Julie Wainwright (Founder, The RealReal) on Facing the Competition and Taking Companies Public
In this episode of Money Rehab with Nicole Lapin, Julie Wainwright offers insights into entrepreneurship and running a two-sided online marketplace like The RealReal. She recounts her career journey, including the challenges of leading The RealReal through tumultuous times, eventually taking the company public before being fired due to differing values and operating philosophies with new board members.
Wainwright also discusses her latest venture, Ahara Med, which aims to provide affordable access to weight loss medications and nutritional guidance. The company partners with pharmacies and dietitians to offer a comprehensive approach to sustainable weight management, with a focus on securing insurance coverage for their services.
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1-Page Summary
Entrepreneurship and Running a Two-Sided Marketplace Business
Entrepreneurship requires risk-taking and operating in uncertainty, Julie Wainwright emphasizes. Two-sided marketplaces like The RealReal add layers of complexity in managing supply, demand, authentication, and logistics. Technology investments are crucial for operations like pricing, inventory management, and shipping systems.
Julie Wainwright's Career Journey
Wainwright realized early on she didn't want a traditional corporate career path. She was drawn to the excitement of tech and the potential for creation and innovation. Her entrepreneurial family background influenced her drive to build products and companies.
Leading The RealReal was tumultuous - at one point lacking product supply, later raising hundreds of millions for rapid scaling. The COVID-19 pandemic severely disrupted operations and inventory flow. Wainwright was eventually fired due to a disconnect in values and operating philosophy with new board members, despite taking the company public.
Julie Wainwright's New Venture: Ahara Med
Recognizing market demand, Wainwright co-founded Ahara Med to offer affordable weight loss medications and nutritional guidance. Ahara Med partners with pharmacies for discounted medications and provides access to dietitians for sustainable lifestyle changes.
Wainwright aims to secure insurance coverage for Ahara Med's services. Some major insurers already cover their offerings, increasing accessibility. The emphasis is on combining medication with education for long-term weight management success.
1-Page Summary
Additional Materials
Clarifications
- In a two-sided marketplace, like The RealReal, there are two distinct user groups: sellers and buyers. The platform must balance the needs and interests of both sides to create value. Managing supply, demand, authentication, and logistics for both groups adds complexity to operations. Technology investments are essential for tasks like pricing, inventory management, and shipping systems.
- The challenges faced by The RealReal included fluctuations in product supply, significant fundraising efforts for rapid growth, operational disruptions due to the COVID-19 pandemic, and ultimately, leadership changes stemming from differences in values and operational approaches with new board members.
- Julie Wainwright was fired from The RealReal due to a disconnect in values and operating philosophy with new board members, despite the company going public. This decision was made after a period of tumultuous leadership marked by challenges like product supply shortages and the impact of the COVID-19 pandemic on operations.
- Ahara Med, co-founded by Julie Wainwright, offers affordable weight loss medications and nutritional guidance. The company partners with pharmacies to provide discounted medications and connects clients with dietitians for sustainable lifestyle changes. Ahara Med aims to secure insurance coverage for its services, with some major insurers already including their offerings. The focus is on combining medication with education to support long-term weight management success.
Counterarguments
- Entrepreneurship does involve risk-taking, but it can also be pursued with a cautious and calculated approach that minimizes uncertainty.
- While two-sided marketplaces are complex, some argue that traditional businesses can face equal or greater complexities in different areas such as manufacturing or international trade.
- Technology investments are important, but human factors like customer service and community building can be equally crucial for the success of a marketplace.
- Not wanting a traditional corporate career path is a personal preference, and there are counterarguments that a traditional path can offer valuable experience and stability that can be beneficial for entrepreneurs.
- The excitement of tech and potential for creation and innovation can also be found within corporate careers through intrapreneurship and R&D departments.
- An entrepreneurial family background may influence one's drive, but it is not a prerequisite for success in building products and companies; many successful entrepreneurs come from non-entrepreneurial backgrounds.
- Challenges in leading a company like The RealReal are not unique to Wainwright's experience; many CEOs face similar issues, and some may argue that different leadership styles could have navigated these challenges differently.
