S5E1: Jeremy Cai and Italic are Changing the Game for Manufacturers and Merchants

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We are so excited to welcome you back to The Room for Season 5. Today we sit down with Jeremy Tsai, CEO and founder of Italic. Italic is an online retailer that sells high-quality essentials from the same manufacturers as top brands. For 50 to 80% less. Jeremy is on a mission to make quality affordable, but also to empower manufacturers to become merchants. On today's episode, we discuss the early founding firsts of italic, the evolution of the italic business model, and of course, the future of marketplaces in e-commerce. Let's open the door.

Jeremy, thank you so much for being on The Room today.

Yeah, it's a real honor to be here. Thanks so much for having me.

We'd love to start at the beginning of your story. You were born in Illinois, and prior to having started italic, You had family roots in the world of retail supply chain. Tell us about how your family's background in the manufacturing sector really influenced your early interests.

I think I have your classic stereotypical founder story where I grew up in Chicago, moved to school out east, dropped out, moved to San Francisco. And growing up, you know, a lot of the dinnertime conversations we had— for context, my parents started a manufacturing business maybe 40, 50 years ago. We would spend a lot of time talking about, new clients, new equipment, new quality control, new facilities, so on and so forth. And I think in typical founder fashion, definitely did not want to go do what my parents did. And manufacturing was the last thing that I thought I would kind of go back to doing. But after my first business, which was enterprise HR software company called Fountain, really took off and I was 4 or 5 years in, I had a chance to kind of think about what I really wanted to do for a much longer period of time. And I think I really came back to those conversations I was having with my parents at the time and also kind of earlier childhood, just like remembering the interesting things about that. So there's a really big part in playing to the origination of Italic.

I totally relate. My dad actually also works in venture and I never thought I would want to go into it. And ultimately here I am. And it's funny how you realize your dinner table conversations actually were really informative growing up into what you know and what you love today.

So Jeremy, Italic was not your first business as a founder. Tell us about your time as a Thiel Fellow and then the two subsequent startups.

The Thiel Fellowship really was a really cool experience that I think offered me two things in particular beyond just like, let's say, just the money, which as you both know, going in San Francisco doesn't last very long. The first one was arguably the most important for me, which was I think short term, it was really important from the standpoint of like, hey, I'm Asian kid with Asian parents and like school was really, really important. And to justify leaving, you know, college, I'm technically even 8 years later still on a leave of absence right now. Like it allowed me something reputable and prestigious, if you will, to point at and say to my parents, hey, I can stay out of school at least for these 2 years and see what happens. Let me give it a shot. You know, beyond that, like obviously allowed myself to kind of be financially independent for a little bit. The second, which really had longer lasting impact in my mind, is I think as a founder, you quickly realize like how lonely of a journey it is. I mean, you know, Claudia, you probably know exactly what I'm talking about. And it's obviously helpful to have investors and friends and family and your team, of course. But at the end of the day, you're the founder. And I think it's really helpful to have a network of like-minded founders who are going through it at the same period, same time, and also most importantly, the same age as you, which I think the Thiel Fellowship uniquely offered. Whereas most of the other founders I had known at the time, dropping out was a little bit less in vogue, if you will, back then. Really offered that network of like-minded individuals and friends, which really offered a support system beyond just, let's say, the kids you went to high school with or grade school with. So not that that's not helpful by any means, but they just get it more. So I think that was really helpful. And then I guess going into the other two companies, really the three main things I I learned was, well, I learned a lot obviously from building a company in the first foray, but I think the most important of all was how important it matters that you care about what you do. My first company was called Fountain, love the team to death. I realized very quickly 2 years in is like, hey, you typically don't go into HR software. You don't drop out to work on enterprise software in the first place and let alone HR software. So I really wanted to do something I was a lot more excited about and 4 or 5 years in, I finally had that opportunity to. Then I think the two other quick things I really learned was the importance of team. I think there's a common saying of first-time founders care about products, second-time founders care about distribution. This is my third one, so I can say the third time you really care about the team most importantly because that's who you're going to be spending time day in, day out with. Then I think the last one is just from a young founder perspective, oftentimes you're tricked, not tricked, but induced into the ecosystem of, oh, you have to pitch to these very, very prestigious VCs and that's like you're earning the right to to build a company when in reality, a couple times in you realize actually they're the ones who are lucky to be on this journey.

