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James Reinhart

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54

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2021-05-06

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2021-05-06

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1. “All the things that my mom did where she would always give me the confidence that I could do anything, there were all these failures in my childhood and life, formative years. Every time that I would like mess up, she would just be the like during mom would be like, just get yourself back up. You're going to be good. You can kind of do anything you want. And I think if you're an entrepreneur, you always ask entrepreneurs like where resilience comes from. I don't think it comes necessarily from any one thing. But I think having somebody who no matter what always picks you back up, I think that's probably the kindest thing. And it's probably kindness over many moments in my life. That's probably the best thing.”

   2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

2. “Play in second hand. I was talking to some of the other day, like, if you think about the real acceleration in solar and electric batteries and things like that, it was when government started to create subsidies. We really want the fashion industry to stop the cycle that it's on and we want people to make better decisions. What's the role of government incentives to do that? So, you know, I'm spending a lot of time thinking about what that looks like over time. What's the carbon tax equivalent in the fashion industry? Once those fashion companies have to really internalize the fact that 70% of stuff ends up in a landfill, things will have to change.”

   2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

3. “I think about the future, like the best days for our country. I think they're ahead of us. I have an enormous sense of optimism about where we're headed. I mean, I took such great pride live images of Mars coming back. We can still do like amazing stuff. So I'm pretty inspired around where technology is taking us. There's going to be pitfalls and we're going to make mistakes and there'll be negative derivative outcomes of the progress in technology. You and I were talking about Starlink satellite internet, the ability to deliver internet all over the world to rural places that don't get it today. There's such incredible progress being made so many parts of life that I really do think the future is pretty bright. But I think it's going to require entrepreneurs and politicians and elected officials and work more collaboratively. And I think that's the rubber, right? I think that's the thing that I'm like, we need to get back to a more civil collaborative politics. I think government has a role to play.”

   2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

4. “All of us. And so part of the sabbatical when you came back is you did a little 15 minute slideshow QA with the team. We had people who went to the Great Barrier Reef, learned to scuba dive and like repair the Great Barrier Reef. Man, that is awesome. The last thing we did, which was very recent, which is the beginning of the year, we moved to a four-day work week, which I spent a lot of time thinking about. The management team spent a lot of time thinking about. We came to the decision that people do their best work when they're fresh and they're recharged. They're like fired up about coming into work. There's something about the three-day weekend we've all experienced it where having that extra day, you come back into the office and you're like, man, it was great to have Monday. It was great to have Friday. You're kind of ready to hit it hard again because you just had that extra day of recharge. So we're experimenting now. We're in the middle. It's a six month experiment. We'll kind of review it in June. So far, the feedback is really positive.”

   2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

5. “You kind of work from anywhere. You want to come into the office? Great. You want to stay at home? Great. You want to go to a cafe? Great. And I think that carried us pretty far around building this construct around Maker Days and meeting days. The other thing we added is we added an early sabbatical policy. Once you've been at Dredd for three years, you get two months sabbatical. We pay you. And the idea was we need people to constantly be refreshed and recharged. One of the things I loved about being a teacher when I was in my 20s was the summer's off. I got to travel. My wife and I got to travel. We did all kinds of like amazing stuff. And we came back to the school year and you're like fired up. And I thought, well, why is the business world? Why can't we have some similar construct? We built sabbaticals into Threadup. And the only thing we asked you on your sabbatical was that you didn't sit around and do nothing. You had to do something meaningful. Like go travel, go do something that gets the pistons firing in your brain, expands the universe.”

   2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

6. “That went so well over the next couple of years that a couple years later we were getting feedback from the company, we persistently were hearing, man, I am so productive on my Maker Day. Like I get so much done. I do my best work. If I just had more Maker Day time, I was like, well, we can solve that. So if that's the thing that boys want to do their best work, well, let's go to two maker days. So we moved to a schedule where Monday, Wednesday, Friday was in-person meetings at the office and Tuesday, Thursdays were maker days. And the switch on that was also for maker days is you didn't need to come into the office. You should go wherever like you do your best work. And some of that is the DNA of from me as the founder because when I was in college, I always do my best work in the coffee shops. I loved sitting in a coffee shop full of people writing or reading or studying or thinking. And that was always like my safe place to like get stuff done, do my best work. The idea of the maker days being like.”

