Episode Transcript
[00:00:00] Speaker A: Think about going head to head with Airmes, which is really the only other scarf purveyor in the world that you can think of. Would you pick your first business on your own to go head to head with them? Well, Sarah did, and when you hear her story, you're pretty convinced that she's going to be right up there neck and neck with them. Thanks for listening to Sarah Summers of Shop to Seda.
Sarah, how's business?
[00:00:43] Speaker B: It's good, thank you. Yeah, everything's good this year, 2023, has been a big expansion year for the business.
[00:00:50] Speaker A: Okay.
[00:00:50] Speaker B: So we're just trying to ride that wave and take advantage of all of the opportunities that are coming our way.
[00:00:56] Speaker A: Okay, well, not many people can brag about taking advantage of all the opportunities. So I know wholesale was on your list. Has that played out in the way you wanted?
[00:01:03] Speaker B: Yeah, I would say it's in process. I mean, it's like anything. Well, the background on the brand, we're obviously selling direct to consumer as well, which is very straightforward. Wholesale is a B to B sales process, which you're very familiar with, obviously. So that takes a longer sales cycle. A longer sales cycle. So we've been planting those seeds and we've been making headway, but I think we'll be reaping more of the rewards of our efforts probably going into 2024. But we're getting there. And I think for us, it's not just about having lots of partners around the nation indiscriminately, but instead, because of the nature of our product and the nature of our brand, really finding like minded brands, like minded retailers where we fit into the story and the curation that they're sharing with their clients. We want to make sure that we're in the right neighborhood.
[00:01:58] Speaker A: If that makes yeah, no, it makes total sense. It's funny, we just visited with someone who was so long on retail, which if you look at all the trends, you wouldn't say that was a great investment, yet she's definitely proving the model wrong and you're somebody doing the same. What do you think is the differentiator in your retail business? Your retail presence, not your B to C, just the footprint you have in.
[00:02:21] Speaker B: Lake Forest, the footprint we have. So I believe that it's really about and I'd be so interested in what your other guests said, too. But I think it's really about the atmosphere and the energy that you create for the client when they step in. The door and just taking that pause and taking that moment to have a connection, to really share your brand story and then in the process, learn about them and what pulled them into your store or what even pulled them to Lake Forest that day. I mean, this is something that I find very interesting. I think of all of these north shore communities as these small, beautiful and amazing, but small town communities. And even in Lake Forest and the little downtown, every day we're getting guests from around the country and around the world. So it is amazing how when you make that personal connection and you really start to learn the stories of the people that are crossing your threshold, it really helps you to think about what are you projecting within your four walls. And what can you do to draw more and more of these really diverse, dynamic people across the threshold and into the store environment?
[00:03:34] Speaker A: Yeah, so I think the fact that you have these collaborations with artists is good because you have someone else helping tell your story. And Scarfs and accessories are a limited purchase category.
So how do you combat that? Say I buy this and maybe I buy another one for the season. I probably don't buy 20 like I buy shoes. So how do you combat that? It's not an intuitive thing to go into a Scarf art store.
[00:04:03] Speaker B: I love how you called it a Scarf art store because I do think that curiosity is something that brings a lot of people into the store, especially for those of your listeners that may have visited. It's really set up in a very gallery like manner. So I think people sometimes come in and they're like, what is this? Is this a gallery? Is this a store? And then we explain that connection between us commissioning artists from around the world to create original artwork for us that we then use to make the Scarf designs. And then everybody kind of has this like AHA moment or this little click which I think kicks off for a lot of people that moment of curiosity where they want to learn more. But your question was how do you get people to come back again and again as our clients? Just like with anything, and this is something that we're always juggling as a business is we need newness, we need newness. We're always working on our next collaboration. And so we do have this very loyal client base that does get excited and wait for the new releases as they come out. And as opposed to the more traditional fashion cycle that you might see in a ready wear to brand, ready to wear brand or in other accessories brands, we're not releasing our spring collection and then the fall collection. Instead we're just constantly releasing new scarves. We're trying to get into a rhythm of having regular releases on a monthly basis across our different size ranges. So that brings that newness. We're not then seasonally based and since everything's run in limited edition quantities, I think that that also helps the customer to make that decision. Am I going to grab this now or am I going to wait and see? Is it still here in a little while.
