The Power of Process
Episode 61
July 6, 2021

The Power of Process

with Aaron Luo, Co-Founder and CEO of Caraa

Aaron Luo is the Co-founder and CEO of Caraa, an American design house of luxury sports accessories based in New York City that offers sports bags, small leather goods, and fitness related accessories for inside and outside of the fitness studio. In this episode, Aaron shares with us his journey from growing up in China and Spain, to working in his family's Chinese restaurants, to studying engineering at the University of Massachusetts, to landing his first job at his dream company, General Electric. He talks with us about how he and his Co-Founder Carmen came up with the name Caraa, why they chose not to be venture backed, and how they reacted to the pandemic by donating masks and creating Caraa Cares.

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this episode sponsored by

In This Episode You’ll Hear About:

  • How he spent his childhood growing up in China and Spain learning the supply chain and manufacturing industry through his family 
  • Why Aaron came to the US for college to study engineering and why he loved the problem solving aspect of what he was learning
  • What companies he interned with during his time in college and what he learned about hard work and determination throughout the process
  • How his time at GE taught him so much about the processes that would help him scale his own business later 
  • Why he started Caraa, what the thesis behind the brand was and still is, and how they began to carry out their mission as a high-end, functional handbag DTC company
  • Why he is thankful for a Co-Founder, and what building Caraa was like in the early days of the company
  • Why they decided to not be venture backed, what that has looked like, what they have learned, and what advice he offers to others regarding fundraising
  • What Caraa has done to help people during the pandemic and why that has been important to Aaron and his Co-Founder, Carmen
  • What is next for Caraa and how they will continue with their steady, sustainable growth and intentional customer affinity for years to come

To Find Out More:

Caraasport.com

Quotes:

“There's always extra things that might not directly tie into hard work and merit, but I would say 90% of the time when you work hard and you put your heart into things, it will pay off.”

“You have to understand the human aspect of people. So having that perspective and having that emotional intelligence was something that I had to learn the hard and quick way.”

“If I aspired to be a CEO or a business owner, having the know-how in terms of process management was very important to me.”

“What we said is, what if we turn things around a little bit, still make the products in a very high end way, but really kind of make it very functional and keep the prices below four hundred dollars in terms of our average order value, because we're going to direct.”

“Stay true to who you are in terms of authenticity.” 

“You'll be surprised if you do a little bit of soul searching, how much you can discover.”

“To a certain extent it helps to have a Co-Founder. You know, I think single founder entities are very tough, not because you're not capable, it's because sometimes you need a shoulder to cry on.”

“I'm a big believer in product market fit. If you can sit somewhere and think about, hey, the world needs these, but if you don't find the right audience to purchase it or to resonate with your product then you just have a little project or a little hobby. It's not a business yet.”

“I was looking to grow, but I was looking to grow sustainably in a profitable way, if you may. So we ended up just saying, you know what? No to venture funding.”

“When we were trying to raise, I felt that I was becoming more and more a professional fundraiser versus a professional business manager.”

“We had that emergency meeting, me, Carmen, and also the board really quickly made a decision to convert part of our factory into essentially making masks using our scrap material. This was in the early days of the pandemic. And then we donated.”

“If you don't have the right processes, everything will be very chaotic. So I think we do a pretty decent job in terms of creating controls and checks and balances and processes along the way.”

“In moments of crisis, in front of the customer: transparency, transparency, transparency. Don't hide anything.”

“Make sure that you have product market fit and then test quick, fail fast, and then reiterate.”


Lee: [00:00:03] Welcome to Episode 61 of the Stairway to CEO podcast. I'm your host, Lee Greene. And today I spoke with Aaron Luo, the Co-founder and CEO of Caraa. Caraa is an American design house of luxury sports accessories based in New York City that offers sports bags, small leather goods, and fitness related accessories for inside and outside of the fitness studio. In this episode, Aaron shares with us his journey from growing up in China and Spain, to working in his family's Chinese restaurants, to studying engineering at the University of Massachusetts, to landing his first job at his dream company, General Electric. He talks with us about how he and his Co-Founder Carmen came up with the name Caraa, why they chose not to be venture backed, and how they reacted to the pandemic by donating masks and creating Caraa Cares. Tune in to hear all of this and more. If you like what you hear, don't forget to subscribe to the show and leave us an awesome review. We hope you enjoy this episode.

Lee: [00:01:54] Hi, Aaron, thank you so much for joining the Stairway to CEO podcast. I'm really excited to hear your awesome story in building Caraa. We go way back from when? We met at XRC Labs. Was that like 2016?

Aaron: [00:02:08] 2015, 2016? I think it was end of 15 and 2016. And yeah, I'm super excited to be here. Thanks for having me. Love your show. Love the content and pleasure to double click and dive right in.

Lee: [00:02:25] Awesome. Well yeah, I feel like I know you but I don't know you know you. So I'm excited to hear way back all about you. Tell me about where you grew up. Where are you from originally and what was your childhood like? Did you have siblings? What did your parents do? Stuff like that.

Aaron: [00:02:40] Yeah. Yeah. Let's get personal. {laughter}

Lee: [00:02:44] Yeah. {laughter}

Aaron: [00:02:45] So I'm Chinese background. So I was born in Shanghai, China, and then we moved to Madrid, Spain when I was pretty young, about eight years old. And you know, part of my family was in Spain. It's a wonderful country and we kind of grew up in Spain. As a matter of fact, my Co-Founder for the brand, she was also born in Spain, and that's how our families knew each other, how the brand initially started. I'm sure going to get into that in a minute. But yeah, I grew up in Spain, came to the states for college, stayed for undergrad and business school. You know, most of my family still divides their time between Shanghai, Hong Kong, Madrid, New York. So we are somewhat of an international family. And but I'm currently spending most of my time between Asia and New York. That's kind of where I spend my time. And then background wise, you know, my family has always been in the fashion industry. More on the supply chain manufacturing side of things. I didn't want to go back, or go into a fashion, right away. So I spend about a little over ten years in finance, in corporate finance, with General Electric.

Lee: [00:04:06] Before we get too far along, I want to know about little Aaron. Like kid Aaron. When you were a kid, what did you want to be when you grew up?

Aaron: [00:04:16] Yeah, it's funny. You know, it's I always knew I wanted to be a merchant. It's funny. Maybe it's not that inspiring of a goal because, you know, I think I talk to my kids or I talk to other little kids, like "I want to be an astronaut," or "I want to be a firefighter."

Lee: [00:04:31] Right.

Aaron: [00:04:32] And I knew I wanna be... I want to be negotiating. I want to be you know, I was the kind of kid that was really happy counting money that we got from Christmas. You know, other kids maybe play video games. I would just like be counting money that I got.

Lee: [00:04:50] {laughter}

Aaron: [00:04:50] But no, my family even growing up, they were all merchants. They had restaurant businesses. They had export/import businesses. So I guess it runs in the blood that I've always aspired to be like my parents or my grandparents. So I think merchant was the one thing that I was pretty clear in early days that I wanted to be.