It's clear that your wisdom from the first two experiences has definitely transferred to Italic and has certainly paid off. And just hearing your learnings, just even personally, has caused a moment of reflection. I am trying to focus on distribution and so many early-stage startup problems, but really with your first startup, Notpot, you were disrupting bail payments, and then with Fountain, you were scaling hiring. And with Italic, you've really shifted to the world of e-commerce, and that might seem like a big sector shift from your first two experiences. Could you walk us through the early aha moments that ultimately led to embarking on founding Italic?

The startup world that I guess I was thrown into and grew up in really was the one where, when like the Tim Ferriss MVP, minimum viable product, and Lean Startup is very popular. And obviously nowadays there's very different mentalities around that and whatnot, but I think there's really two types of companies that are created. One is one where you iterate your way through a number of problems and you're in many ways creating a startup for the sake of creating a startup. And there's nothing wrong with that. I obviously did that with Fountain. And I think that the second type really is what people might classically call a fat startup. I'm willing this thing into the world and it takes a lot less iteration and it's more like in order to get to step one, you have to basically cross a mountain to begin with. And a lot of examples, you obviously worked at Uber, you know exactly the challenges of a managed marketplace and the go-to-market kind of machinations of building infrastructure. But Itelic very much was in the latter camp where it was founded off of a very clear thesis, which was manufacturing companies don't actually care about the direct-to-consumer client they're servicing or the legacy client they're servicing. If it's a Gap or an Everlane, it's one and the same to them and they make margin the same exact way, which is cost plus, let's say, 15 to 20%, and then they sell it to a brand who sells it for 5 to 10 times. And really, I think the insight there was just like how Airbnb and Uber had kind of piloted these really novel new experiences in their respective categories, we think that marketplace disruption can happen in the same way, not on the brand side like you see with an Amazon or on secondhand marketplaces, but actually on the product creation process. So The core insight was like, hey, these expensive products that these brands sell for a lot of money are expensive because the brands have to mark them up many times to afford the retail distribution, afford, you know, selling direct to consumer for shipping, for Google and Facebook and so forth. But the products themselves actually are pretty affordable for the majority of the world for high-quality essentials. And that's like a very strong misalignment in terms of where the value is being accrued in the supply chain. The Italic case specifically, the way we validated this really was twofold. One, most importantly, we are a supply-driven business, so We need merchants to come onto our platform, see the value proposition, and get going. And the whole reason why manufacturers would do this, as opposed to what they've been doing for many generations, oftentimes like 50 to 100 years, is really these are oftentimes family businesses, second generation, third generation owners. The newer generations want to innovate more with e-commerce. I think in our case specifically, manufacturers are an incredibly low margin business. So here's an opportunity by selling on Italic to actually double or triple the margins, the yield that they were receiving off their existing production capacity. And then on the flip side, I think for the consumers, we needed to validate, hey, do people actually care about quality and price? And I think there's a lot of telltale signs that they do and they also don't. Like in the case of luxury brands, there is no world where like you will replace buying a Prada handbag for an Italic handbag. But on the flip side, there's a lot of people who, let's say, don't actually care about having that label on the product. And what they're looking for is like the highest quality at the lowest possible price for that products. I think in validating both of those, I could talk about specific ways we were able to do that. The first year we pitched over 150 manufacturers, 2 said yes, so it was incredibly invalidating. But I think over time, and this is why I was bringing up the vision-led startups, it's you keep at it so long that the why and the mission and the vision still persist. Otherwise, the second you have doubts around that, then I think that's when you probably should reevaluate. But for us, it persisted and we were able to get over that initial hurdle. And some startups just take longer to go to market. So we had to build a lot of that supply chain after the fact.