   2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

7. “Another place for you to meet interesting and unique and different people. And I think not having that social communal space, I actually think is really bad for the body politics. I think just bad for the country. I think it's bad for us as citizens to not have places where we collaborate. It feels like a dystopian future when we're all just sitting at home reading our own news, reading our own news that gets delivered to us, talking to the same people in our circles. And so I just think it's another step breakdown. So I'm like not a big fan of the distributed forever workforce. Our culture, in the beginning, we really tried to be innovative around how do we help people do their best work. About five years ago, six years ago now, we started with a, let's create this thing.”

   2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

8. “How much time do we have? I have all sorts of things. When I think about why people work, why do we work? You zoom way up, you're like, well, what is the point? You start to think hard about like the type of culture that you want at the company, the type of people that you want. And I think the shared values of a workforce, of a culture at a company, are really, really important. And I think the commentary right now around the future of remote work and distributed workforces, I'm very much in the, we all need to go back to the office camp because I just think that atomization and dehumanization that happens when everybody's sitting alone at their houses, I think can be really destructive, especially with given the amount of time that people will spend at work sitting behind their computers. And I think in the short term, people will think it's fine. I think over the long term, I think it's just another way that breaks down the fabric that binds us together. I think the office is.”

   2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

9. “Cool, guys. Like, I don't have any pairs of their shoes. I love what they're doing, but I just signed up for their, I think it's called the Cyclone, or I can't even remember what it was, but it's like a shoe subscription. And the idea is that the shoe literally every single part of the shoe can be broken down, recycled, and made into a new shoe. And I think you're going to start to see things like that come to market in ways that I think will move us forward.”

   2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

10. “For recycled cotton, the math just doesn't work. Everything in these industries, it needs to be driven by like the fundamental economics. So my hope is that a lot of the innovation that's being done in recycling will help us get there. And I think the development of materials that are made to be recycled, I think Adidas was doing this very, very well of thinking about the full cycle of their products. I just signed up, you know, this company on, you know, the running company.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

11. “There already is a lot of great work being done in textile material recycling the same ways that we made tons of progress in recycling plastic, recycling glass and these types of things. I think fashion has been a little late to that game, but I think it's catching up. There's work being done by a number of companies to take any piece of clothing and break it down to its constituent parts, strip out the cotton and strip out the polyester and strip out the metal. So I think you're going to see real breakthroughs over the next few years around garment recycling. And I think the biggest challenge is we need to get to a point in the fashion industry where producing clothing from recyclable materials is the same cost or potentially lower than it is to produce it from new materials. Because I think the margins in the fashion industry writ large are not amazing. Every brand would love to be more sustainable, but they have to pay 25% more for organic cotton or 25% more.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

12. “Place. Okay, you're done with that thing. Let us take it back. Let's put it back online for somebody else to buy. And we can live in a better, more circular future.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

13. “Path is we make stuff, we sell it to you as best we can, we discount stuff we can't sell to you, you wear it, and then you put it in a landfill. That has been the path of the fashion industry for a very long time. What that means is that 70% of what people stop wearing and give away ends up in a landfill. 70%. It's just crazy. And the thing that I'm obsessed about is, okay, let's break that path. Let's go from, yeah, let's produce stuff. I think we should produce less. I don't think we need to produce as much stuff as we produce today, but let's produce stuff in a more sustainable way. Let's have brands sell it. Let's have them sell it in a way where the margins get better and not worse because of discounting and markdowns and everything else, which has crushed the fashion industry over the last 10 years. So let's stop doing that, let people wear it. And then when people are done wearing it, let's loop it back. And I think where Threatup sits in that is really in a powerful.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

14. “A mission driven company from the very beginning, there has to be a better way where my team spends a lot of time is what do we want the world to look like 10, 15, 20 years from now? And I think we want the fashion industry to continue on this much more sustainable circular path. I'm not sure that we can get the fashion brands of the world to produce stuff more sustainably, whether that means using less water or environmentally friendly dyes or the types of wool, the sustainable wool that they use. They're coming around to the idea that we need to start to treat these resources more carefully. And I think there's a lot of incredible work being done there, especially by great new emerging brands, Allbirds was a good example of Rothy's is a good example. Everlane is a good example. I think our job is to get the fashion industry off the linear path.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

