Modernizing Luxury Good Shopping with Sarah Davis

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Welcome to the Tacos and Tech podcast where we discover cutting edge San Diego technologies and the builders making it happen. I'm your host, Neil Blum, San Diego's tech ambassador, and together you're going to put a face to the name of today's tech leaders with our own blend of local lifestyle.

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And welcome back to the podcast. I'm your host, Neal Bloom, and I am thrilled to be joined by founder of Fashionphile, Sarah Davis. Sarah, thanks for being on the pod.

Hi. Excited to be here. Thank you.

Absolutely. We've gotten the chance to write about you in the past for City of Carlsbad and now we get to tell the full story in front of the tacos and tech audience. So I'm thrilled to have you here. Love the purse background. I am a partial owner in a few Birkin purses myself through an app called Rally Road.

Yeah, yeah.

So can you give us an overview of what fashionphile is and then we'll dive deep into it?

Yeah. So we are an ultra luxury accessory reseller and so kind of like your Neighborhood consignment shop. But only I kind of joke that we sell the muffin top of the consignment shop, which is like the best part, which is not the clothing, it's the accessories. So handbags, shoes, you know, small accessories, belts, travel goods, like fine and fashion, jewelry and watches. So all those categories. And the thing that's great is it's not just like a trendy way to sell, but it's like your grandparents did consignment, you know what I mean? Or resale. And so what we did is took the old consignment model and we brought it into technology in order to get a scale and then just kind of brought it into the new era, which is for us, it's not consignment. We pay up front. So we give you an offer, we pay up front, we buy that, find accessories, and then we take the risk that they're going to sell for what we say they will. Which means we've got to really have good data and technology to help us to nail that number because if we're wrong, we're going to lose money. So.

Yeah, interesting. I'm really excited to dive into how you got to this point because I've got to imagine it's iterated, especially over the last year. Let's dive back even further. Like, how did you get into, how did you start this and where are you from originally?

Yeah, so I started it when I was in law school. I was born in the LA area, so South Pasadena. I started selling and this is just. This is what I think is anybody's interested in technology. I find, I find they find that the path is it. There's been so many iterations as technology has developed. Because when I started selling, I started selling on eBay in 1999. That really dates me because there was no PayPal, there were no online payment systems. In the early days of ebay. You would mail me a check and I would wait for the check to clear. Do you even have a checkbook now? I mean, like, what do you use checks for? You know what I mean? This is where it was. I waited for checks to clear and then I would send the product. I mean, how crazy. I did not have a digital camera. I mean, I'm sounding. When I tell my kids these stories, they are just. I sound like I'm ancient, you know, but like, I didn't have a digital we mo. Nobody had digital cameras. This is 1999 and I had a 35 millimeter camera that I would take my photos. You Know, with. And then I would develop that film onto a floppy disk at CVS. And eBay did not have its own photo hosting. So I would take those images that I got off this disk, and I would upload them to a photo host, and then I would use those images that were hosted on this. On Photo Bucket or some other. So to give you a little context of how many iterations we're talking about.

Yeah, seriously. So is this just a personal hobby that you're doing to, like, sell your own purse or something like that?

