How Rothy's Became A $1 Billion Brand Without Compromising Sustainable Practices

0:00Have you ever met someone who finds their zen through an Excel sheet? Our next guest says that when she needs to relax, she reaches for a profit and loss statement. Welcome to C-Suite Unscripted. I'm Maggie McGrath, your host. And for today's episode, we are going behind the numbers of shoemaker Rothies with CEO Dayna Quanbeck. Dana joined the company in 2019 as CFO and today is CEO. She led the investment deal in 2021 that valued the brand at$1 billion. And she's also helped build revenue to nearly$230 million annually. Dana and I talked about her past experience on Wall Street and how guiding Charlotte Roos through Chapter 11 bankruptcy shaped her perspective as an executive.

0:46We also talked about why being an outsider to the shoe industry is actually a competitive advantage, and why she believes every team needs a balance of rocks and balloons. Let's dive in.

1:04Dana, thank you so much for being here. Thank you for having me. You are here at an exciting moment in your professional career. You earlier this year were named CEO of Rothy's, And as I was saying before we started recording, I couldn't find many interviews you've done since you've been CEO. So I have to ask, how's it been going? Exactly as I expected. You know, I've been at Rothy's for seven years. It's been a wild ride, one that is so fulfilling and fun. And, you know, I've had my head down for six months, hence the lack of interviews. Well, I appreciate you sitting down with us. I know Rothy's because I do have a pair of the flats, the pointy toe flats.

1:42But for folks who think they know, maybe have passed a store, but haven't really walked inside, can you give the 60-second elevator pitch for what Rothy's is today in 2026? Absolutely. So Rothy's is an innovative product company. We make footwear, beautiful footwear that is meant to be worn sort of throughout your day. So think about starting your day, going to a breakfast meeting, maybe attending a board meeting, having drinks with girlfriends, and a shoe that can take you seamlessly throughout your day where you feel amazing. It was really founded on the premise of wanting that front of closet product.

2:22And sustainability came when our founders saw how really destructive the footwear industry is. And so we think differently in how we manufacture and how we bring products to market. And you use recycled water bottles. to make these shoes that are washable. I've put mine in the wash. How? How? Without getting into probably six hours scientific explanation. I could have brought show and tell here, but basically recycled polyester, R-P-E-T, is something that the industry uses. It's basically recycled plastic. So you take a plastic bottle, you chip it into little pieces. It then gets pelletized and those pellets get strung into this beautiful thread.

3:02So if you think about plastic, it doesn't feel or sound pliable, but the end product of the thread that we use is absolutely soft. And we knit to shape, which is really unique in that we don't manufacture with cutting room waste. So we are using a circular knitting technique to really make shoes use as much material as we need to make the shoe instead of more. The analogy I've heard you use as a baker, this spoke to me, if you've ever rolled out cookie dough and you've put the stamp inside, right? If you're making biscuits, then you have a bunch of leftover scraps. That's right. That's the typical way of making a shoe, but you guys instead maybe roll the balls of dough and there's no extra.

3:42That's right. And, you know, it really started with our founders having no experience in the footwear space. And when they had this idea of making this beautiful front of closet shoe, basically that their wives could wear, they flew to Asia to learn how shoes are made. And I think that they were just appalled. And they were coming at it from a place of having no experience. So they didn't know better, but they were then more convicted that they wanted to make shoes, but not like that. So they came back and really spent four years perfecting how to take the craft and kind of change it so that it could be more sustainable.

4:18I was listening to a podcast to prep for this and the person speaking was a journalist researcher and his estimation of Rothy's is that half of the value of the company is actually in the manufacturing process. And you own your own manufacturing facility. And that's something that was kind of embedded into the early days of the company. Can you talk about that and how important that's been both for financial growth, but also commitment to sustainability practices? Absolutely. I talk about it a lot as a part of our moat. As the founders came back and started to get to work on how Rothy's was going to come to life, it took them four years from ideation to actually having a product that was saleable.

5:00And over the course of those four years, they really thought intimately about how to make shoes better. There was nobody doing it. There's nobody manufacturing in the way that we do. And so we had to build it ourselves. That has allowed us to innovate. It has allowed us to do a lot of things differently than the industry. And we own over 200 patents as a result. So innovation and our manufacturing technology is the heart of our sustainable story. Recycled materials is another aspect of it, but it's really the way that we think about creating product that makes us unique. Do you still have that one manufacturing facility in China or are there more?

