Lee: [00:00:03] Welcome to episode 77 of the Stairway to CEO podcast. I'm your host, Lee Greene, and today I spoke with Sid Gupta, the Co-Founder and CEO of Quince. By removing the middleman from the supply chain, Quince is the first M to C, Manufacturer to Consumer, online destination for quality first essentials, including apparel and fine jewelry to home decor and kitchenware. In this episode, Sid shares with us his entrepreneurial journey from growing up in the Bay Area, where he worked at Fry's Electronics, to joining at a consumer and retail M&A group after graduating from the University of Chicago, to creating Lolli and Popss into one of the largest independent confectionery chains in the US, with over 90 stores serving over five million customers annually to launch in Quince just three years ago. We talk about how he's grown the company to include over 60 factories, his perspective on the future of retail, and how Quince got its name and why it was originally called Last Brand. If you like what you're hearing on the Stairway to CEO podcast, don't forget to click Subscribe or text me. You can text me at 310.510.6044 to enter to win free products and get special discounts from some of your favorite brands. And they're my favorites, too. So shoot me a text and say hello or just tell me your favorite brand and I'll try to hook you up. I'm so excited to hear from you, and I hope you enjoy this episode.

Lee: [00:02:22] Sid, it's so awesome to see you again. We met, I mean, a while ago.

Sid: [00:02:26] I know, yeah, it's so good to see you, Lee. I mean, we must have... What did we meet at a conference like a couple of years ago now?

Lee: [00:02:33] Yeah, you were on that panel that I had at Retail Next. I think it was a CEO summit. You were on the panel.

Sid: [00:02:39] Oh, that's right. That's right. In Monterey, I think.

Lee: [00:02:42] Yeah, exactly.

Sid: [00:02:44] Yeah. Yeah, yeah.

Lee: [00:02:45] Back when people were hanging out.

Sid: [00:02:46] Had you left by then for Grin?

Lee: [00:02:50] That was when I was with Grin. I'm still there.

Sid: [00:02:52] You were. You had just left, right?

Lee: [00:02:54] Right.

Sid: [00:02:55] Yeah. Awesome. Amazing.

Lee: [00:02:57] I know. So it's great to see you. I'm so excited to hear you know more about your company, Quince, which I think was called something else when you were on stage with me at Retail Next.

Sid: [00:03:09] You know, when I was on stage, it was just in its early formation. It was called Last Brand, actually. {laughter}

Lee: [00:03:17] I knew the name was different.

Sid: [00:03:19] That's right, it was our OG name and customers quickly told us, like, "What do you mean it's the last brand? Is it the stuff that no one wanted? What's wrong with it?"

Lee: [00:03:30] Oh, {laughter} the left overs.

Sid: [00:03:31] And so you know that quickly convinced us that we better come up with a better name.

Lee: [00:03:38] How did you come up with Quince?

Sid: [00:03:42] Well, you know, there's the official story, which is, you know, we were thinking about names, and we like the word "Quintessentials" and, you know, Quince sells premium essentials a great price. And so we said, OK, well, what's a shortened version of quintessentials? And that's Quince.

Lee: [00:04:02] Mm hmm.

Sid: [00:04:03] But you know, off the record, we were eating at a sister restaurant to a 3 Michelin Star restaurant called Quince in SF, and we really love the name. And the restaurant we were eating at was not nearly as fancy, but quite good food. And so we said, "If it was good enough for a 3 Michelin Star restaurant, then it might be good enough for us." And so, you know, and also quince was like a fruit. It's like, I don't know if you've ever eaten a quince, but it's between a pear and apple.

Lee: [00:04:37] What? No, I didn't even know this is actually a food.

Sid: [00:04:40] Yeah. Like actually, most people eat quince as a jam. They like it as a jam.

Lee: [00:04:45] Really? Am I the only person who has never heard of this? It's a fruit.

Sid: [00:04:48] No, I mean, it's not big in the US. I think it's like a European thing, frankly.

Lee: [00:04:53] I am married to a German, so I feel like I have no excuse right now.

Sid: [00:04:57] You should ask him.

Lee: [00:04:59] Have you not told me about this quince fruit?

Sid: [00:05:02] Yeah, you should ask what he's been holding back.

Lee: [00:05:05] Why is he hiding this?

Sid: [00:05:07] Yeah, exactly. So it was a broad canvas of of anything we could fill in it. So anyway. [00:05:14] We liked the name. It was crisp. It was clean. And it represented a modernity about what we were trying to do. [00:05:23] So we really liked it.

Lee: [00:05:25] Very quince. Yeah, that's awesome. Well, I'm excited to hear about it. And but I think, you know, there's so much more to kind of cover here. So maybe you can just kind of start with a quick background where you're from, what was childhood like? Tell us more about you.

Sid: [00:05:41] Yeah. So I grew up in the Bay Area. I grew up in a small town. At least it was a small town called Fremont.

Lee: [00:05:48] Is the Bay Area small town? For some reason, that just doesn't go together. {laughter}

Sid: [00:05:53] You know what? I'll give you a funny story. So growing up in Fremont, there was vast amounts of farmland still in Fremont. And so I remember the house I moved into when I was five. If you looked out my backyard, it was on these hills were complete farms, people with horses and cows and everything. And of course, now that's all filled with houses. And so but it was really, you know, no one thinks about it, but Silicon Valley was just basically a bunch of orchards. You know, if you go back 50, 60 years ago, and so obviously a lot has changed. So, yeah, I grew up in Fremont, had a solidly middle class family and background. I think interest in business came early for me. I had parents who were entrepreneurs and grandparents who are entrepreneurs. And so it just kind of, you know, whether it was reading the newspaper in the morning and seeing my dad look at the stock tickers in the newspaper because back then, you know, they didn't have the internet. So you'd kind of look at the back pages of your business section, you get to see what the stocks were trading at or, you know, my mom was a realtor. And so growing up helping her build her business. She became quite a successful realtor and lugging open house signs and making photocopies.

Lee: [00:07:25] Handing out cookies when they walk in.

Sid: [00:07:27] Exactly. Yeah, exactly whatever you had to do to to sell the house. Yeah.