At the time, I've always been kind of. Because I grew up in the fairly solid, like, middle class. But my parents, you know, if I wanted nice jeans, my parents weren't buying them for me. I had to buy those with my own money, you know, So I always was just finding a way to make a buck. And so this was just another way that I was finding to make a buck. I was in law school, so had no money coming in. Law school's expensive, and we have to live and all that. And so was just finding a way to make some money. And so I was shopping in the mall, actually, and was in a store, and a woman was checking out of the store, and she was buying a bunch of, like, sale items from the store. And the woman behind the counter says, this lady, like, what do you do with. You buy all these clearance items? Like, what are you doing with them? Apparently she's like, a regular, and she's like, I sell them on ebay. And I'd never heard of ebay before. So I went home and looked into it, and I was shocked that, like, not only were these. She was buying these. These blankets. And I looked up the blankets, and I was like, whoa, she's buying for 20 bucks, and she's selling for 40 bucks. I'm like. And as a, you know, student, I'm like, okay, $20 profit times 10. Sweet. I can use $200. Like, yes. That's awesome. But the weirdest thing that I noticed was that some of the used blankets were selling for more than the new ones, because there. Apparently there's a collectible aspect of this type of. And so then I just. I kind of went around and I had a. Went to, you know, looked around my house. I had a bag of stuff I was going to donate to Goodwill, and I just put, you know, a few things on ebay. And I didn't have luxury stuff. I had, you know, a pair of old Gap overalls and, like, Doc Martin Mary Janes that I'd had Since I was in high school or whatever. And I sold these things on ebay and I made $200 out of my stuff that I was just getting rid of. So I started just selling on ebay and realized very quickly that the better the label, the better it was keeping its value. That when you had things that weren't a good label, they were actually selling for tiny fraction of their value and that purses were doing really well. So I started just. You know, I've always loved getting a deal as well. I've always loved the secondary market. And then I love consignment shops and discount, like all of the Neiman Marcus off Call, you know, Last Call and the Sachs off 5th and, you know, Nordstrom Rack and all that. And I'd see like, oh, my gosh, that's a great, like, Fendi skirt. But it's size 0 and I'm not size 0. And so I would just be like, oh, well, it's a good deal. I just can't buy it. And then at this time, I was like, oh, maybe if I buy it, I could sell on ebay. So I started doing that, and I did that for a couple years, and I realized very quickly that handbags were just really keeping their value the best. So by 2001, I just stuck to handbags. And then since then, I've slowly added the other accessories. But that's kind of how I started just figuring that part of it out.

At what point was it a business for you versus like a side, side hobby, side hustle kind of thing?

Really good question. It's actually super interesting because I was just fell into it because for me, I'm like, okay, I can pay off some of my loans and just get by or whatever. Just as an aside, because I was going to be a lawyer, like, I. During this time, like, you know, I'm in law school. It's hilarious because we didn't have. Also, like, everybody didn't have, like, laptops. I had like a Dell that was like this deep, you know, that my husband and I were sharing. And we're in law school. He was in medical school and I was in law school. And we're sharing his computer. We only had one that was like, that's how you did it back then. And so I would go to the computer lab at school and like, have my stuff there, like, listing. And my. My classmates like, what is wrong with you? You know, like, why are you. Don't you have, like, something to. But I was really enjoying, you know, that whole process of like creating a brand around my little. And I, And I also, although my mom always called me industrious, she meant entrepreneurial, but that wasn't like a word that they use. So she'd always like, my daughter, she's so industrious, you know, by these little like money making ventures I would have. And so, but when I was in, when I was like a debate nerd in high school and so law schools, like what you do if you're a debate nerd, you go that route. And I was super