenty-two.
Reshma:My co-founder and I never saw ourselves reflected in swimwear. Swimwear has been a male-dominated and male-designed industry for decades. It’s been over-sexualized, and it has not been innovated on. We realized that women like us wanted to be sexy on our own terms. Sexy didn’t mean size two — it included a size two, but it also included a size twenty-two.
We wanted to create a swimwear experience that was truly inclusive. As someone who is Indian, I literally never saw an Indian woman in swimwear in any ads in my entire life. My co-founder and I come from very diverse backgrounds — she grew up in rural Missouri, and I grew up in Bombay, India. When we came together, we realized that there was such a big gap in swimwear, and she had been designing and manufacturing swimwear for over 10 years. We saw an incredible opportunity to fill a white space where fit was at the center, and the woman was at the center.
Going back to your first question, we were solving a problem for women that men had not been able to solve for us. We made swimwear that actually fit, that looked good, that did what you wanted it to do. From a brand perspective, we actually spoke to women the way we’d want to be spoken to. That was really generation-defining and groundbreaking — it hadn’t been done in our industry before we launched a campaign called ‘Every body is a SUMMERSALT body.’
Last year, we showcased about 30 different women from all walks of life — from eating disorder survivors to actresses, and everyone in between. It was an incredible experience to be able to showcase women in that way, a way that was inspiring to us. So many women were holding themselves back because of a piece of apparel. We wanted to change that.
Mercedes:I love how personal each of the stories are, and how you guys really took what was your own and started working on it.
Getting from “zero to one”
Mercedes:I know that getting from zero to one is the hardest part. You’ve all clearly gotten past that initial zero-to-one phase. How did you go from “I have this idea,” to [becoming] a real business? What helped you get through that period?
Reshma:Lori and I met for lunch at Chipotle (very fancy). It wasn’t intended to be a life-defining lunch by any means. We talked about the state of the industry, and about direct-to-consumer. She shared with me the incredible I.P. she had — she’d been designing and manufacturing swimwear for so long.
We bumped into each other in January 2017, and we launched on May 23rd, 2017 — about five months of madness to get us there. It’s very easy for people to see that and say, “Oh, that was really quick.” But we often forget that decades of work went into those moments to get us there.
We both left that meeting inspired. Lori wrote the initial business plan for what is now SUMMERSALT. We literally bumped into each other at a dark bar, and that’s where it all came together — she shared with me the strategy and I was like, “Let’s do this together.”
Getting to that next stage, where you actually launch and have a product, is always a tough piece. But finding a co-founder that has complimentary skill sets is so, so incredibly important. We credit the speed at which we moved to our incredible backgrounds, and the legacy infrastructure we both had in place from a product and digital standpoint.
We had an exceptional concept-to-market timeline. We bumped into each other in January 2017, and we launched on May 23rd, 2017 — about five months of madness to get us there. It’s very easy for people to see that and say, “Oh, that was really quick.” But we often forget that decades of work went into those moments to get us there.
I would say zero-to-one is complicated. But if you have a co-founder with a complimentary skillset, you multiply your resources from the get-go.
I was determined to get something in the market, and to see if someone would actually spend money on it. You can have as many surveys as you want, but people don’t always act the same way that they will when they’re talking to you.
Piersten:I was in business school when I started working on Pressed Roots. One of the first things I learned about was understanding your customer. I talked to about 200 women with textured hair — finding out their anxieties about salons, what their fears were, what their best and worst experiences were. I really got to understand the customer problem. Taking that information, you can “business plan” and “pitch deck” yourself to death when you’re just starting a company. I was determined to get something in the market, and to see if someone would actually spend money on it. You can have as many surveys as you want, but people don’t always act the same way that they will when they’re talking to you.
I took the step, and did a pop-up shop where I just rented out a salon space. We had our Pressed Roots method that we had developed — we trained a few stylists on it, and started advertising to students in Boston. That was my zero-to-one, the pop-up shop.
We then took that concept — the pop-up shop — and just started rolling it out. Soon, we were doing pop-ups all over the country.
