Phia’s Cookie Crumbles

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1:57Hello and welcome to Fashion People. I'm Lauren Sherman, writer of Pucks, Fashion and Beauty, Memo, Line Sheet. And today with me on the show is Line Sheet correspondent Malik Morris. We're talking Olivier Terriban, the Spanx sell-off, the Fia scandal, and so much more. Happy Tuesday, everyone. I am back in LA. I am still technically on vacation, So I'm going to be super fast here. Check out Line Sheet. Malik and Sarah and Rachel have been doing an incredible job. And we also have a special guest post from Style Analytics, Molly, who kind of breaks down the impact of K-pop people on social media and brands.

2:40There's like you go to a fashion show. There are a lot of K-pop people there. They're important. And Molly explains why. It's super interesting. Also, just wanted to have one addendum to the Victoria Beckham beauty conversation that Leek and I just had. The other brand, because I mentioned Gucci Westman and VB is the beauty brands I really love. But the other brand I've become obsessed with is Farah Homidi. I just started wearing the concealer. I also have all the lipsticks. I feel that the lip gloss has become like a status symbol among fashion people. It's very interesting. And I am going to ask Rachel to look more into that business and what's happening with it.

3:27But yeah, it's a really interesting brand. If you are fascinated by the conversation we have about Victoria Beckham Beauty, which just surpassed$100 million a year in revenue, you might want to check out Farrah as well. I believe that Rory Satrin was the first person to write about it in the Wall Street Journal. I remember when she did it and I think I bought a lip palette from her story. But you should check it out. It's interesting. Anyway, I'm going to finish up my holiday and I will be back in full form on Wednesday. And so I will see you all later this week. Malik Morris, welcome back to Fashion People.

4:06So good to be back. So good to chat with you again. So how was last week? I took a vacation, which is not, you know, here's the thing about Americans. We shouldn't be proud that we never take vacation. So I don't take a lot of vacations, especially because I don't believe in this unlimited holiday policy thing that every company has now because it just means no one takes vacations. But I have been hard at work online sheeted for the last three years and have rarely actually taken a vacation. And last week, mostly in thanks to you, because you are now with us, I did not open my laptop for four days.

4:47I'm back in LA now and I'm doing some admin stuff for the next two days, like around the house. But I really went on a proper vacation last week. What happened when I was gone? So much happened when you were gone. Well, first of all, it was a much deserved vacation. You worked so hard. So I'm glad that you got that. Oh, thanks, Faleek. You don't have to say that. That was true. I'm excited for you to take a vacation next. Yes, yes, we'll see. But yeah, no, so much has been happening. Some more executive reshuffles. This whole FIA scandal that I'm pretty sure we'll get into, that's been really fun to report on and to follow.

5:25And there's been a lot of Spanx drama that I was reporting about. Like, there's just been so much. It's never a dull moment. It's so funny that it feels like, I guess, the summer, late summer is supposed to be a slowdown, but never, never a slowdown for us. No, it's the news never stops. That's that is for sure. OK, so let's get into let's start with this FIA thing, because FIA, can you explain what it's P-H-I-A? Yes, P-H-I-A. It's funny because essentially it's a portmanteau between Phoebe Gates, Bill Gates' daughter, and her co-founder, Sophia. and it's essentially is like this affiliate link based shopping app and what it's supposed to do is to help you find better prices on whatever items you want so it's like a price comparison play so if you're looking for you know i'm sorry i just have been through so many of these things same same is it like a little widget that you put on your yeah so it's an app that you can download and you can shop through there or you're a widget or like a browser extension And that was actually essentially the drama.

6:29It was taking credit for sales that it wasn't driving. So with all these affiliates, there's these links that you click on and you get to the site. And what Fia was doing for the people who had downloaded the browser, added the extensions of their browser, was basically replacing the credit that was originally there with their credit, essentially stealing commissions. From who, like Shopmy or whatever? All of them. All of them. And yeah. So the price comparison app thing, I, I have been introduced to Phoebe through friends and we were going to meet up. And to be honest, like she seems cool. I sat with her at the, at a Tory Birch foundation breakfast.

