Beyond Yoga: Michelle Wahler

Transcript from https://podmenti.com/t/cb59c761308c25c0


vendors and we were just going through um all these fabric samples and I was like
What is this? And I remember my sales rep, she was like
Oh Michelle, you don't want that, that's way too expensive.
And I was like, no.
I need this. What is this? It's fantastic and it feels really good and I was like, I don't care how expensive it is.
This is what everybody is going to want to put on their body.
Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements.
They built.
Guy Roz and on the show today, how Michelle Whaler went from printing t-shirts for friends
To helping build a massive activeware brand.
Yarn Yoga.
There are two
Basic ways to launch a consumer brand, whether it's food or skin care or apparel or whatever. The first way is to raise a ton of cash from investors and try and flo the market with ads, promotions, and product. And that can work. There are plenty of products you probably know about because these brands are well funded and outside.
Spending their rivals. But it's also risky, and there are also plenty of brands that took this approach and no longer exist. The second path is to bootstrap or raise the bare minimum amount of money and try to hit profitability fast, even if your overall revenue is pretty low.
This approach usually means you will grow more slowly, and it's unlikely, unless you are really lucky, that you'll make an immediate splash.
That second path.
That's the one Beyond Yoga took. For the first 10 years of its existence, Beyond Yoga operated pretty much under the radar. Bigger brands like Lululemon and Athleta got most of the attention from the media and consumers. But the company did a few unusual things that
ultimately worked.
It was founded in two thousand five by two women, Michelle Wailer and Jody Goober Brovski.
Though in this episode we'll just hear from Michelle.
Anyway, they launched the business with a relatively modest investment from Jody's dad, and with that money, they developed a line of yoga apparel for women. Now one of the things Beyond Yoga did, which was risky,
was to go the wholesale route.
In other words, unlike more aggressive startups,
They didn't pursue a direct-to-consumer model, at least not at first. They sold their clothes through boutiques, yoga studios, and eventually department stores. And where Beyond Yoga actually found its niche was in making yoga clothes for women of all sizes. Now today that's pretty standard.
But remember, back in the day, brands like Lululemon had a reputation for being designed to make women look skinny.
Beyond Yoga took a different approach, and it paid off.
Slowly, carefully, and methodically, the brand found a lot of loyal fans.
And by twenty sixteen, a decade into the business, it became the fastest growing indie yoga brand in America.
In 2021, Beyond Yoga was acquired by Levi's for$400 million.
And it all started with a LinkedIn message to co founder Michelle Wailer.
How that deal went down was also unprecedented, which you'll hear about.
Three years after the acquisition, Michelle stepped down as CEO, and today the brand is looking to compete with its much bigger rivals.
As for Michelle, she grew up in suburban Maryland, where her dad ran a chain of record shops in the DC area, and her mom took care of things on the home front.
She was, you know.
The mom that was involved in everything, and I loved having my mom around and it was great. But one thing that was highly influential on me is the fact that my mom
Really struggled with her self-esteem and how she viewed herself, and my mom is an extremely beautiful, smart, kind, caring person.
But I think that she fell kind of into the trap of
Um
Just never feeling like she was enough.
and wanting to you know, we we were at that time it was a lot of diet culture and I think she thought there was only
One
vision of beauty and that was skinny. And when I would bring some of my friends home, you know, she was always talking about what everybody looked like and oh this person's so skinny and oh this person, you have the best smile. And she started giving superlatives out to me and my friends.
And
That was very important to her, and I watched her struggle with her weight.
And
It was just frustrating to me because I really wanted her to see herself the way I saw her. And
She didn't
Hm.
And and and I also want to ask about your dad,'cause I th I think he was an entrepreneur.
Yes.
So he had a m a chain of music stores and he started off, he bought one music store and it was kinda funny because he wasn't really that into music, uh, but he thought it was a good opportunity.
It was initially called Kent Mill Records.
And
He
built this business, um, you know, one store at a time. And I think by the end he had over thirty locations.
Wow.
Yeah, Camp Mill was
The record store, the D C, Maryland
Virginia area. I mean I remember it'cause I lived in that area for some time. And like that was
This is huge, it's everywhere. That's amazing.
Cat Mill.
Yeah.
Although I imagine that
b around the two thousands things probably started to change a little bit as
Young people
start to download music and for free. Or not paying for it.
Exactly. So
Once the you know, once MP threes came onto the scene, once Napster, all of that, that really shifted everything that was happening with my father's business. And I watched my dad.
lose his entire company, which was really
painful to watch. And it wasn't because he did anything wrong. It wasn't because he wasn't, you know, managing his
numbers or paying attention, but the industry just kinda shifted overnight and sometimes there's just
Nothing you can do about it.
And how old were you when that started to happen?
I I was in high school when this started to happen. It was before I left for college.
And I think he didn't
Really want to be a part of
the contraction of the business. I think that was just a little more than his heart could take. So at some point along the way, um he had
Two brothers who became his business partners.
