How I Sold My Start-Up To Lululemon For $500 Million

i remember the day my daughter evie was born like it was yesterday i can picture sitting with my wife as she told her mom the news over the phone i sat in awe of the miracle that just took place right before my eyes bryn putnam also made a call shortly after her first child was born on november 15 2016. only she was securing three million dollars in venture capital to fund her tech-based fitness company called mir see yourself in the summer of 2020 she sold mira for 500 million dollars to lululemon the pandemic has been good for business mere ads are plastered across new york city's subway system airing on tv and clogging up social media channels but selling a company for half a billion dollars is just a small part of bryn's story and frankly it's not even the most interesting are we doing this we're doing it all right there are three numbers to watch out for in bryn story 15 000 the amount she had in her savings when she quit ballet 3 million her first outside investment and 500 million the amount she sold me here for in 2020. here's how bryn putnam built a company that's worth half a billion dollars in just two years for cnbc make it i'm nate skid this is founder effect there are two distinct halves to bring putnam's story the athlete and the academic one of her earliest memories of growing up in manhattan is climbing on stage at one of her parents dinner parties at the age of three in a diaper and proceeding to dance with the band she started taking dance seriously at age seven joining new york ballet's pre-professional school and then joined the company full time before her 16th birthday but around that same time she was admitted to harvard i deferred harvard for a year so i was accepted to harvard um and accepted to new york city ballet uh almost in parallel so tried to sort of juggle academics in my dance career um and then returned to dance after i graduated so i've always had really um these two sides of my personality i think creative side and then maybe more analytical problem problem-solving side which i think ultimately got united in the creation of my businesses what did you study at harvard i studied russian literature and culture at harvard that russian literature that would come that would come in handy in a couple of years right my dad said at the time if i'm gonna pay for this expensive school maybe you could also learn a skill like a language that decision would impact her life in ways she couldn't anticipate bryn was aging out of ballet and looking to use her experience to open a fitness studio i couldn't afford a traditional space because they were all too expensive so i decided i would just walk up and down the streets of manhattan looking for off-market or unusual properties that maybe i could rent for a cheaper price i stumbled on a russian church that was finishing services and so i sauntered over and started trying to practice my russian skills and quickly was shot down due to my poor language skills but the minister did say that they had a room for rent in the church and if i was looking for space it might be fit it was a strange space however though because every saturday we had to give the space back to the church for sunday services then every sunday we had to rebuild the space as a fitness studio i had saved about fifteen thousand dollars from my years of dancing and so i needed to build out a fitness studio and a business with really limited funds which meant a lot of the actual physical labor that went into building the studio was done with my own two hands in 2010 she opened refined method but bryn says she also spent that year meeting with athletic trainers coaches and physiologists to better understand how professional athletes train she condensed what she learned into a program suited for average mom and dads that she saw in her studio what was the initial reaction like and how quickly did it grow it got really lucky i have to say i mean it was really um i think an example of explosive organic growth powered by an incredible community flywheel i had a small group of five or six women who were my initial clients and then they started bringing friends who brought friends who brought friends and so studio one student paid for studio two studio three what do you mean by flywheel i hear that term often uh with entrepreneurs and business leaders when you really achieve that fit between the product and the market the business starts to grow much faster without uh traditional paid marketing or using other channels that was definitely the case with refined method we never spent a dollar on marketing but it didn't take long for her to find the limitations of a brick and mortar fitness studio no matter how popular it became most mom and dads can only work out before or after work leaving a massive hole in the middle of the day you reach a point where you're serving thousands of people or tens of thousands of people but it's just not the scale that you can reach with technology there there has to have been a bridge between that and mirror and i'm wondering what it was i started to think about how to take what i had created um in real life and translate it to in home but i always felt like working out at home and you were sacrificing quality for convenience you were putting a big bike or a treadmill into your small new york apartment or you were searching for content on youtube and then watching it on a tiny phone while you tried to awkwardly work out and so it was really trying to figure out how to take the learnings of what makes a great experience and figure out the appropriate technology to to bring it to life in the home go deeper for me if you can where did you see like a financial opportunity a business opportunity because working out at home isn't new there was an emphasis on the quality of content and instruction that got developed through the rise of these boutique studios that combined with developments and technology so i think those two trends really united this idea that people were willing to invest money in their health and wellness they wanted to prioritize good content good instructors and frankly they had the pipes in their home to stream that content brynn watched her instructors carefully as they pace the room tracking times adjusting workout difficulties all the while motivating encouraging them to do their best she knew she could livestream instructors and there was technology in place to keep track of statistics like heart rate tracking i couldn't figure out the vehicle for putting all those pieces together until we did a survey of our members um completely unrelated and we said what was the best thing we did all year refined method and one of the things we had done was put regular dumb mirrors into our studios and our members said it was the best thing we had done was give them that visual feedback and that the mirror created this incredible real energy loop that inspired them to work harder and i realized that all the technology i've been thinking about building into a phone or some other platform really worked within a mirror so she went to work building a prototype at her kitchen table with the help of her husband out of a piece of one-way