[00:05:48] Speaker A: So one of the things that I talk to people a lot is how are you building your business for the future?
So if decades just hits all your goals in the next three years. What does that look like?
[00:06:05] Speaker B: Well, the thing that I think it makes our business very dynamic, it's also part of the challenge. But part of the opportunity in the same way is that we're focusing even at this early stage on developing multiple revenue streams all at the same time. So I of course, would love your opinion on this. It's a very challenging thing to do, especially when you're a small, lean and mean team. But the business started to naturally kind of organically evolve this way from the beginning. I was saying earlier, I didn't know that so early on in our business's development we would have a retail storefront. That was always something that I aspired to, but I really thought that we would be direct to consumer first online. I thought we were going to be an ecommerce led business. I came from a finance and a technology investing background. I was really interested in everything that was happening in the D to C world and tracking brands that had grown up as direct to consumer first and looking at how they established their business models. And that's what I was looking to initially emulate with how I built the SATA. But as mentioned, there was this opportunity to open a storefront in the town where I lived and was raising my family. And I thought, why not? This is a great opportunity to connect with the community, get out there and get that direct feedback loop. So already on almost day, I mean it was less than day, whatever 360 we had the direct to consumer online, which I had established first. We had this storefront that I was trying to figure out how I was going to maximize that opportunity.
I started traveling and participating in different trunk shows with different organizations and different retailers around the country. Then there was the wholesale piece, which also I had on the roadmap, but I didn't know it was going to come as quickly as it did. But we were very lucky early on to have a great supporter in the Art Institute of Chicago's museum shops. I was connected to the woman who was running the museum shops at the time and she thought our line would be a great fit for the museum, makes so much sense. And so they were our first wholesale partner and then so that kicked off me thinking, oh my gosh, okay, this is a great fit, this is working well for us. What other profiles of retailers would be good for us? And then another opportunity that presented itself and this is something we've really leaned into this year is doing custom scarves for different brands and different organizations and we had the opportunity to really initiate that process last year in 2022. And just organically on the heels of that activity have been approached by other organizations. And so we have another half a dozen collaborations in the works right now. So it's a lot of different revenue streams that, as you know, have different KPIs and metrics that you're looking at and all different goals and different sales cycles. And we're just trying to throw that all into a blender and make it work.
[00:09:09] Speaker A: Okay, so I think all of what you said shows why you'll be successful. You have such a business brain. And I think a lot of people have just the creative brain or maybe just the business brain, but you have to have all the brains when you're in entrepreneurship. So I think the no concentration, I think that's a really strong play. Not just having retail or just having wholesale. I think in this channel, multiple streams of revenue is just so important. Is the business profitable at this point?
[00:09:40] Speaker B: It is. Well, yes. We achieved a break even level of profitability going into 2023, which we've maintained this year. For me, that was always a strong personal goal, a very important personal goal, because I don't believe a business is a real business unless it's generating profits.
Although we could get into a big discussion about that because the Amazons of.
[00:10:03] Speaker A: The world, I would like to squelch that dream because none of us are Amazon. We have to run businesses to have ROI.
[00:10:11] Speaker B: We have to exactly. And that respect. I was very pleased. But it's a big tug of war for me as an entrepreneur because I have self funded the business to this point and really bootstrapped it. And I came from the world of finance and also early stage technology, investing not consumer products or retail, but more software as a service businesses. And there is something to be said for taking on capital from the right partners at the right terms, with the right plan and vision in place. And I'm really proud of how scrappy our team's been and what we've learned and what we've delivered on what we have to work with. But now that I have the experience that I have under my belt, and now in this space in particular, and with building my own brand, and now also seeing that we do have a brand, I think there's a difference. It's a small one, it's a growing one, but it is a brand. It's bigger than just the product in and of itself.
And I think there's a lot we could do to take the business to the next level with.
[00:11:18] Speaker A: So whether you funded it or you went out for money, sometimes people have a pile of money and not enough opportunity. But you started with, we have a lot of opportunity. We got to run it down. So would more capital allow you to deploy on some of these opportunities?
[00:11:36] Speaker B: I believe it would. I think one of the things that's slowing us down a little bit right now is just our opportunity to create breadth and depth of product.