And he ended up selling the business to them.
Um but it wasn't
the exit that I think he always imagined. I think it was more of a
closing down and and
changing of guard, there wasn't any big financial reward out of that situation.
So
So what did he do?
So I think it was hard for him to realize that this had actually ended. And I think there was a large period of denial. And you know, my father had been relatively successful. And so I think that he thought he had a a pretty good runway.
in order to, you know, figure out what he was gonna do next.
And unfortunately I never really saw that happen. He started um a couple different things. He was gonna do some business consulting, but ultimately my parents ended up moving to Florida. So they basically lost their home. They downsized to like a
a little condo in Jacksonville, Florida, and my dad tried to do
Um
Sail uh he kept going on the sales path.
Mm.
And he kept thinking'cause there was a lot of upside. But he wasn't a natural born salesperson and
I think that was something that he never really
Um
Accept it.
Yeah.
Yeah, I mean th this'll sort of circle back a little bit to
Uh to your to your own story and then we'll we'll get there eventually.
Um, but I know I know that that for college you went to the University of Florida. Um and I read that that when you first got there you were thinking of
uh majoring in like pre med or or even business
Um, but you you end up studying graphic design, is it is that right?
Yes. So I thought my dad was gonna
lose it when I said I was gonna do this. But he actually was really supportive and he was like I absolutely
think you should follow this art path, which I was surprised that he was so supportive about, but he really was.
And were you like
I kind of already into art and
painting and was that a thing you did as a kid?
That's like all I did as a kid. I would draw and paint and I was always in the art classes and the drawing extra curriculars, and that's always what I gravitated towards.
So when you graduated from college, I guess you moved to New York.
to to g and and to I guess to pursue a career in graphic design.
Yes.
This is about two thousand one.
Two thousand and one. So I moved to New York and I really
I really didn't know anything about New York. I got two graphic design jobs. Um, but then
very quickly um nine eleven occurred. And so both of those jobs basically disappeared. And then very quickly I just started waiting tables and then every table
That I waited on. I said, Do you know anybody who needs a graphic designer? And I would slip my little card in and
Um, it wasn't actually through that that I got a job, but eventually I got an interview for a position at Sports Illustrated.
And
That didn't work out, but the recruiter really liked me, and when there was an opening at People Magazine, she called me again.
And I was able to come in. So a people.
I loved working at People Magazine. It was a great place. I met so many fantastic people.
It was just a a very warm, nurturing environment.
And I got to see so much and I got to learn so much. And one of the things that I saw that I wasn't as excited about was all of the photoshop that was going on. Everything is photoshopped. And so when women are looking at these magazines, and they even if you think you're seeing just a real picture.

It's not. It's not really who they are. And everybody is, you know, getting their legs elongated or their arms, you know, nipped and tucked in in these photos. And I realized that was just continuing to perpetuate this impossible
image of what women are supposed to look like and
It was very frustrating to me.
But
When I was working at People, I started my first entrepreneurial endeavor.
Which was called Unsweetened, and I made this t shirt line for women that you know, I drew women and I drew them as they are. Um I call it the unsweetened version uh or the unsugar coated version of themselves. And I tell me, tell me how that sorry interrupt, how did that start? Because
I I know that you started sort of a T shirt business, but did it
w was the intention to m turn into a business initially?
No, it definitely wasn't
Um, so when I first moved to New York, I was living with my best friend from college and I it was her birthday and I was trying to think
What could I get Lauren, the girl who
Pretty much has everything.
So I made this really cute illustration of Lauren and I bought a t shirt and then I put the picture of Lauren in the center and I gave it to her for her birthday. And then very quickly all of my friends were like, I want an illustration of me. And so throughout that time I started creating this
collection, you know, different women doing different activities, different shapes, different sizes. And I would put the pictures up on my w wall in the cubicle.
at People magazine and I had a really good cubicle.
because I was right outside of the publisher, um, Kathy. And so people were always waiting to talk to Kathy, so they'd hang out at my cubicle and they'd be like, Oh, what are these cool illustrations? And then I'd tell them and then people would be like, Oh, well your friend Rachel looks like my friend Rita. Or you know, could you
You do one of me, and so I started
Selling people.
My T shirts.
while I was working at People. And then I started going to holiday bazaars and I would walk up and down the streets in New York and I'd go into different boutiques and I would sell them my t-shirts. And I remember um one of my favorite ones that I got into was this store. I don't even know if it still exists, but I loved it. It was called Pookie and Sebastian.
And
When I got in there, I felt like, oh my goodness, I I really made it. And
It was it was very exciting.
Alright, so so meanwhile
You had a a pretty good day job.
Uh in graphic design.
But I guess you eventually decide to quit and and then move from New York
to California for a a change of pace. Um and I g I think this is around two thousand five.
And you still have the T shirt business going, right? Like the w when you first settle in California, I think in San Diego, right?
