How I Built This with Guy Raz - Vuori: Joe Kudla

Episode Date: October 2, 2023

Vuori founder Joe Kudla built a 4-billion-dollar company on a risky idea: that men actually cared about the clothes they worked out in. When Joe launched Vuori in 2015, women’s athleisure brands like Lululemon were exploding, but there wasn’t a similar brand that catered to men. So Joe set out to sell men’s workout clothes that didn’t scream “hey, these are workout clothes!” and tried to place them into yoga studios and other small stores. At first Vuori didn’t get much traction – so Joe made a quick pivot to DTC, soon learning that men were more likely to buy activewear if it worked for everything: yoga, running, hiking, or just hanging out. After risking its dwindling cash on a major marketing campaign, Vuori hit its stride, becoming profitable within two years after launch.This episode was produced by Rommel Wood, with music by Ramtin Arablouei.Edited by Neva Grant, with research help from Alex Cheng.Our engineers were Gilly Moon and Josh Newell.You can follow HIBT on Twitter & Instagram, and email us at [e-mail] 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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at Airbnb.c a host. Hey, you know, we hear a lot of stories on how I built this about overcoming self-doubt. I recently talked with Sigourney Weaver about this exact thing and why she was reluctant to pursue acting for so many years. I know it's hard to believe that one of the most acclaimed actors of her generation almost didn't act. You should definitely check out my interview with Sigourney Weaver. On my other podcast, it's called The Great Creators. Just search for the great creators with Guy Raz wherever you listen to podcasts. And now on to today's show. You know, I think some people saw the opportunity, but maybe questioned whether I was really going to be the guy that was able to go and do this and disrupt this space. You know, a lot of meetings

were short and there was a lot of passes. Yeah. I developed a really unique relationship with rejection. And so that was all building my backbone. for trying to raise capital for an apparel brand, because it was kind of like starting a band and telling your friends you're going to be the next Rolling Stones. People are like, yeah, good luck. 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 Joe Kudla made a risky bet that men would buy yoga clothes, rewrote a bad business model in real time, and built his venture into the powerhouse activeware brand Viori. If you heard my interview with Chip Wilson on this show back in 2018, you may remember the story of how he started Lulu Lemon.

It was 1997, and he went to his first yoga class at a gym in Vancouver. And as he tells it, he was the only guy in the room. But in that class, he saw that yoga was starting to explode, especially for a certain type of young, professional, health-conscious woman. But most of these women, they were wearing sweatpants and t-shirts. So Chip decided to make clothing specifically for yoga. He found performance fabrics and tested them out, but only on women because at that time, yoga was dominated by women. And Lulu Lemon took off.

The brand basically pioneered the concept of atleisure. And it wasn't until 2014 that Chip expanded to clothing. for men. And the reason it took so long is because people thought men really didn't care about what kind of clothes they wore when they worked out. But at around the same time that Lululemon branched out into men's clothing, Joe Kudla launched Viori, a yoga and activeware brand designed, at least initially, just for men. As Joe soon figured out, what men seemed to want most was athletic gear that performed well and was versatile. The same pair of them. of shorts that might work for a yoga class. Men also wanted to use those shorts for running,

hiking, surfing, or just hanging out. And once Joe had that insight, Viori began to hit its stride. Today, the brand is a huge business with 1,500 employees and revenue in the hundreds of millions a year. But before starting Viori, Joe struck out with two previous fashion ventures, but he learned a lot about what didn't work with those other attempts, and it helped him figure out how to get Viori right. Joe grew up in the 80s and 90s in Washington State. His dad practiced natural medicine and acupuncture, and his mom was a psychologist who led guided meditation retreats. And as a kid, Joe knew that his life was very different than a lot of the other kids he knew. I grew up on this little island called Vashon, which is just off the coast of West Seattle.

It was a very alternative community. And when we were in middle school, we moved to Bellevue. And Bellevue was really known for Microsoft was really becoming a popular thing. And so Bellevue became a fairly affluent town. And we were kind of like the hillbillies that moved to the city. And my parents just having these very kind of alternative lifestyles and professions and interests, you know, my house was always the house. I was always a little, you know, shy to bring people there and look in the fridge.

all these like healthy, natural, organic foods. But it was a beautiful upbringing, very rich in love, not necessarily rich in material possessions. So naturally, I was hanging out with a lot of other kids who I just looked at their families and it was a little envious, you know, just there was Coca-Cola in the fridge and they took their annual trips to Hawaii. And that seemed like a very appealing lifestyle at the time. And so I was a little bit, um, Yeah, I was just a little bit envious of people that grew up in a more traditional way. You ended up going to college in California, you went to the University of San Diego, which is, I believe it's a Catholic liberal arts college, a small liberal arts college. Yeah, you know, growing up in Washington, I was wakeboarding a lot in the summer.

I was skiing in the winter. I was fascinated by these kind of alternative sports and really fascinated by Southern California beach culture. And I remember I called the admissions office. I think the first contact I ever had with the school was to ask them how many miles away they were from the beach. And I remember the answer. They were seven miles away from the beach and that was good enough for me. And, you know, I had to work my way through school. My parents literally sent me there with virtually no money and it was up to me to get through.

I had scholarship and financial aid. But my friends, again, were always, you know, it never stopped me from being a part of that social scene. I guess you majored in accounting in college. And when you graduated, you were, because the plan was you're going to work at Ernst & Young in San Diego as a trainee. Yeah. But that didn't happen, at least initially. So what happened instead? What happened that summer?

Yeah. So I was surfing in La Jolla one day, and I came out of the water and was going back to my car. And a woman stopped me on the beach and asked me if I had ever considered modeling before. And it was something I kind of chuckled at at the time. But she explained to me that her son had been living in Europe and had been traveling and having this incredible life experience. And if I'd be open to exploring it, she would introduce me to this guy. So I said, okay, well, I'll take a meeting. So I met this gentleman.

