FIGS: Trina Spear and Heather Hasson. The $2.5 Billion Scrubs Brand That Investors Said Would Never Work

the value of what you have the shares you have are worth a lot of money yeah i mean i think you know we made the forbes like wealthiest women alive or whatever list and then the following year after the stock went from like fifty dollars to five dollars we were the two women who fell off meet the two women who are now not on the list we're an eight billion dollar company now we're a 400 million dollar company 600 million dollar company now we're two billion like it none of it it's so transient and you can't get really tied emotionally to any of it yeah in terms of your self-worth let alone your net worth welcome to how i built this a show about innovators entrepreneurs idealists and the stories behind the movements they built i'm guy ross and on the show today how two founders with barely any background in health care built figs what some people call the lululemon of scrubs all right so i'm going to give you a really good idea an idea for a business that if executed correctly could make you a lot of cash here it is here it is ready adult incontinence okay maybe not what you thought i'd say but but hear me out there are 26 million adults in america who experience some form of you know leakage which is a little over seven percent of the population now if you could come up with cool products or a better experience to help them feel less embarrassed or awkward i would argue this could be huge but most of us wouldn't even look at a category like this because well it only reaches a fraction of the total population but that fraction of people they can be massively important consumers this was the brilliant insight that today's guests had around a different product hospital scrubs you there are 24 million health care workers in the u.s again around seven percent of the u.s population and many if not most of them wear scrubs and for a very long time scrubs were things you bought at a medical supply store they were boring and baggy and almost no one looked good in them but heather hassan and trina spear saw an opportunity to reimagine scrubs and to build a brand around them in 2013 they formally launched a new product called scrubs figs and initially they faced a lot of skepticism from friends and especially from investors but what they proved was that there was a demand for a better fitting better looking hospital scrub today figs is a publicly traded company with a market cap of over two and a half billion dollars and heather and trina are still very much running the business in many ways the two are total opposites trina grew up in miami and followed a traditional business business and she was a she went to harvard business school and worked in finance for a few years afterwards heather on the other hand grew up in los angeles and attended the university of wisconsin madison and though she was always creative what she really wanted to be was a doctor yes i always wanted to be a surgeon actually specifically a reconstructive surgeon so i could combine you know the the two skill sets which is art and science into one and you know i've always wanted to be a surgeon you know i tried really really really hard in school and i just it didn't i didn't cut it i didn't do well and so but i tried so hard organic chemistry is impossible whoever you know possible that's what that's where people like that's where it ends for a lot of people organic chemistry right it's just so hard it's it's really hard i think i mean anatomy is really hard everything's really hard so i didn't i didn't become a a doctor yeah but i really i was into fashion i love fashion and i got out of school and you know got a job and where did you get a job i got a job at a few jobs in in madison or in la or where uh yeah no new york too and so new york so i got a job at levi's oh you moved to new york after you graduated very very briefly and worked for levi's in new york correct yes okay so you're in new york and i guess at some point you you started a business a handbag business and you're in new york and you're in levi's and you're in levi's and you're in levi's tell me about i guess this is around like 2005 maybe yes 2006 tell me tell me what this is tell me the story so i started i you know i love design so i started making handbags and how um i had some connections in italy so in college right i went to italy for about a year and a half um and i was actually making coats and selling coats to americans and that's i think my first foray into designing with my hands not just drawing but you you know cutting patterns and things like that okay amazing and then you know fast forward now i'm in new york in 2005 um starting this handbag company and i had you know connections in italy because i was there doing that for about a year and then i meet steven who was my business partner um who is steven just some guy in new york or was he italian some guy in new york he was actually italian too he was actually italian from italy really great guy he started a bunch of different companies you know tech companies uh cafes he just did different things really interesting human so he was your partner to start a handbag business did it ever did ever go anywhere i mean did you know did you make handbags i did yeah we did we made beautiful handbags beautiful out of out of leather or what unfortunately yes i'm a vegetarian now and and where were you selling them i didn't even get that far okay i didn't get that far we just made a a bunch of bags we're about to go and i'm gonna get like a you know sales team and do the whole thing but he passed away um he had lung cancer and he passed away and it was very unfortunate um he died at a very young age and it's just how old was he he was i want to say 36 wow yeah he was really young but i was very fortunate i mean he you know he funded my business and he really believed in me um and you know the whole thing just came shuttering down and crashed down because you know passed away and that was that so what did you what did you do at that point i mean you've got a bunch of handbags and you're so young and this is kind of sputtering out i honestly i was so heartbroken for uh you know a number of things um that i decided to go to northern kenya i went there just to clear my head i didn't go for any actual purpose or i had nothing i had no money i had no plans i've my business partner died from lung cancer i had zero going for me so i'm like let me see what's going on in kenya but yeah i think i think my parents are probably like what is she doing and what what did that i mean did that lead to anything or was it just an awesome experience and kind of cleared your mind your head as you as you had hoped uh yeah it led to actually um a few things so i would i was traveling around it's really inexpensive in kenya and you can travel for um you know just a little bit of money and um i went to a lot of different schools and i was looking at these kids and i said oh my god how come these kids aren't wearing uniforms or why aren't they going to school and then you know a lot of the the teachers were saying well they don't go to school because they don't have uniforms and i said that's ridiculous and i thought well how much is it to make a uniform just like helping some you know kids out so they can go to school and i think that this was my real foray into uniforms and the meaning of what a uniform really does when you do see a child go to school you know they're putting a nice uniform and they go and they crush it it's a different mentality and it's amazing if you can make even a difference in that respect i just it really stuck with me and and so that experience i guess what like inspired you to figure out a way to get your kids to go to school and to go