FUTUREPROOF.

Empowering the Fashion Brands of Tomorrow (ft. Andrew Wyatt, CALA)

August 25, 2020 Jeremy Goldman Season 1 Episode 90
FUTUREPROOF.
Empowering the Fashion Brands of Tomorrow (ft. Andrew Wyatt, CALA)
Chapters
FUTUREPROOF.
Empowering the Fashion Brands of Tomorrow (ft. Andrew Wyatt, CALA)
Aug 25, 2020 Season 1 Episode 90
Jeremy Goldman

I think 2020 has taught us all the importance of infrastructure. That, and face masks. Anyhow, Jeremy came across CALA recently, and I thought it was a startup that’s very of the moment. They’re a New York-based marketplace that provides a total retail infrastructure for influencers and existing fashion brands to design and launch their own fashion brands. Think of it as taking your idea from a napkin sketch to the product being delivered to a warehouse.

slacAs always, we welcome your feedback. Please make sure to subscribe, rate, and review on Apple Podcasts, Spotify, Stitcher, and Google Play.

Show Notes Transcript

I think 2020 has taught us all the importance of infrastructure. That, and face masks. Anyhow, Jeremy came across CALA recently, and I thought it was a startup that’s very of the moment. They’re a New York-based marketplace that provides a total retail infrastructure for influencers and existing fashion brands to design and launch their own fashion brands. Think of it as taking your idea from a napkin sketch to the product being delivered to a warehouse.

slacAs always, we welcome your feedback. Please make sure to subscribe, rate, and review on Apple Podcasts, Spotify, Stitcher, and Google Play.

note: this transcript is ~95% accurate. It's not perfect.

[00:00:00] Andrew Wyatt: [00:00:00] your job as a CEO or my job as a CEO is to be optimistic, even when things look completely AFT, because so many people pull the energy from the leader , and I think.

If I ever lose that confidence, everyone's going to feel it.

Jeremy Goldman: [00:00:18] When you think about 2020, it's really taught all of us. The importance of infrastructure. the U S has been in more dire straits than some countries, just because it lacked the infrastructure to respond. To the virus. So,  it's really been top of mind for me. And I came across Calla recently and I thought it was a startup that's very of the moment. 

They're in New York based marketplace that provides a total retail infrastructure for influencers and existing fashion brands to design and launch their own fashion brands. Think of it as taking your idea from a napkin sketch to the product being delivered to a warehouse. Andrew Wyatt is the cofounder and CEO of Kayla. 

Uh, and I'm [00:01:00] excited to bring them to the show. So let's, uh, take it away. 

So Andrew, welcome to future proof. 

Andrew Wyatt: [00:01:07] Thanks so much. Thanks for having me. 

Jeremy Goldman: [00:01:09] One of the things I really wanted to ask you, and I start off relatively often with this is, who are you and what do you do on a day to day basis? how do you see your work riff away? 

Andrew Wyatt: [00:01:18] Awesome. Yeah. So I'm Andrew CEO, founder of CALA, and on a daily basis, I'm empowering creators.

It's actually our company purpose, empowering creators everywhere. What that really looks like is helping perhaps marginalized people take advantage of best in class processes, resources, networks to create great products and bring it to market. 

Jeremy Goldman: [00:01:39] And I wanted to ask you a little bit about how the concept came to you.

Cause when I first heard it, I thought it makes a lot of sense just in the way that a company like, just works or Tri-Net, that outsources in a way, part of the infrastructure that. startups didn't want to deal with it. It made a lot of sense because people can focus on the things that matter to them and [00:02:00] why they got into a business in the first place.

but tell us a little bit about the origin story here. 

Andrew Wyatt: [00:02:04] Absolutely. Fundamentally. I believe if you're focusing on what you do best, you're going to be the most successful and be the happiest. The impetus for the Cal idea came on as head of operations for a startup called ship. And what should it did was like Uber for shipping, I guess you could say.

So if you didn't want to ship it to the post office, you could take a photo of something you wanted to ship a courier would come pick it up pack and ship it for you. The ultimate sort of Displacing mom, the need for mom, then that sort of era of startups. So we started, we launched in 2013 and immediately these boots in the mission in San Francisco started using ship in combination with Shopify to reach this broader audience than just people who could walk through the door.