He was a manager. And he was having a casting in San Diego with an agency from Milan in Italy. And so he encouraged me to come to this casting. And if he told me that if I happened to get picked, he would represent me. And so I remember I showed up. There was a line wrapped around the block. And I waited in line in. I met with this group.

And, you know, they ended up choosing me to go. And I think I was like one of, there was three guys that were selected. And so I flew straight to Milan with a suitcase of the wrong type of clothing. And I ended up spending the summer working in the fashion history. as a model and fell in love with it and was like, why would I go home? I'm traveling the world. I have an opportunity to continue doing this. And so that's what I did for a couple years.

I hesitate to ask you this because I know you've been asked this a thousand times by your friends and people who might have given you a bit of a ribbing. But was it anything like Zoolander? I did love that movie because there were some things that maybe were just a little bit too close to home. but I actually didn't really ever like being in front of the camera or on the runway. Those things didn't necessarily light me up, but I learned so much. And it was like my little peek behind the curtain at the fashion industry to understand

how things work a little bit. And ultimately, I loved watching designers build collections and how they worked with fabrics. And just being around the creativity was very inspiring. Did you make decent money? I mean, at that level of modeling, especially as a man, can you actually make good money? You know, I was never a superstar model. I made enough to travel and come home with enough money to buy a car and kind of settle in and get my roots back in San Diego. Right.

But it was never going to be a huge career for me. So you always knew you were going to come back to pursue being a CPA, but to come back as an auditor. And I guess that's what happened. You came after two years. You got, I guess, Ernst & Young and San Diego agreed to hold your job for you and you went to start your work there. Yes, exactly. And meantime, I guess you started a little side hustle with your girlfriend at the time.

Tell me about who she was, what this side hustle was that you started. Yeah. I went up to Washington in the summer before I started my job at Ernst & Young and was studying for the CPA exam. And she was about to get ready to go off and start at FITM and study fashion. And so we dated for a while. And when she graduated from FITM, I encouraged her that, you know, we should just start her own brand.

And she could design the clothes. I would help her in every way possible. I would do all the books. I would help use my salary from Ernst & Young to fund the business. And so that was that was the path. We decided to launch a women's contemporary brand. We called it Sammy Joe, which was her middle name and my first name. And we jumped in not knowing anything about what we were doing.

And I guess presumably the idea of launching a women's fashion brand, you were inspired by your time in Europe. You were like, this is, you know, I've been watching these brands. I've been watching, you know, how they take. textiles and turn them into clothing. I've been, you know, visited manufacturing facilities. Like, I think maybe I can do this. Yeah, that was very naive. But I had never taken an art class. I'd never nurtured a creative bone in my body. I just always, you know, ran into things for sport. You know, I was a football player and a lacrosse player. So I didn't have a lot of confidence in my own creative sensibilities. But I loved supporting others that did. And so,

we decided to start Sammy Joe. It was a women's contemporary line. We would drive up to Los Angeles on the weekends and shop for fabrics. We'd literally drive away with bolts of fabrics that we would buy on the open market. And then we would work in San Diego with local pattern makers. You know, Abby would do design work. And we would visit little specialty boutiques and we would sell them our clothes. And, you know, we got into a bunch of great boutiques up and down the California coast. It was a really awesome experience. How did you, I mean, so Abby, it was your partner, she was designing the clothing. Was it blouses, trousers, like what types of clothing was making? It was women's contemporary clothing. So we worked with a lot of, you know, silks, and we would do skirts and little,

you know, blouses and dresses, things of that nature. And in meantime, you were doing at least 40 hours a week at Ernst & Young. 40 hours on a light week. It was a very busy time in my life. And we were young and we had a lot of energy. So we were able to do it. But the fact that the materials we were using weren't repeatable because we were just buying them off jobbers. They were like leftover scraps. And so we couldn't really create a repeatable model for making the clothes we were making. And we didn't know enough. And so ultimately at the time we were faced with that decision, we chose to close the business. So it was a great learning experience.

I learned how clothing is made. And so for that, I'm forever grateful. So you, all right. All right. So you closed that business. But almost immediately, well, I think you were still at Ernst & Young. You started another one. What was that?

What was that business? Yeah. So when I closed Sammy Joe, I very quickly thereafter, started a graphic T-shirt company with a partner. And this partner was what was his or name? His name was Chad. Chad was a really talented graphic designer. And so we decided to start making T-shirts, working with different humanitarians and

environmentalists to tell their story on the inside of these garments. But really the business model was just to sell them to boutiques because they were really cool. The art was very contemporary. It was very fashionable. And this is at the time when like Ed Hardy and, you know, this is at the time when like Ed Hardy and these brands with like big graphics all down the front of the shirt was really popular back in the early 2000s. And so that was what we were creating with Viori. You called it V.

Yeah, it was a different business, but it was called Viori. And that's ultimately where I got the name to start the Viori that you know today. And that name means mountain in Finnish? Well, you know, it's interesting because Viori one, 0.0, it was all about honoring these humanitarian environmentalists. They were our heroes. We kind of told the story of how they almost climbed these mountains with what they were choosing to pursue and what they were taking on. And so I'm still trying to figure out how that was going to make money. You would sell the t-shirts into boutiques. And I understand the humanitarian side of it,

but like you still have to make a sustainable business, right, to finance your business. So how was Like, just help me understand how this was going to be a viable business. Yeah, I mean, no different than like a Tom's shoes or any brand that has a give-back component to their brand. It was a great margin business in apparel. And there was enough left over for us to donate a percentage proceeds back to these organizations. So that was the model. It was like, you buy this shirt. We're going to give some of the proceeds to this group.