to school and to go to to get school uniforms to those kids and it's not entirely clear to me whether how it's connected but but i guess while you're figuring this out right how to make these uniforms you go back to la yes and started a business not but not bags this time but i guess like scarves and ties and things like that you know i wasn't actually intending it to be a business it was really to help children but i didn't have any money so i had to sell ties so i could put these kids in school so it wasn't i wasn't doing it as like oh let me do a business i was doing it so i can just help some people while i clear my head and the ties were bow ties and neckties and scarves and they were like silk and wool and the whole nine tell me about that how did you do that i mean again you were young and clearly you know very resourceful but like how did you um get it going how did you get the money to buy the material and to then make this stuff and and Because you were, you know, you were broke, basically. Oh, yeah. No, I had nothing. I really had a few thousand dollars in my pocket. But also, the material for a tie is very small compared to, you know, three yards for, you know, a pair of pants. I was working in retail stores in L.A. I don't even know if it's around today, but it's called Theodore in Malibu. I was making $9 an hour, and then my $9 an hour was actually paying for whatever I could afford for the ties. So what do you—you want to help kids in Kenya. How do you want to sell the ties? What's the game plan? Literally like a door-to-door type of situation. A combination of, you know, website, trunk shows, word of mouth. And did you call it figs at that point? I've seen references to fashion-inspired global sophistication. That's what it stood for at the time. Is that right? Well, I just put that, but I didn't—it didn't really. The real meaning behind it was I'm almost like a fruitarian, so I love figs. I love the fruit. And so that's why. So you're doing this, but it's not—this is not a huge business, of course. This is a small— Tiny. Yeah. Tiny. I wouldn't even call it a business. I would say this is like a little hobby. I'm just trying to, you know, get my ducks in a row, and I wanted to design, and I thought it was fun, and I can put some kids in school, and that was that. Right. And I put about 10,000 kids in school, so people bought a lot of ties from me. And just rewinding. Rewinding for a sec to your time in Kenya. Another thing I think that you noticed while you were there was that medical workers didn't have proper uniforms as well, right? Like, they didn't have scrubs, and I guess you want to do something about that, too? Correct. Yeah. I was in one clinic, and they were—they let me in the OR, the operating theater, and they were operating on this little boy, and they didn't have scrubs. And these nurses have been nurses for 25 years. These doctors, same thing. And I thought, let me just send them some scrubs. Help them out. And so when you came back to Los Angeles and you kind of implemented this as part of what you were already doing for kids and uniforms, how did you—you knew how to design clothing. Where did you get the scrubs made? Did you just, like, find a place in China? Because this is—like, today you could just go to Alibaba or whatever and just, like, I want 1,000 scrubs, and you get them next week, right? This is a little bit harder in 2010, 2011 to do. So in 2010, here in L.A., you know, there's fabric stores and there's sewers, and I bought fabric off the shelf, made the pattern, hired a sewer, sewed up a few, I don't know, maybe 30, and then sent them out to a couple clinics. I remember they were forest green, and then I put the label in bright yellow figs on them, and then I sent them out. And I didn't really think of anything of it. I was just trying to help people because it feels good to, like, look good. But then it triggered to me—I was—started to walk into certain hospitals and just sit there. Did you have friends who worked as nurses or as medical workers? Yeah, I definitely did. But yeah, it really—it really kind of struck when I started sitting in hospitals and I had coffee with a friend of mine who was a nurse practitioner. And she—when I met her for coffee, I was like, What are you wearing? You're a nurse practitioner. This is garbage. But scrubs aren't supposed to look good. They're supposed to look like—right? It's like— That's right. But you sort of noticed this. You were like, you don't look good in those scrubs. I mean, who looks good in scrubs in 2010? Well, and when I was in college, right, you have to wear scrubs. And when you're in anatomy, you have to wear scrubs. Right. And they do a one-size-fits-all. So I had the extra-large, giant scrubs, right? And I didn't think of it then, but you have to roll your scrubs up, wearing it, and it's like— Your sleeve is kind of getting in the way. Uh-huh. And then, you know, meeting this woman for coffee and thinking, how has this not evolved since I was in school? How is this even possible? And that's when it really—it bothered me. Okay. So the gear—I can see the gears in your head start turning, but I don't think you're quite there yet thinking, Oh, this is a business. You're just thinking, huh, maybe this is interesting. Well, I do think there were— There has to be something out there. So I said, let me go shopping for you first. Let me just go shopping. I'm going to go to these—where do you find a scrub store? And then I was driving so many miles away to go to these, like, strip malls, and the scrubs were obviously the same as what she was wearing. And I was like, okay, there's nothing here. I'm going to tailor your scrubs. So that's what I did, and she called me. She was at Cedars, and she called me. She goes, hey, can you tailor me another pair? And then one of her friends, she asked—said, Heather, can you tailor, you know, one of mine? I said, this— This is weird. And then that's when it shifted in my head, this is what I want to do. This is awesome. Okay, at the time, I would just assume there's, like, a scrubs room at a hospital. You go there, and there's, like, okay, what do you need? And you just pull the scrubs out, and you put them on, and you go to work. That's not how it works? There was at the time, that's how it works, but not 100% of the industry. So a very small percent, the hospital did provide, right, in vending machines, scrubs, right, for their— For their employees, for the HCPs. But you got to—most people have to buy their own scrubs. That's correct. But if you were to go into a, quote-unquote, scrub store, oh, my God. The retail experience, there are cardboard boxes, bedpans, crutches, everything in the store where it's like, why are you—why is a healthcare professional, right, why is a surgeon, why is a dentist, why are they coming in? Why are they coming in to this type of retail experience? I just thought it was, like, absurd and inappropriate. I mean, it's interesting, because just before I bring Trina in, did you get that reaction from people that you talked to? Were they like, I'm so angry that scrubs suck? Like, I wouldn't even know that people would think that. I would just think, oh, whatever. No, the reaction was, well, this is what we wear, Heather. Right. I was like, why? Stop it. We're going to stop this. We're absolutely going to stop it. That's why your reaction is so interesting. It's very unusual. I mean, you were literally angry about something that the people you were talking to didn't seem that angry about. They didn't seem that angry. It's because they didn't know that there was something better. Right. I was very upset. It came from a place of being so upset that the people who are saving lives, the people who are pulling, you know, all-nighters are subjected to wearing these