Yes, so
Essentially I'm in
I'm in San Diego, I'm not really loving it. I am very homesick for New York.
and I'm thinking I probably should go back. But my heart is like, I put so much effort into getting out to California. I'm already here. I can't just give up. But then I, while I was still in San Diego, I signed up for a trade show.
in LA. It was called the LA Giu. And when I went up to that gift show, I ended up meeting um a gentleman who ended up introducing me to Jody who became my business partner. Uh okay this this would be um Jodi a goober.
Yes.
Um but I want to get to that in a moment. So you go to the trade show um obviously looking to see if maybe boutiques would d would put in orders
And and there was uh somebody who who was this person that came
came by and started ch talking to you?
He was another vendor. He had his own product he was selling. His name was Brad. And he came over and he was just very friendly and
He was like, I'm really impressed with this business you're building. And so I stayed in touch with Brad and I was like, Hey, do you know anybody who?
You know.
needs a designer and
He said um actually I just met this
incredible woman and she has this idea for an activewear company. Um, but she's just getting started with some of her like trademark
Um and
You know, that information, how did you do all of that? And I was like, Oh, I just you know went online and did it. He's like, Would you be willing to help her? And I was like, Of course.
So
Then I went over to Jodi's house, uh her apartment. His friend was Jo or this woman he had met is was J is Jody.
Jody Fubert.
Exactly.
And was she in the apparel business or was this just a a a a new thing that she wanted to do sort of like we you were
trying to do.
She was just getting started with
this. She had been in the apparel industry a little bit before, but this was her she was doing this on her own and she needed some help and she said like I'd love if you could help me.
Um
I didn't have any money, so I was looking for side work. So I was happy to help her.
And then very quickly
I fell in love with the idea of Beyond Yoga. And Beyond Yoga is
The whole the whole reason Beyond Yoga exists. It's created to make clothing that are for women of all shapes and sizes, and to make show whip you know, show people that everybody is beautiful and all bodies are good bodies.
And I remember hearing Jodi on the phone with this designer that she was working with in the very early days and she was getting frustrated because the designer wasn't capturing
her intention and
I turned to her and I said, You know, I know how to do this. I was like, Do
want me to fix those sketches for you. I know exactly what you're talking about. And she was like, Yeah, I do. And so I said, Oh, just forward me the files. I'll work on it, you know, over the weekend And then that night I fixed the sketches that she had and then I had some other ideas for things that would be great for Beyond Yoga and
I sent it back to her and then the next morning she called me and she was like
Our relationship is about to change.
And pretty much from that point on, I spent the next
Eighteen years.
Building, growing, and leading
Beyond yoga.
Well right, well let's go back to that that moment. So you were not
You were not meeting Jody to
help found start this business. You were really
just kinda giving her giving her advice and helping out
But when you
When you sent her sketches.
For
um apparel. She called you and said
Hey basically said, Hey, why don't why don't you come work with me?
Your time.
Yeah.
Not just full time, she was like, let's let's do this together.
Let's be partners.
Yeah. And it was based at how how before that point, how many times had you guys met or s or interacted?
I think that we had been working together for a couple weeks at that point. It was very early on.
And did you
I mean what was your did you initially think
Well, I've got my own thing going, or was it like, yeah, I wanna do this.
It was like I wanna do this because I really loved
the mission of Beyond Yoga and the idea of creating clothing for women of all shapes and sizes. And I, you know, continued with Unsweetened a little bit on the side, but for the most part.
It was beyond yoga or bust.
Did she have I mean you I'm assuming I don't think you had a whole lot of money at all, maybe very little. Um
I mean, what did she offer you? Did she offer you to be a partner? Did she offer you to be an employee? Like how was it gonna work?
In the beginning
I don't even remember exactly how we talked about it.
Um, she had gotten initial funding.
From her father.
And eventually, as we continued to work together, as we got closer, as she saw that I was just taking on more and more and more and more. Um
Then we got into more of the equity conversations and um really
solidified that piece of it.
Her dad, we should mention, her dad w is
A very famous Hollywood producer, Peter Goober, he did like
Big movies, um, certainly in the eighties. We did Batman and uh the color purple and Rain Man.
And he's I think he's e he's like a co owner of the Golden State Warrior. So I mean he's a very
A high power dude, and he gave her some seed money.
to start this, right? So there was some money behind it.
And so now now you're in this and and you're working with Jody.
And you want to create
a clothing line.
Um, but you were a graphic designer, not a fashion designer, right? So so how did you how did you start?
You know, we started working with a local factory in LA. You know, they helped us source the fabric, they helped us with the patterns. I would create the sketches for what we wanted. Um, so right from the beginning I started
Focusing on the design, the sketching, creating the line sheets. I hired the sales team.
And and who are you looking to sell? To to stores, to like
Boutiques.
stores and boutiques. And so um our first store was a a studio up in um Santa Barbara called Drishti Yoga. And then we got into Yoga Works, which was huge.