5:38We are vertical, so we still have the manufacturing facility in China. But last year, which I think was time, we did start to expand to use some partners. And from a risk perspective, especially as the CFO, the former CFO, having one node of manufacturing, it's quite risky. And we needed to diversify for all of the obvious reasons. So I imagine tariffs were a significant part of that. It was a part of it. But it's interesting. We are partnering with manufacturing partners that have expertise that we don't have. So if you think about our expertise in flats, And as we expand into sneakers or as we think about kids in a different way, in a bigger way, finding partners that have deep experience in that has been really beneficial to us.

6:23So we're starting to innovate, co-innovate, if you will. And it's been really fun to see that evolution. You talk about product evolution, but I want to talk business model evolution first because I knew it as the traditional almost Silicon Valley D to C business back in 2016, 17, 18, 19. It was my, honestly, San Francisco friends who were wearing Rothy's first. I saw them in the Bay Area before I ever saw them in New York. Or maybe it just took awareness there and then I started seeing them here. But you've expanded into wholesale. You, earlier this year, you previously had partnered with Nordstrom, but you expanded the Nordstrom partnership.

7:01So can you talk about, especially as the former CFO and now CEO, how strategically you've approached expanding beyond just D2C? It's something that I thought about every day since my very first day at Rothy's. And I come from a traditional brick and mortar background, right? My last role was at a very large retailer that went through bankruptcy. So imagine as I came on board to this digitally native darling, I'm like, oh, I need a minute from stores. But it was really obvious to me how your consumer community can come to life very differently online than in stores. And so building a brand and scaling it without IRL is really hard.

7:44We saw the benefit of that early on. We had one store when I joined. I think we have a very robust e-commerce business at that point. We were very happy growing very quickly. But we started to dip our toe in and build and expand in retail. And our stores are phenomenal. But they're community. They're a place where a community can come together and you can experience the product. We can storytell in a different way. And wholesale, I would say, is adjacent to our own stores. And it's working really well for us meeting our customer where she is. You have 40 brick and mortar stores right now? At the end of the year.

8:20How do you think about that number? Is that meant to be static? Is that going to be a lever that you pull? And I ask in part because I've been talking to a lot of executives about this. In the age of AI, that IRL experience is feeling more important to consumers, but also e-commerce is the heart of your business. So how do you think about balancing the two? It's a great question. I think, and we've said this openly, I think we'll have somewhere between 70 to 80 stores in the United States. And as I think about this business, it's a global one. Obviously, our customer, the product market fit is a global one.

8:55But, you know, we want to meet her where she is. If she's online, that's great. I think we, footwear is a craft. And leaning on that craft in our stores and where we can, you can touch and you can feel the textures and the prints and the patterns, that is really important. So I think it's about that balance, honestly, and not having one channel, you know, be the star of the show. It's a balanced portfolio that we're after. And how do you think about product expansion? Because I think Rothy's, and again, maybe it's because I own a pair and I think very specifically of the pair that I own, but that ballet flat or that pointy toe flat that was that flagship product back in the late 2010s, you now have Mary Jane's, you have men's shoes, you have kids shoes, you have tote bags.

9:38We have bags. We've had viral success with our clogs. I think the premise of all of our product, right, where it is, it looks great, it feels great. The washability is amazing. Think about a clog or a slipper that you can walk your dog in and then you're like, ah, I'm going to wash those because I was outside or I was in the rain. That's different and unique. And those product tenants live throughout our portfolio. As we've innovated and we'll continue to think about other areas of the closet that we can get into, we're going to stay core to that. Sustainability, manufacturing with integrity, and making beautiful product that's meant to live at the front of the closet, high frequency of use.

10:22You hit$227 million in revenue last year. What are you targeting for this year? I can say this. We are on a path to build this brand for the ages, and scale is something that really is my challenge in this era as CEO, bringing Rothies to the world in a big way. And while we're looking for moderate growth this year, we're really using this year to set the stage for everything that's to come after. We have a huge opportunity in men's, kids' bags, so you're going to see more from us. There's product expansion and geographic expansion that can be tailwinds. We're also operating in an environment where pricing pressure on consumers is a huge issue.