boxy, ill-fitting, scratchy clothing every day. And after doing my research and, like, going to these scrub stores and getting calls from, you know, friends saying, hey, can you tailor my scrubs? I said, I'm going to make the best damn scrubs out there. Yeah. But, of course, I didn't have any money, so how was I going to do that? Right? How was I going to do that? But then I found a manufacturer who was really cool and believed in my vision and helped support the first production run. Of my designs. It was a very small production run. I think it was, like, 15,000 at the time. I got people off Craigslist to do a photo shoot, got it on the website, and then started selling out of my car in emergency rooms. Wow. Okay. Trina, I want to bring you into the story now because Heather was kind of taking this kind of windy path to get to FIGS. And at the same time, you were on a, I would say, like, a more traditional track. You had an MBA from Harvard. And when the two of you met, you were actually working in finance at Blackstone in New York. Heather is a random person in Southern California doing something a little quirky. How did you even come across your radar? So we had a mutual friend. She worked at a private equity firm across the street from Blackstone, and we would go every day at 3 p.m. to get a coffee. You know, we would talk about random. And she was like, my friend is working on this idea for scrubs. And I was like, that's really interesting. Could you connect us? And so she did. Why did you think that was even interesting? You know, I think I wanted to do something more entrepreneurial. I, Blackstone, I realized there were a lot of people a lot smarter than me and a lot more passionate about the work that we were doing there. And I was like, even if I could, you know, get there in terms of all. The things I would need to learn, which I think I could. It was that passion. I think that separates, you know, the good from the great. And they were much more passionate about those jobs than I was. OK, so you contact Heather and you're like, hey, tell me about what you're doing. Yeah. And at the time I was actually headed to L.A. to visit one of my friends from business school. And so I said, you know, would love to meet you. And she said, oh, I see that you play tennis. So why don't we. Hit some balls. I got smoked. I got smoked, smoked. So we met up. We played tennis. You know, I was in L.A. for I think it was July 4th, the weekend. This was 2012. And we were talking about what she was doing and her idea and her vision. And, you know, what really stuck with me was this concept of, you know, there's so many companies that are building. amazing product, amazing gear for athletes. And at the time, I mean, so to this day, you have Nike and Lululemon and Under Armour that are creating the most technical gear for people to score more goals and run faster and swim across all the lanes. But what about the people saving lives? Who's building for them? Who's creating for them? So here's my question for you, Trina, because I think you are, I mean, you're a business school grad and you're in finance and you're working with like data and you had done diligence as an analyst. So like I'm thinking, I'm just going to take a leap here and think that you would want to know if there's actually a there there. Like at the time, what did you try to look into this and validate whether there was a real opportunity there? Yeah. I mean, and I didn't leave my job for about, six months after I met Heather. What did you start to like look into to see if there was, what did you discover? Well, I remember Heather said, well, before we start working together, can you help me with this financial model? And even before we would start working together, as a friend or as somebody I just met, can you help me with this? And so, and I think Heather, if you remember, you had somebody build something for you and you sent it to me and I was like, this is crap. We got to redo this. And so I, you know, used all my financial modeling skills from my, from banking and private equity. And, and to your point, Guy was, you know, started looking into the industry. How, how big is the market? Who, who, who are the players? How does it work? And it was such an attractive industry, right? Healthcare uniforms, healthcare apparel is mandated. You have to wear them to go to work every day. But the hospitals weren't paying for them. And the healthcare professionals were on their own to go buy them. The industry is replenishment driven. You have to order your uniform over and over and over again. It's a non-seasonal business. Most apparel companies are waiting for that holiday order, right? In order to, and that's where they make all the revenue for the year. It's a non-cyclical business. Healthcare is recession resistant and healthcare jobs are recession resistant. And so there's all these attractive dynamics, but the industry was fundamentally broken and that all the players were going about it wrong. They didn't sell to healthcare professionals, even though 85% of healthcare professionals buy their own uniforms. They sold through distributors and that's where the problem was. So this is amazing. I mean, 85% of medical workers had to buy their own scrubs. So that right then and there, that's huge. Did you find out what the total addressable market was? Yeah. So the total addressable market, so there's 24 million healthcare professionals in the U.S. There's 140 million healthcare professionals in the U.S. There's 140 million healthcare professionals around the world. The industry in the United States at the time, I think was about 10 billion. That's, it's a lot bigger today. It's over. That's insane. Yeah. It's over 12 billion now. It's $80 billion industry around the world. And so massive industry. Yeah. It's incredible. All right. So Trina, you meet Heather and from what I understand, you started to come out to LA every couple of weekends to, to do informal work together, but you were not yet formally working together. Is that right? That's right. So, and you know, in finance, you get a bonus at the end of the year. So at this point, I'd already put in about half the year. So you might as well wait for the other half. And I still had a lot of debt coming out of business school, right? I had only been at Blackstone for about a year when I met Heather and Heather was, already had the collection. And, um, we were selling and she was, well, I think Heather, you said to me, Hey, Harvard girl, if you want to work with me, you got to sell some scrubs out of my car. And I was down. So we would go at 7.00 AM and 7.00 PM. Um, when all the doctors and nurses were changing shifts, um, and we would sell scrubs on the sidewalk outside of emergency rooms. And these were tops and bottoms, tops and bottoms. Yeah. Tops and pants. Yeah. I always had the North star of something in my head called a technical, a little bit of a shirt. And so we wanted to come out with a product that had stretch and that was super soft and really worked for the HCP. Yeah. But also I thought, why don't we give healthcare professionals colors that I believe they should have? So for example, a graphite. So if you see, you know, business folks and they wear slacks and they're wearing a Heather gray slacks, why shouldn't healthcare professionals wear that same type of Heather gray? Okay. So you guys are selling scrubs out of trunks and Trina, what did you see? I mean, were you, I mean, it sounds like clearly like more and more of this is being validated in your mind. You were like, yeah, wow. People are just, were they flocking to the sidewalk? It was like, I need a large, I need an extra large, I need a small, like what was the scene like? Yeah. I mean, I think there was some of that, but it was also for me, it was a lot, it was a