And how did you get into, did you get into, like, how many stores did you? get into. We were probably selling to 25 to 30 stores when we decided that we needed to close the business. And a couple of things happened kind of concurrently, but the great financial crisis of 2007, 2008 hit right after we started the business. And all of a sudden, Walmart started selling organic cotton graphic t-shirts for $25. And we just kind of, we just could not compete. the plan that we had wasn't, we weren't getting the type of traction that we needed to see in order to continue on. And Chad wanted to go and travel and came to me one day and said, hey, I'm going to go travel around the U.S. and an RV and I'm out.

So when Chad, when you guys decided to kind of shut down this business, what do you remember thinking this is around 2007, eight, I guess? Did you think, well, this. there's still something else in me, or did you think, okay, maybe I'm not cut out for this, because that's, you know, the second business I've shut down. And I wouldn't say other than were failures. You just, they didn't quite reach velocity like you'd wanted them to. Yeah. You know, I was heartbroken. And I always saw something big for that business. And I always thought it could really materialize into something. It probably wasn't going to end up going anywhere. And so I think ultimately closing that business was really the wisest decision, even though at the time it felt like a death in my family.

You know, it was something that I'd put a lot of energy and invested, you know, all of my savings into. All right. All right. So you close down the second apparel business. And I guess you also, around this time, you also decide to leave Ernst & Young. And then I guess, and then you help launch yet another business, which is not this. this one was not in fashion, but I guess this was like a recruiting and a consulting firm called Vaco, which I guess you did with a couple of other people. And you did this for quite some time,

like eight or so years. But during that period, were you also thinking about, you know, like maybe one day getting back into fashion? Yeah. You know, at this point, I wasn't eager to start another apparel brand. You know, Chad and I parted ways and I bought the trade. mark off of them. So I had that sitting there just knowing that I love the name and the brand. So in the event I ever did want to do something in the future, it could be there as an option. But, but no, I just immersed myself into Vaco. And we ended up building a really great company. We had a couple hundred consultants working for us across San Diego. We had multiple lines of business. But I'm kind of starting to feel like maybe material wealth alone isn't

ultimately what's going to inspire me. I was going through a tough time in my life. I just had a business partner that, you know, it kind of left, but my first marriage didn't work out. I got divorced. And I was in a relationship that was, you know, kind of toxic and probably not good for me. And I was partying probably more than I should have. So there's a story I've read, and I'd love to, you know, sort of tease us out a little bit because I guess there was a you met somebody at a party. I've seen this described as a psychic. Tell me about this story because I don't know whether this is apocryphal, real, or if it's even that significant in your life.

But I read about it, so I'm curious to hear your take. Yeah, it's very much a part of my story. It's so happy to share. I'm at a party, and this woman who was a life coach, she worked with a lot of executives. but she's also an intuitive, came up to me and she started telling me all these really crazy things about my life, about how I was raised, how like my mom was, my dad. She told me that I had worked on a business that was my passion that I wanted to be successful so desperately. And she said, this business that you're working on, this idea is going to be wildly successful.

She's like, it's going to be bigger than you could ever imagine. but it's not going to be in its current form and it's not going to be with your current business partner. And I just literally started crying and ultimately she encouraged me, you know, to step into some of those things that I was feeling. And so the next day, I woke up, I broke up with my girlfriend and I went to a yoga class. A friend had been suggesting that I try yoga to my back for a long time, but I knew that yoga had a lot more benefits than just physical. So you start to get into yoga. I mean, did you connect to it right away? Was it, did it feel cathartic, like almost immediately? Well, at first it felt really hard, you know, and, you know,

being somebody that's worked out and been into exercise and played a lot of sports, you know, I wasn't scared of a hard workout, but yoga was just different. And I was taking these, they were non-heated classes, but I was sweating so much, and it was like very intense. And then the feeling you would get after class was just like a complete release, like complete relaxation. And I became really addicted. It was like a very healing experience, not only for the physical benefits and getting a lot of relief in my back, but also just feeling light. So Joe, while you're, I mean, obviously you had two small apparel brands that you had started in the past. That's of which kind of panned out, you had experience as a model as a younger man. Clearly, at some point,

you started to think about what you were doing and apparel, and particularly apparel for people like you, for guys. Tell me how those ideas start to percolate in your mind. When do you remember starting to think, you know, there's something missing here? Yeah, well, you know, it was really a good friend of mine, a guy named Chris Miller, who's a Hall of Fame skateboard. And Chris had started some action sports brands. His first company was a company called Planet Earth, which was one of the first sustainable action sports brands. They did a lot of cool outerwear for snowboarding. And then he sold that business to K2 sports and then became the president of their action sports division. And they launched a skate shoe company called Audio Footwear.

And so Chris also was very into yoga. We'd go to the same classes together. And, you know, I was starting to think about apparel and getting another brand going. And Chris was actually having a lot of the same kind of thoughts. And so he and I would go surf together. And it was just a very inspiring time. And we live in this incredible community in Encinitas in coastal, North County, San Diego. And it's this stretch of coast right along the Pacific Ocean. There's yoga studios on every block.

And Chris and I always felt like Encinitas is the perfect. source of inspiration for a brand. I mean, meantime, there were brands out there, right? I mean, there was Patagonia, for example, just the first thing that comes to top of my head. Maybe that's more sort of mountaineering and hiking. And there were surf brands. Surf brands have been around for a long time.

But what was it, what was missing? Our observation was that the big brands that we grew up with, as kids competing in sports, You know, you think of the Nikes and the Adidas of the world. Like, they designed clothing that really identified you as somebody that was going to the gym or going to compete in a sport. It had a very competitive spirit about it. It was very urban kind of street inspired.

A lot of big logos, shiny reflective details, kind of loose baggier fits. But as I've gotten older and now I'm in my 30s, I'm going to yoga. You know, the lifestyle was just very different. Like, studio fitness was booming, and it became all about community. Yeah. People weren't looking for product that you just wanted to rush and change out of right when class was over. Because you would stick around. You'd mix and mingle.

You'd go do something with friends. And so we needed clothing that would keep up with us. And so what was really interesting is in Southern California, our observation was that people were wearing board shorts that were designed for surfing. Like longer shorts, right? It almost went down to your knees. Yeah, exactly. And they had fixed waistbands. And so when you get sweaty, they would kind of fall down off your hips. And great for surfing, but not necessarily designed for sweat and movement in the way that you'd move in a yoga studio. And so our feeling was like, why is it that people in Southern California that maybe grew up in these subcultures of surf and skate didn't identify with the big mainstream active wear brands? And so you thought, all right, I'm going to. I'm going to go for this.

And was Chris also ready to do it at that point or not quite yet? Was he still? Because he was running a business. Yeah, you know, ultimately we decided that we were going to, that I would be the first one to leave. I would quit my day job. And the plan originally was that Chris would eventually kind of follow suit and join me on the journey. And I understood that if we were going to have a chance at doing it, I was going to have to jump in with two feet. because there's just too many opportunities where things get tough and you want to retreat back to what's comfortable.

And if you have a day job, you have a salary paying the bills, it's too easy to return to that safe space. People thought I was crazy at that time, especially my parents who were like, wait a minute, you've just invested eight years of your life building this great company of great flexibility. Like, why would you leave to start your third apparel company, two of which have already failed? And I had this acute awareness of what it would be like to be on my deathbed, looking back and saying, gosh, I saw that opportunity so clearly and I didn't pursue it. And I just wasn't willing to live with that. I couldn't live with that. When we come back in just a moment, how Joe sets out to design activeware that does not scream activeware. Stay with us.

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So if you're looking for a way to level up your business, check out Squarespace.com slash built for a free trial. And when you're ready to launch, use offer code, built to save 10% off your first purchase of a website or domain. One more thing before we get back to the show, please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And it's totally free. Hey, welcome back to how I built this. I'm Guy Raz. So it's around 2013. Joe leaves his consulting firm Vaco and starts working with a new partner, Chris, to start an activeware brand for men.

We needed to raise money and we would have calls with private individuals, sometimes financial institutions, really anybody that was willing to talk to us. We put together a brand deck and a business plan. We took a lot of investor calls and sadly got a lot of rejection in those early days. What was your pitch? Tell me how you would pitch me. I mean, you'd come in and you say, we're going to start a men's lifestyle brand. And I'm like, well, what does that mean? Tell me what you would say.

Well, it was very much, you know, Lulu Lemon had really exploded, but they weren't resonating necessarily with men, you know. It was one of the fastest growing active apparel brands in the space, but men's was an afterthought. We saw yoga in this active lifestyle for men as just a wide open space with nobody really competing for it. Yeah. And people were like, well, what's the IP? Like, what's the customer acquisition hook? Are you guys digital marketing experts? And we were kind of cut from the old school. Like Chris built a legacy wholesale brand. Neither of us had a lot of e-com experience

or we weren't thinking about the business through more of a tech or digital lens first. We saw an opportunity to build a community around the brand that was different than what existed in the market. And this was around 2013 when all those started, you started to see an explosion of DTC companies raising money. some of them succeeded, some of them didn't. But I imagine that also some of the questions were like, so wait, you're going to make, like what?

Like, yoga pants or yoga tops? Like, tell me what you're going to make for guys. It almost never even got to that point, honestly. I think when people realized that there was nothing proprietary or there wasn't a customer acquisition gimmick or hook to the business, a lot of meetings were short and there was a lot of passes. You know, it's just funny, you know, when you talk about a relationship with rejection, being a model, and working in Europe, it was constant rejection. And then my experience at Vaco,

trying to be a salesperson, when I was a pretty shy guy naturally, I developed a really unique relationship with rejection. And so that was all building my backbone up for trying to raise capital for an apparel brand because it was kind of like starting a band and telling your friends you're going to be the next Rolling Stones.

People are like, yeah, good luck. Yeah. But nobody was interested in investing. Well, yeah. I mean, and I'm, and I'm, sure they were like yoga guys aren't guys aren't gonna buy yoga gear that's they don't do that they're gonna come in with their adidas and Nike shorts yeah i mean i i i remember going to yoga classes and Nike shorts that's what i would do yeah um i didn't think too much about it so i imagine the pushback was like

it's it works for women lulu lemon because yoga still perceived to be like sort of a sport for women even though that's not true, but I think that would have been the pushback you were getting. Yeah, you know, we saw the success Lou was having. They really defined a new category within active. They were working with better materials. You know, the dirty secret in our space is that the big brands, you know, they were really premium footwear offerings, but they never really had a premium apparel offering. Whereas, like, Lulu inherently was working with fabrics that were much more expensive.

So before you did any cut and make of the garment, just the textiles, which is a huge ingredient in making, a great garment. They were just better. Yeah. And so we wanted to do something really cool, premium, and do something for men. And it just did not exist in the market. But probably, and Lulu Lemon is, there's a femininity about the name, too, or perception, probably, Lulu Lemon. So, I say this as somebody who has some Lulu Lemon apparel for men.

But I imagine that people at the time that you were trying to raise money from would have said, well, if Lulu Lemon wants to do this and it's now working, why are you going to work? I don't remember that question specifically, but I think just in general, people looked at me, somebody that didn't have a track record of success in apparel. And even with Chris, you know, Chris was there because he had a great background. He had had some success in consumer retail in footwear primarily. But they just looked at us and said, like, no, these aren't going to. You know, I think some people saw the opportunity, but maybe questioned whether I was really going to be the guy that was able to go and do this and disrupt this space.

So any luck raising money from private equity or VCs in 2013, 2014? No, no, nothing. It was really challenging. And how much were you, how much were you looking to raise? I think our original goal was $2 million. You couldn't raise the money from, you. private. So from what I understand, you decided to go to reach out to your network of friends and family to raise the money. Yeah. I think our first raise, we had a goal of a couple million dollars.

I think we raised 400, like 400,000 to 500,000, somewhere in that range. And that was enough for us to get started and start working on samples and starting to bring some products to life. All right. So let's talk about now next step. You raise a little bit of money. You're on this full time. And it's just you and Chris, but who is going to help you? Let's just start with just designing the apparel. Did you have somebody that you could work with or that you could source? Yeah. So, you know, Chris had some experience with a woman named Rebecca Bray, who he worked with back in his action sports days dating back to planet Earth.

And, you know, Chris always felt Rebecca would be a really good fit for Fiore. and we sat on a couch in Chris's living room and talked about the vision, the idea for the brand. And she just loved it. She just saw what we saw in the active space. And so we hired her almost as a consultant, an independent contractor. And in the evenings, I would go over to her house and we would chip away at it. And tell me how you would do that. Like you would say, I'm looking for like this kind of waistband.

And this kind of fit, like, what would you say? How would you describe what you wanted? Yeah, I mean, the first thing we were aligned with was, like, we wanted to create a more casual point of view in the category. You know, there's a saying in our space that, you know, activeware is turbo, meaning it's like it looks like really technical activeware, product that identifies you as somebody that's going to the gym or competing in a sport. you know, and we wanted to be the antithesis of that. So we wanted it to be effortless, easy to wear. We wanted to have functional details that would support you through a workout, but we wanted to almost hide them from eyesight.

And it wasn't that turbo kind of technical look and feel that was so commonplace in the active market. You know, speaking of technical performance wear, right? Like, I mean, how did you even know what kind of fabric you wanted? You didn't want like stretchy, right, tight-fitting pants. You wanted something, but not like loose, like 80s sweatpants or thick. You wanted something thinner, lighter. I mean, how did you even know what kind of material you wanted?

Well, it's been an evolution. This industry was just being developed. Premium activeware was very new. And so where to go for sourcing. It was a puzzle. It was like a scavenger hunt to figure out where to go to source. So the first products we brought to market was. Our first product was the core short for men.

And it's still our best-selling men's athletic short. And the idea was to create a short that almost looked more like a board short that was designed for surfing so that it would resonate with our community. But it had a built-in supportive liner. It would support you through a great workout. It would move and stretch with your body. It had an elastic waist. And we put a draw cord on the outside of the shorts that was natural

that just looked more West Coast, more California-esque in its aesthetic. All right. So when did you, so you basically, you know, 2013, you kind of jump into this, fundraising, trying to get in, you know, to the designs. You bring in Rebecca. Rebecca Bray is her name, I think, right? Yeah. And how long before you land on the design where you're like, that's it, that's the one? Do you remember how long it took? We loved the core short. You know, when we brought that short to market, we started showing buyers across whether it was a big, national chains or it was fitness stores. They looked at it and they were scratching their heads. Like, what is this?

It looks like a swim short. You know, this is an active wear. And, you know, we even had some activeware buyers tell us this is never going to sell in New York City. You know, maybe on the West Coast, but never here in New York. But that was it. It was the core short. That was our first product.

We were like, this is the one. All right. Let me back up and fill some gaps in before you go to market with this. So you've got a design. And by the way, were you able to hire anybody else or was it really in the first year just bringing in consultants? Yeah. So, you know, it was really myself and Rebecca initially. And then the first person we hired with the little fundraising that we had done, because I chose not to take a salary from the business just to be able to keep the lights on longer. The first person we hired was Nikki Sakelio, who is our CMO today. And Nikki's been with me since day one. Becca is still with us today, but Nikki had an incredible marketing background. She was most recently before Viori with a company called Prana, which is like an outdoor

kind of climbing, Patagonia-esque brand. And then also she worked in the surf industry. She worked for a company called Globe and O.P. back in the day. And so she had this interesting hybrid background between action sports and surf and beach culture and yoga and performance and outdoor. All right. So you sort of land on a design for the shorts. Where did you source the place that was going to make you the samples? So Rebecca brought in a gentleman who she had been working with in another business that did some golf type of apparel. He did some surf apparel. And he was an agent. And he represented a factory in China that had some experience working with these types of stretch performance materials. materials. And so that's who we contacted and started working with on these first designs.

How did those initial samples come out? Were you happy with what they made? No, the first samples, the fabric was way too heavy. The prints weren't executing properly. The liner didn't fit well. And, you know, today it's funny, we have these big technical design teams. Then they're pattern makers. They're experts in making product fit exceptionally well. In those days, it was Rebecca and I, we were winging it. We would get a sample in my size. I would try it on and we would talk through how to change the fit and we would try to communicate that to the factory and then we would get another proto back. Our vision is to create the best product on the planet. But when we started, the product kind of sucked. And we had a lot of work to do to improve it. All right. And so it took

you about a year and a half, right, before you were ready to launch that first product. But before we get there, did it feel like your pace was the right pace, or did you feel like it was taking too long? I think at that time it felt like it was taking a long time. Obviously, I was a little naive. I hadn't built an apparel brand with offshore production and all the complexity of sourcing these types of materials. And then from product ideation and design through like delivery of production, it's a long time. And so to be chipping away at something, to be burning capital and not being in market, getting real-time feedback, can feel like a slug. It can feel like a really long time.

So what were the biggest, I mean, the biggest obstacles presumably were just, I mean, there was everything. But what do you remember in that first year and a half just getting frustrated over, you know, what kind of things were driving you crazy? Well, there were other brands that were launching around the same time that had similar ideas or similar takes on this. category, whether they were women's or men's. But we were hearing that some of these brands were having a lot more success raising capital than we were. And so I developed a complex that, man, these other brands have a lot more money. They're going to outspend us. They're going to outmarket us. And ultimately just beat us to market with a similar idea. Because here we were. We had raised a $400,000, $400,000. I wasn't paying myself. We were working in a garage.

from one of our investors that didn't require us paying rent. It was a true bootstrapped business. And I had a little bit of an insecurity around whether or not we could go out and compete with these brands that were raising a lot of institutional capital and getting big kind of retail names on their boards. And that was really nerve-wracking. When we come back in just a moment, how Joe and his team embark on a risky new strategy when their first business model does not pan out. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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Choms are simply made with natural ingredients you can feel good about. Right now, Choms is offering our listeners 20% of your first order and free shipping when you go to chomps.com slash built. Go tochops.com slash built for 20% of your first order and free shipping. That's C-H-O-M-P-S dot com slash built. And don't forget to use our link so they know we sent you. Hey, welcome back to how I built this. So it's 2015, and with dwindling cash and an eye on competitors with a lot more money,

Viori launches its first products into the world. The initial idea was that we would sell through gyms and yoga studios. You know, and studio fitness was exploding. So these concepts, whether it was Soul Cycle or it was CrossFit or, you know, Orange Theory or Equinox, there were studio fitness concepts popping up everywhere. And so you were seeing a lot of women's brands that were popping up that were selling in these studios and gyms and building great little businesses. But there was never an offering for men of any, nothing really substantive. Yeah. And so Viori felt like, well, we can be that brand.

And, you know, it may not be a huge business, but a great jumping off point to kind of get started. All right. So you start to roll it out. Like, do you remember how much money you guys spent on your first order from the factory in China? Was it, you know, half a million dollars? I mean, was it a big purchase? I think it was less than that. But we ordered 500 units per color of, I think, like three items.

It was the minimum order quantity, but it was maybe like, I don't know, $100,000 worth of inventory. Yeah. And you ended up getting them into places like Equinox and Core Power from the get-co? Not initially. We were selling into a lot more independent yoga studios. Yeah. You know, your one-offs or it's chains that had three or four doors. I don't think the product was quite ready for national distribution with Core Power or Equinox.

at that time. But presumably, I mean, this is the way to go, right? Because you're going to expose your brand to your audience. You know, we got some sell through, but it was typically when a guy left his shorts at the office. So he didn't have something. He would buy a pair of our shorts. So there was that. And it wasn't just yoga studios.

We were selling into some surf shops, some outdoor shops. We were calling on the big guys and trying to get meetings. And we actually did get a lot of meetings. I remember the first trip I took was to New York and I just packed a suitcase. And I toaded my products around, walked into a bunch of different gyms and talked to some more sophisticated buyers at specialty shops. And people just looked at the product and they didn't really get what we were trying to do. Again, it just looked very different. It didn't look like active wear.

And therefore, we got a lot of passes. And keep in mind, this is at a time when premium active. where wasn't a category that was sold at Nordstrom. It wasn't sold at REI or outdoor shops. So if you explain to somebody that you were going to build this premium men's activeware brand, people just were like, that's not a top priority for our business. You know, right now we have a challenge where everybody's wearing Lulu Lemon. All of our female customers are wearing Lulu Lemon. If we're going to get into activeware, it's going to be a women's brand to address the need to service that woman. So yeah, that was a really low point for me because, you know, we just didn't know if our business strategy was going to work.

Did you think that maybe you were wrong? Maybe guys aren't looking for this. I mean, I knew that our community was. I just, I saw it so clearly and I believed it wholeheartedly. But of course, you know, there was definitely that. you know, a lot of self-doubt. I would go home to my now wife at the time she was my girlfriend.

And, you know, I had some really long nights and, you know, it was just doing a lot of self-reflection. Here I was somebody that had thrown away a career at a company that I had built to pursue something, you know, with a lot of friends and family money. And it wasn't going really well.

And so, yeah, those were, those were some dark days. And I mean, I guess pretty much within a year after you launch, you sort of realize that your strategy isn't working. And so you guys, you do like a major pivot. I guess you decide to start selling direct to consumer. Yeah. I mean, at that time, you know, DTC was starting to take off.

So was it clear to the team like, you know, we got to go do this. So we got to just try and sell through websites. I think it was scary. You know, we had a little bit of capital left. And so we did take some meetings with digital agencies that would help us with our advertising strategy. And what we understood was that you had to spend a certain amount of dollars in order to get enough data pushed through your website so that you could then be responsive and make adjustments. and ultimately find your customer online. And so the idea of taking the little precious capital that we had left

and investing it into what appeared at the time, having no experience in digital advertising, it was like you were just blowing it into the wind. That was really scary because if it didn't go well and we didn't define this engine of growth quickly, we were going to be out of business and that would have been lights out game over. Who is the marketing strategy?

I mean, how did you find the right? Because there are hundreds of digital marketing companies that were pitching you. And how did you land on the right one? Well, you know, it's so interesting because back in those times, my reflection was that advertising on search was very much a proven industry. But social advertising was very new. And we got a list of names, and we ultimately landed on a digital agency that, you know, we trusted. And so I remember, you know, we got started in this advertising.

We started paying a lot of attention to the ads and what was kind of getting a better response than others. And, you know, after an okay response, like I remember our first month, we invested $5,000, we got $5,000 back. And so we were like, okay, we just gave away essentially a lot of product, but we got some new customers wearing the brand. Yeah. The next month, we invested maybe $7,000 and we got $8,000 back. And it was like that kind of a bill.

We were like getting our product back for our inventory or getting our money back. And it was, these were static ads that you would see on Facebook or were they videos? Yeah, they were static ads. Oftentimes they would have a guy doing a yoga pose and then we would have a message on that image that said something like versatility is a virtue or one short every sport. You know, this is men's yoga, you know, things along those lines. We were testing a lot of different copy. It was a really defining moment for me. I remember I was sitting on my couch on a Sunday. And I remember I just pulled up Photoshop and I lined up all of our different colors and prints of this core short, this short that we had launched with that was the differentiator. It was our reason for being. And then across the top, on a white background, it just said, run, surf, hike, train, travel, chill. And the idea being conveying. like that this isn't to be put in a box, like we're not going to tell you one specific end

use. This is a versatile athletic short. And that ad started to get really awesome traction. And it was like before you knew it, we were putting $10,000 in and we were getting $20,000 back in a month. And then we were putting $20,000 in and we were getting $60,000 back. And all of a sudden, we had this engine of growth that we could take back to investors and we could show them the data. And, you know, while some guys were wearing it to yoga, what we heard loud and clear was that what people really loved about the brand was the product and its versatility. And so I wonder how, like, it seems like from the, really from that moment, right, when you go DTC, it's working, but you also decided to work with retailers, brick and mortar

stores as well. And a lot of DTC brands then, even now, won't do that because you can make a lot more money just selling direct to consumers. Can you kind of give me, sort of help me understand why you wanted to work with brick and mortar and do DTC? I think partly because we had to add a necessity, you know, we weren't flush with the capital. And so keep in mind, like over, so over the first few years of the business, we raised $2 million of capital from friends and family. No financial institutions. Some of our competitors had raised 20, 25, upwards of 50 million. million dollars. We couldn't compete with them solely on the social playing field. So we knew that we needed to complement what we were doing. And we needed another customer acquisition vehicle. And we

knew that wholesale could be a critical component of that. So after kind of hitting the pause button on wholesale while we were developing and building our digital community, once we established an engine of growth and we got out of the gates, and these wholesale accounts could take note of what we were doing. A lot of the nose that we originally got when we first showed the samples to these buyers turned into yeses. Were you under pressure to sell at different price points? I mean, was it the same price in those stores as it was on the website? It was the same price, but because we were a premium brand, we sold a little bit higher than where the market existed for wholesale. So activeware in the wholesale market historically was dominated by Nike and Adidas and these big brands.

And they really didn't have a premium offering. So their athletic shorts might have been $52. Ours were 68. And so when we first launched before we had built a direct community on our website, buyers would just say, we don't sell activeware at this price point. Not only does this not look like activeware, but this is priced out of our range for our consumer. So what did you do? Well, after building that model online and people started seeing that we were getting momentum, they started changing their mind. And we ended up getting a call from REI, which is a really fun story. Nikki worked with a gentleman from Prana, her Prana days.

He was in their marketing department at REI, but she introduced me to him. I connected with him when I went out to outdoor retailer, which is a big trade show. But he took a meeting with me and just talked to me about REI and the inner workings, and I brought him a bag of clothes. And I just said, this is for your time. I just wanted to thank you. We didn't have any expectation. There was no ask of giving him that close. We got a call from him. And he asked if it would be okay for him to connect us with the buyer, the active wear buyer at REI, because he was wearing the hoodie that we gifted him in the hallway. And the active wear buyer asked him what he was wearing. She said, I really like that hoodie. Who makes that? And he said, oh, these are, this is this start.

up down in San Diego called Viori, and the next thing you know, we were on a plane up to Seattle to present the line to REI. And that was really the first big wholesale partner that we had as a brand. So one of the things that happened during, you know, sort of as you're building, because, you know, you're still a small company, right? But by the way, do you remember how long before you reached a million in revenue? Did that happen in 2016, or did it not happen until later. Yeah, that happened in 2016. Let me ask you about competitors at that time. Roan, outdoor voices. They were raising money doing deals with private equity, bringing in big executives. Were you nervous when you were seeing the kind of money they were attracting and the deals they

were doing at that time? Were you like, God, we're in trouble. They could crush us. Absolutely. And I felt like others might beat us in the market. They might end up just beating us to the ultimate goal that I think a lot of us saw in the market. it. And Roan was kind of a I mean, even now, but it was certainly a bigger competitor at the time, right? Yeah, the CEO of Equinox once told me in a

meeting that Roan was like Biggie and Viori was like Tupac because, you know, they were originated on the East Coast at a very similar time that Viori started. They wanted to create a premium men's activeware brand. They kind of built it through the lens of

the East Coast and that lifestyle. We saw the same opportunity, but we built our product and our brand through our lifestyle and our community here on the West Coast. But they had an advantage, a financial advantage, right? I'm assuming they had raised a lot more money than you had raised by the time by 2017. Yeah, they had raised a lot more money. And so, again, real reason for insecurity.

You know, when we showed up at trade shows, it was always Viori and Rhone as the only two premium men's activeware brands in a sea of where. women's brands. And so we were very competitive with them. We were very in tune with what they were doing. And yeah, so it was hard to see them have a lot of success raising capital when we weren't having as much luck. Were you, when do you remember feeling like, okay, were, I mean, because I think by 2018, you were going to do maybe $30, $40 million in revenue that year? I mean, that's a massive jump from when you first launch. in 2015, that year, do you remember feeling like, okay, we're in a good place? Like, we are, it's all growth from here. Yeah, you know, I think it's two, there were two things. We built a

really great business online. The second was when REI called and they wanted to bring in Fiore, and they brought in some other emerging brands like Roan and some others, and then they brought in some legacy brands, the big names that everybody knows. And they put this activeware concept together on their floor and they did it in 10 of their biggest metro market doors and i remember the buyer the first time that i felt like we might be really on to something here the buyer called me and said viori blew out the competition and you guys had the most productive inventory in those 10 doors wow they were they were very surprised and so they asked us if we wanted to grow from 10 doors to 70 doors in the next season but now this is the first time we had a date of

data point where we sat on a national level with virtually no real marketing next to some of the best brands that we grew up aspiring to as kids. And having such having so much success in that test really built a lot of confidence in the garage. So we were, we were really excited. And you sort of now around that time got into the Blue Lemon space. Well, you already kind of were, but you released a women's line. I mean, was that because women were seeing men buying it and they were saying, hey, why you make clothing for us? Yeah.

It was always a vision to be a dual gender brand. And so we always knew women's would follow. We just knew that men's was the right business strategy to lead with. And so 2018 was when we decided it was time. And we designed a very small capsule for women's and we brought it to market. and today, 50% of our business is actually women's. You hit profitability, I think, within two years of launch, which is really unusual. I mean, part of it is your price point was higher.

People were willing to pay $68 bucks for shorts. But part of that had to have been efficiency. So what were some of the things that you did to save money to become profitable? Like, tell me about some of the strategies you've used to become profitable within two years. years. Yeah, I mean, I was an accountant by trade. So conservatism, I think, was just embedded into who I was and as an operator of the business. But I never understood the idea of acquiring a customer at a loss. And that became a very popular trend is to, you know, you spend $200 to acquire a customer that would only spend $150 with you. And so after your margin and everything, you know, you're losing a

considerable an amount of money. And the argument was, well, once you acquire a customer over time, they'll continue to buy with you and they'll become profitable a year down the road or sometime in the future. And that really never made sense to me because you always have to market to your customer to get them to re-engage and buy. So we're very particular about the contribution margin of every dollar we spent on advertising. It had to yield a specific return. So that was one. You know, number two, I never took a salary. from the business. I lived very inexpensively in a little tiny apartment, and I found ways to make my savings go a really long way. And then I made requests of the people, you know, that a lot of

people that joined me in those early days worked for a fraction of the price of what they were worth on the open market, and they believed in what we were building. And so we just, we were a true bootstrap business. So, I mean, basically, this takes you to your first really, big fundraise, which I think happens in 2019, which is $45 million. And this is really the first time you brought in a lot of money from an outside investor, right? Yeah, the business was growing really fast. And so we weren't in a place that we needed capital. And I think that's, you know, the funny thing about this entrepreneurial journey is like when you need it desperately, it wasn't available. But as soon as we didn't need it, you know, there it was. But we changed. But we

chose to partner with Norwest venture partners because they were really supportive. They saw the vision for the brand clearly. They believed in us. They believed in the management team. And they wanted to be invited guests. They wanted to be along for the ride, be helpful where they could be helpful, but not really disturb the creative nucleus that we cherished so much at the brand. And so, yeah, we raised our first round. A lot of the money ended up going to shareholders because the business didn't need capital. So we didn't go out and put a bunch of money on the balance sheet at that time because we didn't want it to create bad habits. We were very proud of the discipline and the financial rigor with which we were building the business.

So we didn't want a big check sitting on our balance sheet to disrupt that. So essentially a lot of early investors got some liquidity. Yes. So you are now, I mean, you've got some funding, but also it sounds like you've got cash flow coming in. I mean, you're able to kind of grow simply through sales. And, you know, from everything I've read, I mean, you hit 2019, 20 are going great. And then you've got the pandemic, which, of course, would turn out very differently from how it started. Yeah, it was one of the scariest moments of my professional career.

We got calls from all of our wholesale partners that said, you know, don't ship us any inventory. but we had inventory that was on boats or was already in our warehouse that was dedicated for them. When we got those calls, it had a downstream effect. We called all of our suppliers and we said, please hold the production lines. Don't make us any more inventory. We've got to work this out. And then quickly, as people started getting comfortable with their new lifestyle, they started shopping online.

And all of a sudden, what I thought was panic and calling my suppliers and telling them not to make inventory. I called them back and I said, you know what, I don't think we're making enough. And that was a roller coaster of emotions over a couple month period. And coming out of the pandemic, you, I guess, were approached by SoftBank, the giant Japanese investment bank, SoftBank, to maybe make an investment. Did they come to you unsolicited? Yeah. We weren't looking for capital. But, you know, we had ambitious plans for Viori. And that was a really big moment for the brand because short of an IPO, I think it was the first time that maybe the market understood how special this business is that we're building. And it wasn't just an investment. It was a $400 million investment that valued Viori at $4 billion. One of the largest investments and valuations to be made in a non-public apparel company ever.

And for some people, that was the first time they heard of Yori. Like, some people were like, V what? What? What? Who? $4 billion? What is this company? Yeah. We didn't have a real big share of voice in the media. We were kind of overlooked.

And so that was a really special moment for our team because we all got to celebrate this incredibly special thing that we all built together. Joe, when you think about, you know, growing up and Sean Island and then. outside of Seattle and then trying modeling and a couple of failed brands and then really a couple years of just really working hard to get traction with this brand. How much of where you are today do you attribute to how hard you worked and how much do you think how to do with luck? Just luck of people being interested in this product of the weird, odd luck of the pandemic, just all those things. Do you think that they matter? I think every little piece of that is a part of a big equation. I don't think there's one thing that defines our success. All those things that maybe have felt like defeat in the moment when I look back with hindsight, I realized they were the biggest blessings. And I didn't do this alone. You know, whether Nikki and Rebecca in the early days, you know, Chris and the formation of the idea, like so many incredibly talented human beings. that are still so close to me today.

I think it all plays a part. The one constant is you have to work hard because luck might open a window or a door, but it's the hard work and the preparation that allows you to walk through it. That's Joe Kudla, founder and CEO of Viore. By the way, his founding partner, Chris Miller, still sits on the company's board.

And if you get a chance, check out some of the videos of Chris skateboarding. He's won a ton of international awards. and in 2015, he was inducted into the skateboarding hall of fame. 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 totally free.

This episode was produced by Rommel Wood with music composed by Rumpteen Arablewe. It was edited by Neva Grant. Our audio engineer was Gilly Moon. Our production staff also includes Casey Herman, J.C. Howard, Sam Paulson, Alex Chung, Carrie Thompson, Elaine Coates, John Isabella, Chris Messini, and Carla Estevez. I'm Guy Raz, and you've been listening to How I Built This.