How I Built This with Guy Raz - Banana Republic: Mel and Patricia Ziegler

Episode Date: August 19, 2024

With $1500 in savings and no experience in retail, Mel and Patricia Ziegler stumbled upon a clever idea: buy inexpensive Army surplus gear, refashion it into stylish clothes, and sell them in a setting that felt more like a safari than a store. With a retro- feel catalog that turned shopping into an adventure, Banana Republic caught the attention of the media, and sales grew. But so did the headaches of running the business, and in 1983, the Zieglers sold the brand to The Gap. Over the years, Banana Republic lost its distinctive, retro-Safari feel, and the Zieglers departed to start another brand, The Republic of Tea. Today, Banana Republic remains a multi-million dollar business, with hundreds of stores around the world.This episode was produced by Kerry Thompson with music by Ramtin Arablouei. It was edited by Neva Grant. Our audio engineer was Kwesi Lee.You can follow HIBT on Twitter & Instagram and sign up for Guy's free newsletter at guyraz.com.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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I remember going to the printer to put out our latest catalog. And I hadn't slept in like three nights. I think I was just up around the clock, just trying to get it all pasted up and ready to go. I was driving home across the Golden Gate Bridge. And all of a sudden I hear this honk. I wake up and realize I veered into the oncoming traffic. You were falling asleep. I was falling asleep. I was so sleepstaffed. And I went home and I just broke down.

And I just told Mel, we can't do the catalog and the store and make the clothes. I just, I can't do all this. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today how Patricia and Mel Ziegler brought a sense of style to army surplus clothes, sold them in a safari setting, and built a multi-million dollar business, Banana Republic. A lot of people sit at their desks and dream about starting a business. You might be doing this very thing at this very moment. I remember having that feeling, and I remember the anxiety I felt leaving my job to do.

do it. And so it's probably why I identify with today's story so much, because Mel and Patricia Ziegler were, like me, journalists. Back in the 1970s, they both worked for the San Francisco Chronicle. This was a primo gig, a job you don't leave. The Chronicle at the time was a prestige newspaper, but neither Mel nor Patricia was satisfied. And so when an idea came to them to start their own thing? They decided to take the leap. The problem, like so many startup stories, was money. They didn't have much to start. But what they did have were complementary skills. Mel was a writer. Patricia was an artist who also knew how to sew. So together, they set out to tell a story about clothing. Mel would write a quirky, photocopied and hand-stapled catalog.

Patricia would buy inexpensive Army surplus clothing and gussy it up with fashion forward alterations. With the little money they did have, they were able to open one shop in the sleepy town of Mill Valley, California, about 20 minutes north of San Francisco. This was in 1978, and they called their little store Banana Republic. At first, no one came. Crickets. But eventually, people started to discover their social.

safari-themed apparel. Now, the original Banana Republic was very different to what you see today, and we'll get to that. But what made the brand pop and then explode nationally was how different it was at the time. Stores were decorated with life-sized palm trees, bush planes hung from the ceiling, jeeps embedded in the front doors, and the Zieglers started this thing with just 1,500 bucks. Mel and Patricia met in the mid-1970s at the San Francisco Chronicle. Mel was a reporter, Patricia was a courtroom illustrator and sketch artist. Patricia had majored in art in college. This was during the Vietnam War era.

But as it happens, becoming an art major was kind of accidental. When I got to UC Santa Barbara and I was registering for my, I guess it was the second year, I was registering for my major, I thought I was. I was in the anthropology line, and the lines were like two hours long. I got up to the head of the line and said, okay, I want to register for anthropology. She said, oh, this is the art line. Anthropology is the next one over. I thought, oh, I can't do another two hours in the sun.

Okay, it's my fate. I'm an artist. From what I understand in your early 20s before you started your career, which would also be at the San Francisco Chronicle, you kind of drifted for, at least a year, maybe more. It was a couple of years. I call it my walkabout. And what did you do? I mean, you've written a little bit about this in your book

that you had a boyfriend who was evading the draft and you were camping and hitchhiking and living up in the mountains and Santa Cruz and outside of San Cruz. What were you doing? Well, things were getting very stormy at UC Santa Barbara and, you know, it was just right before they burned the Bank of America building down. My boyfriend was drafted, was called up. And he had heard that there was a psychiatrist up in Stanford who was helping guys get out of the draft.

So he asked me to come with him. We hitchhike up together. Came back about two days late. I see all my stuff in the alley at my apartment. I asked the people, so where's Sue? My roommate, she said, oh, I hear the people dropped out that were here before. I said, what? There are very ambitious real estate people in Isla Vista that just wanted to keep all this apartment filled.

So I had no place to live. My parents weren't too happy about my draft resisting boyfriend, so they kind of stopped talking to me. And I went into the deans and said, you know, I decided I don't need a license to be an artist. I'm out of here. And we took off, I made him a pair of fringe leather pants. We took off hitchhiking. Everybody wanted a pair of fringe leather pants to saw us.

And so that became my income for the next couple of years as I traded fringe pants for rides to Idaho, Oregon. You would sew them yourself. I would sew them myself. And basically just traveled wherever our thumbs would take us. Yeah. I know eventually you went back to finish your art studies. I did.

In San Francisco at the Art Institute. And out of that, you got a gig at the Chronicle as a sketch illustrator, right? this was, I don't even know if newspapers hire, these are jobs in newspapers anymore, but you were basically sketching in courtrooms, right? I was both sketching in courtrooms and also sketching for the daily paper. And I was just thrilled. Here was a job where I'd go in, read stories, and draw. It was, and then at that time, they just started letting an artist into the courtrooms,

like Patty Hurst and the zebra. trial, Sarah Jane Moore. There was a lot going on in San Francisco at that time. So you were covering, so you were sketching these trials. In the meantime, Mel, you were also the Chronicle and you were covering some of these stories

as a reporter, right? Yes. How did the two of you meet at the paper? Well, I think at those days, the only job an unemployable person could get was as a

newspaper reporter. Anyway, I was sitting there. I was covering these stories. And then I saw this beautiful woman walk in and turn into the art department. And I thought, whoa, that's somebody I want to meet. And right in front of the art department was the copy machine, the Xerox machine, as they called it that day. So I suddenly developed all these things I had to copy. And I went over and copied and copied and stole as many classes as I could until finally, a couple of days later, there was a Christmas party.

And I worked up my courage to go over and meet Patricia. And it was a moment that we talk about a lot because it was one of those moments that will be lost in time forever because when we both saw each other, there was such a profound connection. that in many ways we haven't barely been apart since. And so you guys became an item pretty soon after that? Well, we did, but we tried to keep it quiet. And then we decided at one point to both take a week off at the same time and we went to Hawaii and we both came back with tans. So if you look at this Chronicle Newsroom, full of people in the middle of January, and there's two tan faces here and there. So people began to suspect.

Were they together? How did this happen? But we didn't really let anybody know. I mean, we were very quiet about it. For two years. For two years? We really kept it. Yeah.

Remember? But it was so much fun in San Francisco in those days. It was so much fun. The mid to late 70s. It was so much fun. It was such a different city than it is today. It was just a really vibrant, bohemian city, free-spirited in every way. All right.

So you guys date and then two years later you get married. Yeah. Did both of you, I mean, Patricia, from your perspective, when you were, you know, you guys get married in 1977, did you think that the career path that both of you had chosen would be? your life? I mean, did you imagine that, okay, you know, we're here at the Chronicle, and this is what we're probably going to end up doing? Well, we're having a lot of fun at the Chronicle, and also a press pass could get you a parking place anywhere on any corner, fire hydrogen or not. But we looked around one day and realized that some of those people had been there for 30 years, and that that was kind of horrifying to us to have that predictable of a life. Yeah. Well, we wanted to travel.

We wanted to travel. We really wanted to travel and see the world. And it was pretty difficult to do being tied down at the Chronicle. We had to show up every day. You couldn't be in Timbuktu or, you know. So when you guys left the Chronicle, you did not have this grand idea to start a business. It was just, let's just travel and we'll make some money as freelancers and that's it. Figure it out.