11:07The idea of sustainability, depending on where you go, I don't want to make this sound universal, but it's not necessarily as popular in certain segments of the country as it was before. Are you experiencing either of those elements as headwinds? Pricing is always something when you're a consumer-facing company, you're always going to have pricing pressure. You know, for us, we've thought very strategically about our portfolio. So how do we have an opening price point around$100 might be considered for some consumers, might be a complete trade down for others. But how do we really think about sustainable footwear in a democratized fashion where everybody deserves to have a beautiful, comfortable, sustainable shoe?

11:51And that's something that's really important to me as we think about expanding. So I would say that we're, you know, aware of it. But sustainability is just, it's etched into our DNA. So we don't think about that as a pricing premium or is it important? It's important to me. I come to work every day thinking this is meaningful to me. Whether the consumer cares about sustainability or not, we care and we're going to do the right thing. But it's, I think, an added benefit of the brand and it's not the reason that people buy. by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new.

12:29It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18 plus. I know a few people who I think bought exactly because of the environmentalism, but they're also scientists, so it's very consistent with their career. That's right. But speaking of what's important to you, I'd love to get into a little bit more of your tactical role and how you think about being a leader at Rothy's.

13:04So you became CEO in January of this year, but you joined in 2019. So you were CFO beforehand. Was it always the plan to become CEO? No, but such as went my career. You know, when I joined Rothy's, I was coming out of a CFO role at Charlotte Roos, where I saw sort of the rise and demise of mall-based fast fashion. And it was at a time in my career where I was starting to think about what was next. And I met the founders and they, I just, they are dear friends of mine now. And they convinced me to come on board and have a little fun. And that's exactly how it started. And that's exactly how it's going.

13:46So I've evolved. I think great CFOs see all aspects of the business. I mean, really what you're doing is translating the business into numbers. And curious ones keep going. And that's been my path. Curious ones keep going. I've heard you say that you went from playing the orchestra to leading the orchestra. What was the hardest part in going from a player to the leader? selecting the music, making sure you've got the wind instruments and the bass instruments and percussion all playing that same music. And, you know, I think as a leader, my job is to inspire the musicians to play in the orchestra, but also make sure that we are building the most beautiful piece you've ever heard.

14:35So, you know, I became very much sort of having to zoom back out instead of, you know, let me get into my comfort zone, which is a P &L. Every once in a while when I need a break from the big picture, I will get into some Excel. I just, I want you to repeat that. Every minute when you need a break, you will, you will dig into the Excel and open up the P &L and have some fun. And that's like Zen time. It is my Zen time. I know that sounds really silly, but that's spoken like someone who cut her teeth on, on doing financial models, building models. Exactly. But, you know, I think as a CFO, you have discipline and rigor.

15:12I want my CFO to be the discipline and rigor, you know, seat at the table. And as a CEO, you've got to balance that with a risk appetite that I think is coming more naturally to me than I expected. But it is definitely a balance. I can see both sides. It's a lot of fun, actually. CFOs can sometimes get reputations for being bean counters and not people who can see the broader table, if you will. the broader picture. Have you had to overcome that stereotype in others or maybe an internalized stereotype within yourself? I don't think so because it came from Wall Street. I think if you come up through the ranks or you come from accounting, that's probably your, you know, your traditional background.

15:55But because I came through strategic finance and I knew how value was created and I'm constantly thinking about, okay, here's this year, what's the next three years look like? What's the, you know, how do we create value in this brand? It was always in the numbers for me and in the technical aspects, but it was actually so much more as well. And I think that's why it was natural for me to take on strategic parts of the business instead of traditional CFO curriculum, like logistics, technology, you know, people, legal. I ended up skewing much more to the strategy side, which has been fun for me.

16:33So in 2021, Rothy's had a 49.9 % acquisition that valued the company at$1 billion. How involved in that transaction were you? The founders and I, it was during the pandemic. So the founders and I were the only ones in the office. It was a process that I was ready for. I was a dual banker, and it's something that I've loved as an operator. So every so often I have to do a deal to keep myself interested. But it was something that we were so proud of. And our partners, Alpergadis, are incredible partners. They sit on our board. And I think they brought a global lens to Rothy's that has been really beneficial.