big learning experience of what do you, what do you love about your scrubs? What do you, what do you not like and where do you hold your, you know, your tools and what types of pockets are needed? And but yes, we also sold a lot of scrubs on sidewalks and we would go in the morning, we would go get a big thing of coffee from Starbucks, a big thing of hot cocoa. And we were just giving people free coffee and hot cocoa coming off a night shift and, you know, learning more about them. That's smart. Yeah. It was really great. Yeah. Trina, you are still a Blackstone. I mean, I know that, that basically in January of 2013, you, you decided to leave and go full time on figs. But Heather, when Trina was like, hey, I think, I think I want to do that. I want to do this. What, what was your, how did you feel about that? In the beginning, I was like, absolutely not. Like what? Why? Yeah. Why? Because, you know, my manufacturer, in terms of funding, right, my manufacturers were funding myself. And, I had an intern, they were funding the production, which was, it's very hard to convince your manufacturer, hey, believe in my vision. I know it's going to sell. You got to, you know, front the production run. So you had, you had this funded. So you're thinking, I don't need anybody. Right. And then Trina and I, we got to know each other. And I was like, we are magic. We are so different. But at the same time, we come from the same cloth, essentially, in terms of, that we are both very competitive by nature. And I really appreciated her so much. I was like, I think we can do something awesome together. You're going to do everything I don't want to do. And she goes, great. I like to do that. I want to do those things. And I said, amazing. Okay. And Trina, you, you had some savings, right? Your 401k, I guess, 401k through your work and, and I'm assuming you still had some debt, but I have to imagine that to do this, you had to make, put in some cash to make a financial commitment. Yeah. I mean, and I think that was my commitment to Heather as well. Like she had, you know, done a lot before I got involved. And so, you know, I did liquidate my 401k, and, which is a horrible tax decision for those listening. It was 50% of everything. Yeah. Horrible. And I did have business school debt as well, still. That I was paying off. So you put some money in and do you, do you mind telling us how much you were able to put in? $70,000. Okay. So that was everything you had. Yeah. So I think it was the 401k was 140,000 and then divide by two. Yeah. And, and this is tricky. We always, there's a tricky conversation. Okay. We're going to be partners. How does this work? You know, Heather, you'd been running this now and you had it up and running. And now you're running it. And so, you know, you're going to be running it. And so, you're now you've got a partner bringing in 70,000. You guys have to figure out how this business is going to be structured. Yeah. And I think we came up with an equity split that we both felt good about. And so, you know, Heather is a creative genius and her equity was greater than mine. But I think that was in line with what was fair and what was right and what had been built. I think a lot of people really get caught up on what am I getting and what are they getting? And we just have never had that relationship because at the end of the day, if it fails, we both lose. And if it's great and it's successful, we both win. But a part of me thought, like, even if this didn't work out, and I think Heather and I both have this belief in ourselves, like, I can only fall so far. Right? I did work. I did go to Harvard Business School. I did work at Blackstone. Like, if I wasn't going to do it in my late 20s, like, I was never going to do it. I didn't have a mortgage. I don't have a family. I don't have kids. Like, you know, if I wasn't going to do it then, like, when would I do this? Yes. And I think anytime you, you know, get into any type of partnership, especially business, it's a massive risk. But I think there was more, there was a larger risk us not partnering up. Like, life is a risk. Just also have fun. Right? And so I thought Trina was also, like, a lot of fun. And I want to have fun in life. And we only live once. Did anybody say, Trina, you're going to leave Blackstone? Like, to sell scrubs? Like, really? Is that a good idea? Everybody said that. Everybody said that. They said, you know, what are you doing? And what's a scrub? Both questions. When we come back in just a moment, Trina and Heather get turned away by hundreds of investors and learn the art of the quick no. Stay with us. I'm Guy Raz and you're listening to How I Built This. Hi, it's Phoebe Judge, host of Criminal. I'm going on tour. If you like hearing me tell stories about people, well, I've decided to tell stories about my life and the people I love. A letter was left carelessly around, so I was sort of caught red-handed. It's a show about secrets and forgiveness. I hope you'll come see it. Find all our tour dates and get tickets at thisiscriminal.com slash live. Hey, welcome back to How I Built This. I'm Guy Raz. So it's early 2013 and Trina leaves her job at Blackstone and moves to L.A. so she can work with Heather full-time on figs. The two of them are sharing an apartment and they start to use Shopify to fulfill orders. So we had a two-bedroom apartment and the living room was cleared to have our stacks of figs. And they were in. These light plastic polybags at the time, which would slide and Trina would always, you know, pile up the right colors and the right sizes. We would ship out of our quote-unquote warehouse. And the initial, like, units, let's say, were made where? I mean, I'm assuming they're made overseas or made in Asia. Even though I know there's still quite a bit of manufacturing that happens in L.A., clothing is made there. It's just, it's very expensive to make it there. We tried that, too, though. I mean, we tried in the beginning. It was, you know, production in Los Angeles, production in China, production in Vietnam. And then I was in Vietnam for quite some time. And we did have a production issue early on. And so in order to, like, really get the quality and the fit right, we ended up, to Heather's point, coming back to L.A. to perfect it to then go back overseas. And so that's kind of how that worked. Yeah. And I would spend a lot of time in Vietnam commercializing our product, right? I spent a lot. Working. Working at the factories. Oh, yeah, dye houses, factories, yarn, mills, everything. So I'm very particular about our fabric, very particular about our yarn, very particular. And it takes a lot of time and energy, and especially when you're creating your own fabric and you're not just buying something off the shelf. And I think when I was doing that and dealing with the commercialization of the product and perfecting the product, Trini was out running our operations and then raising capital. So, yeah. From what I gather, you were able to, you guys were able to bring in $2 million from friends and, like, a friends and family round. Mm-hmm. And do you remember how many people it took? Because $2 million, I mean, it's not that easy to raise $2 million. Like, how many people were in on that? Do you remember? I think it was about 40 to 50 people, $5,000 checks, $10,000 checks. People that believed in me believed in Heather. You know, we actually didn't really take money from family. Not at all along the way. Yeah. Were you nervous about doing that? Like, because that, if you lost it all, like, they'd lose money. I don't know. I think it was they wouldn't give us the money. Yeah, they didn't give us the money. More than. And, yeah. And, yeah, I think I didn't want that to be an additional pressure. It was enough pressure given what, you know, we