We'll figure it out. Yeah. Okay. There was no plan beyond that. Okay. So how did that go? Well, it was more difficult than we thought. I mean, freelancing wasn't really going to get us where we wanted to get.

That became pretty clear pretty soon. We weren't going to get enough money to travel to see the world. And so we at that point said, well, we got to figure out something. We got to start a business. But we had no idea what kind of business we were going to start. But how did that idea even come to your minds? I say this as a former journalist. And I know journalists are entrepreneurial in many ways and how they operate, but very few of them think about starting a business.

They don't have that perspective for a variety of reasons. So what even gave you the idea of starting a business? Our goal was always to be free. Our goal was always to be able to live the life we wanted to live. And starting a business was going to be the only ticket we could possibly think of. Was there something that inspired that idea? You found that book. Napoleon Hill.

Thinking grow rich. Classic. A classic book. It was a silly but a wonderful book. It was written in the 30s or 40s. It was simple, profound. It was, and I read it. I said, this is what we got to do.

We got to figure out how we're going to do this. And so as I recall, there were three steps to this thing. How much money do you want to make? how long will it take you to make it and what will you do to make it? Yeah. The magic number was a million dollars. We wanted to make a million dollars. Five years. We'd give it five years.

We had no idea what kind of business. No idea. But right about that time, you got the assignment to go to Australia. I had a freelance assignment to go to Australia. I was gone for a couple of, for a week or two. and in Australia they had the they have

their versions of Army Navy stores are called disposal stores and I in those days ever since even at Columbia in the 1968 all I wore

was Army surplus the old P jackets and the anything I could find and so I was fascinated by that that was the only place I shop

so I went into the disposal store in Sydney and I came out with this beautiful khaki jacket and I brought it home. I wore it home. And of course there are still Army surplus stores all around the world but I think I imagine they were just much more prominent in the 70s.

They were much more prominent. Because first of all there was still so much World War II era stuff. That's correct. That had to be unloaded and then of course there were other wars. Yes. Basically these are stores that sold like what, pea coats like navy peacoats and... Australia was part of the British Empire at some point and so the, you know, and so you What I found there was not available in the U.S.

And what the jacket I found was, I think, a Burma from Burma. The cotton is thicker than anything I've ever seen to this day. It was beautiful. It was well-tailored. It was a well-tailored jacket. I don't know, probably an officer's jacket. I mean, listen, they know what they're doing. Yeah.

So you get this jacket. And I should add, from what I understand, Mel, you are not. clothes guy. You were not like a clothes maven. Like Patricia was. Like Patricia was always well, you were always well dressed. I always found fashion to be a language or style, personal style. And you always like, did you have the cash to buy nice stuff? No, I'd go to flea markets or vintage stores or make it myself. Nice. All right. And but Mel was like, you know, whatever was in the closet. Yeah. And I told her, I didn't care about fashion. I don't care about fashion. I don't care about what I wear. I wear the next available thing in the closet.

I got you. And I just point out, today, you're a very well-dressed man, very well put together. But back then, you were, you know, not a schlub, but just, you know. An army surplus. Army surplus guy. Okay, okay, I got you. So you buy this cool, and did you buy the jacket thinking, oh, Patricia's going to love this? Or did you just buy it because you liked it?

Well, yeah, I knew she would like this jacket. I knew she was a flea market shopper, and she would appreciate it. that this was a very special jacket. And what did you think about it when you saw it in San Francisco? Wow. I said, this guy's finally got style. No, I thought it was fabulous. Yeah.

But, you know, it needed new buttons, and I thought it could use a few other touches. So I offered to kind of upgrade it for him. Yeah, some leather under the collar, patches. It was amazing. Patches on the elbows. So I went back to the chronic lever. He said, where did you get that jacket? And I guess that was the extent of the research that made us realize that this is what we ought to do.

We ought to find more stuff like this and sell it. So that and the strength of that jacket and people asking you where you got it, the two of youth begin to think, let's open a basically army, Army, Navy surplus style store? No. No, no. No. But if you could find jackets like that, you could upgrade them. you know, kind of add some classy touches and sell. Like buttons or patches or buckles?

Or eventually cut up the pieces, make them into different things. But, yeah, and then we would sell safari clothes. So, all right, but going from a cool jacket in Australia, from our Army Navy Strip, a store to people in San Francisco saying, I love that, to then the two of you saying, you know, let's do this. Let's try to find things like this. Well, then what do you do?

Like, then that's a bigger leave. Well, then it helped to be a reporter. And I started to do some calling around, and I found out how where this army surplus was being sold. It was largely being sold by the government in huge lots that were auctioned off at Air Force bases and other places like that. So you could actually go to Travis Air Force Base. This is in outside the Bay Area. Just sort of at the edge of the area. Places like that or anywhere.

And the government would have an auction where they would sell lots of government surplus. So a lot of government surplus could be, you know, 50 shorts, khaki shorts, several dozen tubes of army toothpaste. Typewriters. Typewriters. And so we walked around this thing. And we went to these things. and we were the only people there who were not surplus jobbers. The surplus jobbers would go there, buy a lot, and figure out how to sell all this stuff to everything else.

And the clothes would be part of what they would turn up in the Army Navy store. And the people who went to these auctions were people who had Army surplus store. They were the jobbers. Or they were the ones who would supply the Army Navy stores. Yes, they were the suppliers. They would buy the lots and sell them off to the Army Navy stores. But Mel found the name of a few jobbers. We did find one in Oakland.

He was a guy who would go to these auctions at the air base. All over the country. All of the country. And he would just hit a warehouse in Oakland with just stacks of crap. Full of everything. Boots, army fatigues, peacoats, whatever, everything. Okay, so you find this guy in Oakland thinking maybe we could buy some stuff from him and then, okay. And what, first of all, when you guys.

got in there. He looked at us like we were the strangest people in the world to come in there. We knew we couldn't go in. He knew he would know that we didn't have a store. Right. So we'd have to go in with some kind of a story. What was your story? So, well, I decided that I'd play some rich dilettante, you know,

woman who wanted to start a boutique. And my husband would just be wanting to please me. The enduring husband wanting to please my wife. Please me. And this would get a. So you pretended like you were sort of a trust fund dilettante wanting to start a store, which to me seems like not a great strategy because then you would think that maybe he would he had a dollar signs in his eyes and think, oh, he did.

He did. He did. He was going to charge a dollar 50 instead of a dollar 25. For what? For whatever. Everything was either $2, $1. If nothing was more than a couple of dollars. Well, as we walked through, I would ask, you know, oh, what a

about those and he started 250, you know, and then I found, and then we walk a little further, and I'd say, how about this? He'd say, 225. You know, and I could tell he was just playing this all by year. Yeah. But then I saw this pile of olive green and khaki look like great fabric. I went over and felt the fabric, and I could see it was a shirt with epaulettes, and they had this cool kind of patch on the sleeve that was paratrooper. It was like a button-down shirt? Made out of wool?

No, made of a kind of rayon and cotton blend. It was, yeah, it was just beautiful. It had a beautiful drape to it. The colors were kind of vintagey looking, olive and khaki.

And I knew that there was something here. In those shirts. You knew that you could figure out how to sell those shirts. Yes. Okay. Just before we go on, how much money did you guys have between you at the time? $1,500.

$1,500. And so that was what you were going to use. This was our life savings. To finance this business. And the credit card. We had a credit card. Finance the business, pay our rent, you know, pay our expenses. Yeah.

And before we get to how you did it, did you have an idea of how you would sell these? Did you think we're going to, because you did not have a shop? We were making it up as we went along. We figured we would... First find the shirts. Then we'll figure out how to sell it. But you didn't have a name for your business yet? Not yet.

Not yet. Okay. Let's just get these shirts. And so these were shirts from where? From Spain. From Spain. So the Spanish Army. Spanish paratroopers. You could see a paratrooper emblem that was embroidered on the sleeve.

And they were clean. They were... Oh, no. No. No. No, they were dirty. They never washed anything. And you could smell them all the way.