But of course they didn't know how to order boxes or, negotiate FedEx rates. So they use ship to, just take a photo of the address and we'd come and pick it up and send it. And it got me thinking there's [00:03:00] more tools than ever Shopify, eBay, Etsy for transacting, Instagram, tick tock, YouTube for building an audience.

And there's just going to continue to be more and more tools. Sometimes people need a little bit more than just the self-serve tool. And so that's what got the idea of what if we focus on one space instead of just helping the shipping, we try to provide this sort of like verticalized solution that really solves every single pain point end to end.

And that's when the initial ideas were when I first started working on Calla. 

Jeremy Goldman: [00:03:29] I think it's also smart, obviously, just trying to conquer or really build something that feels appropriate for one industry as a, trying to be all things to all people, right? Yeah. I think fashion was probably out of all of them, a really good one to disrupt, which I.

Personally I agree with, because I think that there's a lot of disconnect between some of the functions that people have to do and where their skill sets might lie. But how did you guys arrive at that conclusion? 

Andrew Wyatt: [00:03:58] So for me, it [00:04:00] comes down to the sort of personal interest. So I think if I would've seen a big opportunity to Help wrappers.

Then I probably would have figured that out, as a tooling, maybe or something like that. But I'm supply chain guy worked in tech, not necessarily the most creative person, but I love being around creative people. A lot of my friends are artists or things like that. And so for me, it was around how can I take my skillset around supply chain, operations, technology, really non-sexy stuff and help other people who are super creative that I find to be inspiring.

But. Are not good at all in operations or supply chain or tech. And so it was one of those things that we're going back to what I said before, where it's if you can focus on your zone of genius, I think every everything's better and everyone's happier. And so it was that combination of seeing a lot of these fashion brands struggling.

Jeremy Goldman: [00:04:44] what's some data that you can point to that suggest the market opportunity will be bigger for platforms like CALA in the future. I'm obviously sold in that regard because we're talking, but I think that it, to me, I asked.

[00:05:00] Because obviously when you're starting something up, that's one of those decisions you have to make. And, you say, I'm going to spend X number of years building this thing because I believe it's going to be bigger. So what are some of the indicators that you were looking at where you saw this has the opportunity to grow?

Andrew Wyatt: [00:05:16] So for me, the initial indicator that kind of got me excited about all right, let's do it now. Was. When I first started dating my wife, she would leave work and go and call me from Bloomingdale's. I worked at tech, so I worked until 10 o'clock at night, but so she called me like, Hey, I got off work.

She's like browsing Bloomingdale's. And she popped down to Neiman's or whatever. And then over the course of six or eight months, she stopped doing that all together. I'm telling you she would do it like every day. And she just was started buying from revolve. And from these influencers that she is falling stone, gold Fox for love and lemons.

And that's what really cemented this idea of Oh, wow. These influencers are our brands, and that was in 2016. we're definitely two years too early, had a huge struggle with raising and all that stuff. [00:06:00] And then I swear to you, Kylie Jenner is on the cover of Forbes sometime in 2018 and everything starts to shift.

And so what the data I can point to today is, Kylie Kanye and Fenty, which is Rhianna's brand. These are individuals that have built billion dollar brands. What's interesting about individuals is that you could buy a tee shirt from Ghana. You could buy lips gloss from Rihanna. You could buy a shoe from me on a, in an album.

And it all makes sense for Maybelline. For instance, you may buy a lipstick from them, but you definitely not going to buy a shoe from them or a, or an album. And so when we look at these individuals that are already driving trends, I think I saw a number that 80% of gen Z and millennials say their purchase decisions start on social.

So they're already driving, this, the ones that have the most scale and resources have been able to create these billion dollar brands. We think that. Anyone with 50,000 followers could launch a high quality brand and start being successful. And so you look at the numbers on Instagram, alone, 15 million [00:07:00] people have more than half a million followers, that 15 million potential brands.

And we're seeing people with far less than 500,000 followers have success making. 40 K a month. And it's pretty exciting. 

Jeremy Goldman: [00:07:11] Yeah. I think that when you think about it, that way, it makes a lot of sense. I think that obviously people want to interact with personal brands, and that's, a huge opportunity for people who are trying to monetize everything that they're working on.

So I think absolutely now, one thing I was curious about in, your development of this, how defensible is your idea, and that's part one. And then I guess part two, how does an upstart marketplace like yours protect itself against creating this economic model and then having a bigger player, smash you to pieces?