set out to do. All right. Let's talk about, Trini, you arrive in 2013, and you guys are living in a two-bedroom apartment. And you've got a wedding. Website on Shopify. And I'm just going to throw out a number there. I'm thinking you're doing, I don't know, you can't be doing more than $20,000, $30,000 a month, right, at that point? Less than that. Less than that. Okay. So small. Okay. So, and again, at the time, it was, you know, in 2013, it was a unisex clothing, or was it specifically cut for? Oh, yeah. No, it was specifically cut for male and female. And we really tailored the product, and I was really focused on the glutes area. The glutes area was a big deal, right? Yeah. You know, it's interesting you say that, because, I mean, this was the secret success of Lululemon. Everybody who bought them said they make my butt look better, right? And that was a key kind of innovation that they had. And so it makes sense. But that would be an area you would think about. Yeah, and we still think about it today. And I think also bringing fashion to healthcare professionals, to the design, was very, very, very important. So back in 2013, we had, I think, very original, not just fabrication, right, but also the style, the silhouettes. And we had our first, like, for example, a slim pant. We had a slim pant, and everybody was like, what is this? This is horrible. And I was like, no, we need a slim pant. And that was actually one of our top sellers. Instead of just baggy, like, scrubs. Mm-hmm. And so we came out with something called a Raffaella top, right, which is a top with no sleeves, essentially. And everybody's like, this is crazy. What are you doing? Like a muscle shirt. Like a muscle shirt. Exactly. Like a muscle shirt. And so, you know, everybody's like, what is this? This is not going to sell. This is terrible. I was like, no, it's forgiving. It's flowy. It's feminine. You can wear underscrubs. What's an underscrub, right? We invented the underscrub, the layering pieces. And that was our number one selling top. Huh. Now, let's talk about even before you raised the first real seed round, which I think happened in 2014. What was the sort of the thinking about how you were going to sell these products? Because you need to bring in cash. And one of the things that I would have thought of, that everybody thought of, I'm sure, was, like, hey, you're going to make money by just selling these in B2B. Like, go to hospitals, go to medical centers, go to private clinics, and just have them buy tons of this stuff. Did you get any traction with that approach? No. None? No. They weren't interested? Yeah, they weren't interested. They didn't get it. They aren't the end. They're not our customer, right, for the most part. The administration of hospitals and clinics are not our, they're not healthcare professionals that are, you know, helping patients and doing that work. It was super frustrating and upsetting, but at the same time, that was the blessing, is that, like, none of the routes that we were going, that most companies go, they go for, I'm going to sign up a celebrity, I'm going to get a lot of press, and I'm going to go get some big institution to say we're great. All of those things didn't work for us. Every aspect of getting a gatekeeper to say, oh, figs will do great, none of that worked. And the only thing that ended up truly working was going direct. And so, you know, that's one of the things that, you know, that's what we're trying to do right now, is we're trying to build a relationship with them, one-to-one, at scale. It's interesting because, like, a nurse, for example, right, it's a very good job. I saw the median salary for a nurse in the United States is close to $100,000 a year. Now, we're talking about 2014, so it was different, but still, it's a very, it's an in-demand job. It's a hard job, but it's a very good job. And so, I'm assuming that the scrubs that they were buying, that were available to them, might have been a little bit cheaper than what you guys were selling. But a lot of these people had the incomes to pay a little bit more for something a little nicer. Is that right? Yeah, I mean, I think that the, we think a lot about, like, the price-to-value ratio. So, because these companies that were making scrubs sold through. Distributors and paid licensing fees, the cost of their product was really low because in their margin structure, they were giving 60% of the total price to the retailer, and they were giving 8% to 12% of the retail price to the license holder. So, that left very little to innovate or create a great product. We were selling direct. And so, when you think about our business model, our cost is about double, but we only had to charge about 15% to 20%. Because you didn't have all of the middlemen. Because we didn't have all the middlemen. Makes total sense, right? And direct-to-consumer, certainly in 2014, like, that was the way to go, but you still had to acquire customers, and that would require cash, which meant that you still had to raise money. I mean, apparel is cash-intensive business. We know that from, you know, dozens of episodes of this show and just, you know, knowing what to know about the industry. So, going to really start to raise money. I think in 2014, this is when you, I think, started to go to more institutional investors or professional investors. Yeah. But the process of raising that money, I have to think you do get no's. Oh, we got, I mean, we probably got 300 to 400 no's. Yeah. And then… 300 to 400. 300 to 400 no's. Easy. How are you pitching 300 to 400 people? Easily. Oh, we're a machine. We don't stop. I mean, and it was… It was… It was life or death, right? It was… We were very focused on getting fast no's. Fast no's. So, you know, when people… People were not sure or were not getting back to us. Okay, that's a no. Why would people say no? Because you would show them the data and say, here's the opportunity. What were the reasons? Nobody cares. No one cares. As a healthcare professional, you don't care how you look. You're getting blood and you're getting liquids on you. Nobody cares. Well, actually, you know, we can talk about all the reasons people do care. And also, one thing from an investor standpoint, they were like, the TAM's not big enough. It's not big enough. It's not big enough. But you were saying there's 20 million people. It's not big enough. It's not big enough, right? And our point was, maybe it's not, but that's not the right business to invest in. You need to create the TAM. If you create TAM, that's a whole other ballgame. That's something you would want to invest in. Wow. So you couldn't convince investors every now and then? That's right. And it took a number of contrarian thinkers who believed in us and believed in what we could do that didn't invest. Okay. You raised the money, $3 million. Well, it was $2 million was the seed. We raised a million-dollar bridge round, and then we raised another two, and then we raised five to get us to a total $10 million. Okay. Yeah. I want to talk about this time. This was kind of a golden moment. 