You got a, did you get a decent price for them? I think we paid a dollar, dollar. He was asking, I remember, he was asking 175. Yeah. And I said, well, how many do you have? And, um. You said, how many do you want? Yeah.

And I said, well, at 150 we'll take them all. And it was like, okay. Yeah. So we piled them in the back of our car. And that was how many shirts? Do you remember? 500 shirts. 500 shirts.

That's, that's, that's, that's, that's, that's, that's, that's, that's, that's, that's, eaving into your saving. That was it. That was it. We put them in the back of our car. We drove home. And we brought them down to our wash room. There were 500 shirts.

We had piles of piles of shirts. We had to wash them ourselves because they hadn't been washed. And so we did that. And we had a dinner party at that point with a number of our writer friends and other friends, one of whom was a dear friend of mine, Herb Gold, who actually just recently died at 99. A wonderful novelist. He wrote about 36 novels. But at that point, he was there at dinner, and he went down.

He said, where's the bathroom? It's downstairs. He came back upstairs with the shirt, and he said, what's this? And I said, oh, that's his Spanish paratrooper shirt. But he said, oh, I love it. And he started taking off his denim shirt and putting on the shirt. And then he realized the sleeve stopped. about mid forearm.

And so I ran down and got him another one. And those sleeves were too short. I ran down and got two more, and they were all super short. Do Spanish paratroopers have short arms? I think they were just a defective. I see, okay. Which is why they were surplus to begin with. So you bought 500 irregular defective shirts.

Were you crestfallen? I mean... We're just, we're thinking so fast because, That's, we had no choice. Yeah. And I just looked at Herb and I said, oh, Herb, you wouldn't, nobody would want to wear sleeves rolled down with a shirt like this anyway. And I went over and I rolled up his shirt, sleeves.

And I said, there. And he looks in the mirror and he was very pleased. Yeah. And has so much more pinash, you know. He said how much? How much? And you were just. I was about to give him the shirt.

Yeah. As you should. Here's your friend. Patricia said. It's at 650. And he said, great deal. And now you've got 499 shirts that you're washing and hang drying, I guess, in your basement or whatever. Yes.

Okay. And how are you going to move that product? Well, there was a flea market in Marin County then in Marin City. And it was a very dusty flea market every Sunday. We said, let's go to the flea market and sell these things. So that's what we did. We set up a booth. I made a sign.

What did the sign say? Short-armed paratrooper shirt, 650. Short-armed paratrooper shirt. Short-armed Spanish paratrooper shirt. For short-armed Spanish paratroopers. People were right by. They were so fascinated. Yeah. Nobody bought any.

Nobody bought one. Well, maybe two. We probably sold enough to cover the booth fee. The booth fare was $30 to $40 that day. But I knew that we did it wrong. We had a problem. Yeah. But Patricia had the solution. Which was?

Which was, well, people don't see. the value. We've got to raise the price. So the next weekend we went to the fair and I styled Mel in one, you know, put up the collar, a little rope up the sleeves. He wasn't wearing it the first week? He wasn't wearing it the first time. Neither of us were. Okay. Which was such a mistake. Right. Mistake. Okay. So and and then I wore mine belted over some tight jeans and heels and made a sign that said Spanish short arm paratrooper shirts 1295. Double the price. You double the price. Yes.

I didn't think the price was communicating the value of this shirt. So we put up the sign, we're there looking stylish in these shirts. And now it's 1295, which was a lot of money in 1978. We were swamped. Wow. We sold. We had a couple hundred dollars at the end of the day. I remember that.

And we said, let's open a store. When we come back in just a moment, how Patricia and Mel creates so much buzz with their safari-themed store that they hit a wall and almost smash into a bridge. Stay with us, I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1976, and Mel and Patricia have made a little cash by selling their Spanish short-armed paratrooper shirts at the farmer's market. And with that cash, they decide to open a store.

And Mel decides to give that store kind of an unusual name. Banana Republic. It was irreverent. Yeah. It was intentionally irreverent. It was going to get attention because Banana Republic is an unstable country where the military takes over the treasury. We were only going to be able to sell these kinds of things if they had store. stories attached to them.

So. And so we thought, okay, well, where would these come from, you know? They would come from, you know, a new dictator who moved in who wanted to, didn't want to look like the last army. He wanted to have his own style. So, you know, he would sell them the old ones to us at a good price. That was kind of our background story. And so, all right, so you have this name, Banana Republic.

And Patricia, I mean, what's great is that, you know, you. You both have very different skill sets, right? Like Mel, you're, you were a writer and a storyteller. And Patricia, you're an artist and a designer and an illustrator. You've got this really creative mind. And neither of you have any business experience. You're totally useless when it comes to business and management at this point. Totally.

And children of the 60s, not much sense of the – not much regard for business. Okay, but you can figure that stuff out. But you do have – but you do have some important. complementary skills and very different ones. So Banana Republic is the name and then did you design sort of a logo or a symbol for it, Patricia? Oh, yes. That brought up the idea of two bananas and a star as a crest. A red star, I think, right?

A red – well, the bananas were yellow. The background was green and so the star was red. Which would look like a, you know, like a communist coup. It could. Who, you know, right, like a symbol. Our banker took it that way. Yeah. Right.

Okay. So the idea was, let's open a shop. But what was going to be in the shop? I mean, you only had short-armed Spanish paratrooper shirts. That was the next problem. We had to find stuff to put in the shop. And before you did that, did you, was it like a chicken and egg thing? Did you find the merchandise first or did you find the shop location first?

Well, now we knew where we could find some more things because we knew the job. This guy in Oakland. In your book you call him Zim, I think. Zim. And was he like a tough cookie? Oh, it's tough as they get. It was about 300 pounds, always, cigar always in his mouth. But you had to pay him and then get the goods.

Yes, that was another thing we hadn't thought about. But yes, but now we, the money was tied up with a store and we didn't have any money to buy anything. And how did you, how did you get a store, right? Because, I mean, you still didn't have that much cash. I mean, even with the sale of this stuff, let's say you're closer to, you know, about 2,500 or something. Well, we found a store in the back street in Mill Valley that was available because the door had to remain unlocked because people had to go through the store to an Ikedo studio, which was upstairs. As long as the door remained unlocked, it was available to, we could rent it. For how much?

250. $2.50 a month. Okay, that's pretty good. And is it in a heavily trafficked part of Mill Valley? No. I mean, downtown Mill Valley is very nice and cute and you can walk around and people have been there. And I was about two or three blocks out of the center of town. Okay. Okay. So now you've got a store and presumably you start working on getting it ready. Tell me how you started to then populated with stuff to sell. I mean, did you go back to this guy, Zim? Yes. I think first we went to the banker.

Didn't we go? Well, we went to the banker first. That's correct. And we said, you know, we're starting a company. He said, oh, that's great. What's the name? Banana Republic. He said, hmm.

You gave him your business card. I gave my business card. He looked at it. He looked at it. He saw the crest. Patricia. And he said, hmm. I said, well, we need some cash because we need to buy some merchandise.

And the crest, again, looked like you were, you know, it was like a. It was two bananas. Two bananas and a star. Yeah. And he said, why? He said, why the red star? Why the red star? We hadn't even thought about that.

And I told him I thought it went well with the yellow bananas. It was a color choice. It wasn't anything to do with that. But yeah, he said, well. There's three Cs. He said there's three Cs to get credit. To get credit. Yeah.

The first one is a capital. It doesn't sound like you have that. Second is capacity. I don't think you have that either. But the third one is character. And I have to admit it, you guys are characters. But he still didn't give us the money. Yeah.

You had no business plan. No business plan. No, we had no plan. No collateral. No collateral. You had no collateral. No collateral. You did not own a place.

We had no. We didn't own a home. And you thought you'd get a loan based on the strength of this pitch? We thought. We thought we didn't. Yeah, well, you know, we were. But he did. He said to us, you know, one thing you might not know is that there's something called credit.

