We regularly invite leading entrepreneurs and investors to host Q&A sessions with the Stripe Atlas community. Heidi Zak, co-founder and co-CEO of ThirdLove, recently answered questions from Stripe Atlas founders.
What worked in your early fundraising days?
We were able to raise money because we were credible founders: knowledgeable, passionate, and able to build and sell a huge vision.
I angel invest in other companies getting off the ground and one of the biggest mistakes I see is founders who don’t sell the big idea. It’s not about what you’re going to execute on in the first year or the first three years, it’s about who you’re going to be in five or ten years. What kind of billion-dollar business are you building? What’s your grandiose vision?
I personally struggled with this. I learned from my co-founder, Dave, that it isn’t lying to talk about what you want to become. Sometimes it can feel really awkward for people to sell that big vision, but that’s what you have to do.
What didn’t work in your early fundraising days?
At the beginning, we tried to talk about everything. But the biggest learning for me is that you actually shouldn’t do that.
Each pitch conversation is different. You can’t have a standard pitch that you deliver to everyone and expect it to resonate. You have to read your audience.
Look at eye contact. Look at body language. Are they bored with what you’re talking about? If they are, just move on. Don’t feel compelled to talk about everything. Just talk about what is interesting to that specific person and then move on.
How did you iterate on your pitch deck?
Every single meeting it changed. Pitch decks evolve because every single meeting someone will ask you a question you haven’t heard before.
By the end of pitching for any of the rounds we raised, we were on fire. I could have done it in my sleep with my eyes closed. I knew how to answer every single question. But at the beginning, you’re sort of stumbling.
Each meeting gives you a chance to go back, look at your slides, and ask yourself: “Am I telling this complete, compelling story, and what can I update in here to make this better?” Your pitch deck is a living, breathing organism, and it will evolve over the length of your raise.
How far along were you when you raised each of your rounds? And how big was each round?
We’ve collectively raised three rounds. For the first nine months we bootstrapped: We put in $50,000 of our own money; we hired two people. And then, prelaunch, we raised our $5.5M seed round, which was the largest consumer seed round in 2013. And then we raised our $8M Series A in 2015. In 2017, we raised our Series B, though we didn’t publicly announce it.
The hardest round to raise is an A. Investors want to see product-market fit, and on average, an entrepreneur doesn’t yet have product-market fit. We certainly didn’t—we had some things figured out but not everything.
How long did each of those rounds take?
They each took about three months.
The first thing was an informal coffee chat where I gave the investors a little update on how we’re crushing it in the business. And at some point in the conversation I would just say: “Hey, we’re thinking about raising soon, probably sometime in the next few months.” Doing that helped me understand how interested people might be. So that’s the first step.
And then there’s the pitch meetings themselves, which I usually tried to keep to under a month. So it’s a month of coffee chats, a month of meetings, and a month of potentially negotiating.
Building a modern brand
How did you originally educate and convert customers while keeping your customer acquisition cost (CAC) low?
That’s a very good question. One of the near-death points for ThirdLove was in early 2015, right around the time when we were trying to raise our A. At that point in time, we had manufacturing in place, we had amazing product, we knew women who had our bras loved them. We just didn’t have enough customers. We were on Facebook and our CAC was $400. It was crazy!
We had about 12 people at our company at the time. We were sitting around a table and the stakes were clear: If we don’t figure out how to acquire customers profitably, we’re going to go out of business in a year. So what are we going to do?
At the time, we were putting up ads that said “This bra is really comfortable” or these other generic, blanket statements—this is the most comfortable bra you’ve ever had, blah blah blah. It wasn’t working.
People didn’t know who ThirdLove was. Nobody had heard of us, nobody trusted us, and women had been let down by their bras and had been for their entire lifetimes. How were they going to trust a Facebook ad by this crazy company promising the most comfortable bra they’d ever worn?
The answer is they’re not. They don’t believe you, they’re not going to click on the ad, and they’re not going to spend $68 on a bra that could be the worst thing they’ve ever bought.
So we had a crazy idea, which was to create this program called “Try Before You Buy”—nobody else does it, even today—and this is a program where you can pay $2.99 and we’ll send you a bra, let you take the tags off, and actually wear it for 30 days. If you decide to keep it—if it is your favorite bra—you pay for it after the 30 days. And if you don’t love it, you send it back for free.
That program completely changed how we were able to market. We were able to get someone’s attention and prove value up front before charging them money.