excited, but actually loved it. I loved the experience. But I always like when I was in business, when I was in college and I'd walk by the business school, it just looked like a bunch of sticks. It looked like guys in suits. And it just seems totally interesting to me because again, I thought of myself as industrious, not really as like a business entrepreneur. But I really, when I was starting this thing, it was just really kind of fueling this kind of passion in me. So I graduated from law school and I am like studying for the bar and all this. And at the time I'm still like cranking, cranking my selling. And I'm realizing I'm doing pretty well. I like paid off my law school. I'm like. And so I've got. And so I finally realized I'm like, I don't even. Even though I just graduated law school, I'm like, I don't know that I'm like structuring my business in the best way for tax reasons and all that. And you know, I was like, there's probably ways to structure it in a way that's probably better and am I doing everything right? So I didn't have any mentors in my life, like, meaning my parents. My, you know, my dad was like a geologist at Exxon and, and my mom, like, you know, had six kids and was cranking in the home, but wasn't, you know, didn't have a job outside the home. And so I was like, I don't really know what I'm doing. And I didn't have anybody to ask. So I was like, who's the richest person I know? And there was a guy that I knew who owned a cancer center that he just opened that we went to church with actually. And so I was like, hey, I'm like a super embarrassing, like, you're rich. Like, how do you like, do you. Who does your money? You know, basically I said to him and tried to like. And he's like, oh my gosh, I've Got this great account and you should talk to him. He's like, he's actually really entrepreneurial minded. He'd probably love to talk to you. And so I'm like, sweet. So I go to talk to him and I bring my little Excel spreadsheet that I've been, you know, keeping track of my numbers and everything. And he looks at my books and he's like, this is legit. Like, what's, where's your business? Do you have business plan? And I'm like, no, just keep doing this, you know. He's like, okay, listen. He's like, listen, you're going to come back to me via, you know, talk about your taxes again in six months. So I want you to read this book. And he gave me this, he gave me this book to find to go to like Barnes and Noble because I don't know if there's Amazon back then, but he's like, I want you to get this book. It's called the E Myth. And that's like, it's not E like as in email, it's E as an entrepreneurial myth. And anyway, it's a really great book. He's like, read this book and then let's talk about it next time you come in or whatever. So I'm like, okay, you know, so I get this book and it like blew my mind because it was so good. It just really defined what my situation was because it talks about the fact that as entrepreneurs we can spend so much time working in the business that we don't have enough time to work on the business. And I was just doing that. I'm taking pictures, I'm packing, shipping and photographing and I'm making a decent amount of money. It's, I'm like, you know, like I said, I was able to really grow it to decent points. Point. And I'm excited about it. But I realized that if I got help in some of those areas that I could pass off that I'd really be able to spend more time working on the business, which is what I really loved. Like, I don't love the photography part or I didn't love necessarily the packing and shipping and all those things, but I was really loving building a brand and kind of making a plan and really fine tuning, like what kind of inventory and the authentication process and all that. So I read this book and by the time I came back to meet with this guy, I had moved the business out of my house. I had a 350 square foot office that's such a tiny Little office. We now are in North County, San Diego. And our headquarters here is 30,000 square feet. And this is one of, you know, we have many different locations, you know, so a tiny little office. Hired a couple girl, college, you know, girls to help me out with the stuff that I could pass on. And I really just started focusing on the business. And as I did that, I just fell in love with that and never got a job with my fancy new law degree and I passed the bar and never did a thing with it. And at that point I really just decided like, hey, let's just give this a go. This is a blast.