What, 30-day terms. And you can ask for these terms. It's quite common. Net 30 or net 60. Which means you get the merchandise, but you don't have to pay them for 30 or 60, sometimes 90 days. So that was the trick. That's how we're going to do it. So we'll get the clothes.

Try to sell them within 30 days and then pay. But we knew Zim would not. We just knew. We had paid him outright the first time, so we knew he was not going to give us credit. We knew there was no way. But he had told us about. this other guy, he asked where else we were buying. And Mel just kind of cool, it just shrugged his shoulders.

And he said, well... I hope it's not Shapiro in Sacramento. Yeah. I'm making up that name, but I don't know any of the word. So why? He said, I had son of a bitch, don't buy anything from him. He was just a crook. Crook.

So we went up to Sacramento and we talked to Shapiro. And we convinced him. It was a smaller place. And there wasn't that, but you could see things more clearly. Yes. And we weren't looking for at that time. A lot of the U.S. surplus was poly cotton, and we were really into the natural fibers and the good quality.

So we were looking for more European or foreign things. And we found a box of belts from Argentina and some Swedish gas mask bag. Swedish gas masks bags. And a few other things. This is like a shoulder bag that would carry a gas mask? Yes. But the gas masks were no longer in it, so they were selling the bags. And the bags are cool?

Yeah, like a purse. All right. So you see some things there, and what do you say to this guy? So we bring it all up to checkout, and he said, do you have a D&B, the Dunham Bradstreet Report? Patricia said... I said, the family really doesn't like to expose its finances or something like that. And He said, where else do you buy?

Yeah. We said Zim. That son of a bitch gives you credit? All right. All right. So he gave you credit. Gave us credit. Based purely on this roof.

The fact that he hated Zim. But now that you had credit with this guy, you could parlay that with Zim. Yeah. Exactly. So we went to Zim's and found. We're getting credit from Shapiro. Yeah. So, all right.

What were you finding? I mean, everything that you were buying at this point because you had to populate this store. And first of all, I'm assuming that 90% of this stuff was really for men because most military gear was made for male soldiers. So first of all, it was basically going to be a men's clothing store. And it was, you were going to differentiate it from an Army-Navy surplus store because, of how you were curating it? Yes, yes, how we would style it. But also I knew that we'd really need half our customers to be women

because they would spend more on clothes than I thought men at that time. I did try playing with the shirts, the Spanish Army shirts, taking them apart, and finding I could put two of them together and make a safari dress or cut off the sleeves and make a skirt. But we needed a lot more. All right, so just to be clear, I mean, You weren't, like initially you bought the Spanish Army shirts, right? But then you go back to this guy Zim.

You go to Shapiro and Sacramento. These are surplus dealers. And you're looking for finished items you could just put on your shelves? That would be ideal. But we don't really see anything that I feel is wearable. But then I started, I went back and looked through several of the piles and realized that, wow, these mattress covers are really. good linen, you know, could make a good blazer. And

the sleeping beds were sheepskin. These would be great vests that I thought could make good handbags. So you would basically, instead of look for clothing that you could sell, you were just looking at the material that you could then pull out and then you yourself would sew them? Well, I knew

because we didn't have that much time, I'd need to find some help. A seamstress. Yes. And at this time, this was not like mass produced in China. I mean, this stuff was made in U.S. made in the U.K. Right. It was probably like wool. With no expense bared. Right. Wool from

British woolen mills and Irish linen and you know American denim. Like it was really high quality stuff. Very high quality materials. Okay. But now you've got piles of all this stuff. Now it's one store. Right. How many pieces of each thing? Like

okay, so you see a sheepskin like sleeping bag and you say, okay, I'm going to turn this into what? Maybe 50 vests. A vest. Oh, not from one sleeping bag, but we bought 50 slipping bags. But you turned it into a vest. Yes. And, but now you've got to, I mean, you're starting up a business.

You've got to decorate the store. You're going to make the clothes. Right. How did you do that? Well, I hired, I ran an ad. I got one response. This Sicilian seamstress named Anna. And I showed her what we were going to do.

I started cutting and pinning and she started sewing. And we just went nine hours at a time. You are hand-making everything that you sold. That's unbelievable. And so that we could have women's styles too. Mel, you are so lucky that you married Patricia. I know. Because you'd be screwed.

I mean, you didn't know what to sew. You didn't know what a design. You're a great writer. But he knew what to name it. And you know your creative mind, but you're not a designer. Not at all. Not at all. Patricia designed every single, every one of those things.

You're the luckiest guy in the world. Okay, so while Patricia and the seamstress are sewing all this stuff, what are you doing in this? Well, we're going to have a business. So I was the lawyer. I was the accountant. I set the business up basically by figuring out how to set a business up without hiring any professionals to do that. So you were learning how to... As we go along.

How to basically stand up the business. And meantime, did you have to do any build-out in the store? Oh, yes. And the store was this small, dark, low-ceiling place. Nottie pine walls and ceiling. And the landlord said we could not paint the walls or the ceiling. So I needed light reflected. So I went to the meat market and bought rolls of white butcher paper because it was cheap.

and then stapled that to the ceiling and painted like big palm fronds to make it look like a jungle, but also the white would reflect some light. And you could do all of that because you knew how to do that. Well, yeah. He's the artist. And then there were these big, like, telephone poles that were holding the ceiling up. And they kind of got in the way of looking. So I thought, well, these are unattractive.

Let's turn them into palm trees. And so I drilled holes into. the top and went to the flower martin bought big palm fronds and stuck them in the top. And then, but I was worried that nobody would notice this store from the outside. So I painted the front door black and white zebra stripes. So they kind of popped. You wanted it to feel like a jungle. I wanted to feel like a jungle.

And this was what you were selling was adventure gear, not gear, adventure clothing. Like sort of what Humphrey Bogart might wear. Yes, yes, exactly. So you're working on opening up this shop, right? And I think the idea is you want to get the shop open in time for the Christmas season because that's – and so we're talking about the fall of 1978. Meantime, help me understand. I think you also decided that you wanted to concurrently with opening up the store, build a catalog, make a catalog.

Yeah. Okay. Yeah. This is the era of catalogs. I mean, this is, today it's direct to consumer or websites back in the old days. Catalogs was, that's where the gold was. Yes. Patricia's an artist.

I'm a writer. Let's do a catalog. It was the pre-Kinko's days. And you would basically take it down and they would do an instant job. Like a mimeograph? Mimeographed kind of thing. But you'd paste it all up. You'd paste it all up and photographed it.

And they photographed it. And they were able to print it. from that, like the early Xeroxing. But it didn't look like Xeroxing. And so we found a place to do that. I remember we had enough money to print it, but not enough money to stable it. And the idea was you would illustrate the clothing,

and then you'd have maybe the prices. Yes. And then a little story. Was anybody doing that? Was anybody telling stories? Nobody was naming. We were naming every product. And you would just tell little stories about.

tell them stories about everything. About each article of clothing, like, you know, from the depths of the, you know, the jungles of Burma, the, this were worn by Gurkhas or something like that, you know. Yes. And where are you going to mail them? Well, we didn't have any mailing list, but coming from the media in those days, I realized that the only way we were going to get this story out without advertising is to sort of see if we can get anybody in the media interested. Yeah. So what we did is we printed, I think, 500 catalogs. 500 catalogs.

Sent them to every friend we had. And you guys put them together and stapled them yourself. Staple them at the kitchen table because we didn't have enough money to staple them. Hand wrote the address. Yes. On each catalog. Yes. Wow.

Yeah. And so who did you identify to send 500? Well, we just went through mastheads and looked at who the ed. Wow. Who would send to any given people? So you would send them to editors and newspapers, mainly in New York? And by the way, were you getting any orders? Because, I mean, what's a hit rate on a catalog back then?