- The COVID-19 pandemic disrupted many businesses, and some may argue that the most successful companies were those that adapted quickly and effectively to the changing environment.
- Being fired due to a disconnect in values and operating philosophy suggests a misalignment, but it could also be argued that a change in leadership can sometimes be necessary for a company's evolution and growth.
- While Ahara Med's approach to affordable weight loss medications and nutritional guidance is commendable, some may argue that focusing on lifestyle changes without medication could be a healthier and more sustainable approach for some individuals.
- Partnering with pharmacies and securing insurance coverage increases accessibility, but there could be concerns about the over-reliance on medications for weight loss instead of addressing root causes such as diet and exercise habits.
- The emphasis on combining medication with education is a holistic approach, but some may argue that the focus should be more on preventive measures rather than treatment after the fact.
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Entrepreneurship and running a two-sided marketplace business
Entrepreneurship requires a unique blend of risk-taking, resilience, and relentless drive. The challenge intensifies when running a two-sided marketplace, which presents its own set of complex operational requirements.
Successful entrepreneurs must possess a risk-taking mentality and be able to operate in gray areas
Julie Wainwright, known for her leadership in the online consignment industry, emphasizes that entrepreneurs need to be adept at taking risks and navigating the uncertain territory of business. They must also be quick to iterate on their visions, leveraging the talent of their teams. Fundraising, a critical component of entrepreneurship, often features rejections and is a sphere where women, in particular, face an uphill climb in a male-dominated venture capital landscape.
When someone starts a company, they are immersed in the business, sometimes foregoing work-life balance to ensure the company's growth and success.
Two-sided marketplaces are highly complex businesses to operate
Handling supply and demand is crucial for two-sided marketplaces. Wainwright illustrates this by recounting how The RealReal managed their inventory through thematic aggregation, ensuring customers found sufficient product variety. Another layer of complexity in marketplace operations is dealing with physical goods—The RealReal holds inventory for inspection and authentication, requiring extensive operational centers and expert staff, like gemologists, to ensure the authenticity of high-value items.
Tracy DiNunzio echoes the complexity of such operations, particularly when shipping and authentication are concerned. Direct shipping from seller to buyer can lead to missteps like dispatching the wrong items.
In response to specific challenges, such as hoarding items in shopping carts, Wainwright cites the implementation of a timer mechanism to facilitate sales. This points to the necessary investment in t ...
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Entrepreneurship and running a two-sided marketplace business
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Clarifications
- A two-sided marketplace is a platform that connects two distinct user groups, such as buyers and sellers, enabling transactions between them. These platforms must carefully balance the needs and interests of both sides to create value and sustain growth. Examples include e-commerce sites, ride-sharing apps, and real estate platforms, where the success of one group is often dependent on the other. Operating a two-sided marketplace involves managing supply and demand dynamics, ensuring trust and quality between users, and often requires unique strategies to address the challenges specific to these interconnected ecosystems.
- Thematic aggregation in managing inventory involves grouping similar items together based on themes or categories to enhance the browsing experience for customers and ensure a diverse selection of products is available. This strategy helps in organizing inventory efficiently, making it easier for customers to find what they are looking for within a specific category or style. By curating products in this manner, businesses can cater to different customer preferences and offer a more engaging shopping experience. Thematic aggregation is a common practice in retail and e-commerce to streamline the browsing and purchasing process for consumers.
- Authentication processes for high-value items involve verifying the authenticity and quality of expensive or luxury goods to prevent counterfeiting and ensure customer trust. This often requires specialized knowledge and expertise, such as employing gemologists for jewelry authentication or art experts for verifying paintings. Authentication procedures can include detailed inspections, testing methods, and documentation to confirm the legitimacy of the items. Implementing rigorous authentication processes is crucial for maintaining the reputation of a business, especially in industries where counterfeit products are prevalent.