And like I said, I think we've done a nice job proving out the model for where we're at. I know you're really familiar with the brand, but right now, all of our products are silk scarves, and they're of various size categories. But we've kept it a really lean, mean collection, and we've stayed in this niche on niche like silk scarves within a much broader women's accessories or group of categories that we could explore. I think it's taken a lot of discipline to stay where we're at, but it's been really good because we've proven out the model. But now when I look at where would I deploy capital, I would love to have more capital to develop more. Our product is not inexpensive to make. Everything is printed in Italy. We use only premium grade silts. All of our scarves are finished with a hand rolling technique, which means an individual seamstress like hand sews the edges of all of the scarves, which is a 45 minutes process per scarf. So these are all things that they're costly, and I want to defend our quality level and our place in this premium category. I think it's very hard to establish a business there, and now that we've got it and we're in that premium bucket, I want to really defend it. But so if I want to bring more depth of product, I have to have money to invest in that product. We also are paying these artists around the world to share their creativity with us and to be our partners in developing the product. They need to be compensated well for what they're bringing to the brand and to our clients as well through the products that they help develop. So it's not an inexpensive thing. So I would love to do that, create more product and test engage the market's reaction. And then I mean, this is another tricky thing for any business, but the marketing engine is a beast, and you could spend infinite amounts of money on marketing.
A lot of our marketing has been more word of mouth and through developing, like I said, this very loyal, passionate client base. And then, of course, the little bit that we do through social media, et cetera. But we have not spent a lot yet on paid marketing and advertising. So that's another place where I would.
[00:14:22] Speaker A: Like to see what goes money.
[00:14:24] Speaker B: Yeah. See what kind of ROI we could get if we got some really talented people around us that could help us on that journey of exploring paid more. So those are things I think about, amongst other things. But those are some of the top.
[00:14:36] Speaker A: Do you think about selling the business?
[00:14:38] Speaker B: No, not at this point. Not at all. I think there's a lot of runway. Who knows where the business will ultimately go? I do think that I have some great examples that I've looked to out there for independent brands that have scaled and ultimately found the right partners for themselves. But I don't see that for us in the short to medium term. I think there's so much runway. I did a lot of research into the licensing side of things, too, when I was starting to say that I didn't know when I launched a scarf. Am I going to sell five of these? Am I going to sell 50 of these?
[00:15:13] Speaker A: Right.
[00:15:13] Speaker B: Do I have potential to sell 500 of these? I really didn't know. So I didn't think it was fair that the artist would bear that risk. Right. Like me, as the business owner, I had to bear the risk they're going to deliver their finished product right. Which is beautiful, creative artwork that they're providing for us. They've done their job. Now it's my job to sell it, to market it and to sell it. So that onus is on me. So I just thought it would be more fair to pay them an agreed upon lump sum upfront and then bear the risk and see where we landed. But over time, as we become a more established brand and as we can have better, well, it's still very challenging, but we're getting better at having that visibility into. Okay, if we launch this scarf at this time of year, we think initially, in the first few months, we'll sell X to Y, number of those scarves, we could move to more of that licensing model. I think we have flexibility built well.
[00:16:17] Speaker A: If you end up scaling the business like you're talking about, it will have been a better investment to buy it up front because now you're going to put in toiletries and whatever all the different things their rebuttal will be. But you're selling so much and you'll say, yeah, but I paid you up front. So, I mean, I think that ultimately it probably works out better the more you grow.
[00:16:40] Speaker B: Right.
[00:16:40] Speaker A: If you stay sort of at the level you're at, it might be better for you because it's less money up front, the licensing model. But hopefully you're talking about because you're in year coming up on four. You're really moving to a different phase of the business if you can step on the gas.
[00:16:58] Speaker B: That's right. And for me, I think it's a dynamic, fluid discussion that we're having with the artists. But just to be clear, I always want to do what's in their best interest and what's fair for them.
The whole idea is to shine a spotlight on them and to reward them for their creativity and their work. We don't want to in any way be like, taking advantage. Everybody should be paid fairly for what they're contributing to the business. And there's market rates for what these artists deliver. So we got to be squarely within that market rate and reward them for when they deliver well for us.
[00:17:38] Speaker A: Yeah. In a way, you're being the good business person for people that aren't good business.
[00:17:43] Speaker B: People are savvy.
