(In a new series, “How I Did It,” FN profiles successful footwear and fashion players — from entrepreneurs to designers to top executives at major brands — and reveals how they carved their path into the industry.)
In 2015, five years after the launch of Richer Poorer, Tim Morse and Iva Pawling sold their socks and undergarments brand to Canada-based e-tailer Shoes.com for $12 million.
But the e-tailer was ailing, and only one year into the acquisition, Morse and Pawling made a life-and-death business decision: They bought back their San Juan Capistrano, Calif.-based brand for $8 million — a month before Shoes.com filed for bankruptcy.
Now Richer Poorer has expanded beyond socks and undergarments, offering men’s and women’s basics including boxer briefs, bralettes and T-shirt dresses. (Its women’s business surpassed men’s this year for the first time, bolstered by last year’s 300 percent growth, according to the brand.)
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The company — which employs 35 people — also works with more than 600 retailers, such as Nordstrom, Free People and American Two Shot. “It slowly transitioned over the last eight years,” Morse said. “We have a pretty diversified profile in wholesale, and we did it intentionally because the big guys are having some challenges.”
Morse’s secret to survival? “Curation, community and experience.” Here, the Richer Poorer co-founder explains why.
How did you become interested in the footwear industry?
“Growing up in Laguna Beach was ground zero for a lot of big-action sports and street brands. After college, I moved into technology and spent about 10 years there, and then Iva and I met. She has a very strong entrepreneurial spirit and was running her sister’s jewelry brand, Gorjana, at the time, but she was looking to do something different. We talked about a lot of different ideas, and I think a lot of our success has to do with timing. We were coming out of the economic downturn when we launched in 2010. People still had the propensity to spend money, but they didn’t have the disposable income they had in the past. The pendulum, I think, really swung to the other side. We caught the trend at the right time, but the goal was, how we could expand beyond socks and focus on basics?. Because you need to sell a lot of $12 socks to really grow into a multimillion-dollar business.”
Describe your big break.
“About 12 months into the relationship, we started to hear rumblings that there were some financial challenges at Shoes.com. They brought in a new president at the time by the name of Brad Wilson, who’s still a great friend and mentor to us now. He was kind enough to give us some insight as to what was really going on, and we realized that we were the only valuable asset in the company at the time because our business was doubling year over year. We approached two members of the board at Shoes.com and said we wanted to pull out. With them, we were able to buy the company back from Shoes.com ahead of the bankruptcy.
“Last year, we bought the company back from our investors, so Iva and I own the business together. We currently don’t have any other investors in the business. It’s a very refreshing place to be. It also reinvigorated my passion for why we started the company, which was to build a brand and be able to do it on our own terms.”
What would you have done differently?
“We’ve been fortunate. But when things seem too good to be true, they typically are. We sold the business for a decent amount of money for the size of the business at the time. It came as a bit of a surprise to us, but we went with it. Not to mention that there were a lot of promises that went with it — that we would get office support and be able to offload a lot of the things that we didn’t want to focus on, which was sales, marketing and design. That never came to fruition; we still had to manage the business. I’d make sure to poke a lot of holes in the team that acquired or invested in you as well as make sure there’s a strong cultural fit because that’s a really important part of this process. Culturally, it was very awkward. You have art and you have science, and you have to find some sort of common ground there.”
What’s the most surprising or craziest thing you’ve done to get your business going?
“When Iva and I launched the company, we just had our first sock samples. She found this really cool attaché briefcase at a thrift store, got on the phone and called a bunch of friends she had worked with during her previous days at Gorjana. Then she literally got on a plane and flew to New York with just appointments and a suitcase full of socks to pitch the brand. That was the genesis of our success. She was able to lock down Nordstrom, Bloomingdale’s and other key retailers. Her willingness to get on a plane with so many unknowns and no experience in hosiery or selling men’s and women’s socks is probably the biggest feat I’ve seen in our eight years of building this company. There’s probably no one else who could’ve done it but her.”
What’s the next move on your agenda?
“We’re a company of about 35 people, so we have to really focus on the best use for our resources, and we made the conscious decision to listen to what our website is telling us. We have this concept for fall called Every Seam Matters, which is just this maniacal attention to detail on the product — where we put seams, the types of fabrications we use, making sure that the fits are perfect. In the past, we haven’t had that skillset as part of our core DNA. Come fall, we will have done a great job of providing, I believe, the best basics at the best price point in the market.”
What’s the one thing you do every day to be successful?
“Every day, I enjoy some sort of exercise or workout, whether it’s riding my bike, surfing or going to a yoga class. It’s about spending time with yourself, getting some sort of workout and feeling the endorphins. If I don’t get that in, I can definitely feel it. Being an entrepreneur and running your own business is extremely stressful, so you have to make sure to take time for yourself to release that pressure valve at least once a day.”
What advice would you give a new designer or someone who wants to join the footwear industry?
“A lot of entrepreneurs focus on growth, scale and all of these metrics, but at the end of the day, if you’re not profitable, it’s going to be a hard business to justify. If I were to start a new business tomorrow, it would be about building a strong and sound business model not to sell but to sustain itself in the long term. I think that if you do that, a lot of those other things will take care of themselves.”
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