- Challenges related to hoarding items in shopping carts occur when customers add items to their carts but do not proceed to purchase them, affecting inventory availability and sales. This behavior can lead to imbalances in supply and demand, impacting the overall efficiency of a two-sided marketplace. Implementing strategies like timers on items in shopping carts can help encourage prompt purchases and optimize the marketplace's operations. Addressing hoarding issues is crucial for maintaining a healthy marketplace ecosystem and ensuring a positive experience for both buyers and sellers.
- The implementation of a timer mechanism in sales is a strategy used by some online platforms to create a sense of urgency for buyers. By setting a time limit for completing a purchase, this tactic aims to prompt quicker decision-making and increase sales conversion rates. It can help prevent items from being held in shopping carts indefinitely and encourage customers to finalize their transactions prom ...
Counterarguments
- While risk-taking is important, it's also crucial for entrepreneurs to practice calculated risk-taking and due diligence to avoid unnecessary failures.
- Rapid iteration and leveraging team talent are valuable, but it's also important to balance speed with thoroughness to ensure product quality and market fit.
- While fundraising is a critical aspect, bootstrapping or alternative funding methods like crowdfunding can also be viable paths for some entrepreneurs.
- Sacrificing work-life balance can lead to burnout; sustainable long-term success often requires finding a balance between personal well-being and professional commitments.
- Effective handling of supply and demand is essential, but overemphasis on one side can lead to neglect of the other, potentially destabilizing the marketplace.
- Thematic aggregation helps manage inventory, but it may not be suitable for all marketplaces, especially those that thrive on a diverse and eclectic range of products.
- Physical goods require operational centers and expert staff, but advancements in technology like AI and machine learning could reduce the need for large operational centers and specialized staff.
- Direct shipping has its challenges, but it can also reduce operational costs and increase efficiency when managed properly with the right checks and balances.
- Technology solutions like timers can help, but they may also create a sense of urgency that leads to impulse buying, which could affect ...
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Julie Wainwright's career journey, including The RealReal and being fired from the company
The career of Julie Wainwright, founder and former CEO of The RealReal, is a testament to the roller coaster nature of entrepreneurial ventures, marked by tough decisions and transformative experiences, including her eventual departure from the company.
Julie Wainwright's early corporate experience made her realize she did not want a traditional corporate career path
Julie Wainwright's career began in corporate America at Clorox, but she quickly realized that she did not aspire to the “old, grumpy men” she saw in higher management positions, nor did she want to follow women who were channeled into HR rather than general management. Her journey took a turn when she was introduced to the potential of early computing, which sparked her interest in the tech industry—more exciting than her trajectory at Clorox.
Julie recognized the potential of the tech industry and was drawn to the excitement and creativity of building something new
Having had a chance to see VisiCALC in action on an Apple II, the excitement of the tech world proved to be more aligned with her aspirations than a traditional corporate role. She observed changes in corporate environments regarding women's rights and sexual harassment over time, and compared her early involvement with Pets.com to the success of Chewy.com later on, underscoring the importance of timing in the tech industry.
Julie's upbringing in an entrepreneurial family influenced her desire to create her own products and companies
Coming from a creative family with entrepreneurial roots, where her parents were artists and her father ran his own design studio, Julie's family environment embodied the culture of innovation. They were constantly creating new products, which infused Julie with the drive to build and create.
Leading The RealReal was a roller coaster journey for Julie Wainwright
Julie Wainwright speaks about the early days of The RealReal, recalling how at one point the company struggled to attract products for their consignment services. They were able to overcome this hurdle through direct marketing efforts and catering to high net worth individuals, as well as a critical moment where they provided services for a celebrity stylist.
Julie raised hundreds of millions of dollars to rapidly scale The RealReal and establish it as a leader in the luxury resale market
Julie drew from her personal finances to support The RealReal and was initially reluctant to accept venture capital funding. However, this changed after the company achieved $10 million in revenue in its first year, and she began to raise funds for the company. She placed importance on shared values over domain expertise when selecting board members, which later became relevant in the context of her termination.
The RealReal faced major challenges during the COVID-19 pandemic, as its operations were disrupted and demand patterns shifted
In early 2020, The RealReal was growing at 40%, but the COVID-19 pandemic led to operational shutdowns and a significant decline in sales. The pandemic’s impact includ ...