2014 to really 2018, 2019, even into 2020 for direct reaching consumers directly through particularly Facebook, right? And some people have said it was like shooting fish in a barrel. You could really – the customer acquisition costs we know were much lower. You were going to be a direct-to-consumer brand. So I have to assume that some of that was going to go to really try and target. Target health workers who are on Facebook. Yeah. Digital marketing was definitely part of our marketing strategy. And, you know, I think the unique benefit that we had was that the other players weren't really doing digital marketing, like at all, right? And then over time, because healthcare professionals are in very densely populated institutions, word of mouth. Word of mouth very quickly became our largest customer acquisition driver. And so, you know, healthcare professionals are walking billboards, wearing figs. Yes. It's a tribe. Yeah. Yeah. I mean, this is – it's interesting, right? Because it is – because it's a unique product and it is – even though millions of people are buying this, you don't – most of us don't see it unless – you do see people wearing scrubs if you live near a hospital, right? But for the most part, most people who don't work in the healthcare industry don't see scrubs all day. Yeah. I think the thing that is truly unique about figs is how we've built a community around a profession. And that community is diehard obsessed with figs and we are obsessed with them. And that's the thing you can't replicate. That's the thing you can't copy. This is a very tightly knit community that we penetrated very early on and became like a part of their life in a way that – Was inextricable. Okay. So either around this time or within this period of time, you guys were co-CEOs, I should mention. At that time, Heather was CEO. I think I was COO at that time and then we became co-CEO, I believe, in 2017. Okay. And there was an investor who you guys met or – he kind of – I don't know if you found out about him, a guy named Thomas Tull. Who would become significant, a significant investor, the significant investor. Tell me about him. He was already a very wealthy guy. He owned some innovation labs. Tell me about how he – who he was, how he came across the business. Yeah. So in 2014, 2015, one of our investors said, you know, you got to meet Thomas Tull. He runs a movie studio called Legendary Entertainment. And we got to get – Fig scrubs into the movies. And we were trying everything at this time. And so we meet with Thomas and, you know, I think Heather – both Heather and I were like, that's not going to be the thing. But at the time, we just said, okay, let's meet with Thomas and see what we can do here. The conversation was super interesting. We ended up – he ended up investing in our seed round and our Series A. And he really got it. And he was focused. He was focused on these outdated industries, right, that were, in his words, run by the mafia. And not to say that the medical apparel industry was that, but if you look at what, like, Uber did with the cab industry or what, you know, like that type of phenomenon that, you know, these Garmentos were just running these industries and not building – really bringing technology in the best minds to build something truly innovative. That was the thesis. And he said, you're doing that in the medical apparel industry. And so he invested in us. And then in 2017, you know, he bought out all of our other investors for a great return. And then that took time and it was a process. But we ended up getting that done. And he would end up, as you say, not only putting in more money but then basically buying out the cap table, like clearing the cap table in 2017. Yeah. So I think – Yeah. Yeah. Yeah. Yeah. I think this would be a turning point, right? Because you are – you would have now some really significant cash behind the business to scale it further. Because I think by the end of 2015, I think you'd done about a million – you'd cracked a million in sales. That's right. Roughly. Okay. And do you remember 2016 roughly? Four million. Four million. Okay, great. So you're now – in 2017, Thomas Tull buys out – or he basically clears the cap table, puts I think about $65 million into the company, becomes the majority owner of FIGS. Now, on the one hand, this is great because you don't have a bunch of investors and a bunch of calls. But on the other hand, it could be tricky because now you've got one investor. And so there are different – there's different views on whether this is an advantage or not. I think in the end it worked out for everybody. But was there ever a part of you – or did anybody say or give you advice like, hey, you want to be good? Be careful having just one investor behind you because that's your boss. I mean we structured it I think really well where Heather and I had two out of the three seats on the board. So we've never lost control of this company. To this day, we have – we control the vote. So we have – as a public company. And so I think that was something that we were really focused on. In 2015, we had raised money from a group called Campfire Capital. Out of Vancouver, right? Out of Vancouver. And one of the reasons Thomas ended up buying them out in addition to all the other investors is that they tried to kick us out. They tried to kick you guys out as the operators? Yes, yes. Uh-huh. Thomas was – he was an entrepreneur. He was an operator. And so he wasn't about kicking out the founders. He was about ensuring that we had all the support and resources we needed to go and crush it. And it worked out great. And it meant that you didn't have to fundraise. Well, and at that point, though, by 2017, we were making money. So really, 2018, we did $55 million in sales. 2019 was $110 million. $263 million in 2020. And then the rest is history. Okay. Basically, as you start to get more and more successful, I imagine you start to attract attention. Because even at this point, I don't think that any big sort of well-known brands were making scrubs. Now, Fabletics does it. And other – their other competitors have gotten into this space because they see there's money to be made. But you guys got sued by this company called Strategic Partners. And they have a lot of different brands that they own that do scrubs, like Dickies. And I think Dickies is one of them. Cherokee. Dickies and Cherokee, mainly. They sued you guys for, I don't know, a bunch of different things. That you made false claims about your products and that maybe that you stole trade secrets from them. And this went on for, like, a long time. It was like a four-year legal battle that – You decided – you guys decided to fight this. Yes. Yes. I mean, this was a company that was basically suing us for – they were basically saying everything that we had ever done was a lie. They were – obviously, your business was – as it was growing, it started to threaten – potentially threaten their business. Yeah. And we had – you know, the legal battle started in 2019, early 2019. And so that's when I think they woke up and realized, like, you know, we were doing something unique and different and healthy. Healthcare professionals love figs. And they needed to – and their whole strategy is litigation, not innovation. So that was their whole playbook was suing companies and taking them out of business. And we thought, we're not going to take this lying down. We've got to go fight this. When we come back in just a moment, we'll find out how the jury ruled in the case and who wound up benefiting the most. Stay with us. I'm Guy Raz, and you're listening to How I Built This. We'll be right back. hey welcome back to how i built this i'm guy ross so it's early 2022 and after a three-year legal battle the lawsuit against figs has finally come to a close the jury winds up ruling in favor of heather and trina but the founders pay a big price how much did this cost you guys to fight 40 million dollars 40 million dollars to fight this yeah it's so crazy to me the only winners are the lawyers that's right but that's i mean that's america right the most litigious country it's so crazy but i would say like it's also the best thing that ever happened like i mean i don't know if heather would agree but 40 million dollars it's a lot no not that part but like this really showed the world like not to you can't mess with us we're not going to settle we're we're going to fight you because we know who we are and then we didn't do anything wrong they wanted you guys to