That's like a uh a chain of Yoga Boo studios.
Exactly. And at the time, you know, that was like the place to go. But we
We started selling to a lot of
You know, small mom and pop.
studios and
The big goal was to get the orders and then for them to sell through and for them to buy again.
And
That started happening a lot quicker than
Than we thought it was, but it was great.
And you know, we did over a million dollars in our first year of shipping.
Your first year focusing on
just trying to do sales and and and getting the product and how many I mean, was it just you and Jody and one other person?
No, it was just me and Jodi in the beginning for probably the first two years. But we worked with
you know, third parties. So you know, at the factory in LA they had pattern makers and you know, we would go and we would have our fittings there and we would try clothing on our fit model who was a bartender at James Beach.
So
I actually want to d dive into
the the kind of the strategy that you took because really your strategy
from the beginning was wholesale, right? To go
And to basically sell to stores which a lot of
Early brands um kind of ballk at, certainly now, because obviously you've gotta sell at a discount, and then you don't always have control over how they are sold in the stores. But that
was a strategy that you guys pursued from the get go. Can you talk a little bit about why?
Yeah.

So I'm a huge fan.
Of wholesale. And I've always looked at this as a way of reinforcing your brand. I think of
Wholesale as marketing that you get paid for. So
Anytime goes into a yoga studio and sees your product, they're discovering you. You know, we had a really diverse distribution network, too, which I think was one of the things that we did really well. So we sold to, you know, the mom and pop yoga studios and the boutique fitness places. We sold to
regular boutiques that weren't fitness based.
We were on the cool websites like Revolve and Shop Bop, and when people would see our products at all of these different places, it was brand validation and reinforcement.
So when you I mean, when you were working on getting into some of these places, you mentioned Yoga Works and some of these other places, how did you
What was the the the pitch? How did you get into some of these places? We our pitch was that we are, you know, the softest, most
Inclusive activewear line.
I'm obsessed with fabrics and I love
the touch and feel and I spend hours, you know, just going through showrooms and and feeling every fabric. And that was really important. So, you know, we were made in the USA, everything was machine wash and dry, we tried to make it as easy care as possible. And then
It was also this concept of
It's for your everyday life. It is for your active lifestyle. So we were among the first to do this active layering and transition clothing. So you could get up in the morning and get dressed and maybe
You weren't necessarily going to the gym.
But you had all these things that you were going to do and you needed to look chic and put together. And then
At some point you're hoping to slide into a class or be able to sneak off and go for a run or whatever the case may be. So we tried to create these layering pieces that made the outfits look pulled together. And then you could
Just pull off this top and voila you are ready to go to the gym.
And
Um, tell me a little bit about
just learning about how to run a business. I mean
I read that the for you
It was really hard.
Just trying to figure out
what to do and and how to manage inventory and and and the books and and sales doing sales calls, like those things w didn't come easily to you.
Some of it came easy, some of it was just a complete learning. So
Yeah, I remember one one day I was
Alone in the office, and all of a sudden we got back our first set of samples on this Pima cotton, and what should have looked like a shirt ended up looking more like a tunic.
And I was trying to get to the bottom of why this happened and
The shrinkage on the fabric.
hadn't been incorporated the right way. And so I was on the m phone with the mill in North Carolina trying to understand
what was happening to the fabric as it was going through the d garment dye process. And luckily, you know, this gentleman was very helpful and he was like, Listen, each roll you have to take it and make a, you know, like a
a square that's like twenty inches by twenty inches and you put that with a sharpie and then you put it through the process.
and you have to see how much it shrinks and then you have to apply that to your pattern. You know, these are things you just learn on the fly if you haven't gone through formal training.
So all right, so you and and I guess
You also took classes at U C L A Extension, which is like their adult
classes, right, to kind of learn about
Business, is that right?
Yeah.
I took accounting classes and I really wanted to understand
what was going on with our finances because, you know, in the early days, I was so focused on
sales and product design and marketing, you know, and in the beginning we were doing so well. Like I think when you're doing well, some of the
The important things might get glossed over on the financial side of things, so
In two thousand and six that was the first year we were shipping, we did um one point one million. Then the next year we did around two point two. Then the next year we did
I think we were around four point five. Then the global financial crisis happened and everything kind of bottomed out. All of you know, at that point we were primarily wholesale. And
We dropped in two thousand and nine by almost a million dollars, which was a large percent to go backwards. And
Yeah.
That was a big
That was a big setback.
When we come back in just a moment.
How a competitor's blunder turns into a major opportunity.
For Beyond Yoga.
Stay with us.
I'm Guy Raz, and you're listening to how I built this.
Welcome back to how I built this. I'm Guy Raz. So it's around 2011 and Michelle is now officially the CEO of Beyond Yoga. And even though the company has m more or less recovered from the financial crisis,
Its books are still a little
Messy.
At that time.