I don't know, maybe I'm just connecting with artists that are really commercially minded. I mean, when you think about it, not every artist would maybe want to do something like this, right? Like, they might just want to create their one off piece, and then it would live as that one piece, right? They might not want to have something that they create, be produced hundreds of times. But the artists that are finding us and that we're finding, they fall into that bucket of being very commercially minded and wanting to get their name out there and grow their following.
[00:18:21] Speaker A: I'm in the art business, and I just find there's extremes, right? Like absolute, epic, most incredible marketers and business people one of those, and then all others, and they're good at defending their creativity, not good at the numbers. So I like hearing that because I think their product and their production is just like, whatever we get paid for, they're just not good at asking for it. And I find, like, anybody who is a business person who doesn't ask for it, doesn't deserve to get it either. I mean, you got to be able to speak up and defend what you want. So if you are the voice to defend people, that's pretty awesome. But I do find that is a big problem in the art space. We've had a couple of really great artists on lately who have no problem with it, but equally, we run into many people that are just, I do it for the love of the art. And I'm like, okay, then don't complain about getting paid either way.
[00:19:15] Speaker B: Yeah, of course.
It's a learned skill, too, right? Asking for money is a learned skill.
So if you haven't been in an environment where you've been exposed to that, or if you haven't been coached how to do that, it can be really challenging. Really challenging. So it is a learned skill, and if you want to learn it, you can learn it. One of the things I speak a lot to about internally with my SWAT team, with my team, and then also our PR team, is that we have an opportunity, I think, to be the as in like, capital T-H-E scarf brand. When you really break it down here in the US. If you wanted to buy a scarf, where would you go? I think immediately at the luxury end of the market, the first thing that most women would think about would be Hermes. But after that, what else is of it just falls off. If you want a unique, quality, beautiful product that falls in this category, where is your go to stop? When you want a new pair of shoes, you probably have a short list of brands that you know and love that you go to. When you want a new handbag, you have your list of favorite brands that you go to. If you'd like a new pair of earrings, you probably have an array of brands that you go to. But if you're thinking, oh, I'd like a scarf to wear with my new trench coat this spring, or, I'd like something really beautiful to pair with this new trouser suit I'm wearing to the office this fall. It's like, outside of that connotation we have with hermes, like, where do you go? And so nobody else has claimed that spot in the landscape, so why can't we? I feel like we're just ready to plant a flag and to do it. So the idea of selling is not something that's on my radar right now. Instead, I think a lot about what could we do to really grow and really try to do all we can to own this category.
[00:21:13] Speaker A: That's awesome.
So really raising money might be a more imminent kind of getting a partner just to have more eyes on it and more strategic growth.
[00:21:25] Speaker B: Absolutely. And I value the idea of the partnership a lot. And I came from this world where I worked in large scale private equity and then raising capital. And then ultimately, I ended up deploying capital and working with a couple of partners to invest in early stage businesses. So I saw pre revenue businesses all the way up to businesses that were worth billions of dollars, and I saw the partnership dynamics and how they can come into play. If somebody's writing you a $25,000 check or somebody's writing you a $250,000,000 check, partnership dynamics are super important. It's not just about the term sheet that you're subscribing to. So when I think about taking in capital, I think about it not as just, I need dollars, but who would those right partners be? And as I've stated a couple of times already, I came from a very different world. So everything that I've learned about building a consumer product oriented business, a woman's accessories business, retail, selling online, all of those things, it's been really a trial by fire kind of journey where I just thought, I can figure this out, and I'm really passionate and interested in it, so let me just dive in. But how lovely would it be now that we really have some there there to surround myself with people that have seen the movie before and could help us really take the business to the next level?
[00:22:55] Speaker A: Yeah, well, your background is why everything is so premium and great. I mean, it's impressive what you've done in short order. And I just asked the questions because of your familiarity, you'd be capable of raising money or selling, and there are two different paths. But I love the growth path. That's exciting.
[00:23:14] Speaker B: Yeah, why not?
[00:23:15] Speaker A: Where do people find you?
[00:23:17] Speaker B: Where do they find us? Well, first of all, if you'd love to come experience DeSeta in person, IRL in real life, we're in lake forest, illinois, right in downtown market square. 266 market square. So you can come see us there. Our website is shop. S-H-O-P daseta deseda.com. And the same for instagram and Facebook shopdeda.
[00:23:43] Speaker A: Awesome. Thank you so much, Sarah.
[00:23:45] Speaker B: Thank you. Thanks for the chat.