Lee: [00:07:33] The bones are really good here. We swear.

Sid: [00:07:35] The bones are really good. That's right.

Lee: [00:07:38] That's awesome. So you kind of knew early on because of the influence of your family that maybe entrepreneurship was something you'd want to pursue?

Sid: [00:07:46] Yeah, I mean, it was also very prevalent in kind of the Indian community in the Bay Area. A lot of our family friends went on to start, in retrospect, quite successful technology companies. And so it was a very common thing for folks to do in the community in which I grew up. So not something unusual at all and something frankly encouraged.

Lee: [00:08:14] Interesting. That's cool. So what happened from there? I know you got your MBA from Stanford and studied economics at University of Chicago. So what were some of your first kind of jobs early on in the school days?

Sid: [00:08:29] You mean at school or after I finished school?

Lee: [00:08:32] Maybe during school? Like, did you have internships? What were some of the kind of the smaller, maybe jobs you were working early on?

Sid: [00:08:39] Yeah, I'm trying to think about what. So I'll tell you about my first job, which will crack people up. My first job was in retail. It was at Fry's Electronics.

Lee: [00:08:49] Nice.

Sid: [00:08:49] Which the folks who don't know Fry's, it is a legend, but it is the predecessor to Circuit City and I think Best Buy, in many ways. But on a much grander scale.

Lee: [00:09:00] Are they like the OG of like electronic stores because they certainly look like it?

Sid: [00:09:04] For sure.

Lee: [00:09:05] Yeah, there's one here where I am.

Sid: [00:09:07] I remember growing up and so obviously we grew up in Silicon Valley, so computers were a thing. So if you wanted a computer, this is like before Dell, you know, you'd basically like, build your own. So you could go to Fry's and you could buy the motherboard and you could buy the fan and you could buy the CPU and you can buy the RAM and you could just assemble your own PC. Or you could buy what was called a clone, basically, which is like, you know, kind of white label computer, if you wanted. Video card... You could just assemble it. And so these places became these clearinghouses for like all the components to build your own stuff. It's kind of like a hobby for a lot of people.

Lee: [00:09:46] That's crazy. Not in Delaware, that was not happening in Delaware. If it was, I did not know where that was happening in the world.

Sid: [00:09:53] {laughter} Yeah, it's crazy how big that was. So anyways, my first job was at Fry's Electronics. I think I got paid like $4.75 an hour. And I was a sales associate in the software department

Lee: [00:10:08] Were you selling Gateway computers?

Sid: [00:10:10] I was not selling Gateway computers.

Lee: [00:10:11] Remember those? They had the cow print on...

Sid: [00:10:14] The cow, yeah. No, that was about the appropriate time, though, and which I was at Fry's. And I have a fond memory in that I didn't agree with the way the software was organized, meaning like they had organized it a certain way. You know, the higher ups and I thought it was a stupid idea. So I went on my own accord and reorganized all the titles of the software, and quickly I got the call that I was out of line and I had to go back and put it back. {laughter} And then after that, I was like, "This job is not for me. I'm not qualified to do this."

Lee: [00:10:51] That's hilarious. Too much thinking outside the box.

Sid: [00:10:53] Too much being an entrepreneur. It wasn't good. It wasn't encouraged.

Lee: [00:10:58] That's funny. Fry's Electronics. I mean, I literally just learned about that from living here. I'm in Woodland Hills in LA. And yeah, yeah, they have a store. It's empty all the time and it's massive, but it's a very like crazy looking store in there. They have like...

Sid: [00:11:14] Everything. {laughter}

Lee: [00:11:15] Yeah, it's huge.

Sid: [00:11:17] Huge.

Lee: [00:11:18] So interesting. So yeah, I guess after you graduated, what was your first job from there?

Sid: [00:11:23] So, you know, kind of surprise surprise. I mean, I think if you graduated in 2002, which was actually a bit of a recession, from the University o Chicago, they had a pretty good program into banking and consulting. And I always like to say I wasn't smart enough to get a job in the consulting firm. So I took a banking job and I ended up working at Solomon Smith Barney, which actually got acquired by Citigroup. And that's actually where I joined the consumer and retail group. And so I spent a couple years doing consumer and retail M&A, you know, pitching equity offerings, although there wasn't much going on at that time and place, debt offerings, those kinds of things. It was really a kind of a boot camp for finance and a little bit of accounting and a little bit of strategy as well.

Lee: [00:12:24] Interesting, so you were in finance for a little bit. You were kind of probably getting a pretty good view or perspective into these different brands, consumer, retail. How did you go from that to being the Founder and starting Lolli and Pops? Which is such a cool... I love that company, and it's such a cool store.

Sid: [00:12:45] Oh, thank you. Yeah, I mean, it was a complete accident. {laughter}

Lee: [00:12:50] Of course.

Sid: [00:12:52] After I finished a stint in banking, I went to work in private equity. I worked at a firm called Catterton Partners, which is now called L Catterton, and ththey really have become the premier, I think, consumer and retail shop and have done a lot of great things, I think. I had a nice privilege to work there and spend time with a lot of talented people there who are running this place now, and [00:13:15] I enjoyed investing quite a bit, I must admit, but what I was always really frustrated with was, you know, you couldn't actually make the change happen. You were kind of, you know, as an investor, you kind of influence the management team, but your job is not to actually run the company. And I always just wanted to run the company. [00:13:37]

Lee: [00:13:37] You're like, "Let me in on that. I'm coming in."

Sid: [00:13:40] Yeah, let me do it. You know, I remember I was sitting in a board meeting and I'll never forget this. And I was thinking to myself... I was telling the management team I was like, "All your margins by like five percent of this business is amazing." And they looked at me like, you know, I was a 25 year old idiot that I was and said, "Well, you know, you come and do that because it's really hard to improve gross margins five percent."

Lee: [00:14:02] That's hilarious.