Lee: [00:05:15] That's awesome. Were you like counting stealing all the Monopoly money? Because I would steal the money from the Monopoly game and like put it into a wallet and like take it to the store and like, you know, pretend that I had all this money. {laughter} I'd count it out.

Aaron: [00:05:26] Yeah, yeah. Even threatening my family and say like, "Hey, I'll exchange one hundred dollars from Monopoly for, you know, the equivalent of like a dollar," you know what I mean? So but no it's interesting because also because I grew up in China in the early days, it was in the 80s, China wasn't what it is now. So I mean, China has gone through so much growth in the last ten, fifteen, twenty years. But growing up, you know, we saw poverty. I mean, I'm not going to be around the bushes. I mean, you know, so it was very clear to me what my parents had to do to get out of that situation, and it was very clear to me what I wanted to do or had to do to kind of continue that legacy to a certain extent.

Lee: [00:06:14] Yeah.

Aaron: [00:06:14] So it was good.

Lee: [00:06:17] Awesome. And did you play any sports or what were your interests outside of that, other than trying to sell kids on things to get their money or whatever you were doing?

Aaron: [00:06:25] Yeah. Yeah. No, I was a pretty competitive athlete, I would say, less in middle school and elementary school, but once I got the high school and college. So I did fencing. So I fenced, you know, pretty much from high school, end of high school all the way until now. I still fence. So that was the main sport. It's funny because I am into martial arts. So right now I do a few other things besides fencing, but growing up in Spain it was funny because, you know, in Spain it was either soccer or basketball or judo or fencing, you know, like there weren't that many options, if you may. And I kind of just liked the sword fighting aspect of things. So I picked up a sword and was like, "Oh, let me try that out." And it's a great sport, you know, in the sense that it's very much a mind game. Sure there's a physical aspect of things that you have to be fit and nimble and all that. But, you know, they call it a mind chest. Right. So it's all about creating an environment where you make your opponent think you're going to do certain things, so they can do something, and they can react to it. So it's an interesting sport. But, yeah, that's might not be the most conventional sport, I think maybe.

Lee: [00:07:40] Yeah. You're the first on the podcast to do fencing for sure. So congrats.

Aaron: [00:07:43] The community is small. It's even my wife tells me like "Fencing. When I first met you... What? I didn't know what that was." So yeah, that's that.

Lee: [00:07:55] You're in the kitchen with a knife. She's like, put it down. No just kidding.

Aaron: [00:07:58] Yup. Don't poke me with that.

Lee: [00:08:00] Martial arts. So are you a black belt or what?

Aaron: [00:08:04] So right now, I mainly I've been doing more Thai, which is Thai kickboxing for almost eight, nine years now.

Lee: [00:08:15] Wow.

Aaron: [00:08:16] It's a beautiful art. It's originally from Thailand. They have a slightly different, I guess, grading system than traditional Japanese or Korean martial arts. You don't wear your ranks physically, if you may. So there's no belts. There's no shirts. There's nothing that says, "Oh, that's a black belt versus a white belt. It's very much simply just, you know, it's almost something that you keep it to yourself. And obviously, if you do end up competing, so on, so forth, you get ranked and grouped with different people. But it's yeah, it's a beautiful sport. I'm very much into strategy to a certain extent. And just like fencing, I think boxing or morti, you know, any of the martial arts, it's very much a mind game at the end of the day, beyond, of course, there's a physical aspect of things. But I love that. I thrive on kind of challenging myself mentally. So obviously there's a competition aspect of things and you always want to come out winning. But I think trying to win, even if you didn't win at the end of the day, but having tried really hard to get there, I think that's that's pretty rewarding as well.

Lee: [00:09:26] Yeah, absolutely. So what kind of first jobs did you have, like in high school before going to college? What were some of those first jobs that you had?

Aaron: [00:09:34] Oh man, you're bringing me way back. I had all sorts of jobs, you know, like you got to realize, I mean, growing up, I knew I was going to be a merchant. I wanted to be hustling and being in the midst of things. So first of all, my parents owned Chinese restaurants growing up. They owned the chain of Chinese restaurants in Spain. So it comes with the territory. You had to work on the restaurants, you know, and you name it. I mean, from the kitchen all the way to waiting tables down the road or a little later on, I've had that. Then once I got to high school, I started working in clubs, in nightclubs as a promoter.

Lee: [00:10:18] Were you really? Where was this? In Spain?

Aaron: [00:10:20] In Madrid. Yeah in Spain.

Lee: [00:10:22] All right.

Aaron: [00:10:23] I loved it. You know, for a little kid, you can imagine, you're organizing parties, you're promoting certain events. You bring cool DJs, you know, you have the little booth that's like for promoters, it's only that you can bring VIPs in.

Lee: [00:10:38] All the girls.

Aaron: [00:10:39] Well. {laughter} And so I loved it. And it was good pocket money. Wasn't much, but it made me feel somewhat alive, if you may. Obviously I was decent in school, but yeah, I always knew that school was going to help me to sharpen my mind, get educated. That's obviously my main focus, if you may. But that was the kind of the trajectory I took in terms of jobs outside of school. And then when I came to the US, it's I mean, for me it was all about testing different things. And I knew that I had tons of energy and just wanted to try different things. So I went from customer service job, to waiting tables in restaurants, tutoring kids, from library jobs. Once I got to my junior and senior year, even sophomore years...

Lee: [00:11:48] And you were at University of Massachusetts, right?

Aaron: [00:11:51] That's right. UMass Amherst for undergrad.

Lee: [00:11:53] And you were studying business?

Aaron: [00:11:55] No, I was just study engineering, actually.

Lee: [00:11:58] Really?

Aaron: [00:11:59] Yeah, it's funny because that was one thing that even though I knew business is what I wanted to be and being a merchant and all that, you know, you got to realize coming to the US, actually, it's quite expensive for foreign students, especially coming from a country in Europe like Spain where education is free. It's part of the social well being for European countries. So I think that was the agreement with my parents. They're like, "Listen, we know you're going to become a business person, at the end of the day. We don't want you to go to school for business." The only kind of, I guess, requirements they had for letting me come to the states for school was that I had to study engineering. And truth be told, I loved it. I went to school for engineering and math. So I double majored in both. And, you know, to me, [00:12:50] I knew I wasn't going to go and build computers or I wasn't going to work as an engineer, but I thrive on the concept of problem solving. I think that was very interesting to me in terms of everybody giving a set of tools in terms of math equations and the different theories, but how do you go about solving a problem? That was very interesting. [00:13:18] And I knew, you know, if I was going to do engineering that I'd definitely want to do it in the US just because I think the US has a very pragmatic way of solving problems versus other parts of the world. If you look at how they go about solving problems or education in general, it's more rigid and it's all about like, oh, you know, like you memorize things a lot more. It's less about creative problem solving versus I feel like the entire US education is all about how do you get creative in terms of problem solving. So I actually loved it. College was a great experience for me. I loved the US and hence I kind of stayed afterwards. I mean, I think to touch your point before when I got to junior and senior year, that's when I took my internships a lot more seriously.

Lee: [00:14:03] Yeah.

Aaron: [00:14:04] That's when I started working with, you know, companies that I aspired to work with at one point later in my career, but that's college.