15. “Gas emissions. It takes hundreds of gallons of water to produce a single t shirt. So I think we're in a world today where that's starting to become more visible to the consumer. So I think young people in particular have really shined a light on this. And I think the fast fashion world has been put on notice around this. And I use fast fashion not in the H&M Forever 21, Forever 21 who's filed for bankruptcy, not just them, but any manufacturer.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

16. “Bunch of steps in between covering 100 years of retail, but you get to the point where then it's really direct to consumer. Okay, now I'm going to cut out the middleman. I'm Everlane, and I'm going to go straight to the consumer. Now you're in a position today where you have this great flowering of direct-to-consumer brands. It's easier than ever, frankly, to start a brand, harder than ever, I think, to scale a brand given the competition. But what all of this has been incumbent upon is improvements in how clothing gets made. and the supply chains around the world, the cost to manufacture clothing pretty much has gone down every year for like 30 years. It's cheaper than ever to produce stuff. And the cost that that's having on the planet is meaningful. And I don't think consumers really appreciate how bad fashion is for the planet. Today it accounts for 8% of global greenhouse gas.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

17. “To retail, all of a sudden there's sort of this inventory that they can't sell because they bought wrong or something happened. So in the 80s, you actually see the rise of what I think has been the biggest structural change in retail ever, which is since the advent of the department store, which is the off price guys. TJ Max gets started in the mid-80s. They start small and they build this compelling store format of discount retail and off-price retail. Fast forward, and then you start to see in the early mid-2000s, 2006, you have the founding of guilt. It's hard to believe that's 15 years ago, but you have like guilt and rula flash sale companies, which were the rage for a while, which were, how do I take the off-price model and do that online through a flash sales format? And you kind of get through that evolution from department stores to branded retail, off price, flash sale.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

18. “Go back 100 years. The first department store, Fields in Chicago, and it was the first time that they were bringing this sort of mom and pop or individual atelier into a big department store. So it wasn't that you went to the bootmaker, the hat maker, or the shirt maker. You came to a place where you could get all of these things in one big department store like multi-floor experience. That really dominated the growth of retail for the next 50, 60, 70 years. And then you had the growth of individual branded retail, where example of that today would be the gap companies. You had Gap and Banana Republic and were relatively the same age, right? It was like the heyday of the 80s and the 90s, the khakis campaign. You had like a lot of these individual brands in what would be considered your store formats of the last 20, 25 years. And then what happens is the department stores and you have brands.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

19. “Are waypoints that's going to help us understand are we meeting those objectives such that we want to continue to fund that investment? That's probably closest to the sort of philosophical way that I think about it, which is around metered funding. We are definitely not a moonshot company. We don't bet the company on anything. We don't take flyers. We're constantly to use the Bezos phrase. I mean, we're constantly planning seedlings. We're constantly doing new things and seeing how they might generate good, strong outcomes. And then we watch how much money we're giving them. And are we really clear on the milestones and the feedback loops? I think Eric Rees in his book has, I think the phrase is, abandon or persevere point. Do we keep going with this notifications thing or is it time to be like, we tried it, probably should just keep doing what we were doing before?”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

20. “I don't know if you're familiar with Eric Reese's, not the lead starter, but the startup way, which is his second book. But in that, I think that book had some real influence on me because he started to talk about as your business grows up, you start to think about capital allocation and you start to think about innovation. How do you think about giving dollars to run experiments within the organization? And he talks a lot about metered funding. What does metered funding look like? The way we think about capital allocation these days is he's very much in a metered funding approach, which is, okay, I'm going to invest these dollars, this capital in, take an example, like in a new notifications platform for Threatup. Okay, well, it's like, okay, well, what are we going to do with it? Well, we're going to build a whole new system of notifications across push and email and on-site and physical mail and like a big platform to engage our customers. Okay, well, what's that kind of cost? What are the milestones?”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

21. “Think everything really came to a head in late 2018 where we were out to raise some money and we had a couple term sheets. They basically like got retraded at the end. And that was really hard because we had put so much time and effort. And still to this day, I really like those investors, but those deals basically fell through. And I remember being like, this might not work. We might run out of money, keep the coffers full to do the investments that you want to make. So I just remember that period being really, really hard at the end of 18. And we totally got through it and ultimately came out on the other side in 19 with a strong investor syndicate. But that kind of six month period in between where as a founder, you're like, has this all been for naught, that kind of, you know, that kind of thing? I definitely had some like dark days. But I think it's the resilience built up over the prior eight years where I was sort of like, all right, well, got to get up tomorrow, put your big boy pants on.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