Rachel:I had this epiphany moment, when I realized that there was never going to be a good moment [to start the business]. I had this idea, I knew I wanted to start something, but I also kept thinking of reasons why now was a terrible time — like, I have this going on, I’ve got that going on.
My zero-to-one was all about faking it until I made it.
Once I decided I was going to do it, I asked myself what the worst thing that could happen was…and I kept following that logic. I asked myself: If I failed, what would happen? I thought, “Okay, well I’m betting my family’s future.” I’m a bit extreme in my thinking (laughs).
So I was like, “How can I mitigate that fear?” In order to mitigate that fear of failure, and to mitigate that fear of betting my family’s future, I decided to set a benchmark. I set this benchmark for myself, which was: Once I had five times more customers that I didn’t know, than customers I did know…that would be my proof of concept. That was where I could dig in, invest, quit my job, raise money, et cetera.
So for me that, the zero-to-one was proving that 5X number. That would make me feel better, knowing that this [customer base] wasn’t just my mom, like, bringing girl scout cookies to the office and making her co-workers buy it. My zero-to-one was all about faking it until I made it.
I got myself a commercial kitchen in Long Island City. I had zero idea how to make food. I started buying ingredients at Trader Joe’s, knowing that once I’d proven those metrics, then I could make all of those other pieces come true. For me, it was about tricking myself — finding “hacky” ways to get the answers I needed, in order to give myself confidence.
Scaling and innovating
Mercedes:Fast-forward a bit. You’ve now all built businesses, and made it through the zero-to-one phase. How do you make sure you don’t get complacent? How do you continue to stay on the edge that helped you get there in the first place?
Rachel:For us, it’s about data, co-creation, and agility. There’s a broad base of customers that have different taste preferences — what you want to eat for lunch might be completely different from what I want to eat for lunch. Understanding what customers want is the data and co-creation side.
You can have data and innovation without agility, meaning you know what your customers want, but you don’t have the ability to deliver it to them… Or, you have the agility, but without the inputs. You really need both.
But the important thing that a lot of people underestimate is the other side of that — the agility side. You can have data and innovation without agility, meaning you know what your customers want, but you don’t have the ability to deliver it to them in a meaningfully quick period of time. In that case, they’ve moved on and found a replacement. Or you have the agility, but without the inputs. You really need both.
The entire ethos of Daily Harvest sits on top of this idea that we’re co-creating our food with the people who eat it. The only way to do that is to build a foundation that supports nimble product development, and nimble ability to respond to customer desires and needs.
As you think about being customer-driven — which is the expectation of customers today — it’s not a “nice to have.” It’s a “need to have.” Customers are demanding. You need to build the infrastructure from the get-go, and give yourself the ability to hear and respond to your customer in a systematic way. That’s the only way, in my opinion,
Reshma:I would completely second agility. That’s so, so critical — not only in product development, but marketing as well. It’s easier to focus on innovation in a category you’re familiar with. But when we think about agility and innovation, we try to think about it from a 360 perspective.
I’d like to give an example from during COVID. When COVID hit, and the flights from Europe were canceled, you saw multiple brands sending out these long letters explaining their philosophy on COVID. “We’re with you, we support you” — and there’s nothing wrong with those letters. But when Lori and I stepped back with our team, we tried to understand SUMMERSALT’s role in this entire COVID ecosystem from a cultural perspective (as opposed to just a business selling swimwear and loungewear).
Innovation doesn’t have to only happen on the product side. It also happens on the marketing side, in how we communicate with our consumer.
Selling pajamas, we quickly realized that we could be part of what our customer needs emotionally, and not just from a product perspective.We launched a platform in three days called the Joy Cast, where customers could text our hotline, and our customer happiness team would respond with pieces of good news — whether that was Italians singing from rooftops to each other, or a grandma waving to kids who were getting on a school bus, or a great inspirational story about a dog that did the most amazing thing. We have thousands and thousands of texts, and we were written up in Fast Company and Harvard Business Review.
That reminded us that innovation doesn’t have to only happen on the product side. It also happens on the marketing side, in how we communicate with our consumer.