Lee: [00:14:12] So what companies did you aspire to or where did you end up having these internships? And what was your first job out of college?

Aaron: [00:14:19] Yeah, so I knew right away from the get go that there was a handful of companies I wanted to work for.

Lee: [00:14:29] Like what?

Aaron: [00:14:29] One of them was GE, so General Electric was one of the companies. I read a book from Jack Welch "Straight From the Gut." Perhaps the listeners have read it. It's a bit old, some I may be dating myself a bit here. But I just loved his philosophy about business. I don't think that works in today's environment. But back when I was going to school or finishing school, I knew that was one company that I really admired. You know, there were other companies I looked into potentially getting into. Mainly the consulting space, so Boston Consulting Group, McKinsey and so on, so forth. But GE really attracted me just because they were a conglomerate. They had a bunch of different companies within them. That was interesting to me. So they range from banking all the way to locomotives and aircraft engines. So that was really interesting. So, yeah, so I, you know, basically leveraged my network in the good, you know, kind of entrepreneurial fashion to find a way to basically get introduced to the company. Found out that we did have a common contact within my fraternity. I was in the fraternity, and to this day, this one guy, his name is Eric, and he's still a mentor of mine to a certain extent. We connected. We chatted. I told him how much I loved the company, told them here are the reasons why I think I should get a shot to go to internship. He talked to the right guy, got me the internship and the internship was very interesting. GE is very much a merit driven organization. So it's not like you know somebody is guaranteed a job or guaranteed promotions and so on and so forth. It doesn't work like that. So what basically ended up happening is I went through a number of rounds for interview, was privileged enough to get an offer to join the internship.

Lee: [00:16:27] Nice. How excited were you? Where you're like, oh my God, I can't believe I just made this happen?

Aaron: [00:16:31] You know, for a foreign kid that was just starting to get around speaking better English... I still don't speak perfect English yet, but coming to the US in the beginning I didn't even speak English much. Because my background was Spanish and Chinese back then. And, yeah, it was a huge privilege. And what made it more interesting was that it was a group of us, I want to say, was about 20 of us, and it was very clear from the get go that basically they said this was our junior year. So I still had one more year to finish school. And the program, the way they set it up was that the top four essentially will get invited to join GE before you even graduate. So they basically give you an offer during your junior year. So senior year basically, you know exactly where you're going.

Lee: [00:17:21] Wow.

Aaron: [00:17:22] So almost like a draft, like a commitment...

Lee: [00:17:25] Sounds like it.

Aaron: [00:17:27] Man, I worked my butt off.

Lee: [00:17:29] You're like, "I'm going to be one of those four."

Aaron: [00:17:31] Yeah. I mean, for the eight weeks that we were there, I think I slept very little. I knew very little. So I knew... And bear in mind I was in the same class in that internship with a lot of other kids. A few of them came from very top schools. I remember there was a bunch of them from UVA, University of Virginia, which is a great school, from their business school. There were a bunch of them from, I think a couple of them from Harvard. I mean, GE always hires from great schools in general. So [00:18:05] I felt like I started already not having the chance to get that role, which basically pushed me to work even harder. [00:18:17]

Lee: [00:18:17] Right.

Aaron: [00:18:18] So I always thought I was the dumbest guy in the room, and maybe I was fooling some people to a certain extent. But there was a lot of things I did not understand. But you bet what I did is I'd jot down the notes, went home, looked it up, tried to study it, and then tried to sound more intelligent next time, I guess.

Lee: [00:18:36] Yeah.

Aaron: [00:18:38] But yeah. So that was... I mean and then I had other internships and I had an internship with Putnam Investments, Lucent Technologies, and a few others, but that was the one that was the most memorable and that was the one that I did end up being one of the top four.

Lee: [00:18:51] All right. You did it.

Aaron: [00:18:53] Yeah, I did end up getting an invitation.

Lee: [00:18:55] Hard work pays off.

Aaron: [00:18:56] It really does. It really does. I think  [00:19:01]I would say this now to people that I mentor that it's not a myth. You work hard, and you put your heart and your head into certain things. Yes. There's always politics. There's always extra things that might not directly tie into hard work and merit, but I would say 90 percent of the time when you work hard and you put your heart into things, it will pay off. [00:19:26] So anyway, so I got invited to join back, spent the next decade with with GE, moved I think north about 15 countries with them, saw I want to say about six divisions within GE and one of the best experiences in my life. I mean, one of the things I failed to mention before is one of the things I wanted to really learn from GE, and that was one of the things that I really want to get out of it is GE is a great operator. You know, if you look at, you know, there's a lot of great things about who they are. They have great leadership programs. So they brew some of the world's best CEOs. I mean, if you're just looking around currently, many of the world's leading company CEOs came from GE, from some of the same programs I went through. So I knew I wanted to get in and go through the ranks and kind of learn that. I knew that it was a process, process, process, organization. It was all about creating sustainable processes to scale. Obviously, there's also other aspects like commercial processes and technology aspects that really make them really great. But for me, it was all about learning the different processes and how to be a good leader. You know, how to manage teams and incentivize people and how to negotiate things and so on, so forth.

Lee: [00:20:52] So what are some of those key insights? Can you share some of the like specifically what you learned about managing people, leadership, that you kind of took from your experience that you use today?

Aaron: [00:21:04] Yeah, no, a ton. But if I boil down to... So maybe I share a couple. From the leadership standpoint, empathy. Empathy is probably the number one thing that would get you very far, and it was tough for a young manager when I first started to have that sort of empathy in the beginning, because you come from an environment where it's like, you know, nobody gave you anything for free. You work really hard, right? Like you made it to a manager position that you are the point that you can manage others. You kind of want to hold people to the same standards, you know, as far as like hours that they need to work or different bars that you set for everyone, which it's not bad. You know, all those things are good. But [00:21:49] you have to understand the human aspect of people. You know, not everybody came from the same background as you. Not everybody has the same motivation as you do. You know, like it's very different where I came from than, you know, a lot of people I work with. So having that perspective and having that emotional intelligence was something that I had to learn in the hard and quick way. [00:22:10] A lot of tough feedback, a lot of, you know, like either you smart up or you are out.

Lee: [00:22:15] Yeah.

Aaron: [00:22:15] So that's probably one of the key things I learned over the years is to be, you know, still kind of hold high rigor, high standards and hold your chin high in terms of be able to say, hey, I work hard, here's everything I was able to accomplish. But having the human empathy is probably my biggest lesson in terms of leadership. When it comes to business and operations, I think once again, it's processes. I was exposed to Six Sigma and Lean. Those are two, I would say, philosophies of how do you go about managing processes and scaling processes and businesses. Toyota initially invented that. Motorola later adopted it. GE, obviously, is a huge proponent of Six Sigma and Lean.

Lee: [00:23:02] Can you explain what that is to the audience members who have never heard of that before?