That is incredibly interesting. And I love the highlight you made around where direct-to-consumer has initially shifted in the popular conversation of eliminating the need for a retailer to facilitate your purchase. And you're reframing that and saying, sure, that's great. Direct-to-consumer is helpful. It does eliminate the retailer. It ultimately lowers some cost to the end consumer. But let's take it a step further down the supply chain and say we can eliminate the brand. You don't really even need them to be the middleman anymore. We can empower manufacturers to sell direct to consumer for the goods that they're selling that are providing the same experience for the end consumer that they would if they were being sold through. In that vision, which was quite bold, what, what was this, 3, 4 years ago, Jeremy, when you were getting started here?

Yeah, about 3 and a half.

Yeah, 3 and a half years ago. You mentioned a lot of nos. That's a pretty grim no rate to over 150. Who was the first manufacturer who did say yes to you on this bold vision you had?

The first one was a small leather goods manufacturer that had produced for brands like Prada and Miu Miu and luxury brands. And really for them, they were more risk tolerant. So they were— this was the fourth generation in the family. They were willing to take a shot on e-commerce. They had seen how it had transformed a lot of their clients clients' businesses. And as a manufacturer, you really have two ways to make more money. One is you get new clients, which in itself takes time and is also hard. And then two, you expand your business with your existing clients, but the downside is they'll then come to you and say, "Hey, can you lower the cost per unit?" And that's a yearly conversation everyone has at every Q4. So I think for them, they saw us as a means— and we didn't understand this at the time, something I think a lot of first-time founders really focus on or don't focus on is first of all sales, but then secondly, when they do sales, typically feature like, here's what we built, or look at all this stuff that we worked so hard on. When in reality, that's great and all, but what the point of the pitch is, is to understand the problem deeply enough so that the solution actually directly caters to what the person is hearing. In our case, on the manufacturer side, we were just saying, hey, we can do this, we can do that. When in reality, what we were missing and why the first manufacturer took a chance on us really was centered around One, independence from the traditional supply chain, meaning instead of having to rely on existing wholesale, like, here's a way where they could actually own a little bit more of their own destiny. Secondly was margin compression. So as a manufacturer, you're always dealing with your clients trying to squeeze you on cost, rising labor costs, rising material costs, rising rent, rising equipment costs, so on and so forth. So here's an opportunity to actually increase yields on your production lines without having to change anything. And then I think the last one, and arguably the, the most important one, was here's a way that you can achieve essentially what your clients have, such as the brands, but we'll do all the hard stuff for you, such as the fulfillment, the marketing, the design, so on and so forth. A lot of the manufacturers nowadays, what we realized over time, is they have really deep R&D competencies in-house, and a lot of the brands nowadays, the, the partners on the brand side will actually go to the manufacturer and just look at what they have in their showroom and then select styles that they'll reserve for their own brand. But in our case, like, we can actually augment their existing R&D competencies by providing all the other kind of components of brand so that they don't actually have to do that themselves. Those were the main kind of issues that manufacturers face today. And since then, we've gotten a lot better at refining the pitch and bringing merchants on, but it's taken a while to understand that.

Are you open to sharing how many manufacturers you're working with today?

Oh yeah, absolutely. We work with about 70, ranging from a couple in Europe, a couple in Asia, and a couple in the States.

Congratulations! From 2 to 70 in 3 years, that's amazing.

It's taken a while. We've gotten better.

You've added a whole suite of products that you now sell on Italian public, but orient our listeners around what was that initial product that you did sell? Because what I'm hearing is there was this challenge in building the manufacturing relationships, but then once they said yes, you had to build it so that the consumers would come.