I'm sure it's one thing that basically everybody is thinking about these days when they build something it's like, you want to build it and you want to be successful, but you're hoping that none of the. quote unquote, wrong people, notice something, 

Andrew Wyatt: [00:07:57] you gotta stay low key for the right amount.

[00:08:00] It's interesting. I think if you would have asked me that question. When I first moved to San Francisco in 2013, 2014, the classic answer is Oh, Google would never do that. Apple would never do that. they're so focused on what they're doing. That's clearly not true anymore. They're just, they're continuously building competitors for, top apps or top providers and whatnot.

So I think it's a great question for us. Firstly, it's about user experience and creating. A painkiller versus a vitamin to use that metaphor. So one of our sort of product principles at Calla is solve the next biggest pain point. So initially we started with the painful, like I have this back of the, this idea of the back of the napkin sketch.

How do I turn that into a hundred versions of that? So I can start selling what we realized is that sending those to someone's house is not valuable. So we added in fulfillment. And then some people actually need help with design. So we've added in this network of ghost designers and then some people need help just thinking about the business.

So now we have these amazing brand presidents that we'll place with our top clients that help [00:09:00] pricing merchandising, drop strategy. So it's really about creating this like layer cake of value, so that with one login, people have every resource that they need. So that's our day one defensibility.

We have 60 manufacturers in 10 different countries now is only possible because we're now supporting hundreds of brands. And so now we're able to offer better pricing, access to better resources to our brands because of economies of scale. And that's just going to continue to increase over time. As we get bigger and bigger, we're starting to work with.

Actual like existing brands as well that come in with some, some real volume. And so it's going to quickly come back. The point where we as Calla can drive more volume than any individual brand could do on their own. And so that of course, creates defensibility. And I think as long as we're always obsessed with that experience for the customer and they're making money, they're successful, they're telling their friends about it.

We're going to have, a nice sort of core group of users. And then it's about getting to [00:10:00] scale as quickly as we can so that someone else that tries to come in with more money or more resources, can't compete with that scale and that sort of network that we've put together. 

Jeremy Goldman: [00:10:09] I think that makes a lot of sense.

I just think, one of those things you got to ask, because it is difficult, like you said, to find something that Amazon or Apple or Google will not touch. maybe the pornography and even that, even that I was going to say, I bet you never say never the moment that I say that there's going to be a big announcement from Facebook, tomorrow about there.

New adult entertainment initiative. Yeah. But, so I believe, yeah, like you said, you started this a few years ago, back in 2016. And how do you balance as an entrepreneur? The challenge of starting a business too early versus too late, because obviously everybody wants to be right on time. It's very difficult to get it to be right on time, because I think then often other people have access to the same information you do, and they might.

Launched the same thing and then [00:11:00] just be a little bit faster. So how did you balance that whole, is it the right time in 2016? How did you make that decision and why do you think we're in a better spot right now? Is it just the fact that influencers have successfully monetized their brands and now other influencers and other smaller, individuals look at them and say, I could do that.

Andrew Wyatt: [00:11:19] Anyone that tells you, they nailed the timing is a liar. They either were actually working on it a lot longer than they, fess up about, or they were able to raise more money and were able to catch up. We definitely hit it too early. Luckily enough, we were willing to work without getting paid for 16 to 18 months, much to my wife's demise, but.

we, Dylan, I, we struggled, but we were so competent that there was something here in the space because every person we talked to you was like, Oh, wow, like, why doesn't that exist? And so that gave us the fuel to keep going. I talked to [00:12:00] Jack from the CEO of Patriot on the other day, a friend of mine.

And he is It's all the difference between startups that fail and startups that are successful is about surviving. And it's just if you can survive long enough, a lot of times the timing will come to you. Therefore, you now we're in a position where, you know, the Forbes article and sort of influencers.

Yeah. Thing, a thing that investors get excited about, that definitely helped us. Influencers were able to monetize through these brand deals. COVID has really been the catalyst for us, like nothing that we've experienced to date. And I think it's really pulled in then the timing, I think the Shopify said that e-commerce is now where it's projected to be five years from now.