Aaron: [00:23:06] Yeah, and I'm probably not doing justice to it because we can spend an hour talking about that terminology itself. But it's a way of life to a certain extent, if you're really talking to a purist. Six Sigma, it's all about eliminating defects. So when you think about large manufacturing processes or large operations in general, when you have a lot of things turning on a mass scale, you by default would generate a lot of defects. So Six Sigma was all about how do you take a large operation processes and then create them in a controlled environment so that you minimize defects? So think of translating that into a real life. For instance, if you are making, let's say, heart monitors or CAT scans or aircraft engines. Like imagine one defect can kill people. Because these are you're dealing with real...

Lee: [00:24:04] 737 max.

Aaron: [00:24:06] Exactly. Or even in the case of Toyota, you're making cars that can become a weapon, if you may. So I think having the Six Sigma mentality or kind of process management methodology reduces the overall defects. Combined with Lean, Lean is something that was later added on, at least in the GE world, to the Six Sigma. And Lean also initially started in Toyota. Actually, I should kind of rectify myself. Six Sigma was really initially started in Motorola. Lean is the one that started with Toyota and Lean is all about eliminating inefficiencies, so one was all about the defects and Lean is all about making things go fast. We call it a single piece flow. So things need to flow really fluidly one after another, but has to be done in the most efficient and effective ways.

Lee: [00:25:03] Yeah.

Aaron: [00:25:04] So, again, the book that I was referencing before from Jack Welch back when I was kind of fell in love with GE the company back in my college days, talked a lot about that. So immediately [00:25:16] in my mind I knew that, hey, look, if I aspired to be a CEO or a business owner or whatever I end up being or managing the organization, having the know-how in terms of process management, it's very important to me. So that was one of the key things that, again, that really kind of attracted me and I walked away from GE in terms of the learnings. [00:25:35]

Lee: [00:25:36] That's awesome. Thanks so much for sharing that. I think that's really insightful and I think a lot of people are going to want to go grab that book by Jack Welch. What's it called again?

Aaron: [00:25:44] So he has several books.

Lee: [00:25:47] "Straight From the Gut," right?

Aaron: [00:25:48] "Straight From the Gut" was the one that kind of stuck with me. You have several books in business that kind of stick with you. For me, that was one of them that kind of give me a lot of inspiration in terms of who I want to become as a leader.

Lee: [00:26:03] Awesome. And so after your time at GE, where did you go? And then how did you start, Caraa?

Aaron: [00:26:10] Yeah, so that's when we're getting to the entrepreneurial, I will say the less structured world. Because when you're in a company, to a certain extent, everything's very structured. It's like you do good, you're going to go for manager, to senior manager, director, VP, CEO eventually. If that's the role you want to go and all that. You know, I left GE knowing that I was ready for a change and also that my family, because they are always in the fashion business. I think my uncles and my dad were ready to kind of take a step back from the company, so they started looking and say, like, "What's the succession plan look like?" And so on, so forth. I always knew I wanted to come back to fashion for a number of reasons. One, I grew up with it and I joke around with a friend of mine not that long ago. Growing up, I remember most of my friends have like video game magazines or sport magazines at home. And I grew up reading Vogue. Not because I was particularly interested in fashion, but because that was the only magazine around, just because of my family being always in fashion. So Marie Claire, Vogue, you know, you name it. And so I had that bug in me, and of course, I know all the major designers. I knew, you know, what a Birkin bag is before any of my friends know how to spell handbag. But at the same time and, you know this well, Lee, too I mean, because you come from the same space that I am in terms of fashion, there's also a lot of inefficiencies and room for disruption. You know, and I hate to use that word because it's overused. But there's opportunities. I guess that's kind of what I was trying to say.

Lee: [00:27:55] Yeah.

Aaron: [00:27:56] And, you know, I knew I wanted to be in handbag just because my family has always been in handbag. We have the supply chain pretty much nailed down just because we've helped brands in the past to manufacture out of China and then and Italy, both of those two countries. And so we had that competitive edge. We had the know how and funding to certain extent to help us get better terms.

Lee: [00:28:21] Yeah.

Aaron: [00:28:21] The one thing when we started Caraa, for those of you who don't know what Caraa is, so the number one kind of thesis behind Caraa the brand was to make high-end functional handbags. That was the mission and the thesis. We knew obviously a lot of fashion brands. A lot of them were doing really cool things when it comes to handbags. I mean, just to name a really few cool brands that we like, like Celine, Dior, obviously Gucci, Chanel, and I mean, they all doing really cool things. The one thing we feel like a lot of them fell short was that the bags were just not as functional as I think it should be, you know, and I won't pick names because I think your listeners probably get it. [00:29:06] It's a lot of them are very high end, but it's all about the logo. It's really not much about the how functional the product is at the end of the day. So what we said is, what if we turn things around a little bit, still make the products in a very high end way, but really kind of make it very functional and keep the prices below four hundred dollars in terms of our average order value, because we're going to direct.  [00:29:31]Back in 2014, DTC was starting to become a thing. It wasn't as prominent as it is now especially during the pandemic. I mean, there were a few. Warby was there, Bonobos was there. Everlane just started to happen. I think for us, we started about the same as brands like Allbirds and Away and so on, so forth. So it started becoming a thing as far as like how to go the market. So we said, OK, we have a good way to how to get to the customers, we have a good way to create the Two-Way relationship with our customers through digital channels such as our website and social media. But the one thing we're really going to bank on is superior product design in terms of bringing that functionality into the handbags. So that's the thesis. And that's kind of what made me kind of leave the corporate world taking a stab at this particular venture. Truth to be told, we also had an agency at the same time, it's a sourcing agency that we were helping smaller brands to source all of Europe and also in Asia. So but really quickly, after we went through a couple of test rounds with Caraa in terms of the products, it was very clear to us that that was the area that we want to spend most of our attention. And so that's how we started.

Lee: [00:30:48] So how did you come up with the name Caraa? Like, what were those first few moments, the aha moment of like, we're going to go do this together. This is exactly what we have to do, to what are we going to name it? You know, those first steps that you need to start a business. Tell us a little bit more.

Aaron: [00:31:03] I feel like that's a very sneaky question, Lee, because you know us pretty well. You know how difficult it was for us. I got to tell you, I think that's probably one of the hardest things in the early...

Lee: [00:31:14] Naming the company?

Aaron: [00:31:15] Oh, my lord.

Lee: [00:31:15] Yeah. It's hard.