settle presumably yeah i mean and lawyers at times were like let's let's just settle this and i have to give credit to our board our board at the time because we were already public so we had you know amazing people that said we're no we're not going to take this lying down we're going to we're going to fight what if you could have settled for two million dollars and you know and and not admitting anything i mean we probably would have done that but that wasn't the case i think you have to think about the cost of doing business so we were being sued for i believe it was 800 million dollars right so if we're going to spend 40 or 60 that's absolutely worth it because we knew we were going to win because um we just did we knew we were going to win because what what they were suing us for was just ridiculous and they lost because we were innovative that's really how we won because we're an innovative company and we put great product out there we have a great business and that is why we won the lawsuit but 40 or 50 million dollars we spent way more than that because of our time right so my time and trina's time and the company's time and the board's time it's discovery and and depositions that's right you know and if you can compartmentalize and block and keep going and doing your day awesome it's it is hard to do but you got to train yourself to be able to do that so you you keep going forward and you know building a great company even though you're being sued here for 800 million dollars in the background how did you uh compartmentalize how did you just do your job and also oh god i gotta do deposition today i mean it was really hard and and you're gonna have lawyers their lawyers are gonna be aggressive they're gonna ask you all kinds of aggressive questions they're gonna try and make you mad they're gonna try they want you to get mad they want you to get testy they want you to lose your cool well not to speak for heather but i think one of the things that helped us win was how angry she was at the trial and the jury saw how angry we were that this has taken so much of our time and it is so ridiculous and you know and i think that i mean i didn't do a great job of compartmentalizing over that time especially not at trial i mean it was all day long we were living in a hotel in santa anna like it was i don't know how people do it if you don't have money i don't know how you do it um it's awful and so you know i do think the anger i think at many times our lawyers were like don't be angry you have to be this you have to be that and in the end we were just authentic and honest because we didn't know how to be anything else and you know i would say the best moment of that whole thing was after we won we met the jury we had a jury and we met them and they were crying and just saying how sorry they were that we went through this i mean it was just i mean it was unbelievable it was unbelievable it's been yeah it's part of i guess part of business in america um okay so i wanted one because this trial would take so long but i want to wind back for a sec which is covid and um wow i mean it this turned into for obvious reasons an insane moment for you because all of a sudden there is a massive need for obviously you know clothing but all but but but ppe protective gear and which was not your business this is not what you were doing but you very quickly got into that business making masks and gown certain gowns isolation hazmat suits like tell me about just how did you get that done so quickly yeah i mean i would say just to be clear on the hazmat suits isolation gowns and um other ppe we didn't sell that so that was all donation uh during that time um but you know we did shift our supply chain um we did you know find suppliers to help us make ppe we were making masks that you know were actually maybe two we had n95s and then we also had our our figs masks that we um you know were selling and i think the the cloth ones right yeah exactly and so i think it was um it was just like we felt this deep responsibility that we had given who we are and what we do and the business that we're in uh to ensure that our community was safe and taken care of how are you dealing with supply chain challenges i mean there were all of a sudden like a shipping container went from you know i don't know 35 bucks to like two thousand dollars for example and and they were there was a backlog i mean how were you how are you guys keeping up with demand during that time yeah i mean it was it was it was hard and we were we weren't necessarily keeping up with demand i mean if if there were there shortages in the website like sold out sold out oh my god all across the board but i think we had incredible manufacturing relationships right our partners we had worked with for at that point eight years you know seven eight years right so they were in it during this time because 2021 was still covid you you guys go public you you do an ipo and you go public uh in 2021 may 2021 and um i have to i mean this is an amazing opportunity and moment because you had done it has such an incredible year in 2020 was that sort of the idea like wow we have an opportunity we better seize it at this point because we are really we're we're doing great i don't think we thought about that bit like that it wasn't about the capitalizing on the opportunity i think it was the company uh should be a public company um you know we had built a real business uh with the scale and with a disciplined approach around revenue and profitability um we did have one investor that at some point would need liquidity and then the ipo was really about celebrating our community we brought 150 healthcare professionals the new york stock exchange we had the best party ever they rang the bell with us not our you know our management team it was a moment to celebrate them and it was a moment to celebrate um all that we had done to get to this point yeah yeah when you go public literally i mean at this point you knew you had a sense it's going to happen but now it becomes real on paper the both of you become very wealthy multi-millionaires like worth hundreds of millions of dollars and i and it might make you feel uncomfortable i maybe not i think it's an amazing achievement but it's it's true right like your shares are worth so much and instantly the both of you who did not have did not go into this business wealthy did not come into the you know into this thing flush with cash the value of what you have the shares you have are worth a lot of money it's valued you know it's a multi-billion dollar brand at this point yeah i mean i think to your point it was on paper and you know we made the forbes like wealthiest women alive or whatever list and then the following year after the stock went from like fifty dollars to five dollars we were the two women who fell off meet the two women who are now not on the list right so i think it was a point in time right it was a point in time and not to say that we haven't done well and we haven't you know taken money off the table to your point we have and um and it it's amazing right we're able to support our families we're able to support people we love and um that's what being financially secure enables you to do but that's not what drives us every day and i think for me it's like having gone through that right that roller coaster of having nothing being worth x and then being worth nothing like this you know that we're an eight billion dollar company now we're a four hundred million dollar company six hundred million dollar company now we're two billion like it none of it it's so transient um and you can't get real really tied emotionally to any of it in terms of your self-worth let alone your net worth well it's interesting because i think now i think the market cap of the of