We were actually outsourcing all of the financial
to um a third party and I started realizing that things weren't coded properly, you know, there were items that shouldn't have been in cost of goods sold that were put in and so
I just realized that there was a lot that was
a little messy and unorganized and we needed to fix that. And this was too important of a piece of the business to outsource. And so I brought that in house. I hired an accountant and that's when I I kind of realized, you know
You have to lean into all areas of the business. The finance side of things did not come naturally to me. I definitely needed guidance and to teach myself, but
I also, you know.
You can't just do the parts that are fun.

You have to lean into the ability to
Just ask a lot of questions and be comfortable.
Not being the smartest person in the room.

Um tell me a little bit about
W how did you when you
Sort of started to make
your hires, right? And certainly your your
you know, initial hires.
How did you
Like what'cause I read the first hire you made as a production manager. So
How did you put those pieces together?
on who to go to first and how to build the team out.
You know, in the beginning
I did as much as I could. I was originally sketching
everything in the collection. Eventually we brought on designers who did that. But I will say I think one of the most important hires I made was when I ended up hiring um my COO, CFO, who
happens to be my husband Jesse. Um
You know, he started
We started dating in two thousand and nine and he was in and around the business for many years before we actually got married. And I think it was like
Two thousand and
fourteen. And um one of the things that I mean there's so many
Things that I
want to share with you about um
how Jesse impacted the business, but one thing that was really helpful was when he joined me and he was really looking at our finances, he's like, You're actually not spending enough. You're not investing enough in your team
and in marketing and
I was so nervous and I think because of you know
what happened to my dad and seeing him lose his business. I was always very nervous to get out ahead of our skis. And so
When Jesse came on board and he's somebody who I trust implicitly, and he said, You
You really need to lean in and and bring on some great talent.
That's when I started spending more on the people who were on our team, and I think that was a huge turning point.
How how did you um finance
the business. I mean you t you got that initial investment.
And and how are you financing just, you know, the growth of the business?
We were just reinvesting every dollar back into the business. We never took on any additional outside investment. We had a lot of people offer to invest and a lot of people offered to buy us at different points. Um
And we just turned everybody down and
We worked with some
Great banking partners. The people at Wells Fargo were really helpful. Um, the team at CIT helped us get a line, um
a line of credit to factor all of our accounts, our wholesale accounts. So that gave us the ability to be able to um
you know, finance our inventory and
That was
Tremendously helpful.
I mean meantime, you're seeing other
brands just explode. Lulu Lemon by twenty eleven, twenty twelve was massive. Massive. Um, probably easily a billion dollar brand by that point. And
Um there were others, Atleta and and other brands that were just
growing and
I mean we're
you weren't really even competing with them at that point, right? And you were just so small compared to them.
Were you
Worried were you looking at those companies and just thinking we're you know, we're always gonna be small.
I wasn't thinking we were always going to be small.
But I wasn't
overly focused on them either. I always looked at Lululemon as an inspiration and as the you know the company that made it
Okay for women to buy a hundred dollar pair of leggings. And I felt like they paved the way and
I'm I'm grateful to them for that.
You know, and there were opport there were times when Lulu faltered and
They were times where
Beyond grew. I remember when they had the whole, you know, sheer pant debacle. I don't know if you remember that, but that was a moment because at the time, I think we were the number two brand carried an equinox, but Lulu was
Yeah,
the lion's share of the space. We were a very distant number two. And the minute Lulu had a pull their product
My buyer from Equinox called and said, Hey
We've got a situation. What do you have in black leggings? And I was like, We got you. And I shipped everything we had, and we sold through what we had. And so that was a moment for us to step up and
Our product got a little bit more floor space and we sold through when we performed and so that
you know, in turn gave us more floor space in the future.
Um one I guess one one of the train points was
Uh
you kind of came across this fabric, um
in in LA, right? There's a whole
District like Garment District in L.
There's New York too. And you were in a warehouse looking, I think in in LA, looking just through
potential like samples of
different fabric and you came across this one fabric that would would become
Like the
the core of what of what you make. What tell me about that fabric and what how how you came across it?
Yeah, that fabric is called space dye and
I was downtown um at the LA Mark.
I went to visit one of our fabric vendors. They had a showroom there.
And we were just going through um all these fabric samples and
I just went through, um, you know, just touched ev walked around the room touching everything. And I remember when I found Space Diet, I was like
What is this? And I remember my sales rep, she was like
Oh, Michelle, you don't want that. That's way too expensive.
And I was like no.
I need this. What is this? And I was like, I don't care how expensive it is. This is what everybody is going to want to put on their body. And I'm really happy that we decided to go with that fabric. I wear that fabric every single day of my life and I absolutely
I adore it and it was worth it.
What makes it different? What made it so
unique. And why wasn't it being used in other apparel by the brands?