Aaron: [00:31:16] I got to tell you, I think we actually had a different name, which I'm actually not even going to say because it really was really bad. And yeah, you know, it was interesting because we didn't want to be a designer brand. So we didn't want to, it's not like one of those namesake brands that the brand is called after the designer. We didn't want that. At the same time, we didn't want to be something too, let's call it DTC. It's like a play off from another word and there's plenty of those out there. So I won't even name them. Nothing bad. We just didn't want to be be like that. So we landed on Caraa. So we were actually very proud that we landed there. We actually didn't even use a branding agency for this, which very proud of this. {laughter} So Caraa is a combination of Carmen, who was my Co-Founder. So her name is Carmen Chan Wu, so Carmen is her first name, and Aaron. So if you take C A R, Carmen, the first three letters of her name, and the two first letters of my name coming together, that's the Caraa with the two A's at the end. So we felt it was very authentic. Authenticity is very important to us and it's very much embedded in our brand values. So we felt good about that. We felt that it was feminine, you know, because the brand primarily it's a woman's brand. So I think it speaks to the audience that we're trying to cater to. And surprisingly, it wasn't... Well Caraa was taken, but we ended up going with Caraa Sport in terms of the URL. So that's the that's the story about it. Man, let me tell you, that was hard. Your an entrepreneur yourself [00:33:00]. Coming up with a name, it's very difficult. But I think for those of you out there listening and either went through this or going through this or will go through this in the future, I think stay true to who you are in terms of authenticity. You know, I mean, sure if you have the budget go with a branding agency because they are experts and they will help you think through things that you probably wouldn't be able to think of yourself. But you'll be surprised if you do a little bit soul searching, how much you can discover, [00:33:27] you know, and that's kind of what we did. We kind of lock ourselves in the room for a good two weeks, not all the way, but...

Lee: [00:33:34] Two weeks straight. No eating. No sleeping. {laughter}

Aaron: [00:33:36] Yeah, figuratively speaking. We kind of just did a lot of soul searching. Who did we want to be? Asked those theoretical questions that you might not ask on a daily basis. So I think be authentic is a takeaway.

Lee: [00:33:52] I mean, you must've gone through like a thousand names, you know, option wise, just like no, no, no... Because you have to come up with a lot of bad names before you land on a good one.

Aaron: [00:34:03] That's right. Yeah. For us it was just a lot of sticky notes. You know, it was basically...

Lee: [00:34:09] Sticky notes all over the wall.

Aaron: [00:34:10] All over. And it was, to your point, was funny because it was basically the for sure "no's..." It's like. No way on earth are we going to name ourselves that. There's the "maybes" like, I could be convinced either way. Let's sleep on that for a few weeks and see. And then there's the "I think this is it." And let me tell you, if you look at those three columns, the one that's "I think it is" had like two sticky notes.

Lee: [00:34:36] Right.

Aaron: [00:34:37] Like we had like zero ideas like, oh, what are we going to do. There were a lot of no's, few maybes and like one or two sticky notes that says, like, yeah, that's the one. Matter of fact, actually we didn't land on Caraa until the very end. And I know I remember exactly the moment that it occurred to us. We were in the elevator. We're like, what if we do this and this? We're like, oh yeah, that sounds good. So just that Eureka aha moment that came to us.

Lee: [00:35:07] Yeah. Nice. In the elevator. That's awesome.

Aaron: [00:35:10] You never know. You never know where the ideas will come.

Lee: [00:35:13] It's so true. It just comes whenever you can least expect it.

Aaron: [00:35:18] Exactly.

Lee: [00:35:19] Especially when you don't want it, which is like at the end of a two week journey of pounding out a bunch of names.

Aaron: [00:35:25] The best idea happens when you are sleep deprived and with very little food in your stomach.

Lee: [00:35:32] Lots of coffee.

Aaron: [00:35:33] I believe it.

Lee: [00:35:35] Awesome. And so when was there a point in time where you guys both kind of looked at each other and were like, "I think this is working?" Or did this never happen? You know, at what point were you thinking, OK, we really have something here? What did that look like? Like how did you measure success in the early days?

Aaron: [00:35:53] Yeah, you know, it was a lot of chest pounding, honestly. You know, you have to. Right? You have to do a fair amount of chest pounding because there's so much negativity around you in the early days. The first three years, I would say it's always the toughest for any start up. And, you know, having gone through that journey once or twice now, you have to stay positive, you know, like so you have to pound your chest from time to time, even though in reality you know you are on the verge of closing. You just have to like, you know, just like, "Yup." And that's [00:36:23] to a certain extent it helps to have a Co-Founder. You know, I think single founder entities are very tough, not because you're not capable, it's because sometimes you need a shoulder to cry on. You just need to hug it out. And just like having somebody on the other end of the mic or on the other end of the table, just like to listen to me for ten minutes and just let me whine for ten minutes. [00:36:48]

Lee: [00:36:48] I'm freaking out. This isn't working. What are we doing?

Aaron: [00:36:50] I'm freaking the F out and need to just vent. But I think just to address your question, so take it from the top in terms of taking from the bottom in terms of like how we started. We produced a first batch. It was a small quantity. So the official story is that it was sold out right away. But the reality is they were sold out with friends and family.

Lee: [00:37:18] {laughter} The truth is told. I love it. This is the truth show. You get the real deal.

Aaron: [00:37:24] In hindsight I can say this now because to a certain extent, I think we were able to go through this.

Lee: [00:37:31] Yeah. You're past that.

Aaron: [00:37:31] And I hope this will inspire others to not give up, because in the beginning it's tough. It's very easy to just be like, "Nah, it's not going to work."

Lee: [00:37:39] Well, and as an aspiring founder, you hear these stories. Oh, they sold out. They're like, oh, my God, what if we don't sell out? Like, you know, there's all this pressure. What does it mean? I mean, they could have sold five units and they're "sold out." Right?

Aaron: [00:37:52] Don't get fooled. Don't get fooled by those things because they're not always what it seems like. Reality is that it was sold out, a lot of it was friends and family. But there were some real customers. And I think the first aha moment for me and Carmen was when we had real customer testimonial coming to us and telling us why they bought the bag and how heartfelt it felt to us at least, in terms of what it did for her. Because you got to realize that at the end of it, we're not just selling a fashion garment. It's not like, oh, it just made me look like beautiful. That's great. And obviously, we aspire to create that kind of emotions within our customers. But, you know, we have customers that's telling us that, you know, "I have a back problem. I used to carry two or three different bags. Never really found a bag that actually looked good, that can actually be functional. After using your products, I can stand up little straighter." We hear like nuggets like that in terms of customer, real customer, testimonials, like, oh, you know what? Actually, We're never happy with our product a hundred percent. I think that's just part of being an entrepreneur or being a Founder. I'm the biggest critic of my products. Oh that's great, but I think we need to do this, do that, tweak this, tweak that. And that's still a continuous journey. And we always going to be critical of our products first and foremost. But I think that's the first moment that kind of gave us a little glimpse of, hey, you know, we think there's a market out there. Because we don't go to wholesale, I think if you talk to other brands, a lot of them, when you listen to the story, it was when they get the first big order from like a retailer. That moment never arrived for us just because we never really actively chased it. I do have to say that when we struck our first partnership with Equinox...

Lee: [00:39:54] I remember that. That happened at XRC Labs.

Aaron: [00:39:57] That's right. That's right. That was very early days. And that was very rewarding. You know, that was rewarding, I think, mainly because a) It gave us recognition in terms of validation. You know, as far as like, hey, there's a product market fit. You know, [00:40:13] I'm a big believer in product market fit. If you can sit somewhere and think about, hey, the world needs these, but if you don't find the right audience to purchase it or to resonate with your product then you just have a little project or a little hobby. It's not a business yet. So having the product market, it's important. [00:40:35] And to us, that was you know, even though we're primarily direct to consumer eCommerce, having that kind of validation was very, very, very important to me. And obviously, we love the people that we work with at Equinox, an awesome relationship over the years. And I call them all of them, my friends. But yeah, I think those are very, very early days. Probably that was the two data points that we needed, by the way, to start giving us that chest pounding...