2.5%, 3%? 2% would be great. It was usually a good hit rate would be 2%. But I think you made some, even though the catalog is beautiful, you made some major errors. At least, at least according to the rules. We did everything. They went to the library after and got some books on direct mailing and what you should do. And we found out that we just did everything wrong. You're supposed to have product on the

cover and the back page and maybe page three. We had a leopard print front cover, a cartoon on the back page, and I think an interview with me on page three. And the people we sent it to were not mail order buyers. They were just our friends or whoever's name we had. So, all right, so you send these catalogs out and around the same time you're ready to open the store. Right. Yes. Okay. And from what I understand, you open the store right, I think, around Thanksgiving, either right the Friday after.

Which is obviously a very important shopping day. You are on a sort of out of the center of town in Mill Valley on a side street. You've got the shop. You're ready to go. you've got the zebra painting on the door, the zebra stripes. Day one, Black Friday, what happens? Nobody comes in. Nothing.

Nothing. There's very few people on the street. A few people going to do their laundry next door. At the laundromat. At the laundromat. Maybe a few other people going to the health food store up at the corner. But nobody, outside of a few glances, nobody is coming in. Until the guy at the end of the day.

who bought the gas mask bag. Yeah. For how much? I think it was $6.6.50. And he gave us, I remember he handed me a $10 bill. And I realized, we don't have any cash register. We have, we don't, how do you, wait, I had a dig into my pocket to give a change. We had no idea.

We didn't even think about getting a cash register. So what did you do when nobody came into the store that day or the, well? We just kept adjusting the outfits that were hanging. on the walls and... Just slightly moved things. Yeah, and I opened the door. It was cold, but it opened the door and kind of sweep outside, hoping to catch

someone's eye and just say, oh, drop in, you know, just anything we could do to attract people. Were you worried? Oh, yes. We were starting to worry. Everything we had was in here. It was the end of the month. We had to pay rent December 1st. And we had net 30.

Terms, net 30. That was going to be due a week after. Right. And... How close were you to? I mean, did you have the cash? We had no cash. We didn't have anything. No, everything was in the store and in the products.

So you're got a week to pay, what, rent and the net 30 on the goods. And what if you didn't have the cash? What would you have to return it or I don't know? We didn't even think that far. We didn't go that far. We just kind of kept going. And then this woman walked in the store, looked around and said, you know, I'm from the, the independent journal, which is the local newspaper.

In Marin County. In Marin County. And said, you know, I'd love to get the story on this place. Can I bring by a photographer? She was back in like two hours. Right. They interviewed us. We tried on different clothes.

They took pictures. And that was great. And so we kept... I think two days before the end of the month or three days before the end of the month. We went, I think it was a Saturday. that Saturday, to open the store in the morning, and there was a line of people outside. And somebody holds up the front page of the style section of the independent journal with a picture, like three quarters of the page of the two of us in Safari Gap.

Wow. And so all of a sudden you get a crowd at the store. That, presumably, they spend a thousand or more dollars in a day. Enough to pay the rent and pay Zim two days early, I think. They're good to go. And is that it? Is that like now you're... A couple of days and then it dies.

Maybe a week or two. Yeah, it died again. It wasn't much. So wait, it was a week of really exciting, excitement, people coming in. And then crickets. Nothing. Nothing. What was the problem?

I mean, did the two of you at night ever say, what are we not doing right? I don't think we ever questioned what we were doing. I don't think we ever questioned it. But we just were trying to think of new ideas. for how we could start up sales again. But we had to keep, it was a store. So I had to be there, you know, 10 hours a day or something in case someone came in that wanted to buy something.

Failure was not a possibility. We would make this work. We would make this work one way or another, and we were determined to do it. It's, you know, whatever we did, there were no mistakes. You just keep going. Anybody who called, I'd answer the phone, of course, Banana Republic. and if they said, oh, wrong number. I said, oh, well, you didn't know about the NANO Republic?

I'd try and engage them in conversation. And then one day, you got a wrong number early in the morning, you thought was a wrong number in the early morning. You pick up the phone, and this guy says, Hi, this is John Gambling from W-O-R radio in the tri-state area, and you're on the air. Wow. Who was that?

He was a DJ and a DJ. of a very large radio station in New York. Yeah. W-O-R in New York. And he got a copy of your catalog somehow? Yeah, he was on a, he's somehow another. We sent him a copy because we sent the radio stations, television stations. Anybody, any media we could think of. And he got one.

And he said, I've been telling my listeners about, you know, reading them parts of the catalog, and I have a few questions for you. What happened to those Italian camouflage jackets without the hood? He asked me several questions, and I went on about mostly quoting the catalog. And at the end, he said, and so what about anybody who's more interested and would like to get a catalog, you know, one of these catalogs? And I said, well, you just have them send a dollar to P.O. Box 774, Mill Valley, you know, 9442. And it was like, thank you, Patricia from Banana Republic. And that was it.

That was it. And then a couple days later, did you start to get? letters. Sacks of mail. Sacks of mail. With a dollar bill. Every single one of these. The post guy comes in dragging these huge canvas bags. The post office was across the street in those days. Radio stations, wow. Every single one of them had a single dollar bill in it. And so, Anne, amazingly, because you were sending the catalogs out, not charging people. Of course, you needed them to get the catalog. Now you were getting paid. Right. Yeah, we charged. Because the catalog probably. cost you about a dollar to make.

Less than that. I know it was at the most of it was 75. But we did put a dollar even on the first one. I think we put a dollar on every one. We wrote it, but we sent them free the first 400 or something. But we did. So now you get all these dollar bills, plus you can send out the catalog, but now you've got a mail order business and an even bigger mailing list that's growing.

That's amazing. So, but the store in general still pretty sleepy, still kind of quiet. Yes. Yes. After that radio station in New York did a profile, did you start to get other media organizations? We began to realize the power of that, absolutely, and more and more, more media. Then there was the fashion editor of the Los Angeles Times, who basically said, these shorts in Banana Republic, the Banana Republic is they're perfect for this summer.

And those shorts were really a breakthrough. And so she says, this is the short. This is the short for the summer. And were these shorts that you were making? No, no, no. These were short that we found in Zim's warehouse. One of our trips over there as we're going through, I see out of the corner of my eye this pile of khaki that almost looks like the same fabric as this original jacket that he brought back from Australia.

And so I went over and picked up this short, and it had two buckles hanging off the side of really. wide waistband, but they were fantastic. You could see they were fantastic. And so you bought these. Right. Mel kind of, I think, gasped a bit when I said, okay, we'll take them all. And the LA Times fashion writer calls them in her column the shorts of the summer. But they were styled. When I did the drawing, roll them up and with some clever little phrases about.

Be believable. Belved them correctly. Yeah. So women could wear them, belt them tight. And so she caught the style of it. And they sold out in like two weeks. So you bought these for like two bucks a pop or something. I think they were 250.

Two-fifty. And you sold them for $15, $16. Okay. Now, there's a lot going on, right? You've got catalog business and you're trying to grow and all these things. And from what I understand, Patricia, you were getting pretty overwhelmed because you were making a lot of the clothing and running the store and sending out the, you know, and doing the illustrations and the catalog was a lot of work. Yeah. I think you guys were also, I mean, you're married couple.

You didn't have kids yet. But you were fighting too, right? We were both stressed. We didn't really mean to blame each other for it, but we were both just really stressed and not. sleeping enough. We were so, we went from, from, you know, dawn to dusk, working. We were always working trying to keep this thing going. Yeah, I don't know, because we didn't really disagree. We trusted each other with whatever we did, totally. And we were just cranky, because we were tired. And I remember once, I remember going to the East, or San Francisco to the printer to put out

our latest catalog and I hadn't I hadn't slept in like three nights I think I was just up around the clock just trying to get it all pasted up and ready to go and then supervise it on the printing presses

and I was driving home across the Golden Gate Bridge and all of a sudden I hear this honk I wake up and realize I've veered into the oncoming traffic on the bridge you were falling asleep I was falling asleep I was so sleep starved And I went home and I just broke down. And I just told Mel, you know, I just, I can't do all this.

We can't do the catalog and the store and make the clothes. I just can't, I can't do this. You felt overwhelmed. Yeah. All we knew is that it's, for years we ate from the dollars in the envelope. We would basically take open enough envelopes. My goal was $500 a day though. Yeah, that's what it.