Sid: [00:14:03] And so I figured I needed to go learn a thing or two about business. As an aside, they did figure out how to pick the five percent up margin, and then the business became very successful as a result. So I will say I was directionally accurate, even though I didn't know how to do it. So I left. I wasn't sure what to do. I didn't have a particularly great technology startup idea or anything. I just wanted to go get some operational experience, and I decided to apply my investing background and basically buy an existing company. And so I looked for lots of different things to invest in, and I had a methodology and the way I was thinking about buying a company, and I ended up buying a distressed chain of 11 candy stores for basically the sum total of my life savings, which is like 50 grand at the time.

Lee: [00:14:58] Wait. How does it even work? Like, how did you find this company and what made you decide I'm just going to buy something that already exists instead of starting something from scratch? Like, where did that come from, that idea?

Sid: [00:15:09] Well, I think, you know, I know a lot of this chat is about  how do you start as an entrepreneur? And [00:15:16] I think one of the things that I find in retrospect that's so important is having an authenticity to the problem. And a lot of people try to start companies, and some do that don't understand the problem well, but they figure it out and they're successful. But most really have to understand a problem really well. And I don't know that I had a problem that I really understood well to kind of start a company from scratch. [00:15:38] And so I said, "Ok, let me go and see if I can buy a company that's operating." And then you're like, Well, where do you get the money to do that? And you know, you convince some people who do have money to to lend it to you, go buy this or invest in you to buy it. In this case, I didn't need that because I bought a truly broken business. I mean, in all intents and purposes, you can't imagine the lights were hanging down. {laughter}

Lee: [00:16:01] Really? What else was broken? Tell us about it. So there's 11 stores you're saying, and they were all busted up. I mean, what do you mean?

Sid: [00:16:08] Busted up, poorly run, the employees were stealing. It was just like a complete disaster.

Lee: [00:16:13] And these were candy stores, they were just selling like chocolate...

Sid: [00:16:17] Yeah, chocolate and gummy bears and all this stuff in malls, basically. And so the reason I got attracted to the business was that, look, candy has really high margins. We had steeper percent plus high margins. We had a monopoly in the malls, so the malls wouldn't put another candy store there. So you had basically this captive audience and there's no fashion to candy. I didn't have to come up with the next greatest candy. Like the same gummy bears was attractive last year as it is this year. And so that, you know, for someone who didn't know anything about the business, that made it attractive. And then, I was able to buy it for less than the value of the inventory.

Lee: [00:16:55] But why wasn't it working?

Sid: [00:16:56] So the person who was running these 11 stores didn't, I think, have the experience or the know how to manage multi-unit retail, which is actually quite a challenging business regardless. Even though it's not rocket science to operate a single candy store. When you start to add scale and you add multiple units, it actually is very challenging as a business because to think about it is actually 11 small businesses that you're actually operating that are sub scale.

Lee: [00:17:28] Yeah. And so you come in and you're like, "Hey, I can do it. I've never done it, but I can do it."

Sid: [00:17:33] {laughter} I can figure it out.

Lee: [00:17:35] You're like, "This guy can't do it, I'll do it."

Sid: [00:17:37] I didn't have much to lose, Lee. You know? {laughter} So I basically, if I hadn't bought it, I'm sure that thing would have just gone out of business. So I ended up buying this thing. And like I remember the first month that I bought it, I didn't sleep a single day, basically because I was just at night, I would just be up in panic. Like, I don't know anything, you know? And like anything you start learning it. And you know, I was the store manager. I was the district manager. I was the buyer of the candy. I was the planner. I was the janitor, and you just kind of you just learn by doing. And I think  [00:18:15]I actually credit that time kind of very intensely for learning so much about how retail operation actually works and all the components. I think I had one of the most unique experiences of most people in understanding at a micro scale first [00:18:31] how all the components of a retailer works, where the bodies are buried, what are the levels...?

Lee: [00:18:38] You have to dig so deep to fix something, right? I mean, one thing is building it from scratch, but another is going in and just layer by layer, like unraveling the onion to get to the bottom of why things aren't working and how to make it better. And it's a whole process, and it sounds really intense. But I mean, with these 11 different stores, I mean, how do you be at 11 different places at once? Like, how did you kind of, you know, take on all of those stores?

Sid: [00:19:03] Yeah, I mean, like anything you you couldn't. And so you had to start to build the workings of a team. And you know, I will say, you know, my hat's off to the women and men who, you know, kind of joined this ragtag set of stores and were willing to kind of roll up their sleeves. And I would say people who work in physical retail are the hardest working people I've met. They have a lot of grit, and they stand on their feet for 12 or 14 hours a day. It's very physical job and thereafter it and day after day and retail never sleeps. And so I Just have a lot of respect for that. The short answer is we actually fixed the business pretty quickly with a lot of just kind of simple blocking and tackling.

Lee: [00:19:49] What you mean by that? Blocking and tackling? That's a very broad statement. So what are some of the specific things that you found wrong that you could fix fairly quickly or that you did that made a big deal?

Sid: [00:20:00] Yeah. I mean, first was just like the team. Who is running the stores, who had they hired, you know, what were their goals like setting simple KPIs? A second thing was just filling the stores with the product. You know, they were fairly run dry at that point. So I think that was like having something to sell was pretty 101, fixing the lights and making sure the experience was passable for the customer. I mean, there's a laundry list. There's nothing sexy, there's no silver bullet. There was like a hundred of these things, which I find in retail in general. Generally, there's no silver bullet. It's just a lot of things you have to execute. And we, you know, we doubled sales in 12 months, the first 12 months. And so, you know, the business was solidly cash flow positive and and off to a good start within the first year. I will say that my parents were horrified that I had thrown away my private equity career to run 11 candy stores.

Lee: [00:20:55] Right, and you took your whole all your savings into it too, right?

Sid: [00:20:59] Yeah, exactly. So I had one year left on my GMAT, which I had taken while I was at private equity, and I applied a couple of places and was lucky to get back in here in the Bay Area where I grew up. You know, at the GSB and so that's what brought me back to San Francisco. And so, you know, here I was in Palo Alto, still running these 11 stores. And then that's where the idea for Lolli and Pops came. Actually, I really thought that retail was moving in an experiential direction and that, you know, that was really the forefront of physical retail. And so we built these beautiful, immersive stores. I don't know if you've ever been to a Lolli and Popss, but there are an incredible kind of experience.