Yeah, I think this is really the challenge of managed marketplaces because unlike, you know, pure-play marketplaces where peers can work directly with one another, in a managed marketplace, you have to build a tremendous amount of technology and infrastructure before you can deliver a single order or item in our case. The challenge in marketplaces, managed or not, is also you're managing supply and demand and you're always constantly either over-indexed on supply or over-indexed on demand. So in our case, it's solving that chicken and egg problem in a balanced way that is constructive for the merchants and we're not over-inundating them with supply relative to the demand that we can achieve for them. We've gotten a lot better at this in retail especially, Madison, as you know, inventory can either make a business or it can really kill a business. And if you choose the wrong product, you can get stuck with it, can dilute your brand, it can, you know, you have to run promos, so on and so forth. So we had to get pretty granular in terms of understanding the level of demand we saw for a product. And it's also amplified by the fact that it's not so simple as to say, hey, if we build this, will people buy it? Because people will often say, yes, I'll buy it. And then when it comes to the payment, like it won't necessarily reflect. To answer you very tangibly, we had a set of leather handbags handbags, we had cashmere scarves, and that was our initial assortment. Quickly found that the products that we had launched with aren't exactly what people wanted from a price point perspective, and we wanted to get a lot more aggressive on price point, and that's the whole purpose of the consumer value proposition. So we brought our margin down to basically negative, um, to achieve like the most competitive prices we possibly could. That's when we really saw the uptake happen, and that's when we started launching new categories to validate, hey, is this just in handbags, is it just in scarves, or is this actually more powerful in other cases? And it turned out HomeGoods nowadays actually performs better than fashion for us.

Hearing you talk about managed marketplaces definitely throws me back to my time at Uber and really, like, one of the big reasons why I ultimately left Uber and went into e-commerce enablement was to bring a lot of the science and technology that we had built over there to the world of e-commerce. And I'm really curious about, and you've mentioned this through, like, experimentation, just testing products. I'm curious about how you at Italic think about deciding what the product should be and what it should look like. Walk us through like the design process in terms of your product offering.

When it comes to a physical product, it's always a blend of an art and science. And I think in our case, we tend to be a little bit less egotistical around like we are, we know exactly what the customer wants and a little bit more around let's look at the market and look at the data and see what it tells us. In our case, we really focus around two segments. One is The categories, and then two is the specific kind of feature sets and designs that people want. And the categories, we look at it from a high-level basis. We have a constant kind of customer panel. We run consumer insights constantly. We run surveys at every single touchpoint, whether you're joining or you're exiting. And really, I think what we care about is, hey, if we launch this category, what is the incremental lift to our ability to acquire the next customer or our incremental ability to retain our existing customer and expand their lifetime value with us. And it can get pretty granular in the sense of, hey, if we launch beauty, we believe we can lift our AOVs and LTVs from a take rate and expansion perspective by X percent and also increase our ability to convert people off of the email subscription list who previously haven't purchased by X percent because they've indicated as such. So that's from a higher level way to triangulate around which categories we should enter. And then in terms of once we've found that we tried to do a lot of market research and customer research around what are the brands that people and customers actually like to purchase, not just the hot ones that are popular in bike hostels of cities like LA and New York, throughout the entire country. What are the things that they care about on those products? So for example, in our luggage, do people actually want a removable battery? And it turns out like it was very split evenly. 50% were vehemently against it. 50% were like, yeah, it'd be nice to have. It's things like that that we try to provide that information through technology to our merchants, and we build a lot of data orchestration to pipe that data from our customers to our, what we, what we call our internal product, which is the merchant portal. We want to eventually make the development process autonomous, essentially with the same level of data granularity as top brands, but it'll just take a little bit of time to, to get there.

I'm definitely split down the middle on the battery question because I think it's so practical and helpful, but then they always yell at you when you try to get on the plane with your battery in your bag now.

I'm a no battery person.

You're no battery. Okay. We heard it here first. Jeremy's no battery. It's just been incredible to see both the, you already shared, you have 70 merchants and, and manufacturers that are now on the platform, and then the number of customers and products that you're offering. You have been building this for 3.5 years and your initial 2 startups, I believe, were venture-backed as well. But when you went off to start Atelier, was venture the first step in terms of thinking about how you were going to get this off the ground?