So, yeah, pretty incredible. Especially a few things you paid off law school before you even passed the bar. Kind of unheard of for a lot of lawyers from this hobby. Do you remember your ebay username?

My ebay username was Fashionphile.

Really?

Yeah.

Oh, that's cool.

My first ebay username was izzy3898 because that was my AOL email address was izzy389ol.com so I think, I believe when I registered it was Izzy 3898. But I want to say it was 2001 or so that it became Fashionphile. So, yeah, so you had, you had.

A brand even on ebay.

And that's why I really, my goal was that this is what I always tell people, my goal because we sold on ebay exclusively till 2007. I got, we, you know, set up the website, but like our goal was always like that. If someone said, where'd you get that? You'd say, from fashionphile. Even if you, if you bought it on ebay from fashionphiles. And so I did that by making sure that when you opened the package, it felt like something special and that you would always get that same experience. We do that to this day, that it's. That experience is something special. And I always feel so complimented because I'd see that, you know, I would see references that I got this from Fashionphile. But we sold on ebay. So it's so exciting that that was.

Like a thing and was everything by mail from the start in that regard or. No, there was pretty quickly like an in person kind of retail experience.

It was all, no, no, no. I was never bringing anybody to that tiny little. To my number, my bedroom to start out with. And then, and then the 350 square foot. It was all that was, is like a shipping, like a secure, like locking cabinet system to put the, you know, bags and stuff in. But like nobody was going to that was humiliating. Like it was so small. We first opened it up to the public. We moved the business to Beverly Hills in 2006 because we're like, there's lots of bags there. Like that's probably a good spot. And I partnered with, with my brother in law who was starting UCLA business school. And so like, okay, if we, you know, that's a good like central spot where we could. We rented a guest house of a really crazy Beverly Hills house. We rented the guest house. It's like right across from the Beverly Hills Hotel, like across the back alley. And so we would just allow people to come in and. But really it was just an office that there's nothing really. 2007, we opened a first location on Rodeo and Wilshire. So again like second story. And we just kind of, we're like, okay, we've got all this cool inventory and like we're just storing it all here. Why not let people shop it if they want? It's all online. But from the very beginning we've. We sell 100% online.