22. “Literally, nothing gets us down. We relish the hard things. We put more chips on our shoulder every time. And I think that that resilience, you have to kind of live through it. I don't think it can be taught intellectually. You need to be resilient, Patrick. No, you either learn to be resilient or not. And you really don't know if you have that resilience and that staying power for the long term until you're like repeatedly tested, built the business out of the recession. It was really hard to raise money in 2010. But I think we're a better company for it.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

23. “Resilient company with really high conviction of where we're trying to go and what we're trying to build. Because I think there's that period, was it 15, 16, where that's when it really started where everybody was raising money and that trend has continued. And I think founders who start off where their series A has done at like a 40 million pre and they raise 10 million bucks. I don't think they know what it's like to really grind through that hardship. And I think our team having run through the grinder multiple times over the”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

24. “Just because she was a woman and a mom, she was just like a really savvy investor around where consumer trends were headed. So what's happened over the many years of fundraising is people, it's sort of a funny thing. I've spent time with a bunch of investors recently and they have this moment when I'm telling the story. Here's what we built and here's why it matters. And all of a sudden, like you can literally see their eyes light up. I get this. And they start to relate it to their experience of cleaning out their closet. And then a lot of these folks, investors now, you know, have kids, daughters who are shopping secondhand in ways that they never imagined. I love that comment from folks like, I mean, with investors and like, I totally get this. My daughter, like, she only shops at thrift shops. Okay. Well, how much would you like to invest? So it's really changed a lot in the last four or five years, but it was definitely challenging in the beginning. But I think it's made us today, I think, as I reflect back over the past 10 years. It's made us just a much more.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

25. “Look, it was super hard in the early days because this has changed a lot, not far enough yet, but certainly a lot more women investors today than there were 10 years ago. You can imagine what it's like to walk into a venture capital firm full of 40 and 50 year old men and tell them that you're selling used women's clothes on the internet for $15. A, they may not have ever bought used clothing before. So they have like no concept of that. And then B, to our unit economics conversation, it's like there's just this extended disbelief around like, well, how could this ever work? And then there's just like a lack of awareness around not just their personal behavior, but just how big the market is. And so it was really challenging. But what I have found over the years raising money in our first investor was from Trinity Ventures, Patricia Nakash, who now the chair of my board, a wonderful woman, she just sort of got it right away.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

26. “Every day. I always reminded the story from one of our customers who's a teacher, and I always remember this because I was a teacher before Threatup. She said, oh, I always check Threadup in between my periods, in between my classes. I have like five minutes and I know you guys are always listing new stuff every hour. I have my set of filters that I have set up and I just refresh and I add stuff to my cart all day long. That's the type of behavior that we see that drives engagement.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

27. “Or 40% of Gen Z and 40% of millennials have bought a secondhand piece of clothing item in the last year. Really a profound acceleration in interest. So I think there's a bunch of big tailwinds for us in the consumer market. As far as like engaging them, I think the thing that people love about coming to ThreadUp is there's always something new every day in your size and it's fun. You go to the website. We don't take ourselves too seriously. It's designed to be sort of a fun, direct slightly irreverent brand. But anytime a woman wants to find a new dress or a new pair of shoes or a sweater and you go to thread up, there are millions of items for you to browse every day where refreshing that catalog. If you think about the traditional retail environment that we compete against, they might change collections six or eight times a year or even like a fast fashion retailer might be 12 times a year or changing the assortment in the store.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

28. “These were not people who were shopping thrift offline and now had found ThreadUp. These were people who were shopping off price or shopping discount retail who now were like, oh, well, now I can just buy it secondhand and it's even cheaper and I feel good about it. So what's really evolved in our customer acquisition journey and our customer makeup is it used to be like the person who bought used and it was buying used and bringing them online and now it's people who had never bought used before but who really see the value proposition that sort of iteration happened in 2015-2016. And I think what's happened since is what you're seeing with young people, Gen Zs and millennials and their buying behaviors, their attention to climate change, conscious consumerism has just rapidly accelerated this such that you're seeing young people buying secondhand at pretty astonishing rates. It's something like half of Gen Z.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