Lee: [00:21:42] They are. They're beautiful.

Sid: [00:21:42] Yeah, there's sensory kind of amazing places. And so we actually worked... I worked on that while I was in business school, my first year and launched it my second year. It became a huge hit right out of the gate. Ended up raising, you know, kind of three rounds of capital and growing that business from one store to almost a hundred by the time I left. And so it was quite a journey. That's probably a separate podcast.

Lee: [00:22:09] Yeah, that's amazing. When you look back, what did you learn the hard way in building Lolli and Pops? What was the hardest thing, one of the hard lessons learned from that experience?

Sid: [00:22:25] Yeah. Lee, I mean, I think there's so many lessons to take from that journey. I think the first lesson that I have for folks is that, you know, rising tides lift all boats, right? And if you are in a category or an industry where that's not the case, no matter how well you execute, it's really hard. And if I think about our performance over the six years that we launched Lolli and Pops, we grew one hundred percent year on year and we had 14 out of 16 positive same store sales quarters, and that's a very, very hard feat to do. But the problem was is that every year there was less foot traffic in the mall. And so, you know, when you're serving five million guests a year and you have a small percentage that doesn't come back because they're shopping online, it's really hard to continue to grow. And so I think the biggest lesson that I take away is that, you know, even if you find yourself in a high growth category, even if you execute like crap, you're going to do all right. But like if you are in a category which just has a lot of headwind, no matter how well you execute, you can be the best executed on the planet. It won't matter because you just can't fight the industry. And so I think that's like if you were to ask me, "What was the one takeaway?" That was it. And really, that was actually the foundation seeds for why Quince was so interesting to me. And [00:23:56] I think we are in the still very early stages of eCommerce. I think eCommerce is 15 to 20 percent of all retail. It's my belief that we will get to 50 percent of all retail is online. And, you know, that's trillions of dollars that are going to go offline to online and someone's got to be there to catch it. [00:24:15] And so I think that, you know, every year, more people are going to shop online and eventually less people are going to go to the mall. And that's a reality.

Lee: [00:24:25] What do you think is going to happen in malls or what should happen to malls?

Sid: [00:24:30] So I've become very good friends with many mall operators because we built a lot of stores.

Lee: [00:24:36] Just pretend they're not listening. It's OK. Just kidding.

Sid: [00:24:38] Yeah, yeah, no. I mean, know. There's no secret here. They know. I think they're in a secular decline. And that's I think there are places that are going to outperform, meaning that they are experiences in and of themselves that will survive. But the vast majority of them will have to be repurposed into other things that you will want and they'll have to... I was in many ways telling them from an early time that they would have to be vertically integrated, that they would go and buy the brands, which you're seeing now because they needed a competitive weapon. And they also needed to make kind of an exclusive piece to their mall because if every mall has the same set of stores, what's to get you in the morning to go there? You know, you're just not going to visit.

Lee: [00:25:26] Right.

Sid: [00:25:26] And so it's got to have some kind of attraction to you. And so I think you'll see them continue to vertically integrate and buy the retailers within their centers, which is a competitive advantage for them. And I think you'll see them repurpose into other things besides retail. But I think it's a challenging road.

Lee: [00:25:46] Yes, it definitely is. I wonder, too, about commercial real estate. You know, you see all these tall buildings that are empty right now with COVID and all of this stuff going on. And it's like, maybe they'll just all be housing, you know? Maybe commercial will become residential. Maybe malls will become schools.

Sid: [00:26:03] Yeah, we certainly need it here in the Bay Area. We need more housing, so it wouldn't surprise me. Yeah, I think office real estate is potentially challenged as well. So, you know, let's see if we all come back to work.

Lee: [00:26:18] So with Quince, I know that you've kind of developed this new kind of MTC instead of DTC model, which at first I was like, what's the difference between, you know, is this just a word he's making up now? It's like MTC, but now I get it. It's really, truly from the manufacturer to the consumer, and you're really taking out these other costs of getting it, what into the warehouse? Can you kind of talk through what that means and the reduction of costs that you've been seeing by doing it this way?

Sid: [00:26:46] Oh, Lee, you got it. You should be preaching the MTC gospel here. But I think it's the future of retail. And so, just for the listeners here, MTC stands for manufacturer to customer direct. We think it's the next phase of commerce. What it is is really, you know, and what Quince is just so listeners know is, we are a curated marketplace of factories. And what we do is we go to the very best factories in the world who already produce for the leading brands, and we ship goods directly from the factory floor to your doorstep. And by doing so, we cut out so many little costs that add up and some big costs. So, you know, obviously we get rid of the cost of having stores. And, Lee, many DTC companies now have stores. They said they weren't going to. So, you know, we got rid of the cost of the store. We got rid of the cost of the distribution center, you know, here, near your house, which adds cost to the goods. We got rid of kind of all the port fees and agents in the middle. There are all these people who kind of are taking a cut from most people who don't know how to get to the directly to the factory. So in many ways, it was a let me just cut out as many steps between the person who makes something, the person who buys something. Kind of old school. I mean, if you think about it, like when you think back 2000 years ago, you didn't go to a mall to buy stuff, you went to the cobbler to pick your shoes, right? You went to the person who actually makes the stuff. And so it's kind of back to the future, so to speak. But actually the more interesting and more transformative piece of the MTC supply chain resides in the ability to manage overstock and under stock in a very impressive way. And so I listened to a podcast recently. I can't remember which one which said something like 30 percent of all apparel that's manufactured is never sold.

Lee: [00:28:46] Really?

Sid: [00:28:48] Yeah, it's nuts. So they just literally burn this stuff.

Lee: [00:28:50] Yeah. Well, I've heard of that. Like, you know, brands burning stuff because, oh, God forbid you wear last season's stuff or just get it on a discount, you know?