Got it. So that must have been a big leap to unplug from ebay and build your own brand. Like what was the decision around that?

Well, obviously you don't pay the fees to start out with. I'm like, you can pay no fees or pay fees like always. And then also just the full experience. We wanted to own every part of the customer experience at every kind of point possible. But we really appreciated the ability. I mean Honestly, eBay number one. I always say ebay was my incubator. Ebay was my mba. Like I got. There were so many tutorials and things that were really helpful to me because I didn't go to business school. I didn't have like, I was not doing anything organized. You know, I just always am thinking about way to make a dollar. Because I never had like discretionary money growing up. I make parents paid the bills, but I had to come up with that. And so it's just kind of that kind of thinking. I really appreciated that ebay for the marketing. You know, as we're developing SEO and trying to get out there with our own website, it's really helpful that if you bought a bag for me on ebay, I would ship it to you and then include our URL and a discount that says come here and really try to own that whole branding experience, even though it was on ebay. And then I would also include in the box to you a little note that says I want this bag back when you're done with it, I'd love to buy back from you. And by the way, what else do you have that I can buy from you? Like on the back was a this is what we take, I'd love to buy it, you know, kind of note and put that in the box and so just used ebay back when we didn't have very much traffic as we're growing it and so we like launched our website in 2007 and then for the next few years just weaned ourselves off of ebay as the really the marketplace. So and then by I want to say 2010 we were off ebay. We kept a part that was like an outlet that we still use the same thing for things that we weren't that we didn't feel like were the quality one at our website. We'd sell them in there, but. And then we were off.

Interesting. So even from 2010 to now, still a good amount of time like working at it, learning probably lots of new things at that. Like what other any pivots or struggles or Besides maybe the 2008 like crash? Besides that.

Yeah, the 2008 crash I think is fascinating. Which is really interesting to me right now. When you look at recommerce has just taken this crazy. So much interest. I mean it's unbelievable compared to when we got started, you know and over time all of the different platforms that are so cool from like Stockx with sneakers, like Reverb with musical instruments, you've got sideline swap with, you know, sporting goods and obviously all the thread ups and real reals and poshmarks and just so many different platforms is really exciting. But back then there wasn't that for like 10 plus years. It was like US and eBay and your mom pop consignment shop there just really wasn't that out there. Which is super interesting. But it's, it's one of those things where we have had so many iterations and one of those things are just like when you deal with what we deal with. Well, you know, you'll hear other platforms say oh we authenticate every item. But you maybe don't even really need to like the realreal. I don't know if you're familiar. They sell everything in the house and so they'll sell an unbranded couch. It doesn't really need authentication because they're just saying it's a $500 couch, it's not a brand. So clearly it doesn't really need that. And like 65% of what they sell is women's Contemporary. And so are people counterfeiting Eileen Fisher pants? I don't know. But you know this. It's not the same as what we sell. We sell the ultra luxury category. So we sell only the most highly counterfeited products that are ultra high price points. So our average, our average sale price is like over $1400. So it's just a very high, you know, level. And so part of the iteration is like, oh, literally this is what happened. We have a very narrow set of things we take. In the beginning it was just handbags and this is not a joke that all of a sudden we opened a box from UPS and in the box someone's sending us stuff to sell. The way that it works is you use our app or website, you take photos and you say, how much for these? Basically, and we say, we'll give you $1,000 for that. $2,000. That if you say yes, then you use a free shipping label that we send you. And then you send it to us and use the old Amazon box you have sitting, put our label on it, send it to us. We opened a box and this woman had put the stuff that we quoted and then she also included two Rolexes. And we're like, we don't even know how to authenticate Rolexes. Like we have a list. We only accept certain items because they are items that we have got an expertise around that we've been able to develop over time. And by the way, it's not fast. It's taken us very, you know, we've been doing this a very long time. But adding each different brand has taken. Taken us time. That was one example. People have been asking us to accept watches over time. We finally just had these two really amazing watches and we let her know, listen, we don't have the capability around this, but we're gonna figure this out. So things like that, like kind of iterations that we've done, it takes a lot of work and expertise. We didn't have to open up a category like fine jewelry or watches. Just being in Carlsbad, one of the things that's super interesting is that out of just pure luck or karma or thank you God, whatever it is, we're like a mile from the gia. You know, like, we didn't plan our headquarters here to have easy access to like the training ground for this, you know, amazing like world renowned program. You know, we are. And the thing that's great is they've got really great tools and technology there that we're able to use. But at the gia, they can teach you, you know, diamond color and cut and clarity and all that. But what they don't teach you is the markings of a Cartier ring. They don't get into the branding aspect at all. They deal with qualities of precious metals and stones, but they don't actually get into the branding side. And so we've been able to have a unique relationship with them because that's all we do, you know. And so it's interesting that we'll bring these highly trained experts who are specialists in diamond grading or whatever, and then we can add the Cartier element or the Tiffany company element using their tools and all that. So it's been a really good partnership. But back in the day when I started, fake jewelry was like not real metals and glass. It's not that today a fake Cartier bracelet is platinum and diamond. It's just not Cartier. So it's worth melted down maybe. And, you know, with the stones, 3,500 bucks. That's a quality, but it's not 50,000 because it's not Cartier. So it's super interesting. So all of those. And then as you kind of said, just developing your own website, we don't have the luxury of just opening a Shopify website. I wish. It sounds so amazing. Just because there's so many different features that we offer that are just too complex. If you sell to us, we want to pay you in store credit. We want to give you layaway options. We want to be able to hold on to your credit in a wallet and pay you, you know, you can use some of that to pay off your layaway and some of them to buy this and you want the rest on a gift card to Neiman Marcus. Those are just all complexities that are just too much for, you know, out of the box platform. And so developing that has taken so much time. You know, a lot of the technology we built for the pricing, identification and authentication is just, you know, taken time. But to me, it's all makes it exciting. It's just a different business today than it was a year ago, than it was two years ago, which keeps it fun.