That's a good question. For Italic specifically, we knew that this was going to be an infrastructurally intensive, capital-intensive business. But more importantly, I think is the reason why, and I think that's actually a question that like every founder should ask themselves. Obviously, the capital markets right now are a great time to be raising. There's more capital and more diversity and more money and, you know, available today than ever before. So if you're getting off the ground, you know, and you have a good reason to raise money, then I think this is a great time to do it. But I think that question of, hey, should you, or what is the reason why you should, is really important. In the case of Vitalik, this is something that I think is true for unique types of businesses. One of the most popular phrases we talk about in tech is economies of scale, and 9 times out of 10, I'm pretty sure that's actually not true. I'll give you a tangible example. In the case of Uber, it doesn't actually matter if Uber works great in San Diego if it doesn't exist in Chicago to someone who lives in Chicago. There's a lot of, I think, local market difficulties that don't necessarily result to pure economies of scale, whereas in the case of manufacturing, it is like, that's the textbook definition of economies of scale. The more volume you drive, the cheaper each unit gets. How that relates to Italic is we really benefit tremendously from scale in every single sense of the word, from our fulfillment costs to the product quality to the product prices to our ability to serve our customers, to the support team, to the degree where in order for Italki as a business to work, it actually has to be big and there's no other way around that. And if it can't get big, then, you know, we probably don't have a business here. So that's a justification in terms of, hey, we want to build this in a capital-intensive way because we believe the stronger consumer experience from a managed marketplace that benefits from scale will supersede doing it in a more lightweight, you know, bootstrapped way. I would also encourage any listener out there to really be deliberate about raising because the second you raise, like, you're basically signing up for a 5, 10-year journey at minimum. And that's what I realized with Fountain. So really be cautious because if you are a solo founder, it's kind of, it's pretty hard to get out.

That is an incredible point and a great piece of feedback for any listener who's thinking about embarking initially on their venture journey for scaling their company. And I have to say, congratulations for all the success you have had going through this this capital financing path. I believe you've raised over $50 million in venture dollars from incredible firms like Index Ventures and Canaan Partners. Just curious, who was the person who first said yes to backing your vision for Italic?

Yeah, it's actually kind of a funny story. Blake at Ludlow has been a good friend for a long time. He, back when I think he was still in college and I had just dropped out, he was the first VC Keith and I had ever pitched. And he was also the first no we ever received. It came full circle because, you know, when I had left Fountain, I was able to talk to a couple investors and just talk through the idea. And they were almost instinctively just without even a huge amount of proof needed, like they were the first yes. And I'm obviously lucky in the sense that I had time to build my network in San Francisco and had some proof points in the past with Fountain and so on and so forth. So I'm in a very grateful to be in a unique position when it comes to financing and know that not everyone can do that. But that was our first yes and very grateful I don't think we'd be around in the same way if it weren't for Blake and Ludlow.

As an entrepreneur myself, hearing about those kind of early nos and then now we're like talking again to investors. It's funny how small the community is and how a no a year ago or 2 years ago can quickly turn into a yes in a different context. So it's really cool to hear that story. We chatted a little bit about venture funding. We chatted about scaling the business. We also mentioned kind of negative margins. Would love to dig into your early business model a little bit. So Italic, if I have it correctly, initially started with a membership model. So you would pay monthly or yearly in order to access the platform. But recently you announced that a customer no longer has to be a member to shop on the platform. Tell us a little bit about what you were thinking through with your early membership model and ultimately why you guys are shifting away from it right now.

Really, it came down to two things. As is the case with every startup, I'll also have the humility to say, hey, like, we don't always have the answers and, and it is very possible that this evolution may or may not be the right call, but time will tell, and it's going to really depend on execution and strategy. But the reasons for the shift really are twofold. One is going back to the earlier point around scale. Originally, to set the competitive prices we wanted to, we would lose money on pretty much every single order, and that's why we needed a high-margin membership to essentially compensate for the losses we were seeing on the orders. Now, with scale, like, products get cheaper to make even though you're maintaining the same quality and experience, if not better. We simply got to the volume where where in most of our product categories we were starting to see margin, and so were our manufacturers, and they were happy about the additional scale. We were able to remove the membership with— from being a necessity to purchase to now being an optional upgrade, and we would still be able to, as a business, make money in both scenarios. The second reason really was more kind of a mission alignment, which was we really want to essentially empower everyone to have a way to purchase high-quality products and to live well as a result of And as a function, we really depend— our business is really dependent on the concept of the more customers we have, the more ability we can— more leverage we have to go to our manufacturers and bring them on to expand our product portfolios, to bring on new merchants who previously might not have said yes. And the result of all those new merchants is we can offer new products and expanded products that our customers previously wanted or potential customers might have wanted. Having the membership as a paywall, essentially, from people being able to try Italki was actually shooting us in the foot a little bit. Hey, we're intentionally gating the number of customers we're letting through that flywheel. Whereas in the new model, the membership is an optional upgrade where it actually improves upon your shopping experience, but it's not necessary to shop. So we want it to be great to shop without a membership and even better to shop with one.