17:15Why 49.9? Why not 49? Why not? Deals are funny. And there is so much growth left in this business. I think they see that as investors. our original venture backer Lightspeed sees that, our founders see that. And so, you know, I think when we brought in the capital, they put 200 million on the balance sheet. And then there was a secondary component. It was really about growth capital. So I don't think there was any specific art in it, in that it was a major minority and not meant to be a majority. I figured, but I just had to ask, because it's not every day that you see 49.9%. It's the extra point nine.

17:56Yeah. If there are other CFOs, presidents, COOs watching this who are considering a similar transaction, do you have advice for them? Really understanding what makes your business different. Investors are, you know, there's a full gamut of investors, but I think where we were really leaning were those that could understand the global vision and aspiration of Rothy's. And, you know, I think when you look at these founding stories that have so much authenticity and these great brands and businesses that are in their early innings, but have a real moat around them, really making sure that investors understand that is important.

18:41And it's hard. Our business is really complicated. It's like, and you've got the factory and you've got sustainability and you've got channels and you've got product and, and, and, and. And so really getting that succinct pitch down takes time. You know, I think it was successful for us. And it's one of the things I'm proudest of in my career. In your career. As we talk about your leadership philosophies, I've heard you also say that every relationship has a rock and a balloon. I know I just said that out of context, but it surprised me so much that I wrote that down and nothing else. So can you explain what that means?

19:19Well, my husband tells me that all the time, because I'm often the balloon in our relationship. No, but when you think about a business, right, you need to have growth and visionaries and parts of your team that are constantly thinking about, you know, risk. And then you need sort of those steady hands at the helm that can be thinking about risk mitigation, right? You cannot skew too much toward one and the other, and it's a balance. As the CFO, as I became president, I started to become much more like a balloon than the rock that CFOs normally play. Our chief legal officer, I would say, plays both sides really well.

19:57And sometimes she's my rock and sometimes she's my balloon. But I think about it as a balanced, really as being balanced as a leader to make sure that you've got both sides. And I'm filling my team that way as well. I was going to say, do you talk to the team about being a rock and a balloon? I do. And, you know, it's really fun to see people step up in different ways. And I think it's important that, you know, we're having a growth mindset, but also making sure that we're thinking really thoroughly through our next steps and our strategies. Is there a moment where someone was too much of a hot air balloon and proposed a crazy idea and you had to be like, Rothy would never?

20:35One of our co-founders, I would say Roth has the craziest ideas. I so admire him because his ideas are ones that you could never come up with without this visionary founder, right? And he and Steven built this into the business, which I just so admire because I don't think like that. And so, yes, I absolutely adore the crazy ideas. And I'm not going to say they don't work because they do. I think that's probably where all of the craziness comes from. I was going to say, is there something in the market now that started as a crazy idea and then consumers just loved it? So last year, we've been working on materials for a long time.

21:16And we've been thinking about how to push manufacturing forward. And one of the things in footwear is, you know, the industry uses glue, right, to adhere the outsole onto the upper. And so we've been working in the background. How do you make a glueless shoe? What does that look like? How does it not fall apart? We even developed a machine to stitch an outsole onto the upper. And this year, this summer, we launched a cruiser, which has been wildly successful. It is sold out a couple times. It's right now in the atrium at Liberty, but it's three components. So if you were to deconstruct the shoe, you could recycle the components.

21:55There's no glue. It doesn't need to be chipped apart. So it's fully recyclable at the end of its life. And that sounds kind of crazy to make a shoe at scale with no glue. but we've been able to do it and they're so durable and washable and all the tenants. So those are the types of things that we do because we love that part of the innovation and we're trying to push the industry forward. Not necessarily because the customer asked for it, but that's our platform. You mentioned the founders were outsiders to the shoe industry. So are you in effect. Do you think that's a competitive advantage? I do, actually.