the brand is 2.4 billion but you're more profitable than you've ever been so it's i think that's right i mean i've looked at the financials and and you're actually your customer acquisition costs are lower and so it's interesting right how that works right and the public markets you know are at times rational at times irrational you know over you know the standard quote like over time it's a weighing machine in the short term it's a voting machine but like we went from like when we went public like the stock went up and down and then it went up and down and then it went up and down and then it went up to 50 in the first month and you know people are inviting heather and i to their castles in italy right and then a year later the stock's at five dollars and it's like we murdered their first born right so Oh, you're not invited to castles in Italy anymore? No, it's like we literally murdered their children. So, you know, I do think like having gone through that, you kind of realize it's all a little bit fake. And the amount of entrepreneurs that I'm sure you've probably interviewed that sell their company for billions of dollars and then go into deep depression, right? Happens a lot. Not a lot, but it does happen. Yep. You lose sense of purpose. They don't have that purpose. Like we're operating this company with the same amount of passion that we had in day one. We just started a foundation. Like it's so awesome. We built a hospital in Kenya. We have an advocacy platform where we're fighting for our community in D.C., meeting with Bernie Sanders, meeting with Republicans. We're meeting with people across the aisle and having, and I always say this, like you have to do well. Like you can't give back and do the things that we're doing without having a real business that makes money. And so the business makes money and that's super important to being able to then do all of these other things that we're passionate about. But those things have to be tied together. Heather, I know you stepped down as co-CEO in 2022. You're the, I think, the executive chairman, chair of the board. And so obviously still involved in the company. And Trina, you are the CEO today, the sole CEO. Yeah. And I mean, again, it's, I'm just curious, like we've talked about your sort of your business life, right? Your public life. And did either of you have time for a personal life at all? And I mean, was there any time to, you know, to focus on yourself and your own, you know, I don't know, the things that were not about the business? I think for me, I'm just starting to figure that out. Even in the past number of months, I think, you know, I do. I do think we've sacrificed a lot to, and you have to, right? Like they always say, you know, you want to be great. What are you willing to give up? Right. What are you willing to sacrifice? And I think we've sacrificed a lot. And I'll just speak for myself. Like, you know, I've just started, you know, playing more tennis. I've just started dating and getting out there. Right. And I think that's, I started seeing a therapist, which makes me like very LA. And so I do think like when you're. So maniacally focused on building a business and getting it to this scale, you, you do give up aspects of yourself and of your personal life. And, and I feel like now I'm trying to figure that out. Okay. I think that, you know, again, the business is based on the public documents. I mean, you know, almost 19% margins and EBITDA has hit 36.6 million in the last quarter, last reported quarter. There are. It's a different business now than it was in 2013. Just from a business perspective for a moment. Do you, you know, as a CEO, right? Do you see figs as long as you are running it focused entirely on this category on healthcare workers? Or do you imagine getting into like athleisure wear or like I, whenever I travel, I always wear, you know, I'm not wearing jeans when I travel. I wear very comfortable socks. Soft hoodies and joggers and stuff like is, is there a world where you also are targeting that kind of consumer? Trina's going to take this, but guy, if we tell you all the things, we're going to have to kill you, man. That's true. That's true. No, I think the, I think there, we have 3 million active customers. We have barely scratched the surface on getting into, you know, really first off having more healthcare professionals, no figs. I mean, there's just so many, there's just so many things like if you look at the original vision board that Heather like put on the wall when we first met, like we're like on number like two or three, you know, and so I think there's always possibility in the future of things outside of healthcare. But I, you know, the next decade, I would say the runway is just so long and so big on what this company will be that, you know, there's no reason. When you think about Heather, what happened, right? And how this unfolded and where you got to, and you became wealthy and rightfully so. I mean, you deserve to be wealthy and you became, your life unfolded in ways that maybe not everyone who knew you would have predicted. How much of, of this do you attribute the success that you got? Do you attribute to the work and the hard grind and the, every, the sweat and how much do you think had to do with, with luck just being at the right business at the right time and the right momentum? I think it's got to be a combination of both. I think you need to have luck on your side. I think you need to hit that wave at the right time. And Trina and I, we are just even like brute force. We kind of willed it. Definitely, you know, I feel very lucky. I do. Trina? Yeah, I think, you know, when luck showed up, we were ready for it. I think the luckiest thing is the people. We've brought on, uh, who helped us build this company. We have the best team. And when the luck disappeared, we had to be really smart and really resilient and do all these things that sucked. And we're super painful, um, so that we can get lucky again. Also, I feel lucky to, to feel so positive. Like I wake up every day, like really happy and positive. And I feel lucky that I feel that way. You know that the copy team, Heather was talking about this the other day. They said, even during COVID, like they would write like this, like, you know, semi dark copy. And they said that you kept being like, guys, it's too negative, make it more positive. Like they know what they're dealing with. They already know what they're dealing with. Like we're the light, like we need to bring the positivity. Like they literally said this the other day. And I was like, that's right. You've always pushed that, not just like for yourself, but for the brand of bringing that light and positivity to like every aspect of how we show up. And it's so cool. Hmm. That's Heather Hasson and Trina Spear, co-founders of Figs. By the way, the brand had its red carpet debut last year at the Emmy Awards. Noah Wiley, the star of The Pit, wore a custom Figs tuxedo in midnight blue. Wiley said he actually asked Figs to make him a tux that was as comfortable as the scrubs he wore on set. Hey, thanks so much for listening to the show this week. Please make sure to click the subscribe button. Click the follow button on your podcast app so you never miss a new episode. And if you're interested in insights, ideas and lessons from some of the world's greatest entrepreneurs, please do sign up for my newsletter at Guy Raz dot com or on Substack. This episode was researched and produced by Catherine Cipher with music by Ramtin Arablui. It was edited by Neva Grant. Our engineers were Robert Rodriguez and Anli Huang. Our production staff also includes Casey Herman, Chris Massini, Alex Chung, Sam Paulson, Carla Estevez. J.C. Howard, John Isabella and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.