I don't think other people were using it because it was so expensive and I wanted to make something that was going to feel amazing for people and I don't think people at the time were willing to spend that type of money to
get fabrics made and it was two different yarns and it was weaved together in a certain way and it had a a brushed hand. There's just something about the way that those two fabrics came together and then ultimately, you know, I worked with the mill to really work on
how to get it as soft as possible and there's some trade secrets there. But
It's fantastic and it feels really good. It has four-way stretch. It has amazing recovery. It holds color in a fantastic way. You know, initially when I first found it, I thought that it was just gonna be a seasonal fabric that we were gonna use, you know, once and then we'd move on.
And as soon as my team felt it, and as soon as the sales reps got it out and our customers were touching it, they were like
You're gonna have this forever, right?
Mm.
And is it primarily cotton? Like what is it made out of? It's a poly spandex blend.
Okay. And and w I mean, was it instant like I mean by by the time you started to sell this, which was I guess twenty fourteen,'cause you came across the
Uh

Well, like w how much were you guys doing in revenue? Were you at that point over twenty million dollars a year?
My years are all jumbled in terms of um where we were. I know that
Um
We uh had double digit growth.
You know, pretty much from that point.
on and so um
We never had a
Think we ever had a down year.
From that point on.
How were you able to'cause I know that
That you also like
Made some
Important hires. Like somebody came from Under Armour and and from Tom's like
How did you
afford them. I mean e e even then you were
Still a pretty small business, so how could you afford to bring on those people who had so much experience?
So first of all, I wasn't the person who was paying the highest salaries. I definitely know that people took a little bit of a pay cut to come and work with us, but I think that people really believed in what we were doing.
And once
you know, one or two people come on board that are really passionate about it, that are great. Like
I I really believe that A players want to work with A players, and so
your team becomes your recruiting tool and
You know, when when this amazing marketer came over to our team
You know, I didn't just hire her and say, I'm gonna give you the biggest salary that I have. I said, look, I can afford to pay you this, but I also
know you're going to need some people around you. And we invested in building a team around her. And you know the same is true for what we did with you know the woman from Under Armour, because you have to give people resources once they come on board. And people also loved the fact that we were primarily
All female. It was funny, um
Yeah, Jesse was
Pretty much the only white male.
and our company for the majority of the time that we were in existence.

When we come back in just a moment.
Michelle gets a life-changing LinkedIn message from one of the most venerated clothing brands.
in the world.
Stay with us, I'm Guy Raz, and you're listening to How I Built This.
Hey, welcome back to how I built this. I'm Guy Raz. So by around 2016, Beyond Yoga apparel has spread to about a thousand stores across the country. And after first holding off on direct to consumer,
Michelle.
Starts to embrace it.
As e-commerce started to grow, we absolutely leaned into it, but
As much as ecom would grow, wholesale was just growing quicker. I forget the exact years and where things were, but I would say it was probably around like 25% of our sales. And
You know, then
I think it wasn't until Covid that it really shifted and became the lion's share of what we were doing.
How did you pick stores to go into? I mean, I have to imagine, like, if you're in
you know, T J Max and in you know, Ross
That's different than if you are in
Bloomingdales and in, you know, Neiman Marcus.
Exactly.

I always looked at our wholesale strategy as our marketing strategy. And we were very particular about
where we would sell. And my team used to get frustrated with me because I would actually
turn them down for a lot of opportunities and you know, they were like, but we could get a million dollars, you know, if we would just sell QVC or if we could do
Cole's
And
I said no, I don't think that's what's right for the brand. I mean we could have been
larger faster
For sure.
But
I think it's very easy to go.
quickly.
downstream and it's much harder to continue to build a really clean high end
Profitable business.

have done is made m virtually most of your apparel in
the United States in Los Angeles, where you're
And a lot of people
I think don't realize that there is like still a a a pretty robust manufacturing base in Los Angeles. Furniture's made there and n it's not just like a a a city of
Hollywood.
Um, there's still things that are made there.
But that's more expensive.
Um was there ever I mean, as you saw other brands and apparel brands moving their
manufacturing or even starting the man manufacturing in Asia, which was a fraction of the price.
Did you ever
Look at that.
Option or possibility?
I
very much enjoy making product in LA. I
like the idea that I know the people that I can go down and pop in and see what's happening at any moment.
And if you
you know, all of a sudden realize that something's selling really fast, you you can ramp it up. And if you on the flip side realize that you're heavily investing in something and it's a mistake.
A lot of times you can just pull it from the line, but it's also extremely rewarding to get to know the people and feel like you're supporting your community. Um, one of our one of our contractors, she started off as a sample house and she wanted to do more production for us. And she did phenomenal.
Samples. Um, and we said as soon as you get your manufacturing license, we will start you with, you know.
Some small quantities and let's help you build your business. We built our business side by side with so many of these partners and
That woman who was our sample house, she ultimately now has
Three different manufacturing factories um in downtown LA. Her daughter runs one of them. You know, it's very rewarding to get to work with people and see those types of impacts.
on their lives.