Other than Try Before You Buy, what strategies have worked well at converting prospective customers into first-time purchasers?
The biggest one is our Fit Finder.
For anybody starting a company, there are two questions to ask yourself. One is, do you have a creative tagline? We had Try Before You Buy. The second is, what is hindering the most people from trying your product? For a bra you’re buying online, it’s women worried about finding their size.
We created a Fit Finder quiz so that a woman could answer 10–15 questions and then we could recommend a size. We educate her on why the size is better for her and we create an environment where she’s much more comfortable making the decision to purchase, because we helped identify the right size for her.
Direct-to-consumer (D2C) brands usually appeal only to specific niches, but ThirdLove uniquely has mass-market appeal. How did you do that?
That’s funny. I wish I could tell you that building a mass-market D2C brand was the master plan all along. 😂
We didn’t plan on it, but that is in fact what ended up happening. When we started out, we targeted 25- to 45-year-old women. We quickly found out that we were reaching women of all ages because we had an amazing product—a bra that was comfortable and beautiful.
Think about our competitors: There's Victoria’s Secret, which is obviously not how women want to be marketed to, and then you have department stores, where there is no marketing. On the other hand, our marketing is non-offensive at a very basic level. I think that really resonated with women of all ages.
But how do you tell a message that is appealing to everybody without being bland?
Comfort and confidence and empowerment is a message that resonates regardless of whether you’re 15, 40, or 75. At its core, that’s what women want. That’s who they are.
When the core message is that strong, you actually shouldn’t say anything else. You just need to stay focused.
How have you gotten your customers to trust you?
We don’t focus on making a sale.
To us, it’s not about how many bras we can sell, it’s about how many women we can make happy. If a woman gets a bra from us and she doesn’t like it, we want her to return it.
At Victoria’s Secret, you walk into a store and their main goal is to sell you something. It doesn’t matter what size you are. They’ll try to sell you whatever size they have in the store. They force you into something that’s going to make money for them even though it’s not good for you.
For us, if we don’t have your size, we’ll just tell you we don’t have your size. We focus on customer happiness above all else. If you do that, then everything else follows.
The challenges of scaling a company
In the early days of ThirdLove, did you ever feel overwhelmed by everything you needed to do?
No, never. 😉
I would say 80% of the first two years was one failure or letdown or stress after another. I spent 80% of my time feeling completely overwhelmed. And then 20% of the time would be some big win—an amazing customer interaction, a great article in the press, a product launch. But in the early days the vast majority of your time is spent trying to figure things out.
It’s very, very hard, and the only thing I can say is it takes a long time. If you’re building an ecommerce business, a lot of it is about building a brand. And that just inherently takes time. There’s no amount of money or forcing it that’s going to make it go faster. You just need to be in the valley of death for a while and get comfortable there.
What’s the biggest challenge ThirdLove has faced as it’s scaled?
Hiring. How do you consistently hire great people? It takes a lot of practice and a lot of time.
To do this well, you need to identify what kinds of people are most successful in the first place. The questions to ask are: What are the common characteristics of the people who’ve been the most successful? And why are those traits making someone successful?
The other thing that helps is that we do all of our recruiting internally. I am a very strong advocate of building your own recruiting team because (a) who wants to pay for an agency and (b) nobody knows your company like you do.
What challenges have you personally faced as ThirdLove has scaled?
The hardest thing for me is not knowing everybody the way I used to. When we were 30 people or even 60 people, I knew everybody pretty well. I knew about them and their personal lives, and I worked a lot more closely with them. Now I don’t.
To try to fix that; I do a lunch with small teams of three to four people every week. I get to hear what they’re working on, what their ideas are for the company, and how they think we could be doing better. Figuring out ways to do things like that are really important.
Do you have any parting thoughts?
Building a business is really, really hard. If you’ve started something, you’ve already done more than most people. It reminds me of Peloton. The instructors always say: “What’s awesome is that you’re on your bike right now. You’re on your bike, and all these other people are in bed. You’ve done something for yourself!”
It’s the same thing. Incorporating and getting started and selling a product is really hard. And then it gets even harder. But every step of the way you’re making progress.
Be cognizant of that. Don’t beat yourself up. Every entrepreneur goes through the journey. Success doesn’t happen overnight. Hard work, dedication, passion—that’s what’ll get you through the valley of death and onto the other side.