So it's pulled in the timing for everything that has made it look like we're geniuses. Now sitting here with this fully built out tech solution and this great network. What's interesting to even take it to another level is like the brand deals are dry have dried up now. So now people are looking for, [00:13:00] and movie productions or paused or canceled tours or canceled.

So now people are like, Oh wow, we actually need to figure out another revenue stream that we can use to monetize our audience. If you pair that with the fact that any existing fashion brand that's operating under this old sort of push system model, where they have 24 months of inventory and they're forecasting out what people are gonna want.

Anyone that was sitting on that amount of inventory in their supply chain back in March is in basically financial crisis right now. And McKinsey did a study with business fashion that about 80% of the top hundred fashion brands are in financial distress and large number of them will go bankrupt within the next.

12 to 18 months. What that means once again, for timing is that now there's this sort of gap in the market that can be filled by, instead of a hundred fashion brands. We think tens of thousands of these influencer led direct to consumer brands. 

Jeremy Goldman: [00:13:54] Interesting. Cause I know that you recently raised, I believe a few million dollars [00:14:00] and Was that easier to do during the pandemic, because this created a market opportunity or, like how hard is it to raise money in the middle of a pandemic or does it just depend on what your cause you're Ray, but you are raising, or you did for something that, like you said, all of a sudden became a little bit more valuable.

I feel right there. People saw the market opportunity or no.

Andrew Wyatt: [00:14:29] So I can tell you exactly where I was as that my wife's parent's place. Cause we bugged out in New York around mid-March when I saw San Francisco go to shelter in place. And I remember sitting there thinking to myself, this is going to change everything. And so we spent like the next 24 hours redoing our financial model, looking at all of our assumptions based on feedback from investors, cutting guidance and all this stuff.

And then we kicked off the fundraising right then. And so we were lucky enough to be able to pull in a good portion of it from existing [00:15:00] investors and that kind of co-sign their confidence. And basically as our investors articulated to me, they immediately drew a line in the sand and they knew that half of their companies, this was going to be a positive and half their companies.

This is going to be really bad or maybe not half, but at least they're gonna fall into one of those two buckets. No one was like, This is okay. So at that point, okay. I think it was too early for us to know which bucket lid we were into, but all signs pointed to that was going to be well, Q2 is our biggest quarter ever.

And we signed like 10 times as many clients as we had ever done before on this sort of like high, highest level tier are uncapped here. And so I think by the time we closed the money, the business actually looked a lot better. And today it looks a lot better than it did when we actually raised. But, we're fortunate to be able to pull it in capital.

Of course. 

Jeremy Goldman: [00:15:46] Yeah, absolutely. I'm wondering how big do you anticipate this can get, and where do you anticipate you'll be in three years. I know probably if you were, if I were to have asked you that question in 2017, maybe you wouldn't be able to [00:16:00] forecast exactly where you are today and you certainly can expect to be able to forecast these market conditions, where are you looking to take this over the next few years?

Andrew Wyatt: [00:16:11] Apparel industry globally, or I have what's called the fashion industry globally in 2019 is like over $2 trillion, absolutely huge industry, depending on how the Facebook VR thing goes. I think people are going to keep wearing clothing for awhile. So then we okay. Market's really large kind of zoom out a little bit.

How much of that dollar amount has been executed through the old model, this sort of like push system. And it's a really large percentage, I would say Zara's probably, they are a big percentage of it, but they're there one of these champions of this new model. So instead of optimizing for unit costs, they optimize for speed to market.

But so if we just look at the U S market alone for peril, 340 billion in 2019, it's going to be a much a sliver of that this year. But what we're already finding is that. Our approach for influencers [00:17:00] and the technology that we've built to really digitize your entire supply chain. It's really great for bringing a brand, a new brand to market.

And for four months, that also happens to be super valuable for an existing company and bringing a new collection to market and, three to four months. And so we're actually, to kick off a pilot with one of the biggest apparel companies. And so to bring that back to where I see ourselves in three years, hopefully Calla is becoming the infrastructure for.

The way that all fashion products are produced and delivered to clients. On our journey towards true on demand production, close to customers. And that's really where we see this vision going is Amazon's 90 actually. Now it's probably less, two years ago, Amazon was 90 miles away from everyone in the U S.

We see a similar model where you could actually have an on demand production center, 90 miles away from everyone in the world and thus, and that's how we truly get to fully sustainable production without [00:18:00] waste. You probably know this, but apparel is second only to oil and gas is the most harmful for the environment.

