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🚗 Better watch out, Tesla — Chinese carmaker BYD is gaining ground.

BYD is just shy of Tesla for taking the lead as the world’s leading seller of all-electric vehicles.

But that might not mean a whole lot for shareholders: Tesla’s $815 billion market cap is still nearly 10x BYD’s, or equal to the next 10 largest automakers combined.

Today, we’ll discuss another fast-growing entity: the rise of athleisure, specifically Vuori’s growth to become a $4 billion brand.

All this, and more, in just 4 minutes to read.

— Matthew

QUOTE OF THE DAY

“Habits are like the atoms of our lives. Each one is a fundamental unit that contributes to your overall improvement.

The seed of every habit is a single, tiny decision”

— James Clear

WHAT ELSE WE’RE INTO

📺 WATCH: Rise and fall of SBF, FTX at the center of new book

🎧 LISTEN: William Green on becoming richer, wiser and happier

📖 READ: The truth of distraction by bestselling author Oliver Burkeman

HOW VUORI ROSE TO $4 BILLION BRAND

Photo by Olivia Bauso on Unsplash

Joe Kudla had grueling back pain.

The 45-year-old yogi and rock climber moved to San Diego to play lacrosse and surf, but it was 2015, he was working long hours as an auditor, and he couldn’t find the yoga clothes he wanted to wear.

So, Kudla quit his well-paying job to found Vuori — pronounced “vee-or-ee” — even though it’d be his third attempt at an apparel company. The first two had failed. Maybe this one would be different.

“In the back of your mind, you don’t want to fail three times in a row,” Kudla told CNBC this year.

“The lessons that I took from those early businesses was that for me to build an apparel brand, I wasn’t going to be able to do it on the side, as a side hustle or out of the garage,” Kudla added. “I was going to have to jump in with two feet and become obsessed.”

His determination paid off. Within two years, Vuori was profitable. By 2019, Vuori got its first big bet, a $45 million investment. Then, the athleisure market exploded during the pandemic, and Vuori earned a $400 million investment from Softbank at a $4 billion valuation.

Not bad after just six years for Kudla, whose intention has been to make “versatile performance clothing you can wear anywhere.”

 

‘Extremely scared’

Several years ago, women’s athleisure brands like Lululemon and Athleta thrived, but men had limited options. Kudla found that about 10 million men were practicing yoga in the U.S. Many wore Nike or Adidas shorts and sweats, not exactly a yogi’s dream for stretching. Kudla saw a clear opportunity in the marketplace.

For years, Kudla, a former model, had been fascinated by the process of making clothes, from the fabrics to how all the materials are stitched together to make something you can sell on shelves. His mother led meditation retreats, and he grew up in a healthy, outdoors-centric environment near Seattle.

Around 2014, Kudla raised about $500,000 from friends and family, tested a few products and tried selling them in yoga studios and fitness centers. But nobody seemed to see what he did. He was only a few weeks from running out of money. Investors balked at his pitch decks.

“We were starting to realize that we were going to run out of money,” Kudla said. “Lots of passes on pitch decks. Constant rejection. Nobody was interested in investing. I was really frightened and extremely scared.

“You can easily spend your last $20,000 in advertising and get no sales, and then you haven’t shown your investors any kind of repeatable process, no defined path to growth. If we didn’t get that advertising message right, we were out of business.”

Photo by Alexandra Tran on Unsplash

Digital ad spend saves the day

As a Hail Mary, Kudla threw some of his remaining money into social media advertising to reach an audience. He spent just about all his savings.

Something clicked through Facebook and Instagram ads. Some of the ads were simple, like a man in a yoga pose with the text: “Versatility is a virtue.” Forget selling at studios — Kudla realized his best bet would be the direct-to-consumer model that helped Lululemon become a $50 billion brand.

Soon, Vuori was getting $2 in sales for every dollar spent on ads. Then, the ratio improved to $4 in sales for every $1 in ad spend. By 2017, Vuori was profitable, online sales picked up, and they expanded to a few retail stores of their own, plus the popular outdoor fitness store, REI.

 

Premium activewear for men

Vuori prides itself on sustainable materials, with virtually no plastic in its supply chain or shipping. It’s high-quality, relatively expensive activewear in a similar price range to Lululemon.

Hoodies and pants can run over $100, but Kudla emphasizes its durability and long-lasting nature for athletes, fitness enthusiasts, or individuals looking for work-from-home clothing.

“Premium activewear for men did not exist in the market,” Kudla said this year. “It’s effortless, easy to wear, not tight or loose…when we started, the product kinda sucked, but we kept improving the samples.”

Just as Jeff Bezos founded Amazon on his now famous regret-minimization framework, Kudla launched Vuori after two failed businesses because he knew he’d regret not trying. He thought about being on his deathbed and not having taken the chance on Vuori.

“I saw that opportunity so clearly and chose not to pursue it? I couldn’t live with that,” he said.

 

What’s next?

Vuori has expected to open about 100 locations between 2021 and 2025 while expanding to Asia and Western Europe. The pandemic and work-from-home trend boosted sales in athleisure brands like Vuori.

Kudla has acknowledged that going public is a possibility. But for now, there’s no timeline. He’s focused on growth and making better clothing for active men and women.

“Life is a lot like climbing a mountain,” Kudla told the San Diego Business Journal. “It’s hard work, but when you get to the top, it’s just amazing. And that’s at the core of our message as a business. We want our clothing to inspire.”

 

Dive deeper

Check out Kudla’s fascinating interview with Guy Raz on the How I Built This Podcast.