Sid: [00:28:58] That's exactly right. Literally, like think about the environmental damage, about the damage to their margins. That's why they have to charge you like eight to ten times the value of the good. What people don't realize is the stuff you buy from most retailers, they mark it up like eight times, you know? And so the intrinsic value of these goods isn't actually that much. It's just by the time it goes through this whole supply chain, I just kind of walked through, it's a lot. So [00:29:22] the magic in Quince is that instead of keeping goods close to you as a customer, we keep it close to the source of production. And the value of that is that I can create a real time signal from the time something sells to the factory. Versus [00:29:38] with a typical retailer, something will sell in the store, it'll take time for that information to filter back to their corporate office, and it'll take time for that to filter through their agents and back to the factory. And so there's a huge signal delay.

Lee: [00:29:53] But doesn't that make it longer time for the customer to receive the product, like if these factories are abroad and I'm ordering like a sweater, isn't that going to mean that it's going to take like two weeks to get it to me or whatever the time frame is?

Sid: [00:30:06] That's the magic of Quince. Like we have figured out, ninety eight percent of packages arrive in two to five days.

Lee: [00:30:12] How is that possible? Are you just overnighting everything?

Sid: [00:30:15] We just figured it out. It's incredible.

Lee: [00:30:18] You have a Quince plane, basically.

Sid: [00:30:20] We need to. We need a Quince Air Force. And so, you know, if everyone who listens to this podcast goes and buys something from Quince, we can get a Quincy Air Force. But I think we figured out how to ship a cashmere sweater from Hong Kong to LA for six or seven bucks and do that in a short amount of time.

Lee: [00:30:42] So you're not going to spill the beans right now and tell us how you do that.

Sid: [00:30:46] I would say I'm happy to spill the beans. It's just it's hard. It took us two and a half years to figure out all the nuances, the logistics, the trade details, the tax implications to build all the technology. I mean, half the company is engineering, which is very different than a typical DTC company.  [00:31:03]We're a company full of engineers, and so building all the tech to optimize for cost and to deliver things at an incredible price was quite an undertaking. Finding the factory was an undertaking, you know, so all these things are actually challenging. So the magic here is we're not producing on demand, but we're producing near just in time, which allows us to get scale and match supply and demand really tightly. [00:31:31] And so, you know, the example I love to give is a pick your retailer ABC will, let's say they want to sell one hundred thousand sweaters this fall. What they would do is they'd place an order in March. So you go to the factory or they go to their agents and say, "Look, I want one hundred thousand sweaters. And based on last year, this is how many red sweaters and how many blue sweaters I want." And so the factory would get to work, they'd produce it mid-July. They'd be ready. They put it on a boat. Obviously, we've got a big pile up right now.

Lee: [00:31:59] I know. I was just reading about that with even just LA. I think there's like over 40 ships just hanging out.

Sid: [00:32:06] It's like Armageddon.

Lee: [00:32:07] That's crazy.

Sid: [00:32:08] Yeah, it's just terrible. But so these products would show up in the store kind of mid-August. And then at the end of the season, you'd have too many red sweaters and not enough blue. Right? But now look at what Quince is doing is every week or every two weeks, we're ordering 10,000 sweaters. And so [00:32:27] we're able to, in real time match the supply and demand. And for us, our goods don't have to get produced, put on a boat, come all the way here, get off in DC, go to a store. That's such a long process. In most retailers it takes two to six months to actually have goods that are for sale. And we can literally make goods salable the minute it comes off the assembly line. So, you know, typically one to two weeks, we can have goods ready to sell. And so that's a huge competitive advantage. A [00:32:56]nd so we think firmly that all non-urgent goods, you know, anything that's outside of like grocery or pharmaceutical or drugstore type of things will potentially come from the factory. And what's great, Lee, is we'd love to actually offer our technology and our know how to other DTC brands. We think we can power this direct ship for them. You know, we can power our supply chain. We've got massive scale in some of these categories. and you know, not only could we give give most DTC folks better sourcing and costs, but we can enable the same MTC for them so they don't have to build it themselves because it's a long and arduous and expensive process to do it.

Lee: [00:33:44] My question is real quick. How did you turn these factories...? How many factories are we talking first? And then second, how did you turn these factories into distribution centers? Essentially like it's a totally it's a new business for them, right? If they weren't doing this before which I assume they were not, how did you turn them into this place that ships with your boxes directly to? I mean, do you own these factories? Like, how did that work?

Sid: [00:34:07] We don't own any factories. We have today about 60 factories on the platform and growing very aggressively. We're very picky about who gets onto the platform. You know, not only do they have to treat workers well, they have to not destroy the environment in the process of making stuff. They have to produce for the best brands and have a proven track record of producing quality products. All those things. We are incredibly picky about who gets onto the platform. The platforms themselves... I mean, I'm sorry the factories themselves. Why did they decide to get on Quince and adopt these new practices that they've never had to before? Well, the world is changing a lot, you know? So the first thing is their big customers are dying. Like if you think about like traditional department stores, they're suffering. And so all of a sudden now they're faced with, "What do I do?" So obviously they can go to pick your DTC company, but most of those are small and don't have very much scale. They could sell on Amazon, but I don't know if you've shopped on Amazon any time recently, but like, you know, type in "sheets" on Amazon, there's four thousand results. How the hell do you know what to buy? A lot of these, I think, marketplaces are flea markets now, and it's really hard to decide what to buy. And I think that's part of the, you know, we haven't spent a lot of time on this, but [00:35:29] we think curation is a really important part of Quince. So when you type in "sheets," you're going to pick between five or six different fabrications that we think most people want. But then we're going to give you the one best sheet, you know, whether it's a linen sheet, which is an incredible business for us because we're able to sell it for 50 or 60 percent cheaper than everyone else. But you can go on Quince and we don't sell you, you know, thousands of versions of linen sheets from all different people and you don't know you have to choose and read the reviews and figure out who's right and wrong. And we just make it really easy for you. And we do that now for a lot of different categories and products. [00:36:07]

Lee: [00:36:07] So you've been working on Quince for how long now? It's been, what, three years, a little over three years?

Sid: [00:36:14] Right. Yeah, just a little bit over three years a.

Lee: [00:36:18] What has been, again, kind of what's been something that you've had to learn the hard way in building this business?