22:30I'm not mired in a business model or a playbook that I've run before. So you think you approach challenges and opportunities, I think, from a place of authenticity of just what is the best strategy here, not what worked last time I did it, which I think opens up for a lot more growth, if I'm being totally honest. So speaking of your outsider experience, I'd love to get into your resume a little bit. And if your LinkedIn is accurate, your first job was as a staff accountant at Arthur Anderson and Company. I was terrible at it. You were terrible at it. I was a terrible accountant. It didn't last long, thankfully.

23:08Eight months. Eight months, yes. I joined Arthur Anderson right as the Enron scandal was happening, and it actually forced me out of audit into forensic accounting. That's where I honed my finance skills in forensic accounting. That actually sounds kind of fun. It's so fun. It's like taking incomplete information and making it whole through puzzles and games, and then you do reverse valuation and there's a psychology of it. It really taught me how to build financial reports without full information. And what's amazing about that is that as an operator, you don't always have full information. So you're constantly making decisions with imperfect data.

23:53And that was forensic accounting for me. So that's the hard skill you learned. You really love numbers. You look so excited. I'm sorry. What is a soft skill you learned either as a staff accountant or in your next job as a forensic accountant? You know, I think it was more storytelling. How do you take really complex pieces of information and make them digestible? That is an absolute skill. And how often do you use that today? Every single day. That's what I suspected. So from forensic accounting, you moved to Bank of America Merrill Lynch, where you were ultimately vice president of consumer and retail investment banking.

24:31What prompted that job? So I realized as I was doing forensic accounting that I was basically doing valuation work, which is what investment bankers do, backwards. And everything I was looking at was backwards. And I really wanted to be more strategic and forward-looking. So I went back to business school and went to Wall Street. And I loved investment banking. I learned really hardcore strategic finance skills, but I also learned how to present in a boardroom, how to take an opinion and get people bought in on it. It was fun. It was a wild time to be on Wall Street. I lived through the 2008 financial crisis.

25:10You were there September 2007 to March 2014. I got it wrong a couple of times. What do you mean? The timing. I graduated in 2001 and then I graduated business school into the financial crisis, basically. But that's a good learning. Yeah. What was the number one thing you think you took away from being an investment banker at the height of the financial crisis? Perseverance. It was a really hard time. A lot of my peers, you know, there were banks consolidating. I was at Merrill Lynch. It was consolidated with Bank of America. There was a lot of change. But at the heart of it was the service of clients.

25:45And we emerged quite quickly. So, you know, there was like a lull for a couple months where New York felt really like a sad place to be. But very quickly into 2009, the markets picked back up and we saw a lot of deal flow. So the energy didn't really skip a beat. Have you taken learnings from that moment and applied it to other moments of market volatility? I'm thinking COVID is probably, I'm picturing the stock chart from March 2020? Two really important points in my career, Charlotte Roos restructuring and chapter 11. And second, the pandemic. And Rothies was not built on rounds and rounds of equity capital.

26:27So we approached the pandemic only ever raising$5 million of equity capital. And as you can imagine, people were not buying shoes. They were buying toilet paper and slippers and leggings. and, you know, we hunkered down and we didn't only survive, we thrived. But that was because we were thinking differently. And, you know, I'd weathered a couple storms before. So I'm like, throw it at me. So, you know, we made it through. I will say, I think I bought my first pair of Rothy's in 2022. So as we were emerging from the pandemic and it was like, OK, let me get a better shoe than the socks that I've been wearing.

27:03But we did skip ahead a little bit. But you, from Bank of America, Merrill Lynch, went to Charlotte Roos. You were CFO, VP of Finance, and also interim CEO. So had the goal been to be in the C-suite? Yeah, I loved investment banking. I loved the advisory work. I loved the fast-paced nature. I loved the high-stakes environment. I loved negotiating. All of that was amazing. But I realized I wasn't learning how to run a company. I was just there for a small amount of time. And then my clients would move on and I would be writing the IPO prospectus like, yes, drinking the Kool-Aid. I love this strategy.

27:42And like, oh, but I'm not a part of it. You know, like you're going to go on and you're going to do all those amazing things. And I realized that I really wanted that experience. And at the time we were leading the Charlotte Russe IPO, which never happened. So I joined Jenny Ming and the rest is history. So I ultimately became her CFO and learned really how to run a business, a very complex business. I've never looked back, obviously. And then while you were there, you had to lead it through Chapter 11, bankruptcy. We could probably do a whole podcast episode on that. But for folks who've never had to navigate through that, what was your biggest learning?