It's really cool to see like over the past few years in e-commerce how there's just so many new ways to shop, whether it be a solely kind of membership access to platform method or a subscription box, for example, or a blended method where you can pay for additional benefits. I'm curious, what do you think the next, like, big innovation is going to be in terms of end consumers actually shop online?

Yeah, I think it's really going to be two things. If the past decade was direct-to-consumer, meaning the retailer was disintermediated, I really do think the rise of— the terminology hasn't really been crystallized yet. Some people call it from, you know, manufacturer to consumer. I really do think there is going going to be more companies that essentially disintermediate the brands and retailers and go connect the consumer straight to the manufacturer. And italic actually is not the first, let alone the biggest example of this. We're leading the front from the managed marketplace perspective and the premium goods side. But Shein, which kind of caught everyone by surprise, is doing $10 billion a year to a Western market. And with product that whether you like it or hate it, like people will purchase. And that's not a brand that has a legacy or heritage is something like a Louis Vuitton. Also, the second kind of fastest-growing segment in retail besides secondhand, which is first, is private label. So in the past 10 years, private labels in Walmart, Target, Amazon, so on and so forth— Target alone has 15 brands in-house that do over $1 billion each. I really think the concept of value will continue to expand in importance, especially as consumers get more intelligent and aware and educated around like where their products come from and the prices they can pay for that type of quality. You see this with The Wirecutter and other Reddit and blogs and so on and so forth, and increasingly improving the customer intelligence. And then I think on the flip side, you know, on the brands, Italic's stance isn't that brands are going away or that we're trying to replace them. Instead, we're trying to offer a value-oriented solution for every single segment. But like we said in the start, if you're going to buy a product bag, you're going to buy the product bags. We think emotional purchases are going to going to be increasingly experiential. You see this in every single luxury brand in Europe right now and the kind of crazy stuff that they're doing, which is really cool in terms of making the shopping experience more fun. I think more like a, I guess, a technological standpoint of that is expect to see more fun services like live shopping, which I know is really has taken off lately, in real life pop-ups, so on and so forth. Right now I think that's limited predominantly to the coasts and big cities, but I think that'll start creeping up throughout the rest the States and really just having more fun with shopping. Right now, I think this Western commerce really reflects back to how Asian commerce looked like in 2015. It was predominantly really frankly boring shopping experiences. And now I think it's going to be hopefully in the next 5 years disintermediated into value-based shopping that's very rational and probably frankly as well boring, but smart and makes you feel good. And then also emotional experiences that really serve the the need of kind of buying into stories and whatnot.

You just articulated an incredible vision for what the next 5 to 10 years for commerce could look like, which is something both Claudia and I are actively thinking about in our day jobs. And the concept of heritage, which you brought up, has actually been a theme we've been exploring since the beginning of this podcast. Our second guest was, uh, Coral Chung of Senreve. And similar to what you've built with Atalic, they have kind of rebranded what heritage can feel like as a modern heritage brand. Italic to me has so many similar ways in which it can relate to customers to say, you deserve the value, but you don't need to pay this insane price. What has that reaction been like from your consumers and how does it bolster the future for Italic for you thinking about providing opportunity to access luxury in a new way?

