Ellie Stang talks with Reagan Moya-Jones
Mar 12, 2019
Stang: Behind every entrepreneur is a great story, and I’ve heard your story about starting your business, as many do, at your kitchen table in Brooklyn. Can you take us back to when you first got started, why you did, and how you put it together?
Moya-Jones: As you can probably tell by the way I sound, I wasn’t born and raised in Brooklyn. I am an Australian, and I moved here in 1996. I had my first of four daughters in New York in 2003. I went looking for a blanket that was very common at that time in Australia, albeit a very utilitarian product, but no one had heard of muslin blankets. I saw an opportunity and went for it.
Stang: And you were working in e-commerce full-time with a baby at the time?
Moya-Jones: Yes, I was working full-time. By the time I really started to build the business, I had already had my second daughter. I like to tell people I chose sleep deprivation over financial hardship.
Stang: Along the way, I know you had thought about and received funding, but you probably got to a million through bootstrapping, which many entrepreneurs do. There is a point, however, when you really do need to bring on investors. When did you start thinking about that in your journey? And how was it?
Moya-Jones: When I left the Economist to work on the business full-time, it was 2009. And then I took on my first private equity investors in 2010. I had been basically borrowing money from friends and family at 10% interest, and it was pretty much a full-time job just trying to get by. By the end of 2009, we were doing about five million in revenue, so I think we did nickel-and-dime it for a long while.
And one of the main reasons I did that was because I actually started the company with a friend, and we had a horrible falling out in 2008. Unfortunately, I did not have any money to buy the other half of the company. I think it ended up being about a half a million dollars at the time, which I didn’t have. So I brought in other partners and kept 51 percent of the business. The reason I was very hesitant to go the venture capital route was because I was fiercely protective of the equity for as long as I could be.
Stang: I think a lot of founders are fiercely protective because it’s your baby and you're afraid to lose control. As you become more seasoned and you talk to more people, there is a right time to bring people on, and there's also skills to be gained from doing so.
Moya-Jones: The right investors. For me, it wasn’t even the fear of control because my private equity investors were minority shareholders. It was that I had an unwavering belief that this is going to be a $100 million dollar business. And I did the math, you know, of what that 5 percent was going to be worth, and I just didn’t want to give that away.
Stang: Before we talk about further funding down the line, in those beginning years when you’re going from 1 million to 5 million, stuff happens. You have smaller teams. You've got to keep the culture intact, and you've got to hire great talent. Sometimes you’re not big enough to get the people you really need. Can you think of some of those challenges in the beginning and how you overcame them? Does anything stand out in those earlier years?
Moya-Jones: Finding great people is hard when you’re starting out; it’s hard when you’re a $120 million dollar business. I fundamentally believe people are everything. You’ve got the right product, you’ve got the right strategy, but if you don’t have the right people, it’s all for naught.
I really truly believe that because I was seeing the right people do the most incredible things in my business. And I’ve bought the wrong people in, and I’ve see the devastation of having the wrong people in the chair.
We were very lucky in the beginning because I found the culture part very easy because you’re all in the trenches together. I just hired like-minded people, but people that I knew would challenge me. I wanted people to say, “Why are you doing it that way?” I always say the reason I was so successful is because I was I was confident enough to hire people who were smarter and more creative than me.
The thing I was most blown away by—in the whole journey in building the business—is obviously when you’re the founder, you're passionate, of course. You’ll work for 24 hours to get something done, to get an order out or fix a problem, but what blew my mind was that I was able to surround myself with other people who seemed to have the same kind of passion for the business as I did. They would do anything, you know, to make it right.
Stang: So, how did you go from one product to two-and-half-thousand SKUs? How did all of that come together? Were you thinking more on a global scale?
Moya-Jones: Technically, I did something that wasn't the norm. I built a global infrastructure very early on. When there was still plenty of growth to be had in the US market, I didn’t wait until that was done before I went global because this particular product nobody knew about anywhere outside of Australia.
I just got on planes and went to different tradeshows. And if I saw the same enthusiasm for the product that I had seen in the US when I introduced it, and the market size was big enough, I put the time and money into building infrastructure in those countries. And I did that in Australia, UK, France, Canada, and Japan.
Stang: Did you think about expanding from a wonderful product and how hard is that to do?
Moya-Jones: Well, given that I had four children, I had a built in test market of babies and kids, so a lot of the innovation came from my own life. And muslin, it turns out, is an extremely versatile fabric. No one had really done anything else with the fabric outside of the blankets.
As an example, our second daughter was a restless sleeper, and sometimes, even more in the summer, she would just need something light over her. We used to put the muslin blanket over her, but without fail, she’d kick it off. And then I’d come in and she’d be a little ice cube. So I was just sort of staring over the crib one day talking to her and it just dawned on me that I could make that into a sleep sack. Then you know, all of the things just started to come very naturally because I am a mother of four, and they were things I wanted for my own children.
Stang: So we have a lot of people in are network who are thinking, “How do I do it? Who do I talk to? Is it something I should do?” Do you want to share any of your insights?
Moya-Jones: So when I speak to other entrepreneurs now, I get asked this question all the time. I’m still a big proponent for trying to borrow instead of giving away too much equity too soon.
For me, that changed when I just got to the point where we would do inventory, work out what we would need and then we would just cut it in half because that was all we could afford. So the reason that I went for the bigger funding is because I was hindering the growth of the company by not having the capitol in the business.
I started with the private equity companies, but the fact was, we were really too small for them. But I was introduced to them by a friend, and we just hit it off. And despite the fact that we were small compared to most of [their] other companies, we just go on so well that they decided to write the check. That ended up being just an incredible experience.