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Julie Wainwright's career journey, including The RealReal and being fired from the company
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Actionables
- Reflect on your career satisfaction by journaling your feelings about your current job and where you see yourself in the future. This can help you determine if a traditional career path is right for you or if you're more inclined towards entrepreneurship. Write down what excites you, what you're passionate about, and where you see opportunities for creativity and innovation in your field.
- Explore your family history for entrepreneurial influences by creating a family tree that highlights any business ventures, big or small. This can give you insight into your own entrepreneurial tendencies and help you understand the values and skills that may have been passed down to you. Look for patterns, ask family members about their experiences, and consider how these influences could shape your own business aspirations.
- Develop a personal value s ...
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Julie Wainwright's new venture, Ahara Med, and the weight loss services it provides
Julie Wainwright, having recognized a market demand for effective weight loss support, co-founded Ahara Med, which offers comprehensive weight loss solutions with a focus on both medication and nutritional guidance.
Ahara Med is focused on providing comprehensive weight loss solutions, including access to weight loss medications and nutritional guidance
Ahara Med collaborates with licensed compounding pharmacies to deliver weight loss medications at significantly discounted prices, aiming to offer the same active ingredients as commercial brands but at a cost reduction of 70 to 80%. The company's approach also involves access to medical professionals and registered dietitians who help clients not only achieve their weight loss goals but also maintain them in the long term.
Julie Wainwright, reflecting on high obesity rates and related health problems in the U.S., suggests that medications provided by Ahara Med could improve life quality for individuals suffering from obesity-related complications. By ensuring clients’ access to dietitian consulting and a combination of proper medication, it's believed that clients could lead longer and more active lives.
Ahara Med's approach is designed to address the challenges that often arise when using weight loss medications
Many people struggle to maintain weight loss after stopping medication due to inadequate nutrition and lifestyle guidance. Ahara Med's integrated approach, offering both medication and nutritional support, aims to assist clients in achieving sustainable weight loss. Wainwright stresses the significance of setting up healthy habits and understanding the roles of micro and macronutrients while on medication so that these habits last post-medication use.
Ahara Med is working to secure insurance coverage for its services, making weight ...
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Julie Wainwright's new venture, Ahara Med, and the weight loss services it provides
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Clarifications
- Licensed compounding pharmacies are facilities that specialize in creating customized medications tailored to individual patients' needs. They can combine specific ingredients in the exact strength and dosage required, often for patients who cannot use commercially available medications due to allergies, sensitivities, or other reasons. These pharmacies follow strict quality and safety standards set by regulatory bodies to ensure the medications they produce are safe and effective. Compounded medications are typically prescribed when commercially manufactured drugs are not suitable for a patient's specific health requirements.
- Micronutrients are essential nutrients needed in small quantities for various bodily functions, such as vitamins and minerals. Macronutrients, on the other hand, are needed in larger amounts and include carbohydrates, proteins, and fats. Understanding the roles of both micronutrients and macronutrients is crucial for maintaining overall health and well-being. Deficiencies in these nutrients can lead to health issues and malnutrition.
- Anthem and Blue Shield are major health insurance companies in the United States. They provide various health insurance plans to individuals and businesses, covering medical expenses such as doctor visits, hospital stays, prescription medications, and preventive care. These companies n ...
Counterarguments
- Ahara Med's reliance on weight loss medications might not address the root causes of obesity for every individual, as weight gain can be multifactorial, involving genetics, environment, and personal behavior.
- Discounted medications, while cost-effective, may raise concerns about quality assurance and regulatory oversight compared to commercial brands.
- The effectiveness of Ahara Med's approach may vary widely among individuals, and long-term success rates for maintaining weight loss with medication and dietitian support are not guaranteed.
- The focus on medication might overshadow the importance of lifestyle changes, which are often the most sustainable form of weight loss.
- Insurance coverage for weight loss services can be complex, and the process of getting such services covered can be lengthy and not guaranteed, potentially limiting access for some individuals.
- The cost of $200 a month for an Ozempic equivalent, even with dietitian services included, may still be prohibitive for some individuals, ...
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