Sid: [00:36:26] I mean, everything always takes longer and cost twice as much as you ever thought. It took us a long time to like, find the factories, convince them to do this. It took us a long time to build the technology to pull this off. It took us a long time to understand the nuances of international trade. You know, in the beginning, it did take weeks to get the product to the customer. I mean, I remember the early days like we'd make a sale, we'd be so happy and then it would take like three weeks to get to the customer. The customer would be like, "You know, the price was great, but like, I didn't like it that much where I had to wait like three weeks." And like, you know, half the time the packages go missing. I remember we did a deal. You know, we have our leather factories in Italy and we did the Postal Service there, and we worked out a deal to ship it from Italy to the customer. And that first winter, you know, half the bags didn't show up for Christmas. And you know, we're telling the Postal Service like, you know, "Dude, where is the stuff?" They're like, "Yeah, yeah, it'll just get there. Don't worry, give it time." You know, like these people are expecting it by Christmas, you know?

Lee: [00:37:35] Right.

Sid: [00:37:36] And so we had to build this sophistication around getting those things, and we had to work through all the issues and challenges by country in some cases. So I think that was one of the things, which is just a broader theme, which is persistence and finding these roadblocks and then figuring out how to overcome them and keep going.

Lee: [00:38:01] So how many days did you say you can ship to the customer straight from Europe or Asia?

Sid: [00:38:07] Two to five days.

Lee: [00:38:08] Two to five days?

Sid: [00:38:10] Don't take my word for it. Try it. {laughter}

Lee: [00:38:13] I still don't know how you do this.

Sid: [00:38:14] It's really fast. It's great. I mean, I think, you know, we're... And of course, you could pay a little extra and get FedEx and you get in two days and you'd still save 30 or 40 percent off the competition. So if you really wanted an Amazon speed, you could just pay a little bit more and you'd still save a pile of money versus anyone else.

Lee: [00:38:35] That's really wild. So I'm going to go back to this question because when I when I ask tell us about a time you learned a hard lesson, it's not really the lesson yo learned, but I want to know where you made a mistake. Like, where did you learn something the hard way and like, Ouch. That really hurt. But I learned that this is actually, we figured out the lessons you learn. But when did you kind of mess up?

Sid: [00:39:01] A big mess up of mine was when I decided to leave Lolli and Pops. I had been doing it for about 10 years and the team was great. We had made so much progress, but after 10 years of doing something, I was really tired and as much if I looked in the mirror and I said, "Do I love candy?" Or "Do I love physical retail?" And I think if I thought in my heart of hearts, those weren't things I loved. I grew to like them. But I really love technology. I really loved nice things. I loved, you know, a lot of the things that we're doing at Quince is the reason I started Quince because I actually wake up every morning and love going to work. It's something I truly enjoy and will be happy to do for the rest of my life. So one of the big mistakes was in thinking about the transition and hiring the CEO to go and run Lolli and Pops. And it ended up being quite a debate with my existing investors at Lolli and Pops about who to run the company. And I think the mistake I made was potentially not grooming someone internally who really understood the culture, really understood the business or creating more of a transition time for a new leader to really learn the business and execute it better. And I think in not affording that other person that opportunity to learn longer and not affording the person an opportunity also to make the mistakes that they need to and be there to catch them and help them and all those things made for a much, much rockier journey for Lolli and Pops afterwards. And so I think that was one of the things that I think about a lot in terms of leadership, in terms of succession, in terms of culture.

Lee: [00:40:57] Were you just eager to get out? Were you just kind of like, "I'm done. You'll figure it out." Were you just trying to get out because you'd been there for so long. Is that maybe why?

Sid: [00:41:08] Yeah, I mean, maybe there is a little bit of eagerness. I think it was maybe in the misguided sense that maybe the other person knew better, Like, you know, because like, OK, I've been doing it 10 years and we got this far, but maybe there's someone else who really understands how to get it from... I got it from A to B, and maybe someone knows how to get it from B to D.

Lee: [00:41:28] Right. So it's like, let them do their thing. They must know what they're doing. I'm going to step aside.

Sid: [00:41:33] That's right. And I think that was probably more of the motivation than wanting to just wash my hands of it. And so I think that transition was not a good one, I think, and also didn't afford the person who took over to see whether they really liked the job either. We just kind of threw them in and figure it out, right? And so I think there are a lot of things if I could go back and redo, I would have done differently.

Lee: [00:42:00] Yeah. And you mentioned something about kind of promoting from within, which is really interesting. What do you think gets in the way of good people making it to the next level sometimes?

Sid: [00:42:10] It's a really good question. I think sometimes before someone takes the next step, they really need the right mentorship and leadership to help them as they progress in the career. They might be really good at the job they're doing today. But when they take on a new role and new responsibilities, they may be ill equipped for that. And most of us are when we take those jobs and we kind of learn. But  many of us also are in companies where we have someone who can teach you and Founders are just trying to get the business off the ground.

Lee: [00:42:45] Survive. {laughter}  Yeah, pretty much. Yeah, we're trying to survive and figure it out as we go.

Sid: [00:42:50] So I would just say that being willing to sometimes have someone come in the organization who has more experience, more expertise that they can teach this person would allow them to grow a lot faster in their career than sometimes thinking that they were being passed over..

Lee: [00:43:10] Yeah, that's interesting. I'm actually curious because, you know, as a Founder, we are mostly generalists. Like we know a little bit about a lot of things and we try to figure it out on the fly. And it creates this environment that, like you said, it's kind of hard to... We tend to... I'm speaking generally, but I think there's this mindset of we have to hire experts in that field, which makes sense, but then also prevents others from having that opportunity to move up. And it's maybe coming from this place of I can't train this person because I don't know what the hell I'm doing so. So how am I going to allow this person to kind of take on this role when we actually need someone who knows what they're doing? Do you think a good solution for that is like having some kind of like outside coach or expert who's an advisor to help these employees grow within the company and get the skills? Or, you know, things that they need to actually, I don't know, move up if that's really what's preventing it?