28:18A bankruptcy is soul crushing. I think, and I had to step in. My board resigned. my chief legal officer and I, you know, at the helm, we filed the day after my 40th birthday party. So I felt ill-equipped for this big, massive job. I don't know anybody that is prepared for that. And I felt the weight of the world on my shoulders because we had all of these employees and I was trying to save their jobs and trying to save the company and all of these things. And I think, you know, I felt to blame because we had to enter into chapter when it really was, you know, we survived way longer than most mall-based fast fashion brands did.

29:07And that was something to be proud of. I think it was inevitable, but you know, you're always sitting there thinking, what could I have done? Could I've done anything differently? That was hard. It was when it became really human for me. Business became really human because normally you're thinking of the numbers And there's probably a way to think of it all very clinically. And then you switch to the part of your brain where you think of the human cost of what you're doing. That's right. And sharing with the team, you know, the ultimate outcome that nobody wanted. That was hard news to deliver.

29:36But I'm grateful for the experience because it's made me a more compassionate leader. It's made me possibly a little bit more fearless because, I mean, I know what the worst case scenario is. And, you know, I think it's like you don't sweat the small stuff if it's really small stuff. You mentioned Jenny Ming. She was CEO of Charlotte Roos when you came on. She was also CEO of Rothy's. So is she the reason that you got the Rothy's job? The reverse, actually. I got my timelines wrong. This is wild. This is interesting. Jenny has been my mentor. She is my friend. And I just adore her. And she is just really, you know, she's just a stalwart in our industry.

30:24She joined the Rothy's board right after the transaction. And if you think about the chapters of the Rothy's story, sort of up until the transaction was our proof of concept, right? The founders, I was part of this phase. We were just proving, is this a viable sort of idea and business? As we approached post-transaction and Jenny came on, she eventually stepped into the CEO role. It was really about proof of scale. Can we expand our product portfolio? Can we expand our channels? And so her and I really partnered during this period of time. And our transition was one that was planned. We worked together over her tenure, really building into sort of this chapter that I'm leading about creating long-term value and a brand that, you know, is for the ages.

31:16So I'm delighted that we've gotten to work together twice. She remains a really important member of our board and kind of first text, first call. And I'm, Jenny, I'm going to pick your brain about something. In fact, we're going to walk the market on Sunday together. So amazing. Yeah. You are the co-founder of something called Ready, Set, Safe. And it comes from an immensely, immensely hard moment in your life. Would you mind talking about that just for a little bit? Yeah. Ready, Set, Safe is an organization that my husband and I founded after we lost our third son to a completely preventable accident.

31:52He died at recess. And really, we've started this nonprofit to advocate for and raise awareness around school safety. We've started with Gates, and we have a bill in the Senate. We have an extraordinary team in Washington, D.C. and beyond that is behind us. And, you know, I think so much of being a leader and an executive, it's all about your work life. And when your work life and your personal life intersect through tragedy like this, it brings more meaning into not only the work that you do, but the people that you're surrounded with every day. So it's a part of my story. I'm very proud of the change work that we're doing.

32:35It is small incremental steps to make big change. but thank you for asking. Small incremental steps, but there was big progress earlier this month, correct? Yes, we have successfully written into code changes to make gates safer. So starting in 2027, the International Code Council has adopted basically a safety mechanism that will be built on all new gates, preventing them from falling, which is basically what happened that led to our family's tragedy. And at the end of the day, if we, my husband and I talk about this often, if we just save one family from receiving the phone call we did, it will give some meaning to our grief.

33:19So it's our life's work, and we'll be doing it forever. Thank you for sharing. Thank you. If you were to sit down with Forbes in a year from now, We've talked a lot about general growth, but specifically one year from now, what would you hope to report to us that Rothy's has accomplished in the ensuing year? I would hope you're seeing our brand being built in an extraordinary way. I would hope that we are becoming one of those category killer brands that are really known for amazing product that have a viral customer base. This all exists, but I just want it to exist in a much bigger way. I would hope that we have some exciting news to announce on our expansion plans.

34:00so we'll have to have you back for that but in the meantime Dana thank you so much for coming in thank you so much