On the product side, I love what Rachel said about agility and data. You want to understand what your customer needs, and then respond to her needs. In a COVID environment, she wanted lounge wear. She wanted pajamas. The way we work at SUMMERSALT, we really think about flagship fabrics — so we quickly moved fabric that was going to be used for dresses over to our silky pajamas, which are now bestsellers.
Thinking about our customer, we were able to address both her emotional needs and her product needs very quickly, which allowed us to have a conversation with her even during a very, very difficult time — whether she was choosing to purchase from us, or to lean on us from an emotional perspective as a friend. We got messages from people whose weddings were canceled, and whose baby showers were canceled. Our customers were incredibly vulnerable with us, especially since we started from swimwear, which is an incredibly vulnerable garment.
You stay agile, and you respond to the customer’s needs just as Rachel said. And you can do it from every part of your organization, not just the product part or the front-facing pieces as well.
Piersten:I agree. At Pressed Roots, one of our core values is to be completely obsessed with the customer. At every touch point we have with our customer, we’re collecting data from them about all aspects of their hair. We make sure that we’re continuing to innovate on what product is best for our customers’ care, what experience, what treatment.
Collect as much data as possible, and be completely obsessed with the customer.
When they’re checking out, we’re asking them: “How was the experience? Do you have any feedback for us? Any ideas or suggestions of things that we could add to make your experience better?” Then we’ll send an email to them after they get home: “How do you like your hair? How did you like your experience?” A week later, we’re sending another email: “Tell us about how your hair has lasted. What else would you suggest to us?”
We’re constantly collecting that data, figuring out what we did for the customer, analyzing how that impacted their experience, and then iterating on that. Innovating on that. Collect as much data as possible, and be completely obsessed with the customer.
Mercedes:Data, agility, obsession…maybe all different words, but these are the keys to keeping innovation happening at scale.
Mercedes: I want to talk a little bit about fundraising. What did you learn from your fundraising process, and how did you help your investors better understand your business and your market?
Piersten:I didn’t raise a dime for Pressed Roots until we had done a year and a half of pop-up shops. There was a lot of education that went into it, and some doubt about the problem that our demographic was saying. I got a lot of questions about the business model, but also about this demographic in general. A lot of the investors that I was pitching to didn’t understand this demographic. Why, when the popular blowout bar concept is $40, is your average order value $80? Why would black women spend double the amount that white women would spend?
It took a year-and-a-half of selling out pop-up shops in different cities across the country, just to show this isn’t a “Boston thing.” This isn’t just an “Atlanta thing,” or a “Dallas thing.” This is black women across the globe — how they spend money, how they behave, and what they need.
It was a lot of educating them about this demographic — how this demographic spends money, what they care about, and what the priorities are for them. You can tell investors all you want, but for my business, they needed to see the traction. It took a year-and-a-half of selling out pop-up shops in different cities across the country, just to show this isn’t a “Boston thing.” This isn’t just an “Atlanta thing,” or a “Dallas thing.” This is black women across the globe — how they spend money, how they behave, and what they need.
It took a lot to distill [these things]. That was my journey, and it was a function of the business that I was going into. It wasn’t a software company. It’s a bit of a different business model than a lot of investors are used to, so they just needed a little bit more attraction. That was my experience. It took a lot of education. But the biggest thing is…it took a lot more traction than the traditional VC backed company.
Rachel:When I think about all the rounds that we raised — and we raised a few now — the similarity between all of them is that they’re all really hard, and they all kind of suck. Anyone that tells you differently…follow them (laughs).
For us, investors never understood what we were trying to build. Especially because in the beginning, we were only smoothies. People couldn’t see past that to the greater vision — they couldn’t see past that to what we were ultimately trying to create.
When I think about all the rounds that we raised — and we raised a few now — the similarity between all of them is that they’re all really hard, and they all kind of suck.
A little trick that I learned — and I kind of fumbled my way into this, but it’s something that served me incredibly well through every round — is learning to ask something like, “What would a Series A or Series B company look like, that you couldn’t NOT invest in? Tell me what that looks like on paper.”