And when people talk about sustainability a lot, it's always like you should do this. You shouldn't do that. We want to make it so that. Being sustainable is the best business practice. And that's how you can really create that change. 

Jeremy Goldman: [00:18:17] I think when you think about it, that way, it is one of those things where if you're able to tout the fact that you are being more sustainable, that you are being more mindful, it does become a competitive advantage, from a marketing standpoint.

And then it forces your competitor to do the same thing, cause they don't want to be left behind. And it's just like the Boulder and. Raiders of the lost art, it just keeps on gaining steam. So that's the way got it. yeah. So just to, cause I know we have to let you go in a few minutes.

This is really interesting to me, since all of my background has been in consumables largely, how do you balance realism versus optimism when you're trying to figure out. How big this can get. you obviously, as a founder and [00:19:00] as the person making the big decisions in charge, you have to be optimistic, but also I feel like inherently that makes it hard to be realistic.

And how do you just balance those two, especially when you're pitching to investors, when you're speaking to them, about how. you're inventing this new type of service that didn't really exist in quite this way before 

Andrew Wyatt: [00:19:25] your job as a CEO or my job as a CEO is to be optimistic, even when things look completely AFT, because going back to surviving once, so many people pull the energy from the leader CEO, and I think.

If I ever lose that confidence, everyone's going to feel it. They're going to see it. And the whole, maybe you did have a shot, but that shot's gone. And so going back to the zone of genius thing, my zone of genius is optimism and setting [00:20:00] this vision and getting people excited about joining me to make it happen and getting our clients excited about what it is today, what it will be and our manufacturing partners and everyone, what I've found.

Crucial is to surround myself with people whose zone of genius is realism. what I've basically done is hired a head of business operations and corporate strategy who takes the vision and helps me to, put numbers to it. Helps us even put numbers to what our optimistic scenario is, what are, good, better, best type analysis.

And what that helps is I have those numbers in the back of my head. And so as I'm talking to investors, I can understand, is this an investor that is going to be a cost focused investor and wants to know, I'm going to put in a dollar. Am I going to get four out or am I going at six out?

And how long that it's going to take. and I think in those conversations, it's a little bit more pessimistic. When I'm talking to an investor, that's what do I have to believe for this company to do a 500 million so that their value is over a billion? So that [00:21:00] they're a unicorn, I'm obviously, talking more about the Optima optimistic, like this is what it can be.

and, oftentimes if you hit product market fit, it can be even better than that. And so that's how I've approached it. I'm still constantly learning and trying to get better every time. But that's how I did for now. 

Jeremy Goldman: [00:21:14] I think that makes a lot of sense. It's essentially knowing your audience and also frankly, knowing your weaknesses.

If you need to surround yourself with people who have a differing skillset or even differing perspective or orientation, you're going to naturally do better in the process of they compliment you. 

Andrew Wyatt: [00:21:31] Absolutely. And the other pro tip is you're, you always take your, you're good.

And if you're doing a good, better, best, you always take your good plan and then dock that about 25%. And that's what you use for the financial plan of the business. So you want to make sure you have enough cash in case you're like 25% under your pessimistic plan. And then everything else is gravy from there.

Jeremy Goldman: [00:21:51] And then you can, so have years like 20, 20, which I feel like the year of the black Swan and, you've done your best to get the market right. And [00:22:00] something that you can, the first scene just throws it off, but know, I'm glad that, you guys are chugging along and doing some very interesting work.

Andrew, I think people will get a lot out of this one. So thank you so much for making the time. 

Andrew Wyatt: [00:22:12] It was a pleasure and, obviously thanks for doing it show, I think it's super helpful for everyone that listens and thanks for having me on.

Jeremy Goldman: [00:22:18] Thanks again to Andrew for making the time. I do think that a company is link his are really of the moment because they're allowing people to focus on what they're really good at and essentially outsourcing or partnering to do the rest. If you'd like what you just heard, and this is your first time here, be sure to subscribe to Apple podcasts, Google play Stitcher, Spotify. The choice is yours. And if you're a longtime listener, please remember to rate and review a future-proof as that's the number one way we get the show in front of people, just like you. 

Special. Thanks this week to associate producers, Jason stack, and To show Once again um jeremy goldman and you've been listening to future proof