Lee: [00:41:06] Confidence. {laughter}

Aaron: [00:41:07] Confidence.

Lee: [00:41:09] We're doing something right here somehow.

Aaron: [00:41:11] Yeah, yeah, exactly.

Lee: [00:41:13] So I know you've said before that you are not venture backed. I'd love to talk to you about fundraising. Since you have such a different story. Can you kind of speak to what fundraising has looked like for you?

Aaron: [00:41:24] Yeah, no, another topic I can talk forever about. Yeah. So you got to bear in mind, when we first started in 2014 and again, you know this for yourself as well, Lee, I think, you know, there was this big... I don't want to use the word hype, but there's this big, I don't know, morale, even expectation to a certain extent about retail DTC brands chasing venture funding. You know, there were a few brands before us that chased it and got it. I think I mentioned Bonobos, obviously Warby and a few others out there. And even a few of the brands that started at the same time we did went out there, chased it, got it. Outdoor Voices was another one just comes to my mind and we started no different than them. We were like, really excited. I was wagging my tail all the time, like, oh, you know, like venture funding. And it is sexy to a certain extent. Right? When you go from very little funding to like all of a sudden be able to hire the right staff that you need or get the right assortment of inventory or get the right website. I mean, there's a lot of awesome things that you're like, wow, you know, like I want that. But then you peel the onion a little bit, at least for us. And we saw our first year of term sheets. So it wasn't the fact that, you know, especially back then where a lot of venture funds were ready to sign those checks, so we saw our fair share of term sheets in terms of propositions, I just never really found a fit. As a matter of fact, I've been pretty vocal in interviews and so on, so forth. I will go to to the point of saying actually that venture backed funding structure might not be the best fit for retail brands.

Lee: [00:43:17] Like all of them. That's a bold statement. You're saying all of them basically as a whole, almost, that it's not a good fit, you think. Why is that?

Aaron: [00:43:24] That's right. And here's my opinion. And it's not right or wrong. It's just my opinion. It's first of all, I think it works really well for tech. You know, when you think about a technology company, when you can once you get funding, you can scale very easily.

Lee: [00:43:39] Yes. From product and everything. Scalable.

Aaron: [00:43:41] Exactly. Yeah. Very, very scalable businesses. When it comes to product companies, you got to realize that it takes four to eight months just to make the product. Best case scenario. If you're counting design, it's even longer, right? And then you have to give yourself time to sell. So it's not as scalable of a business model. So my point of saying that might not be a fit is because the Founder goals might not be 100 percent aligned with the venture funding. Because venture capital and as you know, venture funding, they always have the eyes on the exit. And I mean, that's the name of the game. That's how they make money, I mean, at the end of the day. So I just never could find, you know, maybe I just didn't look hard enough or just maybe weren't ready, but could be a number of reasons. But I just feel at the end of the day the goals were not aligned. I wanted to build a business that that's long lasting and that is profitable. I wouldn't dare to say I want to give it to my grandkids. That never the idea. But I want the brand to sustain.

Lee: [00:44:53] Right.

Aaron: [00:44:54] And I think about sustainability quite a bit as a brand owner. And, you know, when people think about the word sustainability, they always think about sustainable products, which, by the way, we think about that all the time. I mean, if you talk to Carmen, if she was here, she would tell you that easily 20 to 40 percent of her time in terms of sourcing is thinking about how do we bring more sustainable products. And, you know, a little plug here, we will be launching more sustainable products in the next few months. So you will see more coming from us from that area. But for me, sustainable is also corporate sustainability, which basically means that if I hire 20 people, I have responsibility over that. And if I'm not responsible in the hiring process, what happens if my burn rate runs out and I didn't get enough revenue to get to my next round, so I'd have to go back and actually fire those 20 people that I hired not that long ago, and what do I do? What do I tell their families? Or the customers when I, say if I had to close my door to my customers, and say "I'm sorry, you can return the product anymore, that we send it to you because we stand behind our products and so forth because we're going out of business," you know what I mean? Like, to certain extent, I wasn't looking to grow quickly. I guess that's the thing. [00:46:20] I was looking to grow, but I was looking to grow sustainably in a profitable way, if you may. Yeah. So we ended up just saying, you know what, no, to venture funding. We ended up going through the Angel route. And also fortunate enough for us, as I mentioned before, because our family comes from supply chain and global supply chain and manufacturing, we were able to get very favorable terms from our own inner network. [00:46:51] So that helped quite a bit when it comes to inventory because in the early days, there's no marketing costs. Early days it's all about product inventory, at least for brands.

Lee: [00:46:59] Yeah.

Aaron: [00:47:01] So that was really kind of the thinking behind kind of saying no to venture funding from the business standpoint. On the personal basis, I got to tell you, Lee, [00:47:12] when we were trying to raise I felt that I was becoming more and more a professional fundraiser versus a professional business manager. I was spending less time managing my business and thinking about how do I create product affinity and create relationship with my customers, which as a business owner and CEO, I think that's what I should be doing in terms of the perfecting the product, making the shopping experience better, versus trying to go out there and fundraise. [00:47:42] And look, I'm not trying to bash on any other brands that have gone through that journey. I think it's very admirable that they've done that. That's not my life. I didn't want that. I didn't want to be a fund raiser. So that wasn't a person to know that I just felt that it was not good.

Lee: [00:48:03] That's a very good way of putting it, because you really are if you're venture backed, the CEO is a professional fundraiser, essentially like that's your job and you're maintaining relationships with investors and you're just constantly thinking about the next round and how you can build those new relationships or get intro's and just start always thinking about the next round. And it's really tough to be actually operating the business when you're VC backed, which is probably why, you know, they have COOs pretty early on, whereas like a brand, if it's like a lifestyle business or wants to grow organically like you guys have and you do actually get to operate the business instead of go out and try to fundraise all the time and spend the majority of your job doing that. So it is like a different type of CEO, I think, role, like you're saying, for VC backed companies versus not. Would you agree?

Aaron: [00:48:57] A hundred percent. Because, I mean, there are folks that are great at it. I mean, I know top of my mind three or four great friends of mine who are CEOs, who are just natural fundraisers. And they're great at updating investors, communicating with them, creating a buzz about themselves, creating a buzz about the brand. I don't want to say I'm no good at that. It's just not something I'm interested in. I choose this journey because I want to create the product that I think can impact people's life and create certain, you know, tinkling in people's feelings. That makes me proud. It's like one of those things where I'm so much more proud of a bunch of things we've done the last three or four years, and I'm just going to touch on those, than if I was in the headlines saying that Caraa raised 20 million dollars. That means nothing to me. Like if you were telling me that, oh, hey, because you hear all the time in the startup community. I mean, you know, it's like "So-and-so raised a whopping 40 million dollars in their Series A, and the valuation is this and that." And I'm like I don't really know what that means other than that. You were really good at fund raising. And you sold a great story because a lot of it it's just basically we're selling people on what the company can be. It's not like you truly make that much money in terms of revenue. Right? So when I hear that, it's like, OK, what does that mean? It certainly doesn't mean that you are have a good business. I don't think it means that. So I never aspired to be in the headlines for Caraa raised X. I want to be the headlines for Caraa helped this many people through the pandemic, which we have, and I'm sure want to talk about that.