Sid: [00:44:06] I generally am like down on external resources, because the external resources never have the full context of the business and what's going on. I think internal mentoring is a lot more powerful because people speak the same language, they understand the same people that are involved. The recommendations and the advice is much more realistic. And so I think [00:44:29] finding mentors, whether it's the person that you report to or not, within an organization that can teach you is super valuable and finding those advocates for you in the organization is super valuable.  [00:44:43]It is true that companies hire externally for experts, but it is also true if you grow fast enough, the opportunities that you can create continue to outstrip the people that you have and can hire. And so by default, you end up giving more opportunities to the people that are the best people on your teams anyways. And so I think it doesn't have to be an either/or. I think it is a function of growth. It is a function of stage of the company, the challenges the company is facing. And I think, you know, good people always find a way to shine. They always find a way to take their career to the next level.

Lee: [00:45:24] Sometimes. I don't know. I think there's good people out there that maybe get let go or there's no support internally to help mentor that person because the team is too small. Or I do think actually, that good people have a hard time sometimes maybe moving to the next level for whatever reason. I'm not sure, and I think it's different. That's why I'm curious your perspective.

Sid: [00:45:47] No doubt. I mean that all these things can happen to you. I'm reminded I of a two and a half year old daughter, Lee, and I have been reading her this book for a while now. The Places You'll Go by Dr. Seuss. I don't know if you've read this book, but it talks about this person and finding your path in life, essentially, and they talk about times in which you're leading the pack. And then there's a saying in there. I don't know if I'll say it right, but "I'm sorry to say, but hang ups and bang ups will happen to you." Right? It's the reality. And then you'll find yourself in a slump.

Lee: [00:46:27] Right.

Sid: [00:46:29] You gotta find your way out of the slump. And so I tell people, look, [00:46:32] you've got to be the architect of your own career. No one is going to do that. People help you, but you've got to be intentional.  [00:46:38]Bad things will happen to you in your career. It's OK, like it's happening to everyone. Setbacks do happen. But how you deal with it is what really matters in the end. And so I thin people who want to succeed will find a way to succeed. And I think there has to be a level of proactivity there, especially in high growth companies. I say there's no one training anyone in a high growth company, right? You're just barely trying to keep the damn thing flying, basically. And so, you know, there's one fire after another. So they're not places that someone is going to actively train you. If you want that, like, you know, go to Solomon Smith Barney Citigroup, where I started my career. They're very good at training people. And so, you know, so I think in these instances, I think it's really about initiative and a willingness to kind of get in, dig deep, and figure it out.

Lee: [00:47:38] I feel like that Dr. Seuss book is kind of lost. It's like, you get it. Your dad reads it to you when you're two and a half years old and then you forget about it. And then you go to high school and college and then you think that, you know, you forget. It's almost like, where's this book throughout the entire journey of growing up to constantly remind us that actually things are really tough and it's normal to have these really low lows or super highs with the ebbs and flows of building a business? But I think very often people think that things look very easy to accomplish, and they're like, "Oh, I'm going to go do this and it's going to be great. It's all going to be sunshine and rainbows."

Sid: [00:48:17] Nothing can be further from the truth. {laughter}

Lee: [00:48:20] I know. I know.

Lee: [00:48:21] Yeah, yeah. But it's interesting.

Sid: [00:48:23] It's very challenging. You know, it's a roller coaster. I mean, some days you're up, some days you're down and you've got to...

Lee: [00:48:30] Tell us about your most down day.

Sid: [00:48:33] My most down day...

Lee: [00:48:35] Because you're already doing great. I mean, you had a very successful company. You're onto your next successful company. Let's talk about when things weren't really good at all. What's been the hardest day?

Sid: [00:48:48] What has been the hardest day? You know, if I think about 2019, so there was, you know, kind of early summer of 2019, the person who had taken over Lolli and Pops was struggling or had struggled, and the company wasn't doing so good. And meanwhile, Quince was well on its way to doing something really interesting. And so here I was kind of involved as a CEO of one company, Quince, and thinking about Lolli and Pops, you know, and trying to help that company. Compounded with that, you know, I found out my mom got very sick with cancer. And so there was a day or two that month where it was a really hard time. You know, how do you balance your commitment among the things you had to do? And you know, ultimately, I chose my mom, and I chose Quince, and those were the two things I could do. I couldn't do all three. It was not possible for me to emotionally and physically give in all three directions. And so that was a really hard day. That was a really, really hard day. So hang ups and hang ups will happen to you.

Lee: [00:50:23] Yeah. I mean, you pulled through. That's the crazy thing, because I think what people don't think about are those moments, that almost not really break us but break the opportunity. And you kept pushing through, which is really hard.

Sid: [00:50:42] I think so. I mean, I'm just so proud of the team at Quince. We didn't get a chance to talk a little bit about our progress, but the company has just started to grow so fast. If you look at our first six months, seven months of this year, we did 16 times the volume of last year.

Lee: [00:51:01] Wow.

Sid: [00:51:01] And we have just grown and grown and grown. And we've entered a tremendous amount of new categories and the customers have received that and they're visiting with a very high frequency already. You know, we have a very small catalog in retrospect, but our customers on average come back four times a year already and. And so, you know, hats off to the Quince team to kind of persevere through the valleys and are now on the upscale. I mean, we just had our our best month ever in August, and it was up 40 percent from the prior month. And so it's just been a really wonderful journey.

Lee: [00:51:44] I think it's fascinating that you guys pretty much kind of took off, you know, during COVID during a time where personally, I was like, not buying anything apparel related. You're wearing the same thing almost every day. Right? Tell us about this customer, I guess, that is buying new things and I guess still just doing Zoom calls or whatnot? Like tell us more about your customer and how kind of you guys survived COVID.

Sid: [00:52:11] Well, the first thing to note is we just aren't an apparel company. We also have a big home business and home is now 40 percent of our business and up from almost nothing last year. So the home business is just on fire and has been for some time. But I think, look, I think, people need various things at various times. Last year, they needed a lot of sweats. So I can't tell you how many cashmere sweatpants we sold.

Lee: [00:52:39] Oh, right. Nice.