By asking that question to multiple VCs, and really understanding what those businesses would look like from a consumer perspective — what the metrics would look like, what the KPIs would be, all of that stuff — and then literally regurgitating that information back to them a few months later, in their own words, like: “Remember when you said that XYZ needed to look like ABC? Well, here’s XYZ looking like ABC”…you kind of put people in the spot where they’re like, “Oh, wait. I did say that I would one hundred percent invest in it.”
Even though they (investors) didn’t understand the vision — which eventually they would get onboard with — it was more about proving objectively that I had found a market need, that there was product-market fit, and that the business had legs.
Reshma:What’s common between all three of our businesses is that we focused on creating businesses that mostly serve women. In a VC community that’s mostly dominated by men, it’s sometimes a hurdle to explain, “Two women from the Midwest are going to sell swimwear,” when there’s no beach anywhere in sight. That’s an interesting threshold to cross.
We realized in our early fundraising days that when we were getting those prevention questions, we were very defensive. It felt so frustrating — how can you not see the bigger picture?
There’s research by Dana Kanze that talks about women being asked prevention questions, and men being asked promotion questions. They’re asked these questions by both men and women, so it doesn’t matter who is asking you those questions. We realized in our early fundraising days that when we were getting those prevention questions, we were very defensive. It felt so frustrating — how can you not see the bigger picture?
A great example: Someone would say to us, “Your business is seasonal.” And to a man, they might say, “How do you take advantage of the seasonality of your business?” It might be the same question, asked two different ways. (Swimwear is not as seasonal as people think. It’s actually very much an all year round business.)
So we would get a little defensive. Early on, we read the research by Dana Kanze, and it was such a shift because we were like, “Oh my gosh, this is what’s happening. We’re getting prevention questions, as opposed to the promotional questions.” We started really focusing on answering those questions as if that same question had been asked from a promotional lens, as opposed to a prevention lens. Really flipping the equation in our own minds.
Because we understood the opportunity. We understood our future and what SUMMERSALT could be. Similar to you Rachel — starting with swimwear, and starting with a smoothie — sometimes it’s hard for people to understand where it can go, especially when many businesses have not been able to switch categories. I’m really thinking about that expansive opportunity, and answering your questions in that expansive way.
That was a big learning very, very early on. We’ve raised a couple of rounds as well, and they’re all difficult for different reasons. Some feel easier than others for different reasons.
But to Rachel’s point, [it’s important to] always be going back to the metrics. If you eliminated what we were selling and who we were selling it to, you’d still be able to be like, “These are amazing customer acquisition costs. Your unit economics are phenomenal.” We’re able to check-mark against the kinds of standards that VCs expect, but also exceed those expectations, because we’re building a very different kind of business.
That’s when the magic happens, but it doesn’t get easier. You just get smarter at how you talk about your business, and you get more confident in the data that you have, and as more years pass, you’re able to say, “Look at what we just did,” as opposed to “Look at what we can do.”
Creating good relationships with investors
Mercedes:You’ve all had experience with investors at this point. We all want to have the best and most effective partnerships possible — what are some things that your investors do that you really, really love?
Reshma:One thing Lori and I wanted to establish early on was a relationship with our investors. Being able to text at eleven at night, or text and say, “Can I talk about this right now?” [We wanted] a flexible, open relationship and we think has been really helpful — as opposed to a relationship that’s incredibly formal, and you’re not really integrating your investors into what you’re building. The flip side is having investors who trust you, and say, “Just do what you need to do,” because they know that no one else could build the business the way you are.
We’re very grateful to have had a phenomenal year, but it didn’t come without its ups and downs…you really get to know people when things get interesting. You want people who have the same steady approach you do.
Finding that mutual respect, and mutual confidence (both in their ability to help and your ability to execute) is key for that investor relationship. I also think about all the amazing women who’ve been part of our journey. The female investors. Who have been early supporters of what we’re doing. They literally had never met us — after one phone call we were like, “we’re going to do this.” They stuck to their word, and they’ve been an incredible partner ever since.
It’s about more than finding money. It’s also about finding investors who are on the same emotional wavelength, or mentality. Sometimes that’s the most important thing, because everyone’s been through a very interesting year this year. We’re very grateful to have had a phenomenal year, but it didn’t come without its ups and downs…you really get to know people when things get interesting. You want people who have the same steady approach you do. I think that emotional connection is sometimes paramount to everything else, to make the relationship stronger.