Yeah. Back on the GIA or the Gemological Institute of America in Carlsbad. Like one pretty cool to have. Sounds like you maybe identified like a talent pool or talent funnel. Right. People coming out, getting trained up.

It's just genius. And we're right here. We're so convenient for them before they go anywhere. We get like first pick. It's so great.

Yeah. Tell us the story of actually how you got to Carlsbad. What brought you down from LA to North County?

The hilarious thing is literally we said, so I have four kids. Along the way as I've been doing this, I've developed a collection of children that I've born and then my brother in law is my business partner, is my sister's husband. So I only have one sister, very close and it's her husband and they have four kids. And we literally. So the business is headquartered at that time in la. And we're like, where can we go? We could just raise kids, raise a family and just have. You can throw a rock and hit a great school and you've got space and you're just, you know, we're just like, let's go to San Diego. Like literally we really, when you own your own business, you can go wherever you want. And we're like. But we realized being in our studio, we call, we call our studio our kind of stores selling studios because you go there to sell to us, because you buy from us online. But it's a convenient place where you can walk in with the backpack and a pair of shoes and you can put them on the counter. We'll write you check in the same little trip. Well, so we had this, you know, our old studio in Beverly Hills and we decided to open our headquarters here. But we opened the in Beverly Hills in 2006. Like I said, we moved into our actual. We were in that little guest house thing. In 2006, 2007, we opened into the second floor, Wiltern and Rodeo. Like I told you, we were in that place till like last year when we did the Neiman deal. And I'm getting ahead of myself with that. But so we, we were in that place for that whole time. But we opened in 2009, we opened in San Francisco and what we realized is we're like, we really need a headquarters where we can just like kind of like a spoke and wheel where in the spoke we can do the authentication, we can do the, you know, have all of our procurement specialists and the pricers and all of our fancy equipment and all that. We can't like expect to have all the equipment at all these different locations and these skilled experts who really need this like next level, you know, expertise. We can't have that in every single location and we need more locations. So we decided to do the spoken wheel and we're like, where's the spoke? And that's when we decided like, let's go to Carl, let's go to San Diego and so just really like looked into, you know, where we could find a place. You know, my two oldest graduate, you know, went to LCC and you know, just kind of like everywhere we looked we're like, there's all these high schools here. We're trying to figure out where we're going to, you know, have our kids and everything. We're like, all the schools are good, you know, like we can go where we want in this area. We just. And so that's what I think. That's one of the real benefits when you start your own business, you can do what you want. And there are places we could have gone that were maybe for tax reasons that seem tempting. But the thing is this is we're like, we wanted to go where we wanted to live and so we came down here.