Sid: [00:52:40] And for like, you know, 80 bucks or whatever we're selling it for is like a steal. Like, you just can't get that in the market. And so I think, you know, I think there was a whole need to kind of update your wardrobe for that. I think customers have now moved into a desire to just still want comfy things and comfy clothes. And as we launched a legging, which, you know, don't take my word for it, read the reviews. People have said is as good as Lululemon, and it's the third of the price, you know, so we're selling these leggings for like thirty dollars and people are like, "Wow, this is incredible." And so how are we meeting the needs of the customer where she is or he is? And I think as long as you're kind of have your finger on that pulse, it's a good thing. We also sell kind of the core essentials in your wardrobe and in your home. And so I think these are things that you would need regardless. You know, it's also true that during COVID, a lot of people didn't go out and eat at restaurants and things like that. And so they spent stuff upgrading their house and, you know, potentially the wardrobe and all these other things. So I think all of that definitely helped us.

Lee: [00:53:49] Absolutely. Wow, home business is 40 percent. That's kind of not tracking, I guess, because of COVID. Everybody's, you know, focused on the home and making it more comfortable. And where do you see what's next for you guys? What kind of categories are you going to get into?

Sid: [00:54:03] Yeah, I mean, we are constantly thinking and experimenting about new things that we're going to launch, so I can't give away any exciting stuff here. But you know, we're constantly thinking about what we can Quince-ify. So what are the things that you want most?

Lee: [00:54:21] Quince-ify. {laughter}

Sid: [00:54:22] I always think about things like you always wanted, but then you didn't want to spend the money to buy and you just hope someone would give it to you. You know, a gift or something. That's like the best gifts you ever get.

Lee: [00:54:30] Yeah.

Sid: [00:54:31] And how can we Quince-ify the next things in your life?

Sid: [00:54:35] And so this year it's been, you know, we launched rugs, which have been really successful for us. We launched socks. Our socks are incredible and a fraction of the price of which you'll find anywhere else. And so I think, you know, some of these categories are just have a lot of tailwind behind them that we're going to hopefully get on everyone's feet or on people's floors or on people's beds or whatever it might be.

Lee: [00:55:07] What do you think has been the key to your growth and the success ultimately? Is it something from a marketing perspective you guys figured out? How have you attracted customers? How have you guys grown?

Sid: [00:55:20] Lee, the whole thing about Quince is in the supply chain. The MTC supply chain enables high quality at radically low prices. And if you're selling things people already buy, but at 50 to 70 percent off, well, simple kind of supply and demand economics will say that you will capture share. And that has been true for us.

Sid: [00:55:45] So if you used to shop at XYZ Retailer and now Quince comes along and sells the same thing for 50 percent off, why wouldn't you want to save that money? And so I think it's just, you know, human behavior almost.

Lee: [00:56:02] Right. But you can't just put up a landing page and hope people come. There's promotion of people have to learn about you. So how have you brought, you know, how have you done that?

Sid: [00:56:12] Yeah. I mean, look, we wanted to create something that people would talk about and that would get people to shop over and over again. And so, you know, we've kept a fairly low profile, even though I think the scale of our business would shock you and shock a lot of people about how fast we have built this business. But I think, you know, there's a tremendous amount of word of mouth and I gave some of the figures on repeat, but like the business is repeating a lot. Like customers come back over and over again. And of course, that funds a lot of marketing activities if you don't have to pay to acquire a customer over and over again.

Lee: [00:56:51] Exactly. Yeah.

Sid: [00:56:52] So how do you create value for the customer and get them over again? I mean, it's a very simple business fundamental idea. And so well, we think the way we do it is by offering really high quality essentials at 50 to 70 percent cheaper. and so, you know, it's a very simple message. It's a very simple idea. It's really hard to execute, really hard to deliver. But in my opinion, that's the secret. The secret is the technology and the supply chain, not some crazy marketing innovation where we shot a viral YouTube video that someone learned about us and went crazy. I think it's much more durable.

Lee: [00:57:33] Interesting. Awesome. Well, do you have any other kind of final advice for any of the listeners out there that are inspired and thinking about how they can maybe build their own business one day?

Sid: [00:57:48] Yeah, I mean, I think two things I touched on in the chat. One is, find a problem that's authentic to you that you really want to solve that like you're really motivated to solve. Not one that you're kind of tangentially excited about or that you kind of tangentially understand, [00:58:05] try to find a problem that you really understand that really affects you because I think the best entrepreneurs need the motivation to get through the highs and lows that we talked about, [00:58:16] Lee. And I think that goes to the second point, which is persistence. Through Lolli and Pops and Quince, there's been a lot of setbacks and a lot of highs as well. And you need the persistence to get through the low points to get you to the next high point. And [00:58:36] it's really underrated how valuable persistence is to an entrepreneur. [00:58:40] And if you read about anyone from Elon Musk to Steve Jobs to pick your famous entrepreneur, all of them had a number of setbacks along their way. And I don't know a single person who hasn't. Everyone has setbacks. And so the question is how you deal with that? And how do you keep moving forward and how do you solve those challenges? And I think the best entrepreneurs are the ones who are very agile and persevere through the really tough times.

Lee: [00:59:11] Yeah. And I appreciate you going there today, and I hope that your mother is ok. And I'm so sorry to hear that. I mean, that's devastating news for anyone. But I really appreciate you opening up about that. You know, having that kind of personal story is always hard to share, but also something that isn't really talked about on these business podcasts, where it's all just business, as if that's the only thing that affects our ups and downs. But really, family obviously is a big thing as well that can influence our decisions and influence our persistence and all these other things you're talking about. So thank you for sharing that and thank you for being on the show today. I really appreciate it.

Sid: [00:59:51] Yeah, thanks for having me, Lee. I really appreciate you bringing me on.

Lee: [00:59:57] Thank you so much for listening to the Stairway to CEO podcast. Once again, I'm your host, Lee Greene, and if you have any burning business questions, please feel free to reach us at StairwaytoCEO.com. We'd love to hear from you. And if you like what you hear, be sure to subscribe to the show, tell your friends, leave us a review, and follow us on Instagram @StairwaytoCEO. Until next time, guys, keep on climbing.

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