Rachel:In order to find those investors, and to ensure that those are the type of relationships that you can have, it comes to really good communication before the term sheet. A lot of people are afraid to have those conversations before the term sheet, because [you feel] like, “They’re going to judge everything I say. What if they take away the term sheet?”
I wasn’t going to dump money into the market, and have unsustainable customer economics that “at some point would pay off.”
Having done it a few times, the most important thing is value alignment, emotional connection, and that attitude of, “We’re going to roll up our sleeves and be in it with you.” Otherwise, it just doesn’t work.
The way I wanted to build Daily Harvest was not popular. I said from day one that I wanted to grow quickly. I also wanted to grow sustainably. Because I’ve had experience, I wasn’t going to throw good after bad — I wasn’t going to dump money into the market, and have unsustainable customer economics that “at some point would pay off.” That’s something I wasn’t on board for.
But when there’s money on the table, and when you see really efficient CACs, it can come to a head when you have an investor say, “I don’t understand why you’re not pushing on the gas.”
That’s what gives you the ability to have those conversations, and find that alignment, and find those people that are going to be with you in the foxhole. It’s such an important relationship. If you don’t get that “values alignment” clarified up front, it becomes a very strange relationship. I also love my investors, and I attribute that to those early conversations.
The business is doing great right now… but even if we didn’t have this scenario, I feel fortunate that my investors were going to have my back regardless.
Piersten:I’ve been very fortunate. I’ve heard horror stories when it comes to investors. My first fundraise was to get this first location open, and we opened two days before we had to shut down for COVID. Initially, I was really nervous about how our investors were going to react and feel about this.
But they reached out to me. They helped me get through the lockdown, like, “How are we going to figure this out?” They were partners. Thankfully, being in Texas we were able to open up, so the business is doing great right now. But even if we didn’t have this scenario, I feel fortunate that my investors were going to have my back regardless.
Right now, we’re figuring out the best way to scale. I don’t have investors telling me, “This is the way to do it, this is the way not to do it.” They’re giving me the resources and tools to make the best decision for the company. Everything that the two ladies said before — about being careful about who you choose, and finding people who are supportive and on your team — is so important.
Parting words of advice
Mercedes:What’s your parting advice for founders who are thinking about building their business?
Piersten:Be customer obsessed. Find out everything that you can about your customers — what they’re nervous about, what their problems are, and what they love. And once you start building your company, keep them top of mind. That’s my piece of advice.
Reshma:Don’t ignore the unsexy things. It’s very easy to focus on the brand, or the product, but there are so many things in between that are critical to building a very sound business with the ability to be exceptionally large.
Ops, sometimes, is not sexy. Customer happiness and customer service are complicated and interesting. Freight is an interesting, but boring, thing to think about. All of these unsexy pieces are still so important to the entire puzzle coming together.
I would say don’t ignore those [pieces]. They’re the foundation for your business, and will allow you to innovate on the places where you do see a magnified return on investment (like brand and product).
Don’t ignore the unsexy things. It’s very easy to focus on the brand, or the product, but there are so many things in between that are critical to building a very sound business.
As for brand, my one piece of advice is to really think about brand and product integration. As opposed to thinking about product, and then setting brand as icing on the cake — which is more of a complimentary flavor, but hasn’t been completely integrated into the recipe — that’s where we see things not feel as harmonious.
[At SUMMERSALT] we think about brand feeding product, and product feeding brand. It’s a constant loop, so that we’re responding to what our customer actually wants, both from a product and a marketing perspective. Having those completely intertwined is hard, but it’s really where we see the magic happen to be able to deliver on our customer promise.
Rachel:When you’re thinking about brand, the most important things are: Understanding your customer, resonance, responsiveness, and transparency for that customer (what you’re doing, and why you’re doing it).
As for general advice, surround yourself with good people — investors, advisors, and team members who share your values.
DISCLOSURE: This communication is on behalf of eShares Inc., d/b/a Carta, Inc. (“Carta”). This communication is not to be construed as legal, financial, accounting or tax advice and is for informational purposes only. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein.