Money Rehab with Nicole Lapin - Change Maker: Rebecca Minkoff, Designer

Episode Date: April 9, 2021

Nicole sits down with designer and fashion mogul Rebecca Minkoff for a frank talk about credit card debt, what it takes to build a profitable business, and making sure you put a floozy clause in your will. 

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money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia, Nicole Lapin, and you're in money rehab because you want to learn more about money, right? Maybe you're feeling like, everything sucks. I just don't know what to do. It may seem impossible and I get it, but hello, that's the point of money rehab. I'm here to tell you that you will make it through. And I'm going to let you in on a little secret. Even people we view as super successful have

struggled with money stuff. And so today and every Friday, we're going to talk with someone who has already made it through and has made it big. So today I'm talking with Rebecca Minkoff, the designer of the brand of the same name and the founder of the Female Founder Collective. She's here to talk to us about what advice she would give her former self about money. Rebecca, welcome to Money Rehab. Hi, thanks for having me. I'm excited to just talk with you. Well, you and I don't need to break the ice, but let's play a fun financial icebreaker game. A quick round of never have I ever. I'll ask you a question about your finances, and you can tell me if you have or you haven't made this money move.

So never have I ever overdrafted. Oh, I've overdrafted a lot. Never have I ever been in debt. Oh, sister, I'm still in debt. What kind of debt? I have about $23,000 left on one loan. And then my Amex always hovers at about $12,000 to $15,000 in debt and another $8,000 on another card. So I'm good for about $40,000, $45,000. We're going to get that debt monkey off your back. Never have I ever invested in the

market. I have. I've been invested since 2012. Never have I ever opened a retirement account. I don't have one. Girl. I know. Isn't that stupid? I know. I know. It's not stupid. Don't talk about my friend like that, but we're going to get you a 401k. I know. I'm thinking it's time to start. Never have I ever written a trust or will. It's ironic you say that because I just finished mine and my husband was really pissed because I made him and my mom co-trustees and he's like, I'm their dad. Come on. And I said, okay, fine. We're going to have a floozy clause. So if you check up with another woman after I die, then you get a, you get a co-trustee because if you have sex with another woman and she talks you into taking my money and spending it on her new children with you, that is not what I'm up for.

And he was laughing, but we just inserted the floozy clause. That's amazing. I mean, it's morbid thinking about it, but especially if you have kids, man, you have to, I think there are a lot of prenups too, that have stuff like if you cheat, then you, this blah, blah, blah happens. It's important. I don't, we don't have a prenup. Well, we had a prenup that was written on a napkin about 10 minutes before we went to go get married at the courthouse, which I've lost. But my newest prenup is if you cheat on me, I will cut your balls off. Perfect. I think that's, you can, that's upholdable in the court of law for sure, or especially the court of public opinion.

But now that the ice is broken, thank you again for joining me, Rebecca. I've been in credit card debt as you and I have talked about before. I remember what it was like going through that at the time I felt so much shame and it really would have meant the world to me at the time if I could have heard someone successful and awesome like you that I idolized, frankly, share their tough money stories too. So thank you in advance. And for people listening out there that want to kick these nasty money habits. Let's hear more about your story and how you did it starting at the beginning. Did your family ever talk to you guys about money when you were growing up? No, all that, all that was kind of spoken about was just, you know,

that you have to earn it. That if I wanted something, I had to, I had to make the money for it. Things were not just purchased for me just because I wanted them. I had to earn everything. So we had chores. I had to mow the lawn. I had to do dishes two nights a week. I had to make dinner once I was capable of using the stove twice a week. So we definitely, you know, my parents were like, everything you want has to be earned. And that was sort of my money education. And spoiler alert, your brother, Yuri, later became your business partner. Was that a partnership that started when you guys were young? Like when your parents were enforcing tours, did you and your brother band together? We didn't band together when they were strict. What he did as a savvy businessman is he, long story short, when I was five, my brothers

stormed into my room on the eve before kindergarten, scared the shit out of me. And from then on, I had to sleep with someone. So I slept with my parents until it ruined their sex life. And then they made me sleep with my brothers. So my brother, the businessman who scared me in the first place was like, actually, if you want to sleep in my room with me, you have to take my dish night. You have to take my lawn mowing days. I then had like three dish nights and lawn mowing to do in order to earn my quote unquote nights where I would sleep on his floor. I just want to hug little Rebecca. So that's Yuri. And okay. He's obviously an entrepreneur from the womb. It sounds like, but when you ultimately needed money for the

company, your parents said no, but he said yes, asterisk. Like how did that happen? He said yes, but with a lot of questions. You know, I didn't have two bank accounts. I didn't have a tax ID. I didn't have an LLC. I had nothing. I just had my name and a checking account that I could barely live off of. And so, you know, he was like, I'll loan you the $2,000, but you got to get X, Y, and Z done this week. Okay, next. Pay me back. And then when you need it again, I'll loan you more.

So he definitely loaned the money, took it back, and he could then begin to see that there was serious growth occurring because I kept coming back with more orders. I kept coming back with more requests. And that's when he wanted to make something formal and make sure that what he was funding was something that was gonna pay him back minimally, but then give him, you know, hopefully a platform to one day make money.

So he wasn't just helping his sister. I think he was helping, but he was definitely, you know, he's an opportunist and he's invested in a lot of startups and seen great success from them. So I think he, he could see that this might be something. I just, it was all very overwhelming, but we did it. And we're still partners today after 15 years. So working together was never the original goal, right? You just wanted some cash.

I needed a loan and I needed some cash and I knew that I didn't know the business. So when I can, when I could see that he did, I could focus on immediate growth. So that was what I focused on was, okay, I can, I can work on design. I can work on the marketing, the PR, all that, and he can run the business. And so while I say you need to learn all this stuff in those early years, I was able to depend on his skillset, which I didn't have to build the business, but I should have at the same time been learning all that on the side. So it wasn't until years later when I decided to focus on it that I became like, you know, more well-versed in how the business would work. Did you want to raise money from outside investors or

you just didn't even know that was an option? You know, it wasn't an option then. It wasn't in the cultural zeitgeist at all that that's what you did. So we didn't do it. And, you know, my brother had a very firm idea that like, we don't want to raise until we absolutely have to, because once you do that, you're beholden to investors. You have to, you know, make certain benchmarks and we want to have control of the company as long as we can. So even when it was like feeling like I was choking on stress and pressure to raise money because we just didn't have enough to grow, he was like, we're holding out until like, we're going to ring every drop out of this company before we, we sell any part of it. And I, and I also share that with

people. Like we see what's being marketed to us is that everyone needs to raise money. It's like this halo effect of the shark tank world, right? Like, oh, I'm just going to start a company. I'm going to ask Mark Cuban or whoever for money. And that's how it's going to happen. Were you pissed back then? Because even though it wasn't part of the zeitgeist, I'm sure you would have been like, yo, this would be much easier. In hindsight, you're probably really thankful though. In hindsight, I'm definitely thankful. It was really hard to get through those times. But when I talk to entrepreneurs and business owners, sometimes I'm like, why do you want to raise? You have an e-commerce site. You're not, you're not doing anything groundbreaking. You're not a tech

company with some sort of innovation. You're selling clothing online. Why do you need to raise money? Sell the damn clothing and make a profit. So I think, you know, we should, people should just be more careful about what they're raising and why. And do you want to now have a quarterly board meeting where people tell you to shut certain businesses down or when it's right to sell the company? Do you want that stress? And more often than not, and nothing against men, your board members are going to be men. And do they understand your business in the way that you might? Totally. I think people don't realize when they're starting out that they want to be their own boss, but they also want to raise money. So that means they're going to have a boss.

You're going to have a boss. You don't, these people don't lend you money and just say, go have fun. We'll see you in seven years when you're ready to give us our money back. It does not work that way. When did you guys realize that you had something that was going to be really successful? When I didn't have to check my bank account when I left the house to see if I could afford to go out for dinner. How's that? I love it. When we started to see the numbers really like more than double. So it went from, you know, zero to 25,000 to a hundred thousand to 250 to 500,000 in orders. And you could just see like, oh, this thing is

starting to go. And then it quickly hit a million. And then we had this, they weren't correct, but our bank was like, if you can hit 5 million, then you'll be profitable and you'll be able to operate on your own without needing all this cash. And I just remember I drew a thermometer. My colleague in my office said, that looks like a penis, not a thermometer. And I was like, it doesn't matter what it looks like. We just have to hit 5 million and the stress can go away. And I've never been more wrong. But that was kind of when we began to see things really start to go. Why were you wrong? Because 5 million was in revenue and that didn't mean profits? Correct. They said it would and it just didn't because A, we were growing

really fast. And so there were no profits. Everything was going back into by future seasons of leather, of manufacturing deposits. We were a new company, so we didn't really have credit with most people, which people forget about. So we had to do deposits. We had to hire more people, which came with a price tag. So all that sort of took any profit and just lit it on fire. Why is that? Because I think there is this misconception that your name is everywhere, you have all this money. Is it just the simple misconception that revenue or sales equals what's in your bank account? I think there's an assumption when people read numbers that if you're doing a hundred billion in sales, that you have a hundred million dollars in your bank account, or that

you can just live a life of whatever you want. And don't get me wrong. I live a comfortable life, but it's nowhere near what people think it would be. You know, I'll never forget when I was checking someone out at a sample sale several years ago, the guy didn't know I was me taking his money and running his credit card. He's like, must be nice. She's making all this cash. And I was like, I'm married, living in an apartment with roommates who I charge more so that it can offset my rent because I don't even make enough to have this

apartment. And I wanted to scream because there was this appearance that all the money from the sample sale somehow was going to end up in my personal bank account. Correct me if I'm wrong, but prioritization of what you're spending money on is really a challenge. And you were quoted as saying that as it relates to your business, but it sounds like that relates to everyday life as well. Like how do you prioritize the things you're spending on? So something that was really helpful that my husband and I did is we sat down and we made a list, a monthly list of everything we spend money on without a budget. Like when we're not like, when we're just like, put it on the card, put it on the card.

And then we said, okay, what is realistic with what he makes and what I make and who is taking what? So we just divided it almost straight down the middle. And then we at least know what we're responsible for spending. And if we go over budget, each one of us, that's kind of on us. And so I think having that guide rail of, okay, groceries cost X. If we want to have fun night out, here's a pad. If, you know, mortgage is Y. And so you have a very clear picture monthly of the bare minimum. And if there's extra, awesome. And then we try and do, you know, sometimes if we're smart, we'll set aside money for vacations, which we didn't have to do this year at all. But I think just make that monthly statement of like, this is everything I spend. And can you afford to? And if you can't, what do you start cutting until you can?

Can you guys talk about that? Because it's not often that I hear couples say that they are due for a financial talk because a lot of couples just don't address it at all. And then it bubbles up. Do money conversations get awkward or you guys are cool just talking about anything? No, they can get awkward, especially during the pandemic. He was throwing money on one of his cards. I was throwing money on mine.

And then one day I added it up and I was like, oh shit, that's a lot of money. And I sort of assumed he hadn't been keeping up. And so, you know, we got into a fight and then he added it up and he had spent more than me. And I was like assumed he hadn't been keeping up. And so, you know, we got into a fight and then he added it up and he had spent more than me. And I was like, damn it, he's, ugh. So we try and have the money conversations. We're due for one now, but it's not easy.

Another summit, he calls it a summit. What would be the biggest financial advice you would give your former self? I think that I would have not had a credit card until I was absolutely certain I could pay it back without paying interest. That was a big mistake. I was 23 and it was a whopping $500, whatever. What's the term? That's how much I can. The credit limit. The credit limit. And then I went into default and yeah, that wasn't fun. And what did they do? Did you get a bill collector calling you? Yes. And then, and then

I got a check and I went to cash it and they said, we're going to take the money towards your debt. Cause it was at a bank that also my, my savings account, my checking account was in. And so then I had to pay it. And were you freaked out? Of course I was freaked out. I was like, wait, I actually needed the money that I just cashed my check to eat. And now, now I can't, I should have gone to a check cashing place and let, let the debt flow. I would have just being more savvy with how one can make money. Because the sad part about all this is, is if you want a CD or you have a savings account, it doesn't pay you anything. You're not even keeping up with inflation. That I do know. So then what can you safely invest in if

you don't have money to sort of lose in a stock market drop? And how do you do it? And I could be so much better at that. You're obviously such a woman's woman and you help empower so many coming up entrepreneurs and probably a lot in fashion. When they say to you, hey, Rebecca, I just want to make the clothes and make the patterns. I don't know what I'm talking about, by the way, in fashion stuff, you'll forget more than I will ever know. But that type of thing and not deal with the business stuff or I'll raise money or somebody else will handle that. What do you say to them? I say, sorry, you have to learn this stuff because you will get taken advantage of. You'll make wrong decisions. You might make bad hires. You might blow through all your cash that you're trying to raise unless you know the stuff. Doesn't mean you have to be an

expert, but you can't let someone else, who you hire, who you work with, pull the wool over your eyes. So you have to become well-versed in it, even if it's not native to you. Finance is not native to me. Spreadsheets are not native to me, but like we can learn this stuff and I'm still on the journey to learning. Okay. I could talk to you forever. Thanks, Rebecca. Thank you. It was good to see your beautiful face and thanks for having me. Rebecca. Thank you. It was good to see your beautiful face and thanks for having me. So many good nuggets from Rebecca today, but here is my favorite. Today's money tip you can take right to the bank. In business, if you're starting out, don't outsource any of your finance savvy to anyone, including a business advisor. I found that really interesting. Make sure you read up on

the financial rules yourself so that you can run your own show, no excuses. And also stop putting off your will because you need to do that. Put your big boy and big girl pants on. And when you do, make sure to add a floozy gloves. Money Rehab is a production of iHeart Media. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Catherine Law. Money Rehab is edited and engineered by Brandon Dickert with help from Josh Fisher. Executive producers are Mangesh Hatikader and Will Pearson. Huge thanks to the OG Money Rehab supervising producer, Michelle Lambs, for her pre-production and development work. And as always, thanks to you for finally investing in yourself

so that you can get it together and get it all. Money, money, money, money, money, money.