Lee: [00:50:44] Yes, actually I would love to talk about that. I mean, you guys created the most "breathable mask in the world." How the hell did that happen? And let's talk about Caraa Cares as well. I mean, COVID inspired, I guess, a lot of innovation there. So let's hear it.

Aaron: [00:50:58] Yeah, talking about another good example of how to stumble on something that we always thought about we wanted to do, but never really had the opportunity to materialize it. So COVID happened. This was early last year. We didn't want to stay on the sidelines. You know, look, I'm not that old and I joke around with my family, my team. I said, hopefully this is the only pandemic I see in my lifetime. It's been very tough to see all the sufferings around the world, and it's still happening in certain parts of the world. But I think back in the early days when we talk to other brands like, hey, what are you doing? What are you doing? Because we all share notes, all the founders.

Lee: [00:51:35] Yup.

Aaron: [00:51:35] And I don't think I have a big network, but a niche nice tight network that I think I call them confidants. We share personal notes like, what are you doing, what are you doing? And all that. And a lot of things like I don't know, like there's a lot of uncertainty. We just kind of wait and see what happens. And I'm like, you know, I don't know. I don't want to wait and see, like, I want to join the fight. So I'm like, well, what can we do? I mean, like, bags is not necessarily like a pandemic thing. So we sat down with a lot of non-profits. We sat down with the city of New York. We sat down with a bunch of different people is like, how do we help? And back then, in the early days of the pandemic, it was all about masks, you know, not N95s because I think the government was already starting to kind of mobilize and getting those to the first line responders. So to a certain extent, we knew that's either happening or will be happening very soon. But the more people we talked to we'd just realize, how about the underprivileged people? You know, how about the people who don't have a PR budget? The homeless shelters, the foster homes. These are people that just they don't have the means. And believe me, they need masks just like anybody, if not more, because they're living in very, very confined areas and so on, so forth. So [00:52:55] we had that emergency meeting, me, Carmen, and also the board really quickly made a decision to convert part of our factory into essentially making masks using our scrap material. This was in the early days of the pandemic. And then we donated. [00:53:11] We started donating, and it wasn't really a thing was just like almost like a quickly, how can we quickly do something? Because we didn't know how long this thing was going to last either, so it could be gone tomorrow, but it could be the last thing on time. But let's just help as much as we can. And the word got out on social media because, you know, people start tagging us and all that, that we were using our scrap material, which is a pretty fine material for reusable washable masks. So some of our loyal customers went on social, is like, hey, can you sell us some? And it was interesting because we were like sure. You know, we made a small batch. We obviously don't want to lose the charity component of things. So we continued donating. Plus, for every mask we sold, we added another matching donation to different organizations that we were donating and then everything started from there. I mean, you know, I think Wall Street Journal in the summer last year did end up calling us "the most breathable mask in the world." They did, I think, a study of about 50 masks companies back then and then with those things, you know, it's not like you get to actually submit. And I want to run for a certain price or anything like that. It's like...

Lee: [00:54:31] Right. They do their own research and they're like, oh, by the way, here you go...

Aaron: [00:54:34] Exactly. You don't know until it comes out. It's not like they give you a heads up either. Like, "Hey, by the way, tomorrow there's going to be an article in Wall Street Journal about you."

Lee: [00:54:42] Nope. It's like your friend sends it to you and you're like, oh, wow, we're mentioned. Thanks for letting me know.

Aaron: [00:54:47] Yeah, that's awesome. You know, my point is, look, the mask thing was never meant to be a moneymaking or but, you know, what they did allow us to do is basically create a lot of goodwill with our customers, allowed us to reach actually a broader customers that we did not reach out to if we didn't have the event or have this particular initiative. And back to the point that, you know, when I think about what I'm most proud of, back to the point that was made before, I'm so much more humble and proud of being able to help that many people throughout the pandemic than if I was raising like X million dollars and getting X million dollar valuation, you know, it's just so... And it just reminded the Carmen and I of why we started the brand. You know, it's not to make a name for ourselves for capital raising. It's to make an impact on people,

Lee: [00:55:46] So I'd love to hear some of your biggest challenges. Building a startup is really, really hard. Like we were saying. There's all types of news stories out there about success and celebrating that success. But it's rare that you actually hear stories about when things go wrong. What are some mistakes that you've made or things that have gone wrong as part of the journey of building a company?

Aaron: [00:56:12] Yeah, constant struggle. There's always something. I mean, look, a brand is a living, breathing thing, and it's not always peachy by any means. And it's always a juggling, balancing act. I think fundamentally, I think I kind of like ten thousand feet view in terms of how I think about managing risk or managing operations or managing the brand overall. For us, it's all about processes, and I tie that directly back into my GE days, in terms of, you know, creating. [00:56:45].. If you don't have the right processes, everything will be very chaotic. So I think we do a pretty decent job in terms of creating controls and checks and balances and processes along the way. [00:56:56]

Lee: [00:56:56] But is there a specific moment or like a story that you can share of like a fire was in our manufacturing plant? Something crazy?

Aaron: [00:57:06] Yeah. Knock on wood. No fire happened. But no there's a lot of stories I can share. You know, the first one that comes to my mind, and just speaks to also just how important it is to hire the right team too, because if you ask me currently what's my number one struggle? It's hiring the right team to help you grow your business. I think that's probably one of the top challenges as a growing, fast growing company in terms of getting the right people on board to help you fill the roles that you need and then also share the same values and then grow together. To share some stories... I mean, look, you know, I remember one time this was early days where the factory basically messed up one of the components on the bag. It goes back to our checks and balances. Usually we have a QA control at the point of manufacturing so that you can check your issues on this bag. So if there are problems, gets corrected right away, before it gets to the warehouse in the US. Well, someone somewhere along the way failed to check one of the components of the bags. And we found out that it was wrong. It was basically it was one of our locks because our bags comes with locks and it was mounted differently than we basically asked them to mount it. And here we are. We have hundreds of bags sitting in our warehouse. All well packaged. We have  a very elaborate packaging process. So they really comes well packaged and unknowingly that within that one component is wrong. So what do you do? You know, it's funny because like you hear stories about product recalls when it comes to cars or air bags.

Lee: [00:59:08] Right. Food.

Aaron: [00:59:10] Yeah, people don't think too much about it. It's like, "Oh it sucks to be them." But let me tell you, like when that happens to you as a business owner or CEO of a company, it's a real, real challenge. And we immediately made a decision of recalling the products that we shipped out, deploying a team, including myself and my Co-Founder in the small team from our main office. Go to the warehouse for four days straight. I think all of us slept near nothing. I mean, it was basically living in the warehouse for a straight four days, pretty much essentially working with our craftsman. We had flown a couple of craftsman's from overseas to help us with this and basically just manually in the US open each package and they're manually making the updates.