So I read that around by twenty seventeen you guys had hit about twenty million in revenue.
Um and apparently around this time
You said
Yeah.
Why don't we take a why don't we see if we can bring in some investors to sort of supercharge our growth, right?'Cause that's a that's a great number.
And you spent you decided to spend some time um making a pitch, going to investors and pr and I'm assuming you went to New York and probably were in LA.
Tell me a little bit about about that process and and I I am I right? I mean the idea was let's bring in money
Let's
Grow this thing.
Yes.
And we were like, maybe we should be growing a little faster than we are. We did see, you know.
Everybody else moving um at what seemed like a a much quicker clip than we were.
And so we went out, we hired a banker, um, and we did. We did the whole dog and pony show. And I think even though ultimately we decided that we didn't want to bring on an investor, um
I think it was a really invaluable
lesson. And so the things I learned, number one, was people were looking at the business very differently than I was. You know, at the time everybody was focused on D to C only. And people are like, what are you doing with all this wholesale? Like you don't have control over that.
So they thought that that was crazy.
But then also
We were running the business to break even and people were like, Where's your profit? And we're like, Well, obviously if we did this, this, and this, there would be profit, but we are continuing to grow. And people really just wanted to see.
The profit. And
As
A day to day operator. Like when Jesse and I went around doing this, the two of us were the the main day to day operators of the business. It was extremely distracting. And I know that it becomes a cycle where it's like, okay, you raise money and then
you have to deploy it and then you have to raise more money and
I wanted to f I wanted to be back in the office with my team. I wanted to be at the photo shoots. I wanted to be making um the part of the business happen that I loved. And when we spoke to people, they, you know, we were just too small at that point. People wanted to have majority ownership, and that meant that we would give up control.
And probably a lot of the things that I really valued
would go away. Like
the ability to manufacture locally and making sure that we were size inclusive and, you know.
I wanted to be able to run a business the way we want it.
Yeah.

Was it
Was it kind of disheartening to go through that?
A little bit.
'Cause you know, sometimes people
Well think of that as a validation, like, oh, let's let's go and and sort of test this out and and get it validated in the open market and
You know
At that point it sounds like you weren't getting that validation.
Yeah, I think it was a little frustrating. Um
I remember at the time
Talking to Jody and you know, she was asking me what I wanted to do. And she was like, I I'll defer to you.
And
I was like
I wanna take a I w just want to stop.
I wanna take us off the market. I wanna focus on running the business.
And I just
really don't want to play this fundraising game.
Then she was like okay.
Let's go.
Yeah.
When you um when you guys entered
twenty twenty, from what I understand. You had this is before the pandemic
You just
purchased a lot of material because you had a bunch of orders.
And then
you know, March or late February of twenty twenty Yoga Studios start to close.
And all of a sudden, I think in by middle of March, you start to get a cascade of
Canceled orders.
Yes.
Over six million dollars of cancelations in one week.
a lot of our um money
Tied up in raw materials.
And I had big orders placed with our, you know, our fabric suppliers.
Yeah, we had to
Come up with a new game plan. And so I talked to my sales team and I said, we should assume every order is canceled unless you get written consent.
that they want the order.
And everyone was like, Are you kidding? Just go ahead and ship the orders. And I was like, We are not going to ship.
Because
Can you imagine being that studio in Boston and you can't open your doors and all of a sudden you've got Beyond Yoga product landing on your
doorstep and you might not be able to even bring it in.
let alone, you know, sell it to anybody, and then there's gonna be a bill coming and you don't have revenue coming in from your studio classes. Like we cannot do this. But
It ended up um kind of being a blessing because A, I feel good about the way we handled things and we didn't weren't cramming product down people's throats that didn't need it. And also at that point,
Everybody is at home and people were working out from home, people were wearing Beyond Yoga round the clock, and our website was, you know, in high demand. And then also a lot of industries, as you know, were pulling back on their advertising because there was no reason to advertise. So
Our customer acquisition fees
went rock bottom and we were able to acquire a lot of new customers. And because we hadn't shipped all of that inventory to sit idly in a store that wasn't gonna be open, we had it on our website and we were able to start selling that and turning that back into cash.
And so that was wildly helpful.
I guess that year in the fall of that year.
You got a like a cold outreach on LinkedIn from
some are Levi's and and this was just to kinda like do a you thought maybe like a brand collaboration or something. Tell me about
That message.
Yeah, so I got this message and it was from a woman named Lauren and she said, We feel like there's a lot of brand synergies between Levi's and Beyond Yoga, and we'd love to talk about ways of working together and a possible collaboration. And
I thought we were gonna do a collaboration and then um
She was like, Great, next steps. I'd love for you to talk to our CFO.
And
You know, he said to me, I'm you know, we're interested in diversifying what we're doing at Levi's, you know.
Our demographic lens.
excuse more towards men, and I like the fact that beyond yoga is primarily
female and
We may want to acquire a company.