I became a better business person because of the relationship that I had with them. They were true partners and absolutely there when I needed them, and they left me alone when I didn’t. They truly allowed me to continue to be the CEO and run the business, and they also helped me to build an incredibly healthy business.
Stang: And then you went further down the line and engaged additional investors – how did that go?
Moya-Jones: In the summer of 2013, the company was a rocket ship and still growing exponentially. My investors said to me, “Look, you’ve got all of this money tied up in this business. There's a lot of sweat equity in there.” I took a very basic salary, as a lot of founders and CEOs do.
They told me they would like to see me take some chips off the table to set my family up financially and then roll back in whatever I felt comfortable with so that I could have the second bite of the financial cherry.
At the time, I didn’t even know that was an option. I just thought when you sold, you sold; and that was that, and you were gone. So we wrote a process, and we had a huge amount of interest.
Then we met with nine different private equity firms and I chose one. This is very hard for me; but there is good private equity, there is great private equity, and there is horrible private equity. I’m fairly sure there’s more horrible than good. I just want to point out there is good out there.
The firm I chose was all of the horror stories you’ve heard about. The thing that really upset me the most about it was that one of the main reasons I went with them was they were the only firm who had a woman, who also happened to be a mother, in their management team.
Choosing them ended up being a very bad decision. I told a friend they didn’t get the brand they bought, the business they bought, and my friend said to me, “Well you did sell the company, a boutique brand, to a company who understand dog food, cold meat, and yeast infection cream…”
So I was like, “I really should have looked at the consumer products that they had and followed it a little bit more closely.” The point being that my company is a boutique brand and we are sold in Harrods. It's just a very different type of business than selling dog food. They wanted to turn it more into a mass business, and I fundamentally disagreed with them. That was the beginning of the end.
And what happens when you disagree with your private equity firm with vested controlling interest? You get fired. I stayed on the board until recently, where I fired myself from the board.
Stang: So lessons learned, right? Not surprisingly, since this happened, you have been very busy. Typical entrepreneur, you go through a difficult time and are now starting a second company. It’s called Saint Luna, and it is a boutique moonshine business. Why did you pick moonshine, and how that's going?
Moya-Jones: So it isn't as far apart as you might think. For aden + anais, I did not invent muslin; I just reinvigorated the category of muslin. We’re doing the same thing with moonshine. My COO—who used to work for me at The Economist—said, “I’ve got our next business idea. It’s moonshine.” And I said “Moonshine? Are you joking? Isn't that for people who wear overalls?”
But I started to think about elevating it. So I remember I went back into the office and said, “You know, I’ve given it some thought, and there might be something there. I could certainly build a brand around it, but the key is, we’ve got to have really great tasting moonshine.”
So, I used to make it a habit of going to every factory that made our products because I felt very strongly about knowing who was making our products and ensuring that they were being made the right way. We had a skincare range that was made in Memphis, TN.
I was talking to the guy overseeing the production. He was a chemical engineer. I said, “So, soap is your passion?” He said to me, “No, soap is not my passion. Soap is my day job. My passion is moonshine.”
So if that’s not a moment where I’m getting slapped big-time up the side of the head. And it turns out, long story short, he’d been perfecting his recipe for ten years. Very different. Moonshine is a rye-based alcohol, and ours is a molasses-based rye moonshine that's charcoal filtered, so very pure and smooth.
I asked why he hadn’t done anything with it, to which he responded that he was a chemist and didn’t know how to market or sell it. So I took his card, and that was two years ago. We are about to distill our first ten thousand bottle batch. My goal is to have Saint Luna moonshine be the first moonshine served in five-star admissions, five-star restaurants. So far, it seems to have worked out okay for us. We’re in discussions with a very cool celebrity because everyone knows liquor brands need celebrities, right? So, it’s looking very good, and the whole thing is very fun and very exciting.
Stang: You’ve learned so much as an entrepreneur. You’ve taken the time to not only start a second company, but also write a book called What it Takes. Can you tell us a little bit about that and why you felt the need to write this story?
Moya-Jones: Well, I absolutely did not feel the need to write a book. I was approached to write a book about two years ago, and I initially said no because I had a pretty full-day job. There was no way I was going to be able to write a book at the same time as running the company. They persisted, and they found me a great ghost writer, who has helped me write this book. And I eventually came around to it because I’m honest to a fault. And it gets me into a lot of trouble, but I just wanted to tell a very honest account of my experience.
I also did a lot of research around women entrepreneur statistics. It is just mind-blowing when you really dig in, and I felt that that needed to be brought to light. How big the mountain is we still have to climb. It is just fundamentally harder for us to be successful because of the hurdles that we have to face.
The underlying thing for me was, I don’t have a Harvard degree, I’m never the smartest person in the room, and I’m not the most creative. What I truly believe was the secret to my success was just an unwavering belief that I could do it and the willingness to work harder than I ever thought it was possible to work.
I know that sound trite—work hard and you can earn a 100 million dollar business—but it’s kind of true. I really wanted this book to be very motivating and inspirational to other women entrepreneurs out there who might think they don’t know what they need to. Basically what I didn’t know, I just Googled.
I tell a story in the book where I was calling all these stores and a big store was interested in the product. As I was about to hang up, she said, “Can you please make sure you send over a line sheet?” I was like, “Absolutely!” I hung up and had to Google what a line sheet was.
I worked really hard with my story, and I hope that other entrepreneurs that are starting out, who have the journey ahead of them, read this and go, “Oh, so she can do it. I can do it too.”
Raegan Moya-Jones is the 2018 Vertex Award winner. Read more about her journey.