glass and a raspberry pi tablet she bought off of amazon so our first test was really just a tablet that said this is a test repeatedly across it behind a piece of glass in my kitchen is this idea that i have in my head of an instructor and all these components coming to life through a mirror is it baseline possible and once we sort of established through that crew test that it was baseline possible we actually went a very different direction and and started to think about building the brand and the experience and the community and um in a completely non-functional way from here on out brynn says she did the exact opposite of what most successful founders do you know traditional tech startup philosophy is you build something crude and ugly but functional you build up a member base you validate that there's interest there and then you start to build a brand and experience a community and really refine the experience and i really did the exact opposite i felt pretty strongly that what we were ultimately building was a platform for content and so instead of building something functional and then moving to something inspiring we went the other way she put together a slick non-functioning prototype that basically played an animated video of what the mere functionality could look like and from that crude prototype she secured her series a funding remembering that i started this idea in the early days of my pregnancy so by the time i went to raise money i was very pregnant about nine months pregnant um and so it was very nerve wracking to be a single female founder with no technical skills presenting a prototype that looked beautiful but was really not functional while very pregnant what were people telling you at the time i mean that had to have been a really difficult moment i spoke to a lot of investors and entrepreneurs who frankly said that they would recommend that i either got a co-founder who was ideally male and technical and also that i would wait to fundraise until after my son was born um but i felt really strongly that we had a really great product and that the market was ripe for the opportunity and i didn't want to miss my chance i didn't want to wait so do you remember your pitch yeah so uh this is mir a nearly invisible interactive home gym that allows you to stream live and on-demand fitness classes from your home you'll be able to get the boutique studio experience without sacrificing your home to clunky gym equipment that takes over your home and only allows you to pursue one type of fitness imagine the variety of a full studio with the footprint of a beautiful piece of home decor bryn secured three million dollars in funding from her hospital bed the day her son was born she knew exactly how to divide the money hardware software and content you have this amazing vertically integrated platform where you are going directly into someone's home and really controlling the intent experience so it was super important to us that we did own the hardware software and content so that we can be incredibly responsive to our members needs and be able to change things quickly mirror went into stealth mode for two years as it perfected the hardware and produced a content library only the investors and select friends had seen the product but instead of slow rolling its launch bryn decided to go big really big mir bought billboards television ads and hired famous partners they even sent mirrors out as gifts to influential celebrities your product is in the home of alicia keys reese witherspoon ellen degeneres it actually just sort of spread itself throughout the community so one celebrity passed it to another or to their agent we did have a moment our first christmas when alicia keys got her mirrors a surprise from her family and posted an incredible video of her screaming with joy to get this present and i think we all sort of knew the mirror retails for 1495 and subscribers pay 39 per month to stream the classes mirror's rapid success far exceeded expectations its biggest challenge would be ensuring its supply chain could support its growth put it this way in its second year of business mir did 150 million dollars in revenue with a team of 125 but bryn sees potential for mir far beyond fitness i've always really believed that there's room for a new type of screen in the home that you have your phone for small informational interactions you have your tv for passive sit on couch entertainment and that there will be a place for something for interactive immersive experiences and i think people are going to start to move away from watching to doing more and so the ability to serve people experiences that allow them to do to grow i think is really powerful and you're uniquely positioned to do that are you in stealth mode right now always in stealth mode by mid-2019 mirror raised a total of 72 million dollars in outside investment for us seeing was really believing the mirror is a product you've never seen before it's an innovation product and so our pitch was very centered around getting investors in front of the experience and once that happened it really did tend to sell itself how did the lululemon sale come about i've actually known the team at ulemon for my entire fitness career i was a lululemon ambassador in the early days of refined method and the store teams were some of the earliest guests at refine and then fast forward we reconnected and they became minority investors in our last round and it was really just a wonderful relationship you know mirror was not for sale but when we started working together the combination of lou lemon's incredible brand reputation their physical footprint and mirrors growing digital community just made a lot of sense it's easy to downplay bryn's success a professional ballerina turned harvard grad turned tech founder is an elite path to be sure but it is extremely difficult to succeed in any of those arenas let alone all three another female founder said to me you know we all have unconscious bias investors are consumers you need to fascinate them on the market opportunity the product and story and just like any consumer they'll buy so you should go into your fish meetings as a nine-month pregnant solo female founder aware that those biases exist but also aware that you have the power to to sell and it's really important that you focus on selling someone on the dream even to the extreme when trying to paint a story for your potential investors that's all i really had i mean how fortunate that your dad made you take russian don't tell him that he'll get a big head bryn was hesitant to discuss her plans beyond mir but if her story is an indicator of her ambition she'll definitely go big really big

Channel: CNBC Make It

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Keywords: CNBC Make It, How To Make It, Entrepreneurs, Starting A Small Business, Business Success, Small Businesses, Finance Tips, Career Tips, Work Hacks, Lifehacks, Money Management, Career Management, Managing Business, MIRROR, lululemon, lululemon leggings, lululemon outlet, lululemon shorts, lululemon men, lululemon yoga mat, working out, mirror fitness

Id: HgWoLqZILk8

Length: 14min 25sec (865 seconds)

Published: Mon Apr 19 2021