29. “Second hand market, the thrift market was always bigger than people think. Every time I tell people, they recognize, oh yeah, there actually is a few thrift stores in my town and a few consignment stores in my town. And it turns out there are 25,000 thrifting consignment stores in the US. So that's a lot of stores. So there's a lot of volume offline going through secondhand. The way we've approached the buyer, I think in the beginning was how do we take the person who might be shopping secondhand offline and bring them online. It was very much the Netflix approach. Well, how do we take the guy out of Blockbuster, put him in our DVDs by mail system? So we had the same, you know, a lot of Netflix DNA at Threadup. We have a number of executives who were executives there. In the beginning, there was very much of the how do we get the buyer from offline to online? What evolved in 2015, 2016 through some of our survey work was”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

30. “Well, and I think we really rely on. I've been like obsessed from the very beginning around how do you build competitive advantage, sustainable competitive advantage over time. To your point about the hundred things is it's”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

31. “And it's whatever the design of that dress, if that comes in the door in one of our cleanout kits and we start to look at it, is there something we can do with using AI and using our camera technology to say, oh, we've already seen that reformation dress. And these are its characteristics and that helps us reduce all the rest of the inbound processing over time.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

32. “I think that's right. Yeah. And I think the time to prove out that you've got it right was variable on the process. Right now, we're actually transitioning to a next generation Photo Studio where even though we had automated a big part of the last Photo Studio, we had strong ROI and Fishing CapEx build. We had like a new breakthrough where we're now into like the next generation those photo studios and those lighting strategies. It's a constant evolution. But I think the first big step from manual to some level of automation tends to be the biggest one. But there is a continuous curve of how do we make this more automated. Right now we're working on photo matching technology that will allow us to take any garment and see have we ever seen that garment before? Because you know every item on thread ups of Snowflake where we've processed more than 100 million unique items. So we've seen a lot of product. So when we see that dress from Reformation”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

33. “Hard thing to prove, but our facility today in Atlanta, which is our newest, which is DC06, holds three and a half million items on hangars in dynamic storage. But imagine two plus or so football fields full of carousels and conveyors, then put two football fields on top and two football fields on top. And that gives you a sense of what the Atlanta facility looks like. And the one we're working on now is could be bigger than that one.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

34. “Us to take a photo and then cut that photo out of its background so that it looked just amazing online. That's where we were in San Leandro. And then we got the process to a point where it made some sense to start automating. We took probably three years or so running the business day in and day out, getting the process to a point where John and team and the board and I felt, oh, we should start to build some steel in this building and build some structure. We then started to automate a bunch of the processes in the facility because we felt like we really understood them. John's philosophy was consistent with everything that I'd ever been told, which is it's much easier to tell a person to do things differently than it is to tell a machine to do things differently. So when we got to our next facility, we started to build these carousel systems. So now today we run some of the largest carousel and conveyor systems in the world. We think the largest in the world, though that's a”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

35. “Taking photos. So then all of a sudden, we started to be able to take photos much faster, put stuff on Mannequin much faster. The problem with that was that then we were like destroying mannequins left and right because no mannequins that are built at the time were built to have thousands of photos taken on them every day. The mannequin is designed for this bespoke photo shoot. So then we had to like figure out how to make our own mannequins. And so we started working to develop our own mannequins. They were custom molds of fiberglass. build that were light that we could repaint when you're taking 10,000 photos on a day on a mannequin the mannequin starts to look a little worse for wear so how can we refinish the mannequins and i remember walking into the distribution center one day and it was like a mannequin graveyard we were throwing out so many mannequins it was like a horror film arms and bodies and heads everywhere and then we figured out like okay well how do we improve the lighting so we built new reflective lighting shields that allowed”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

36. “We migrated off the iPhone. We built custom stations around how we do photography. And then it was just John and his team, just their big brains, how do we disaggregate this whole process? Every single activity that we do in the value chain and how do we do it better? How do we save money? How do we do it faster? We just became obsessed with all the individual pieces in the value chain. And to give you an example, when we started using the iPhones taking the photos, we weren't taking any photos on mannequins at the time. Everything was a way flat photo. We got to take photos on mannequins because that's how women want to shop. They want to see it on a form. We started taking photos on a mannequin. And then John realized that process is slow. You have a person who is putting items on the mannequin, and then you have a different person taking a photo. We built a new process to essentially continuous flow.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