First of all, I'm a really big fan of SunRev and, and Koral. I They've built up what is admittedly a great business in an impossibly hard market, one of the hardest markets to target, which is extremely design dependent and really material dependent. And I think they've done it in a really smart way. In our opinion, you know, we compete with everyone. And as a result of that, we don't compete with anyone, meaning if you want to buy a bag from Italic, it's not like there is one other place to buy a bag. There are thousands. And same goes for Senreve and Monser Gabriel and so many of these other kind of handbag-focused companies, our opinion really is that brand matters tremendously. It's one thing to say that you are building a new kind of generational business and brand, but like another to actually compete. If someone wants to buy a handbag, they can buy from the legitimate heritage brands such as like Prada or Versace or whatever it is. And it's impossible, frankly, to replicate that type of legacy in a matter of 2, 3 years. Those have been around for 50 to 100 years. I think on the flip side, if you're looking for a modern, fresh take on that, A lot of the new crop of direct-to-consumer brands have done a great job on this. Instead of buying a Rimowa, you can buy an Away luggage. Instead of buying All-Clad, you can buy Caraway. People will always want value-based products. Our opinion is that design matters a lot and brand matters a lot, but there's two types of brands. One is a brand that specifically refers to the model itself, so buying low and selling high. Italik is not a brand. We are a marketplace that connects high-end manufacturers directly to end consumers. But the second, I guess, like definition of brand is like the expectation of consistency from the experience that you're purchasing. And a good example of that is like Uber or Airbnb where they don't— you're not booking like an Uber driver, they're connecting you to a local kind of driver. You're not booking an Airbnb-owned or managed hotel, you're— but they're just connecting you to that. And they've really built, I think, unique brand images and awareness around that type of platform. And I think that's what we really want to build as well. The expectation of what to receive, which is a really high-quality product for really great price point, but doing that across many categories.

Jeremy, I have to ask out of curiosity, what is your favorite product that's available to purchase on italic today?

Yeah, I'm biased. I live in Park City, Utah, so it gets pretty cold and definitely like skiing. So the, the product that I personally like the most, to be honest, is our shearling moccasin slippers for, for men and women. It's snowing right now, so I am wearing them and they're awesome. And they're also really affordable. I have a couple pairs.

Holiday wishlist shout out right there.

I was definitely eyeing those earlier, and I also loved how you said that home is such a good category for you because I was also eyeing the marble cheese platter. So yeah, maybe kept that in my cart later. We've talked, Jeremy, all about the journey you've been on as an individual to get to where Italica is today, and then also the twists and turns, both from the manufacturer's side, the customer side and ultimately the vision for the future. There's a really interesting, unique challenge we're all facing as consumers, but also I'm sure as suppliers, which is the current supply chain crisis we're having. You can't really watch the news or honestly for me, go to Starbucks without feeling the impact as a consumer. How has this impacted Atalic right now?

I think it affects everyone. So in our case, I'll respond very tangibly. Freight costs have gone up a lot and in some of the lower ticket items or bulkier items, I would expect prices to rise, not just with italic, but literally across the entire industry. In other cases, we've— the pace at which we're accelerating scale and volume to our merchants oftentimes will overcompensate for the rise in prices. So across the entire categories and catalog, I would say we're definitely seeing a little bit of inflation in terms of, uh, price point. But I think overall, like, we're seeing actually deflationary prices in some categories when everyone else is going up. And because of that larger volume efficiencies gained on price point. And then on the flip side, when bulkier or heavier products, like we're definitely seeing that kind of price go up as well. I think my main encouragement to everyone listening is go holiday shopping early this year, and hopefully this will come to pass. But there's— it also calls into attention like the fragility of kind of the global supply chain as it is right now, in terms of our reliance on freight brokers. Yeah, it's certainly a challenge for us and everyone.

What advice would you give to a founder who maybe is less seasoned or less experienced than you and embarking in building a of business in the global commerce ecosystem, given the challenges this crisis has brought?

This is, I think, not just true for e-commerce or retail founders. I, like every one of my peers, thought like culture was this like fuzzy MBA BS thing. It turns out it's actually like the single most important thing you as a founder and your company can be deliberate about protecting and deciding on early on. I really would encourage first-time founders especially to really be deliberate as early as possible about the type of company you want to build because ultimately that's going to dictate the type of people who come through the door. You also have a choice in terms of who you want to bring in through the door. You don't have to— just because someone has a great resume or great experience, you could have the best growth in the world, the best perks, the best office, so on and so forth, but if you have coworkers you don't enjoy spending time with, your work is still going to suck, I promise you. So I would really be deliberate about team and culture as early as possible. And every founder makes this mistake. That's really, I think, more important than anything I could say on e-commerce specifically.