So we didn't know. We didn't, we, again, we didn't do anything. thing conventionally, all we did is kept it going. The idea was to keep it going. Somehow or another, we were going to figure this thing out and make it work. Okay, so you go to Mel and you're saying, we need to stop the catalog. It's too much. Yeah, the catalog adds a level to this business that I just can't manage. Meantime, you know that the catalog business is your really best hope. Yes. How did you respond? Why don't you take a day off? Why don't you take a walk on the map?

That's what you said. You said, take a day off. Just go out, because I knew she would replenish. Patricia's not a quitter, and I knew that she would not want really to shut this thing down. I knew we couldn't go backwards. We knew that we needed, at this point, we needed help. We definitely needed help. I mean, this wasn't, in these days.

You didn't have the volume, but you were able to visualize, well, if this little store can bring in this much, if we got a store in a more populated area like San Francisco, we could, that would make up the difference because we'd have the margins, probably the same margins there, but at a bigger volume, and that'll get us through this. And so you said, to me, we need to open another store. And I'm there saying, oh, my God. When we come back in just a moment, Patricia and Mel get a very attractive business offer

that they can't turn down. But then, wind up regretting it. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1983, and despite the fact that Mel and Patricia are totally overwhelmed with their first store,

Mel manages to convince Patricia to open a second one, this time in San Francisco. Same safari motif, same zebra stripes. on the outside, but also some of the same problems. So one of the challenges of your business was that pretty much every, most everything you were selling was a one of a kind, especially the things that you were remanufacturing because you were buying weird articles of clothing for the fabric. You were turning them into articles of clothing.

But that was it. Once they were out, that was it. I mean, which is exciting, but it's challenging if somebody comes in. That's when we realized that was the flaw in our business plan. That was a flaw. That was it. We were selling something that was not, you couldn't replenish it. Surplus.

The surplus we were selling largely was from the Second World War. And it was still around in the early 70s in the late 70s. But we were fast depleting it. And we realized, whoa, what are we going to do? We have a whole business that's built around this. So you start to think about let's make our own line. Let's just design this. Because I'm assuming you were putting a Banana Republic label.

Yes. You were sewing that into everything. Now you want to scale it up. Did you start to explore potential? What we had to do, we first we tried to find manufacturers who were making things that were similar to the kinds of clothes we would make. And by the way, this is the early 80s. I think 70% of clothing sold in America was made in America at the time. Yes.

Yes, that's true. We did find some of the places that made the original fatigues for the Army in the South and find that if we didn't change anything with them, they could make us a small order. Maybe like in North Carolina or Georgia or places like that. But you still need capital to finance that. Did you have the capital? Well, I think we were pouring every penny that we had back into. doing that. So yes, not to do it on any scale, but enough to make the clothes that we needed

to make. And we had great credit by then because we paid everything within 30 days or 60 days. We learned that that was the trick. And by the way, how did the San Francisco store do compared to the Mill Valley? It did really well. It was like three times. Three times. Just because it's San Francisco. There's critical mass. Yes. Who were the kinds of people going into your shop in San Francisco? Because it was a very particular style. I mean, safari and travel adventure gear, khakis, browns, olive tones. I mean, who were the people coming in and to buy the stuff?

Well, I think we originally created the business for other people like us, ourselves. I mean, we really were trying to sell to other creative people. and writers, artists. But I think it went... But it caught on. It got beyond that. I mean, it went to everybody. People, it was amazing how many people.

There were kids to grandmas. And also there was a reaction against how much polyester was coming into fashion. And we sold only pure fibers. Yes. You were selling wool, cotton. Wool, cotton, silk, rayon, anything that was real. Yes. Your prices were like, sort of.

of middle, between the sort of middle and upermost tiers. Well, I would say it's middle and lower. I mean, basically, we didn't. I mean, in those days, we were selling. But double what they would sell for in a surplus. I see. Okay. Okay.

But it was still affordable. It was a affordable store. But less than what they would pay for in the gap. Right. All right. So you've got the store in San Francisco, and it's doing pretty well. And in your mind, I mean, did you have any time to kind of reflect on what was the next step? Or, I mean, was it just let's get the catalog?

Let's just stay on this. Opportunities were presenting themselves by this point. There was a real estate developer who opened shopping centers, and he was a customer. He loved the brand. He said, I want to put these stores in my shopping centers. He wants to put Banana Republic in my shopping center. I think this is Merritt Share. Merritt, sure.

Okay, sure, yeah. And so Merritt was a customer who came. in frequently. He's a very lovely man and we liked him and he said I said, Merritt, I can't, we're doing everything. We're too busy. We don't

even have time to figure out how to get this business staffed correctly. And he said he kept, he'd come back again and again and again and I think one day he came back and he said, it was just a bad day. I said,

not only, Merit, not only will I never opened a store in your shopping center. I'd sell this company tomorrow if I could. He looked at me, he said, do you want to talk to Don Fisher? Who at that point was the owner of the gap, that Fisher family was basically. He's the guy who started the gap. I said, sure. Let's talk to him.

So before we get into this part of the conversation, it sounds like, I mean, you were just, it sounds like that's the kind of response of somebody who was. just overwhelmed. Yes. Overwhelmed. Totally overwhelmed. We're almost four years into it at this point, I think. We never put the initial systems in place.

The business just kept happening so fast that we could never stop for long enough to just sort it all out so that it all could work. And we didn't have, we didn't even know where to go to find the kind of people who could run this sort of thing. We just, we were so busy paying the bills, getting the salaries, getting the, getting the job, getting the orders in the mail. We just, we didn't have time to withdraw and figure this out. And both of us were working around the clock. All right. So you kind of offhandedly say, I'd sell the business before I do this. And this guy, Merritt Scher, share says, let me introduce you to Don Fisher, the CEO of Gap, which by that point in the early 80s, it wasn't what it is today, but it was already a pretty significant.

Yeah, they already had 500 stores. So it was a pretty significant. And Don had started that himself. And they were a public. They were a public. They were a publicly traded company on the New York Stock Exchange. And he had started with a single store in 1968, I think, on Ocean Avenue, selling jeans and records. But Fisher wanted to come meet you.

Yeah. So he comes to the store in San Francisco and you meet him. And what did you – first of all, did you get the sense that he was interested right away? He was fascinated. He went through that store reading very carefully every hang tag, looking very carefully at every single garment. Right, because we had the story on a hang tag on every item. Which fascinated him. You actually named the clothing and you wrote about this clothing.

and what's this and how's that? I remember him picking up, we had these Falkland bathing suits for men. The British, remember the British War in the Falklands in the 1980s when England invaded Falklands? Which is down by Antarctica, but for some reason they made these cotton, tied on the side. Swim trunks. For British soldiers. Swim trunks. And so he looks, Don picks one up and looks at it and he says, wow, do your customers really buy these?

And I remember our store manager said, well, I haven't seen anyone come out of the dressing room wearing one lately, but they are buying. They're like a piece of history. And I could tell he was impressed with her. He was kind of blown away by the craziness of this item. I don't, I'm fascinated. Yeah. So how did Don approach you about seeing if you were interested in selling? I think we went to lunch.

And in the midst of the conversation, we realized he says, well, how much do you want for the business? What? What? You couldn't answer that question. I had no idea. Do you remember what your revenue was at the time? Oh, it was a couple million dollars. It wasn't very much.

But that's pretty good. Two stores, a couple million bucks. Yeah. 1983, it's not bad. So that's, we were thrown back. What kind of a salary would you like? We looked at each other. I know.

Salary, we never had a salary. We just basically took the money out of the cash register and went to dinner. Right, but he said, how's 150 sound? And we thought, does he mean for both of us? Yeah. Do we share it? Yeah, we didn't. We didn't get it.

Was the hope that he would give you a check and you were set for life or at least for the next 10 years or whatever? We didn't think that far. Yeah. We just, we wanted it out. We wanted it out. We wanted to go back to painting and writing and we want it out. And so he took us right down the path. And then at the last minute, he took it to his board.