Love it. Well, we're lucky to have you for sure. Take us through. I think you started to alluded to you'd bootstrapped this company, it sounds like, and even bootstrapped it for your law degree. At some point you said you needed to put some juice on the fire, right? What was that decision point like to raise outside money?

It's super interesting because so I told you I partnered with my brother in law in 2006 and prior to that we both kind of joked that ebay was our rich aunt, that like neither of us had money. And so it's like if you want something and we don't need money, you're like, okay, what else can we sell? Like we needed some money, you know, we had a rich answers, write us a check. But the truth is is that as we started, you know, got off ebay with our website and all that, we were just taking everything we had and we'd sell it and we'd pull the profits out and we'd buy more product and we'd sell more and just grew the business organically for 20 years. We were bootstrapped the entire time. We met with our first, we met with Tech Coast Angels in 2007 who were interested in investing our business and we, you know, we're going to take a good chunk of the company for $400,000 and we're like, you know, we're profitable and we're growing, like why do that? You know, and we thought about, we thought what would we do with the money? And we just didn't think that what we were going to do with the money was worth what we were getting and what it was going to cost us. And so because we're profitable and growing and so for our entire lives together. Since we were keeping track, we've grown 50% a year, year over year and we've been profitable the whole time. And so that is actually very unique. When I rattled off all the e commerce sellers that are out there online right now, none of them are profitable. Not one. I think Poshmark for like four months was profitable right before they went to ipo. They cut the, cut the marketing. So they may be profitable right now. They're, you know, I feel like they're, there's a chance like they're all coming around, but their goal was to like just raise awareness, raise revenue and then have goals towards profitability. And I think there's, I think we're going to see some of them coming around, you know, and gaining that. But like we've always run the business like that. And the reason why is because when you don't have investor money, you have to keep the lights on, you have to make payroll and to do that you have to run a profitable business. And it was just been funny because we actually didn't know like how rare and kind of weird that was for an e commerce company to be running profitably anyway. So we had many conversations with investors over the years and had, we would sit down after, we'd have that same thought. We're like, we're still growing and quite frankly, in a business like ours, if we were selling some type of widget, like some kind of CPG of one type or another, potentially you could raise a bunch of money and just grow super fast and just hockey stick it. And it's fun and crazy in our business, like it's such an elevated service. For us to provide a good service to you, we need to give you that quote right away. We want to pay you as soon as we can. We want to like authenticate that very quickly and all that. And honestly, if we're inundated and just grow too quickly, we're not able to, to number one scale out authentication department or the procurement department who's kind of giving your pricing or whatever. It's also not fast to develop the technology that we need to help our team to do that. Well, it's taken us a very long time to fine tune the algorithms, to dig through our data and to kind of get us to a place now where we're in a much better place and can scale faster because we have those things in place, those foundations of the tech and we've developed out Fashionphile University so we're able to train fast or whatever. But it took us a long time to do that, so we just, you know, continued to slow and steady. Tortoise and hails. We're the tortoise. I joke because in 2010, there's an article in Entrepreneur magazine and it called us one of the smartest, most innovative, hands down brilliant companies on their radar. And then we went under the radar for, like 10 years. We were on a radar for a moment and then, like, went under the radar, but still growing. And in our category, people knew about us again because we're by that time, after 2010, 11, 12, 13, you start to get lots more competitors in our space who are raising hundreds of millions of dollars. And we're still growing 50% a year over year in the midst of all the competitive whirlwinds, and we're still profitable. When all the competitors are raising a ton of money or not profitable, don't have to worry about profitability. In fact, I heard one of our competitors, founders say they asked if they're profitable and she said no. By design like that, that was the plan, is that you're just trying revenue and that profitability is a plan down the road. But right now that's not the plan because they'd have to tighten things up in a way that killed revenue anyway. So we were still able to grow in that time. And so finally we got to a point where we're super excited about this technology we've been working on that again, helps us to scale faster. There's three things that are hard about what we do. So if you bring us that Louis Vuitton backpack that your mom gave you for Christmas and you're like, this is not my style or whatever, we have to identify it. We need to know that that's the pulk. It's a men's line. It's got, you know, that's the one with the black trim and that it's the MM size or whatever, and we need to know that exactly, because that's going to tell us the accurate price for that bag. We know right now, based on our pricing algorithm, that hardware that's gold right now is selling better than the silver counterpart or that this color blue does better than that. And so we have to identify it properly, to price it properly, and then obviously to authenticate it, you know, so those three things are the hard things. If I just called a Louis Vuitton backpack, there's a pricing differential of literally $4,000 in a Louis Vuitton backpack, meaning the Christopher is super hot and can sell for 5 10,000 if it's a supreme Louis Vuitton collab. Christopher versus a monogram backpack. We just really have to nail it anyway, so we have all this technology we're trying to build and that kind of team is super expensive. And to do that fast, we just need a lot more people on board to be able to hire a team. At this time, it was still my brother was our CTO or my brother in law is my partner. You know, kind of really family oriented. We have a bunch of folks here that we've hired, but we didn't have like really kind of experts been here, done that in a C suite at all. We didn't have a C suite. We had no marketing department. Every Instagram post in that 20 years was me, you know, me talking to a, you know, we had an intern that was helping with digital marketing and a graphic designer and me. And yet we did like the year that we finished that Nieman deal, we did 100 million in revenue. So it's not like we were a tiny business, it's just that we were growing organically.