Lee: [01:00:00] Wow, the hundreds of bags.

Aaron: [01:00:02] Hundreds, hundreds. And we have pictures, you know, and it's funny, I sent one to one of my old bosses back at GE like, "Yep. If you wonder what I'm doing right now, this is it," you know, like me sitting on a little store in the workbench and doing... But goes to show nothing is too small as a Founder. You got to roll up your sleeves. I have a freaking amazing team that when that happened, everybody was rolling up their sleeves like I'm dropping everything we need to go out there and actually make it right. So customer service reached out to customer service, head of operations roll up her sleeve and all of us went to the warehouse. It was a real camaraderie moment in terms of seeing the team coming together in moments of crisis. But, yeah, I mean, you know, obviously those problems are preventable and has since been prevented from all of our product because we have now the right checks and balances. But, yeah, I mean, just one example of...

Lee: [01:01:06] So what happened to the bags? Like, did you do to fix them and package them back up? Or what happened? What did you guys do to solve the problem?

Aaron: [01:01:14] Yeah. So that's what we did. We replace them manually. We had to basically open one by one, replace the part that was wrong, recall because all our product are serialized. So recall the products that were already shipped out. Thankfully, weren't that many because it was a new batch. So we caught it right away. But we did have to recall. Obviously, for the ones that we recall, we replaced the bag with free shipping back and forth to the customers. Honestly like that's another lesson learned for us [01:01:43]. In moments of crisis, in front of the customer: transparency, transparency, transparency. Don't hide anything. [01:01:48]

Lee: [01:01:49] Yeah, that's really good.

Aaron: [01:01:50] So many brands, especially when they're small, just like let's not say anything.

Lee: [01:01:56] Yeah. {laughter} They won't notice.

Aaron: [01:01:58] Like sweep it under the rug. Let me tell you, those things will always come back and bite you if you're not transparent with your customers. You know, we're very transparent. We did the best we can in terms of reaching out to that group of people, just like, "Listen, we screwed up. I'm sorry. Happy to refund you or give you a new bag. You choose." Ninety nine percent, I think there was one customer that's like, "You know what? Can I exchange it for another bag?" So she didn't return. She just wanted a different product. But everybody else was came back and like, "Sure, send me a new one," and that's what we did. So it was a good moment of learning for sure. But it just goes to show nothing is too big or nothing too small.

Lee: [01:02:38] Right. Right. And luckily, you didn't have to ship them back to the manufacturing, maybe in China or elsewhere, you could fix the problem in the US and ship it back out just with the team that you had. That's awesome.

Aaron: [01:02:51] Yeah, that's right. Yeah. That case was a batch that was made in Italy, actually. And instead of choosing to ship it to Italy, we just flew out to craftsmen from Italy to come on site and kind of direct traffic and all that. It was just it was a cheaper thing to do.

Lee: [01:03:09] Oh nice. Help advise the domestic team.

Aaron: [01:03:11] Exactly. It's like, why don't you teach us how to replace this versus sending the entire thing back to you and have you do it?

Lee: [01:03:17] Yeah, shipping's a little expensive to do it that way.

Aaron: [01:03:19] That's right.

Lee: [01:03:20] Yeah. So before we wrap up here, because I know that you have to run, are there any other final pieces of advice or any other stories you'd like to share that you think would be really valuable for the audience?

Aaron: [01:03:34] Yeah, I mean, look, knowing who the audience is, because you and I chatted before this in terms of the listeners, look, if you are aspiring to star a brand or try it out, I would say it's a very rewarding experience. I say [01:03:53] make sure that you have product market fit and then test quick, fail fast, and then reiterate. [01:04:01] I think that's probably the best advice I have. And it's not the business level... Even today, you know, when I think about all our marketing strategies and even product design to a certain extent, the truth is because you don't always have the right answer. But the key is to be humble enough and have the right processes to actually try something quickly, fail if you need to fail, hopefully you don't, but if you do, do it quickly and cheaply, and do it again. So I think that's kind of what one of the best lessons I think I've learned throughout this process. It does tie back to my GE days with Lean Six Sigma, because that's the whole philosophy they teach, is that kind of the continuous process improvement and never settle, never stop improving. Never say "I'm done. Good enough. Let's move on." But that's probably the biggest advice I will give. We mentor and invest in some brands and others. And that's probably the number one advice I give them.

Lee: [01:05:09] Awesome, and so what's next for Caraa? Can you share any upcoming, exciting news or any kind of product that's coming out or partnerships or what can we see next?

Aaron: [01:05:19] Yeah, a lot of exciting things. Some of them on the NDA. So can't really disclose and chat too much about that. I think that, look, we're very bullish about retail in general and bullish about eCommerce. [01:05:33] I think if anything we've learned throughout the pandemic is that I think eCommerce is here to stay in a major big way in terms of growth. [01:05:40] If there was any doubt before that, I mean, we never really doubted it, of course. So I think for us it's all about potentially product expansion and could be a category expansion or just expansion of existing products. And a lot of that is also just driven by our customers. I think now that we've been around for a little while, customers are asking what else you got? So I think that gives us a lot of ideas and nuggets in terms of things that we want to test and so on, so forth. There are two collaborations that's coming that, again, we can't really disclose, but it's really cool, really exciting. Can't wait to share that with the world. So that's also coming. And then, yeah, I mean, we're continuously improving different ways that we can build better affinity with our customers. I think that's kind of our number one goal, so it's improving our technology stack in terms of better shopping experience, return experience. So always thinking about what can we do better in terms of creating that affinity with our customers? So that's definitely coming. But I mean, look, if you haven't followed us, we can be found on Instagram and that's the main channel that we interact with our customers to have that two way dialog so you can find us @CaraaSport. So that's one way. And then, of course, you know, you can find us on CaraaSport.com or Caraa.co. Both of those URLs work. And then our customer service love chatting with our customers. So if you have recommendations or things that you want to chat, shoot us a note. We will be more than happy to get back to you and just connect.

Lee: [01:07:30] I noticed on LinkedIn, the headliner for the brand is "Designed for fashion, crafted for sport." I love that tagline. It's so I think defines Caraa in such an awesome way.

Aaron: [01:07:44] Thank you. Thank you for saying that. Yeah. It was again, another tagline that somewhat came organic to us. But again, for us, we just felt that, you know, it kind of captures that thesis and the kind of the why we started the brand and how we going about creating products at the end of the day. So thank you for saying that.

Lee: [01:08:06] Awesome. Well, thank you. Thank you so much for being on the show. It was awesome hearing your story and yeah, thanks for joining us.

Aaron: [01:08:12] Yeah. Thanks for having me. And I'm sure we'll be chatting again very soon.

Lee: [01:08:18] Thank you so much for listening to the Stairway to CEO podcast. Once again, I'm your host, Lee Greene. And if you have any burning business questions, please feel free to reach us at StairwaytoCEO.com. We'd love to hear from you. And if you like what you hear, be sure to subscribe to the show, tell your friends, leave us a review, and follow us on Instagram @StairywaytoCEO. Until next time, guys, keep on climbing.

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