And the board said, you can't buy this company. There's no, it says you can't buy this company. It's not going to really. It's a trend or something. It's just, you can't. And so he basically backed almost backed out of the deal at that last minute. In that point, we had had a huge, I mean, the accountant who was figuring this out with us. We had bills that we had to pay, accountant bills and legal bills and other kinds of bills for all this negotiation.

It was just frustrating. We were spent. But Don still wanted to buy the business. Even though his board said, don't buy this business. So this one we went over to his house. I want to buy this business, but there's one thing. He said, you need to run it. I said, no.

No, I don't want to sell my business. I'm not looking for a job. No, no. Basically, that was my reaction. It's like, oh, my God, after all this, this is where we are. But he said, as long as you're profitable, I will completely fund it and you're on your own. I'm not going to tell you what to do. You have complete creative control.

You won't see me. It's your business. I will give you every dollar you need to grow this business, as long as you keep it profitable. And you agree to that deal. Reluctantly. I think Patricia wanted it more than I did. I was sort of a maybe.

But I thought, well, gee, if all of a sudden we have the money to do this, to design our own line, to, build the stores we want, you know, we could, we could have fun. Yeah. And we could travel. So we agreed. As I said, I mean, by a vote of yes, one yes and one maybe, Banana Republic Board decided to sell to the Gap.

So, so 1983, you become employees of the Gap. No, employees of Banana Republic. That's right. I got it. Okay. But you guys are still running the Cup. company and and and and with gaps muscle you're able to start working with factories to to make clothes for you so you don't have to make them yourself yes and then and then of course you start opening

more stores right like i think like i think the first one i think was in in palo alto at the stanford mall which is pretty fancy pretty upscale um and and patricia you still got to design the store right yes first before we go down there i remember the requirements for the site that you had to have an approved color for the awning and no neon and very low-key front. I remember that. It was so, it was suffocating to just read this thing, pages and pages of restrictions. I looked at it and thought, oh, no. And you said, just pretend you haven't even seen it.

Just design it. Go ahead. Which she did. And so I did a drawing of a Jeep coming through the front window, a tin roof. with a giraffe's head sticking out at the top and two palm trees growing in the ground. And... That was going to be the facade of the store.

That was going to be the facade and a place that was two doors away from Tiffany's. I mean, that looks like a, almost like a theme park look. Yes. It was theater. We couldn't possibly fit into their requirements. So we were just going to do what we do. Yeah.

But you didn't have to paint zebra stripes anymore. Exactly. We could really hire people to make like a giant elephant or a giraffe or a Jeep. Yes. We could find the Jeep. Hire someone to go find the Jeep and drive a car. Okay. So you bring this proposal to this fancy mall in Stanford.

I said we sat down. We sat down. I'll never forget this day. We sat down around the table. It was almost this was exactly opposite of anything that they could possibly want in this mall. And we show her the drawing, the woman across the table. I remember her name, Rosemary McAndrews. She's the design director.

We slipped the drawing across the table to her. We're sitting there looking, there's a minute of absolute silence. And she looks up at me and she says, I love it. I love it. I absolutely love it. We look at each other. What?

And that changed everything. That changed everything because then the next thing, several months later, the store opened. There were lines there. It was the highest grossing store in the mall. Wow. Everybody came into this. It was everything. And these malls, we started getting calls from malls all over the country.

They just, can you build one here? Can you build one there? Because malls, as you know, are percentage rent. Yeah. So the more money we made, the more money they made. Where was the first location you opened outside of California? I think it was New York. I think it was New York.

Not the 59th and Lex store yet. So how many stores were you opening a year after the acquisition? We were opening 15, 10 or 15 stores a year. Wow. So it really was expanding. By the second or third year, yeah. It was fun for a while. I loved designing the stores.

I love the possibilities of it. We would not. No two stores could be alike. Every store had to be different. We had different designs. some were embassies, some were safari camps, some were, we were just designing whatever we could in the genre, but no two stores would be the same. And you were the CEO? Yes, I was the president.

And you were the head designer. Chief creative officer. And so really this proposition was working out well. I mean, by 1986 or so, I think, I mean, you had dozens of stores. You were doing, you know, by one estimate, like $60 million in sales, which is pretty, you know, pretty great. But also, at a certain point, I guess, some tension started to emerge between you and the higher-ups at the gap, and I think may have come to a head around 1987 when the stock market crashed. Yes. We had this huge conference at the Claremont Hotel in Oakland where we brought all the

store managers and regional managers from across the country, and we were celebrating the company. And in the middle of a break, I walked out and I looked at a paper, a newspaper that was in the shop there in the hotel. And it said, Dow falls 22%. This was Black Tuesday. Black Monday. Black Monday, sorry. Wow. Yes.

It so happens that two or three weeks before that the gap had reported earnings. And they missed earnings. And the stock had taken its own dive. Yeah. So it was already down substantial. and then came a crash. Black Monday. It went down further. And suddenly they were, the gap became interested in Banana Republic. Everything was going fine. We were doing quite well. But the gap suddenly became edgy. Don became a little nervous. They were, they didn't quite know where things were going. And so we were beginning to contribute to earnings. And they began to have some ideas about how we could squeeze more earnings out of the company.

And it created some friction. Right. Okay. So what were some of the, you know, as they started to look into your business and started to presumably say, hey, you know, we think maybe you should expand out beyond adventure and safari. and travel gear. Is that what they were saying? Well, that was part of it. There were two different things.

I think that one was the way we were merchandising. The way we were merchandising. It was a shirt we sold, an Indian cotton shirt that was beautiful. We called it the Bombay shirt. And we sold tens of thousands of these shirts all the time in various different colors. And they were doing spectacularly well. But at a certain point, Patricia said, enough. We should stop selling this.

It's time to move on to something else. I could see that other companies were copying this shirt and selling it for lower prices. In fact, there was a whole, the limited started a line called Outback Red that was really a copy of banana at a lower price. And so they were copying a lot of styles, but especially this shirt. But I was saying, okay, now this is the time to stop this shirt because our customers aren't going to want to wear something. something that's being sold cheaper by another company in cheaper fabric. So Bob Fisher was running our merchandising department. Bob Fisher was Don Fisher's son.

Okay. And he was a really by the book's data-driven merchandiser. So he said, well, you're crazy because you can't, how can you discontinue one of our best-selling items? And I explained to him that this was, it was a best-selling item, but it wasn't going to continue to be a best-selling item. And I knew that. And that's something that's driven by intuition, which he did not get. And so there was a tension between us and a tension that was kind of breaking up the spirit of the company. And was there, I mean, from what I understand, some investors were.

also raising questions. Some of them were saying, hey, this is what is selling is a trend. The analyst, because the gap stock had fallen dramatically. And they were looking at Banana Republicans saying this stuff is just a fad and it's not going to, people are going to buy this stuff. Yeah, they're saying it's too hot and it's and it's too wild. And we were now grown to a point where we were not a tiny company any longer. Data did matter. but we weren't entirely reverent of data. We thought that there was other things that we had to be considered. In our intuition, this company was part of our DNA.

It was part of our fiber. We knew when something was right and when something was not right. And so we were getting suggestions. First of all, we had an agreement that they would stay out of our business. We were now getting sort of more and more. urgent suggestions that we should make changes that didn't feel correct to us. I mean, Don came into the office one day and said, you know, I think it's time that you're not going to be reporting to me anymore. You're going to be reporting to Mickey Drexler.