Or we may want to build activeware on our own. And I said, in my opinion, I think you should acquire somebody because
Everybody thinks that they can build an activewear brand, and I've seen so many people um
Do it and
Not realize how difficult and nuanced it is and fail.
Trying to pitch him on me. I was just
giving advice and
Ultimately, um, you know, that conversation went well and we had multiple others and when they said that they were interested in
Acquiring us,
I was extremely flattered.
You know, we absolutely were not looking to sell the business at that point, but it
It was Levi's. Yeah.
And the fact that they've been around for a hundred and seventy years
I also was thinking about my team and what it would mean.
For all of us, I feel like everybody who worked for me was kind of in this like scrappy startup mode, even though we were.
At sixteen years in at that point.
We had always I always felt like people were really
Taking a chance on us and
I thought that'd be a
This would be a really great way to make sure everybody was taken care of into the future.
So it was announced in twenty twenty one that they were
Acquiring
You guys.
f uh for four hundred million dollars, which is an amazing
deal. I mean, you know, for especially for a company that was start started out so small, um what were you able to do like almost immediately that you
you weren't able to do before.
One of the things that Levi's was really
excited about when they acquired us was the fact that we had never opened brick and mortar stores.
And so that was probably one of the most exciting parts of um the acquisition. And um
Yeah, so while I was with them for the last two and a half years, I was able to open six stores.
Well.
Um
I I think that your your dad passed away a couple of years ago, so he was able to see this happen.
Right.
He was. And that was
So um cathartic to me.
I'm really glad. I kind of feel like this acquisition, um
It was kinda like
He got the exit that he always wanted to.
and I I know he always wanted to provide for, you know, our family and take care of my mom. And I I know that when when he passed a new he
Felt.
Good knowing that my mom would always be taken care of.
I know that you formally stepped down from the company in February of twenty twenty four, and also Jesse, your husband, stepped down as well. And so
What did it feel like after, you know, twenty uh almost twenty years of that was your day daily job. I mean that was what you
Lived.
and breathed every day for nineteen years.
Two all of a sudden it just ends.
It was really hard.
Um
Somebody gave me some really good advice. They said, you know, your first day.
that you're not going into the job.
Wake up on vacation.

And so we Jesse and I we decided we were gonna go to Mexico, which is Caba, which is like our favorite spot. And
It was weird that first day though. Like I wanted you know, I'm so used to being in constant communication with my team. And
There were no emacies.
I actually spent that entire
day just lay at the beach listening to episodes of how I built this.
The thing that was the hardest about this whole time, though, or this whole step down, was just not being able to talk to the team. And it wasn't that I couldn't, but I think I had this crazy idea that like
I was g still gonna be coming to the office and like bringing people coffee and going out to lunch with everyone. And I realized that I just needed to give everybody a little distance in the beginning and
Um
Then he needed to give myself that distance too.
You know, I have two small children that I want to be able to volunteer in their classroom. Um, but I've also
Gotten this incredible opportunity to just meet so many female founders and
Get involved in the
you know, the female founding community in LA. And when I was running Beyond Yoga, I was so heads down and so focused on running the business. I
Barely ever talk to people outside of you know my family and my m team and my immediate friend group.
And so I personally just really want to be that person for other people right now because I feel
Very fortunate for
How this all
Ended.
So
I mean, you know a question's coming'cause you've heard the show before. How much of it do you do you attribute to luck and how much of it do you think had to do with
Just the grind and the hard work.
You know, it's definitely a uh
A mixture, but I do think that
Luck favors the prepared mind, right? And
I think we put
a lot of really hard work into this business and set ourselves up.
To be lucky.
But
There's definitely
An element of luck here.
Um
And you have
I mean
the rest of your life and career ahead of you. I mean you're you're
You know, you're still young in your forties, like what do you think you want to do?
With the rest of your life.
That's a great question.
You know, one of the things that I promised myself was that the first year I
Wouldn't start another company.
and I wouldn't join any boards. I would just slow down and really
Enjoy.
You know, this time in my life.
And that's what I'm doing. But I I would be lying if I didn't tell you that.
Every single day I think about starting another company.
That's Michelle Wailer, co founder.
But beyond yoga.
By the way, these days, Beyond Yoga has expanded way past its original mission of women's activewear.
It now sells clothes for men and toddlers, and in fact, if you're not into yoga at all,
You can even buy yourself a Beyond Yoga pickleball paddle.
Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at gyroz.com or on Substack.
This episode was produced by Chris Massini with music composed by Ramtina Rablui. It was edited by Neva Grant with research help from Catherine Seifer. Our engineers were James Willitz, Patrick Murray, and Robert Rodriguez.
Our production staff also includes Alex Chung, JC Howard, Carla Esteves, Sam Paulson.
Carrie Thompson, John Isabella, and Elaine Coates. I'm Guy Raz, and you've been listening.
how I built this.