Okay, so pretty incredible growth story. You just alluded to some pretty big revenue numbers. You know, these are numbers. First of all, that companies, look at that, go public first of all. Right, so partnering with big brands, taking some money, but not doing tons of rounds and diluting yourself a lot. So you've made some really smart decisions for you, the entrepreneur and for your brand to really own and protect it. What does going forward look like? What does it look like now and kind of on the horizon?

Yeah, like when we were not looking to raise some money again to meet those goals, we kind of just decided, we're like, are we going to go for it or are we not going to go for it? You know, like we were growing just a steady little and we're doing fine. But the truth is, is it getting more and more and more competitive and more expensive? And we're like, you know what? Sometimes kind of to our point we realize is that when you don't go for it and kind of raise that extra, that money that you really need to fuel growth, you can allow competitors to just gain Runway that really should have been ours. Like potentially our conservatism to raise money and our, our lateness in getting in the game in that way potentially maybe gave competitors the ability to start or not. You know, it worked out fine for us. I can't complain. But we're super excited now because again, like we found a way to make the business work during COVID In a way, I think we're direct to consumer. As you know, direct to consumer companies have done, did fared better during COVID You know, a lot of people during COVID when you're not traveling, when you're not going to parties, you're not going to concerts, you're not going to sporting events, your kids aren't in clubs, there's, I think people just had some money sitting around that they used to spend on all these things. We were really, when Covid hit, we were just like, oh gosh, buckle up, this is going to be crazy. You know, people are going to stop spending and whatever. And that just didn't happen. We didn't see that happening. And so on our side, what we had to do is say let's make sure it's as easy as possible to get stuff not only direct to consumer, but direct from consumer on the supply side for us. So in the past you had to drop things off at the post office or ups, but people weren't even leaving their houses. So we did things like make sure that UPS could pick it up from you and, and that sounds really easy, but really it doesn't. It's API to API communication with UPS and contracts and it's not something you can just like sign up for today and then it's happening tomorrow. It actually has to be a real scramble to kind of get that happening. We had a great, you know, like we're able to grow during 20 during COVID which is again like we're really grateful for because that's hard and not everybody's able to do that. And then this year has been just even better growth we've ever had. So we're very excited. And yeah, we went out in 2018 looking for money to help us to get our goals. And we've had normal offers from term sheets from normal private equity type investors and we're excited about that. But the very last minute we actually had Neiman Marcus enter the process. And honestly I was like shocked that they even were interested. We had used an investment bank to help us with this because we are not in Silicon Valley, we're not in New York or even Austin. And we didn't have a lot of relationships. We'd just been heads down and so we felt like we needed an investment bank and it was really great. We had a really great result from that. So we ended up doing this deal with Neiman and it's been really fantastic. If you go to Fashion island in Newport beach and we're also in Beverly Hills And San Francisco and Dallas, north park and Palo Alto. But right now we're opening 10 more stores by February of this year. So we're in the process of opening five more. But it's a really revolutionary thing that this luxury department store would do business with a reseller like ours. So you walk into Fashion island with that backpack and you drop it on the counter and you can go shop shoes or go to the cafe and you'll get an alert on your phone that says you have $1,000 check waiting for you. Or if you'll put that money on a Neiman Marcus gift card, they'll give you 10% more. And Neiman is hoping you're going to opt for the gift card and that you now have an $1100 gift card burning a hole in your pocket. That is just free money to. If you have a gift card, it's free money. You're in the store, you're like, what can I buy? And so it's really great because you think about department stores and how they're trying to shake things up. They're trying to, you know, what can we do in this modern era, in this new generation? You know, the way people are shopping is so different. And, and it's really revolutionary that they would be not only having a collaboration like that with us, but like putting their money where their mouth is and like actually investing in our company. So they did that, but it was a minority, small minority deal and it wasn't actually as large of round as we were hoping to. So we ended up finishing that off. We immediately went out to finish that round. We were trying to raise 30 to 40 with the Neiman deal and we ended up so closing another deal during COVID and last August raised another 42 and a half million. So we're still, you know, we still have the majority of the business, but we're, you know, we're excited, really excited about amazing professional people we have on board who are coming from companies we really admire. We know a ton about resale. We actually are not experts at E commerce and we're bringing experts on board. We're not operational supply chain experts. We're bringing those people on board. We're not, you know, we didn't have a full time cfo and now we do. Like these things are all so great and so we feel like it's all just getting really exciting and elevated.

Congrats on that. Wow. I love hearing the growth stories, especially during COVID you know, where first of all, as entrepreneurs we have two ups, two Downs like every hour or every day. Right. So I can only imagine, you know, what goes through your brain on March 8, 2020, where the biggest drop and for it to be, you know, good for you. So congrats to. To riding that wave. Speaking of riding that waves here in San Diego, you know, we, we ride waves and then we. When we eat some tacos and we got to know, since you've been here in Carlsbad and the surrounding north county area, do you have some favorite taco spots?

I do. I mean, that's the thing. When we were talking in the beginning, like, I love tacos and I love tech. So this is like, you're brilliant with that. And I actually, that's one thing I love about Southern California is because there's just so many options probably, if you want to say what the most tacos that I get around here, we love to go. We go to Ponto beach and I love like the Roberto's right there. I actually like the rolled tacos there, which is kind of like shaking it up a little bit, but yeah, yeah. Location.

Okay. Everyone's got their favorite. Roberto's Mines in Del Mar. It's okay.

I know I had. I had to specify for sure.

Love that. And, you know, we're so excited for you guys. It sounds like, you know, we're just on the precipice of the next journey here too.

Yeah, well, and we're up here in the back of an industrial park in north county, you know, in Carlsbad. So if you're ever in the area, Rough Palomar, you know, it's really crazy. It's this big, beautiful building filled with, you know, a lot of really cool tech and luxury handbags. So luxury handbags, tacos and tech.

All right, we're going to make special edition version of the podcast for this. Well, Sarah, thanks so much for being on the podcast and congrats on everything.

Thank you for inviting me. Appreciate it.

Thanks for joining us on the Tacos and Tech podcast with Neil Blum. Thanks again to Cox Business for helping make this possible by expanding the reach of the San Diego tech ecosystem. Big shout out to School of Rap for our rad intro music. And thanks as well to Nest Podcast Network where we are recording live inside their studio at Nest Co Working in Bankers Hill. You can find Neil Bloom on Twitter eelbloom as well as fresh brewed tech and tacos and Tech Pod on Twitter too.

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