And just to explain, Mickey Drexler had been brought in earlier by the Fisher family to do some major rebranding at the gap. And he had just become the president of the company. and then eventually he becomes CEO and he's kind of a legendary guy in that industry. But I guess you didn't want to work under him. You said no? I said no. And our C.O. at the time, his name was Ed Strobin, was a real classic merchant. And the moment he saw Mickey Drexler, he said, beware. He's a grabber. And I think what was going on is that Mickey was eyeing the success.

of banana and wanted to get his hands on it. And somehow or another, that happened. Now, Mickey Drexler is not here to defend himself, and this is not a documentary show. We're just taking your oral account. So I will just say in his defense and not even in his defense, but to say that, you know, he was probably from his perspective. He thought I could do a better job and I want to take over. And he does have, he does have a pretty good record, a successful record. and running big retail businesses, and some were better than others. And, of course, you know, he's considered – That came later, by the – But he's considered to be a pretty important guy in the apparel industry, and I just want to say that, you know, in his defense. But I understand you did not want to work – this was your brand that you started. You did not want to work for some –

Yeah, and the way he approached it wasn't civil. Yeah. And when you – you both decided we're out. Well, at that point, yeah. because this isn't what we bought into. We started this business to travel. We started this business to more, not to become rich, but to be free. Yeah.

And we did travel. And we were free. And we were free. We were free. We had made enough money to be not terribly wealthy but independently wealthy. And that was enough. Enough is enough. And so you leave this company.

At this point, you had two kids, two little ones, right? No, just one. Just one. Okay. And, you know, Banana Republic is now, you wash your hands of it. And it goes its own way. And you guys. And I should say that it went for years.

They realized they made a terrible mistake. They had no idea the devotion that the customers had to the original. Authenticity of the brain. And for years, they just kept bringing one crew after another, after another, and the company just kept flailing for years and years and years. Yeah. I mean, today they're sort of resurrecting it, and they're going back to the tradition originally, which is interesting. They're bringing back some of that event. But it still, it became like an office clothing company.

Gap clothes at a higher price. Yeah. From what I understand in 1988, you guys decided to focus on being parents for a couple years. And what a gift. Yes. You could now, I mean, you had enough money to, you know, as you say, not, you know, be fabulously, you know, wealthy, but enough money to actually have a comfortable life and to not have to worry about, you know, a paycheck, at least for some time. and you could be with your kid. Yes.

And then you had another child that I think, what? Four years later. And did you think that you would do another business or did you think that you were? We weren't looking to do another business. No, we weren't looking to do another business. I had this sense that when I left, first of all, the whole thing was about 10 years from start to finish for us. 78 to 88, yeah. 78 to 88.

and I felt at the end that I had somehow been on a track to succeed, achieve, succeed, achieve, achieve, and I thought, whoa, I want to just back up from this. And so I went away to a... I'd never done anything like this in my life, a Vapasana meditation. Silent meditation.

I went away to this retreat. The rules were no reading, no writing, You sit and meditate for all day. And it was shocking to me. My mind goes so fast to ever have to go through something like that. And by the second or third day, I was sitting there and I had the worst headache of my life. You were going through caffeine withdrawal? Caffeine with deep caffeine.

Because there's no coffee. No coffee. No coffee. And only herbal tea at this place. And so I thought, my God, I never want to have a headache like this. So I spent the rest of the meditation dreaming about a tea company that I would start. Tea. How did that, it just came into your mind in that sound.

Yeah, because if coffee did this to me, I'm not drinking it anymore. And I happened to mention it to, I went to a group at that point I was on the board of a group called the Social Venture Network, which is about socially responsible businesses. In those days, that was a new concept. And I went to a conference and I somehow found myself on the plane with a fellow who was there. And he sort of talking to him and I said, what would you do if you did another thing? I said, well, I'd do a tea business, you know, and I found myself talking about it and getting excited about it. And I sort of dove in trying to learn about it and understand it.

And so I decided, let's start, let's do this cost. Let's start the Republic of Tea. You were going to learn it the Republic of? of tea. From the day. Just like banana. Were you worried that banana Republic would come after you? Well, Don called.

As soon as he heard. What's this thing called the Republic? You know, in other words, should I sue you or should I not? And I explained to him. We had a nice relationship. Yeah. He understood that we were not going to sell clothes at the Republican tea. No close.

He was okay with that. And you wanted to do full leaf tea. Yeah. And to have it. And so I'm assuming once again, you're recruiting the best illustrator you know, which is your wife, who's now pregnant with our daughter. To start to think about designing what this would look like. Right. Because you wanted it to stand out on the shelf, you know, just like our clothes would stand out.

How did you finance it at this point? Yes, it was wholesale. We weren't going to have retail. So it was a lot lighter on our hands. We weren't going to do retail. It was wholesale. It was another business altogether that we hadn't done before. the fun of it was as it was with Banana Republic was was inventing it starting it this is where the the excitement came from it for us as it began to grow a little bit it was back to the same old problem which is basically you have to buy the tea before you sell the tea so you're always short money you're always need more money and at this point our are um Our son was just a couple of years old.

Our daughter was on the way. A daughter had just been born. And we did not want to plunge back into that business. So we said no. So I guess you only kept the business for like three years. And then you sold it to a businessman and a beverage guy, like a guy who was in wine and sparkling water. Right. And this was Ron.

This was Ron Rubin. Yes. Unlike Banana Republic, he stayed revered. The Republican T state reverent to the original concept. We really love that. I mean, the tea business, we're very proud of what Ron and his son have done with that business. And they still own it. They still own it?

His son runs it now. It's about as authentic as ever. It's a pretty, you know, decent-sized brand. Yeah. It's always very, you know, he's told me many times. I said, well, in a couple of years this thing is going to be an inanimate. a number and he said, well, we've exceeded that many, many times over. So he's a very happy new owner.

I, from what I understand and from like the conversations, a brief conversation we've had before this interview, you've been, you know, sort of, you know, some kind of retires in the right word, but you have chosen to live a life that I think is actually kind of the dream. I mean, you're still married. You're about to hit 50 years of marriage. You've got two kids who, your daughter's a designer, your son's an artist. She's a fashion designer.

She's got her own label that she started. And you guys, you know, have been able to do what you want, which is to get to have the freedom to travel and to you paint, Mel, and obviously Patricia, you paint. And, I mean, it sounds like a pretty awesome outcome. We're very lucky. We're very lucky. I mean, you didn't.

You didn't walk away with billions of dollars or hundreds of millions or whatever. What do you do with all that money except have problems? I mean, who needs that kind of money? Nobody needs that kind of money. We have a good relationship with our kids. And it's just a delight to go through our days together. Being through 50 years of this, you go through so many phases. But I would say I'm more in love with my wife now than I've ever been.

I love that. And I'll go dittle with my husband. You got to say that now that he said it. Yeah, she's got to say that. We'll have trouble when we walk out of here. Mel, when you think about, you know, everything that you've achieved and, you know, and all these amazing brands that you've been part of and created, with Patricia, how much of where you got to do you think has to do with the work and your intelligence

and how much do you attribute to luck? Oh, I would say. mostly luck. We say go with the flow, but don't forget to row. I mean, in a sense, being in the right place, being born at the right time. I think that's really true. But just on the side of luck, I want to add that I think you can encourage luck by, if you're willing to see that there's really assets and liabilities, there really is a silver lining of some kind in every crowd.

I guess I'm just an optimist, but there's always a possibility to work with, at least in our more lucky sheltered world. And I think one of the biggest lessons, we talk about at meditation retreats and what comes, is that to me the biggest epiphany was that not knowing is the greatest strength because then you're open to everything.

That's Patricia and Mel Ziegler, co-founders of the Republic of the Republic of Tea and Banana Republic. By the way, their original store in Mill Valley, California, is no longer a Banana Republic. It's now a rug store. But if you're nostalgic for vintage banana,

you can always check out the website, Abandoned Republic. It was put together by old-school Banana Republic fans And on the site, you can find the old catalogs and sketches of the original clothing, like the Spanish paratrooper shirt, the Egyptian cotton short sleeve bush jacket, and of course the authentic Bombay bowler. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show.

And as always, it's free. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at guyraz.com. This episode was produced by Carrie Thompson with music composed by Rumtin Arablui. It was edited by Neva Grant with research help from Malia Agudelo, and engineering by Quasi Lee. Our production staff also includes J.C. Howard, Sam Paulson, Catherine Seifer, Alex Chung, Elaine Coates, John Isabella, Chris Messini, and Carla Estevez. I'm Guy Raz, and you've been listening to How I Built This. Thank you.