7:12I thought I just assumed it. Is it AI? Like what makes their price comparison app different? Cause here's the thing, as you know, and I've been reporting on this industry longer than you, but you've been doing it for a decade or whatever. Like these price comparison widget thingies have existed since the beginning of time. And they are all there used to be one called, oh, they're my friend Margie Cater did the PR for it. And it was like shop something like it was based in Canada. Margie will definitely listen to this and be like, this is what it was. But there have been so many of these with like every new type of technology.

7:51There's a new one of these widgets but like do any of them actually ever take off no they usually don't take off and it's funny because in the story that i wrote i was talking about this idea of like the affiliate link ecosystem just in general it feels like unless it's shop my or ltk or the creator economy where you know who's actually driving a sale it doesn't really ever work it doesn't really ever scale and it ends up just being complete nonsense and it just feels like fia got swept up in that And also, again, it's funny. She's been on this whole, I'm an apple baby, but I want this to be devoid, decoupled from my father.

8:28But it's like her name is really why we're talking about it and why people care. Because there's probably a gazillion of these types that are like fear that are out there. But this was just Buzzy because of the name behind it. Yeah, she seems pretty self-aware. There's an ad. there was like a paid ad where because because she has all these celebrity investors obviously including hailey beaver yeah and there was like a paid ad where it was like bill gates's daughter it was some can you explain it was like some instagram yeah it says hailey were just invested in bill gates's daughter's app and it's low-key genius in the cf but it's coming from the it was coming from the official FIA Instagram page.

9:11So I don't know if this is like a mock TikTok thing or if this was a real thing that they screenshotted. It looks like it's sort of a mock thing. It's like a mock thing. It wasn't like a regrammed or where you can, you know, add someone else's story to your story. No, it was that thing. But so many companies, I mean, even brands are doing this where they're trying to make it seem like it's organic when it's not sort of thing, you know? It's all getting so played out, to be honest. Yeah, and the reason this all came out is there was a Bloomberg investigation. Yeah, there was a Bloomberg investigation.

9:46The exact point you're making, literally no one would care about this. I would never, ever, if you came to me and was like, let's write about this app, I'd be like, no. It reminds me of the fit sizing body scan things. Yeah. There have been so many of those. none of this stuff ever takes off no it just never does funnily enough they've those have been pivoting but with ai to instead of being body scan is to just being like avatars and like just like you know it's placing your no yeah you can place the item on you and see how it looks even though it's not really how it's no one but it will never do it like i don't understand they think they're gonna make money the one that happened a couple of years ago that i thought was interesting was um that croissant which is like yes it basically a widget to see how much your stuff you could resell it for and they had like a reselling yeah they would like help you resell stuff if you bought something they would guarantee that they would pay a certain amount for it yeah um it's an interesting concept i think and one of the guys andrew p who who's not the co-founder i think he might be the cmo or i don't even know if he still works there but um he was one of the co-founders of Outdoor Voices.

11:01So that one was interesting, but I think it was too complicated. I think what you mentioned about the affiliate, like why ShopMy and LTK have worked, it's very straightforward what they are. It's like you're an influencer, you're hot, you're fly, people want to buy what you're wearing. Boom, there's a link. They buy it. You know who to get the credit to. It's very easy. It's funny when you're talking about Croissant, I've been doing some reporting and digging around and even just not even with digging around like I wrote about them when I was still at BOF and they did a fundraise they're actually trying to move away from the affiliate or at least tack on other revenue sources from there um so even they are not like being you know banking on the affiliate game because it's just it's so fickle you know it's yeah it's it's and it's it is a you have to like know what your addressable market is what size you can actually get to I think the reason Chopmai has been so successful in going up against LTK, which used to be called like to know it, which was originally what was Amber Vox?