37. “We got started in our first facility in 2011, then into 2012. And this was way out of my comfort zone. We didn't know anything about ops in a classic way. What we did was we said, look, we need to find the smartest person we can find to help us solve this problem. So we went out and hired somebody named John Boris, still chief systems officer today. And John had spent seven years at Netflix helping build out their DVD business, building out their facilities. And prior between Netflix and when he came to Threadup, he was at SpaceX, actually working on replicating the rocket program. John had this incredible wealth of experience around how do you scale operations. In the beginning, it was John's show. Here's how we're going to build out the first facility, which was in California, right, close to our office in Saint Leandro, so we could be close to it. And it was 120,000 square feet, very, very manual.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

38. “Anywhere from probably 15% they spend on the platform to 25 or 30 over the years. Some people think like, oh, that should be higher. But one of the things that we've been really religious about is that we don't incentivize you to spend it on the platform. We don't say like, oh, we'll give you a 10% more, 20% more. Because I think it creates these unnatural platform lock-ins that make people feel like it's not really cash.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

39. “Your J-Crew cashmere sweater, you earn five dollars for it, and it goes into your threadup account. You're not going out to dinner on five bucks. What ends up happening is people just let those items sell and that money accumulate. So it's like a little slush fund. Women are like, I would just let it accumulate as my little like slush fund. And then I get to a point and I buy a new handbag. And the effect of that, obvious. All those dollars are sitting and working capital. The working capital is negative by a meaningful amount. That's kind of a secret weapon to the business. I think people tend to not appreciate how good the gross margins are, but also the negative working capital.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

40. “We run a business, the high 60s, low 70s gross margin. So from negative to 70, roughly. And the working capital piece of this is, yeah, so when people send us their stuff, we put it online and then it's all on consignment. We don't have to pay you until it sells. And the way it works, and we're very transparent with the seller around this, is you send us items, we sell your items, we then wait 14 days to make sure your items don't get returned. And then we just put the money in your account. We say, hey, We've sold you a J-crew cashmere sweater. We're just going to beat on J-Crew all during this podcast.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

41. “Holds a laundry basket worth of stuff. The average bag took 25 items in it. And so the idea was, well, if you could pile like a whole bunch of stuff in there, and Threadup would pick it up at your house, you know, it comes with a prepaid label. You don't need to take it anywhere. You don't need to do anything. All of a sudden, those 25 items might turn into 50, 7,500 bucks. And then you're like, oh, okay, the ROI on my time across 25 items makes a lot of sense. And so I think people started to be like, wow, historically, I've just given this stuff away and I found it annoying to do. Now Threadup sends me a bag with a prepaid label on it. I send it and then I just leave it wherever my mail gets picked. We even pick it up at your house. And people are like, well, this seems like pretty easy. So anyway, that's kind of how it got started. But it was all about stripping out the friction on the supply side.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

42. “Have a bike. You bought a bike for 800 bucks or 900 bucks. You don't use that bike anymore. You go to sell it on time Craigslist or something like that or eBay or even today Facebook marketplace. You can get like 200 bucks for that bike. It actually seems worth it to take a photo of your bike and be like it's a schwin from 2018 and it's got 12 gears and you can describe the bike because you're going to get 200 bucks for it. So if it takes you an hour to do all that, you're cool. Take that same analysis and do it for something you're going to sell for 12 bucks. You're like, oh, okay, well now this is big waste of my time because I value my time more than I value the return on this $12. What we identified was that for more expensive things, it makes sense to sell them on your own. But when you have individual units that are $12, $15, $20, the actual right organizing principle is to get rid of them in bulk. So when we invented the thread up cleanout kit, the thesis was.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

43. “Barry back there, it sucked. We had this great photo of this shoebox of Chargers, and people just running in there, plugging in iPhones, picking up a new iPhone. Ops innovation, how do we process the goods and then payouts? And then obviously we didn't know anything about pricing. We didn't know anything about sell-through. So maybe that J. Cruise weeder should have installed at $28 and not $25. So you get smarter about willingness to pay. That's the margin.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