That is incredible advice. And I'm sure Claudia is taking fastidious notes, as I know she's hiring, for anyone listening to this podcast. Okay, and our last two questions, Jeremy, the first of which is really, you've shared a lot about what's going on with Atalic and what's next for the business, but we're excited to know what's next for you.

I think really for me, it's, I'm no longer as, I'm still very young, relatively speaking, but like, I'm no longer like new kid on the block with super clear eyes and that perspective. And a lot of the things you can make decisions on early on I think really have compounding effects in terms of how you kind of come to see the world and also work and operate. Going forward, I hope to become a better leader in every sense of the word. Feedback is not something that you should have to feel defensive or protective about. It's something that you should embrace with open arms. And it's up to you whether you decide it's feedback to act on or to reject based on your value system. But I think ultimately it's stuff that will really allow you to work better. Your job as a founder and my job as a founder is not to do everything for everyone, but rather to build the team and to lead the team and motivate the team to accomplish the goals that we set out to do. And in the case of Vitalik, we have a whole lot that we want to do, including new category expansion like skincare and food and beverage, and also expanding our merchant footprint and infrastructure we can offer to them. On a more personal note is I think early on when when you're super young and doing this, like you put the company above all else and you make that your life and your identity. In many ways, yeah, it is, of course, like you signed up for that and that's what, you know, you're going to be thinking about 24/7. But make sure— I think for me, like something that I'm going to try to be a lot more deliberate about is protecting my own kind of personal time and time with my loved ones and relationships and, you know, so on and so forth and making sure that I don't let that go to the wayside. Your job is to not have your hands on everything, but rather to be in a great mental and physical space to be the leader that the company deserves.

Thank you so much, Jeremy, for sharing that and just sharing your whole entire journey. We're incredibly excited for what's to come with italic, but also for you as a leader. We'd love to ask our closing question, which we ask on every podcast episode, which is, who is a woman in your life that has had a profound impact on your career?

In my case, it is my mom, because without her starting— my mom actually started the manufacturing business and my dad works for her. Without her doing that, one, One, I wouldn't be working at Italic. And then two, I also wouldn't have that, I guess, founder spirit that was embedded in me from an early age. So I can give the whole immigrant story and whatnot, but I think that is really important for me and Italic. And then secondly is my partner Katie. I've been with her for 6 years. Being a partner of a founder, honestly speaking, it sucks. It's basically a free co-founder is the way I've come to understand it. So I'm very grateful for that. That.

Thank you so much, Jeremy, for being on The Room today. It was awesome to have you, um, on and to hear your story.

Yeah, thank you so much for the opportunity. It was a lot of fun. And, uh, yeah, best of luck.

Thank you for listening to this episode of The Room podcast. We also hope to see you next Tuesday at 10 AM Eastern, 7 AM Pacific, for another episode of The Room Season 5. Please like, subscribe, follow us on Twitter, Instagram, Clubhouse, Discord, scored, we'd love to hear from you. In the meantime, we'll see you next week in The Room for another inspiring conversation. See you later.

Support for The Room comes from Silicon Valley Bank. Silicon Valley Bank understands these questions can keep founders up at night like Claudia. For over 35 years, Silicon Valley Bank has helped high-growth companies through scalable financial solutions, plus insights and expertise that many other banks just can't, which could be why 50% of US-based venture-backed tech and life science companies bank with SVB. Learn more at svb.com/next. Silicon Valley Bank. Built for what's next.

Cooley is a global law firm built around startups and venture capital. Since forming the first institutional venture fund in Silicon Valley, Cooley has formed more venture capital funds than any other law firm in the world. The firm has 60 20+ years working with VCs, helping form managed funds, make investments, and to handle the myriad of issues that arise through a fund's lifetime. Learn more about the firm at cooley.com and also cooleygo.com, Cooley's award-winning free legal resource for startups.

All opinions expressed by Claudia and Madison and podcast guests are solely their own opinions and do not reflect the opinion of DefyVC. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.