44. “Retail $44.99 strike, you have to create all that data. Operations just got smarter and smarter about how we did this. My co-founder, Chris, probably one of the smartest guys I know. We built the whole operation in the beginning on the iPhone. 2011, 2012. We ran our whole first distribution center like 100,000 square feet on the iPhone and the iPod touch because the hardest thing at the time was getting photos of stuff on the internet without buying really expensive cameras and hardwiring everything in together. And Chris was like, well, why don't we just use the camera on the iPhone? We'll take pictures and we'll upload it and then we'll do some data on the iPod Touch and we'll connect that data in the back end. And that's like Chris and a couple of guys built in a weekend give you the image of how scrappy this was. We had all these iPod touches and all these iPhones and the hardest problem at the time was like keeping them all charged.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

45. “Well, how about if we give you a nine? And people were fine with that. Okay, you're still not getting rich. Well, what if we gave you six? We just started to tease out where was the value creation happening in the marketplace? What we started to really appreciate is that buyers were generating tremendous value because they were getting a cashmere sweater 25 bucks, like a brand name cashmere sweater for 25 bucks. And sellers were like, you've solved a really big problem for me. I now don't have a closet full of clothes I don't wear. I actually like opening my closet and finding things that I like and not all the crap that I don't like. So we just started to like really tweak the value proposition. And so that started to gradually improve the margins on the payout side. The second piece is we opened operations, we started processing the goods and we had, you know, there's no playbook for this. Everything is a snowflake. Everything's a single skew. There's no barcode on the shirt you're wearing. It's not as though you just scan something. You're like, oh, this is a banana republic button down.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

46. “Take this Jake Grew sweater somebody bought for $120, or I bought for $120 new cashmere sweater in a resale context, we would price it for $25. And in the beginning, we gave the customer $12 or $13 of that. We gave them half of what we were going to resell it for. And then it cost us $10 or $12 to process the item. Then it cost us a few bucks in overhead and logistics and things like that. You just run out of dollars. But then we had so much people sending us stuff. We could not get people to stop sending us stuff. We still can't get people to stop sending us stuff. What we realized is like, it's not really about the money. You're not going to get rich selling your used clothing. What people really wanted was they wanted convenience. They wanted this effortless way to do this annoying job in their life, which is I got a whole bunch of crap in my closet that I don't wear anymore. We started to change the payout rates that we would give people. So in that $25 sweater, where we used to give you $12 or $15.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

47. “In the beginning, I had this thesis around supply. So the idea was people send us their stuff, take my J Crew sweater, right? Which we don't do men's today, which of course the irony is not lost on me that we've not yet solved my problem.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

48. “Months to figure out that the real opportunity was not connecting buyers and sellers, but like a first principles approach to reinventing how people bought and sold secondhand. eBay was famously we don't touch stuff and i'll never forget because at the time i just kept telling anybody would listen i was like but would you rather be amazon or ebay amazon's approach was we'll touch stuff we'll do the really hard thing and that will put us on this new trajectory when we pivoted the business to really focusing on ingesting all that stuff the philosophy was man let's do the really hard thing they may not work If we get it to work, it's going to be massive. That was kind of the early days around thinking about low price goods and the work.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

49. “Obsessed with working that hard problem. And so we started with just like a classic marketplace. We just connected buyers and sellers, eBay style. It took about 18 months.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source

50. “Had this thesis from the very beginning that to build really big long term 25, 50 year businesses, you have to do incredibly hard things. Because I think if you do easy things, other people can come into your market and do easy things. The strategy of starting with low price goods is obviously like a big Amazon fan. I remember reading Bezos saying we started with books because if we could sell books on the internet for seven, eight, nine bucks, we could sell anything on the internet. And I was like, man, like if I could sell like $10 pieces of clothing and at the time we had just launched with kids, if I could sell $8 pieces of kids clothing on internet, like if I could figure out how to make that work, I could sell all kinds of stuff. I was obsessed with this idea of solving the hardest problem at the beginning and just getting conviction because if I had done that thing and I could get that going, it'd be very hard for people to compete with us. My co-founders, Chris and Oliver at the time, we were just.”

    2021-05-06 · Invest Like the Best · James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32] · IDENTIFIED FROM THE TRANSCRIPT · source