12:03Amber Vance box. Yeah. What was her first thing called reward style? Yeah. I think the reason Chop Maya has done so well is they, the thing with, I remember when I was a freelancer and I had a little newsletter in 2015, I tried to sign up for reward style to put shopping links. And it was like, I had a free, I had a MailChimp, not MailChimp. It was like tiny letter. It's called tiny letter where I would just basically link out to all my freelance stories. This is like 2013, 2014. And sometimes I would do like, these are things I'm shopping for. And I tried to sign up for award style and they did not accept me.

12:43Yeah. Which fine. But, um, but the thing it was shot my as much more, I don't think they, they're kind of like, if you consider yourself an influencer, you can do shop my links. And I think they've been a little more open. They're just much more transparent in the way that they communicate with the brands. And also that's what I've heard from the brands. And then also with the people using the, the tool itself. I think that's why they've been so successful. And there's obviously like Amazon affiliate links. It can totally work. I just think, you know, here's the thing with, with nebos and all of that.

13:18I think when you come from privilege, if you try to use your privilege to do something interesting, I'm not saying altruism, whatever, like, I mean, just like you work and you try to use the privilege that you have to do something cool or interesting, or you just work really hard. I think a really good example of this is Gabriella Hearst, who isn't necessarily a Nepo baby, but she married, She was wealthy and also married into a really wealthy family. I think not only, yes, she gives away a bunch of money and all that stuff. And she really cares about the environment. And all that stuff is super sincere.

13:53But also, she just works her butt off and is trying to make a good brand. And I think I have a huge amount of respect for that. Because she doesn't have to do anything. And so that's the thing with people like this. I get it. Phoebe's ambitious. Her mother's ambitious. Her father, obviously, is ambitious. She wants to like make her mark on the world and has this access. It just is more complicated when you are public because you're going to more publicly fail. So I hope she just kind of brushes it off and tries to do something like really think about like what is that? What is needed in the market?

14:31Yeah, because if you talk to like a Kirsten Green or whatever, these investors, they are only really investing in service. Products. I don't know if Kirsten's an investor in FIA. I don't think so. But the thing that I always talk about is the inventory issue in fashion. There's just always excess inventory, and you need some excess inventory because you need to mark some stuff down, and that's part of the business. But if they could better figure out on-demand production and things like that, that's what I would invest in because it could just really streamline processes. Anyway, check out Malik's story.

15:10It ran in last Thursday's special Inner Circle issue, and I'm sure you're going to keep up on this because people are interested.

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17:02You also broke a big story last week, which was cool, about Spanx being sold. Can you explain what's going on with Spanx? And I had gotten a tip that someone was like, Spanx is a real mess. You should look into it. And I said, Malik, please, please help me out here. And you did. And you kind of really got immersed in the world of Spanx. So what happened last week? So last week I found out that Spanx, which was sold to Blackstone, the private equity giant in 2021 for$1.2 billion, that Blackstone essentially just offloaded them to HPS Investment Partners, which is a subsidiary of BlackRock. But HPS was also like a creditor to Spanx, kind of like lent them money.

17:47So it's like they basically just sold them to their creditor because they're doing so poorly. their their profits are down like there's like nearly half from when blackstone originally invested in them and obviously revenue was down and all of that it's really an interesting story because when you suddenly look into spanks it really it came off the heels of me having done stories about skims which obviously took ate all of spanks's lunch um and spanks just hasn't been able to keep up and the really the the crazy thing is since blackstone acquired spanks in 2021 they've cycled through five different CEOs.

18:23They had one, then they promoted this woman named Cricket Whitten. Then she quietly left, and quietly meaning the company didn't announce it. She left last fall, I think last October. Then they had this guy come in, and he was like an interim CEO sort of thing. He left for a tire company. Now they have this man named Robert Trubber, who was the CEO of Johnny Was. and he's still there, but it's just, it's been so much executive turnover, which is never a good thing. And some of the strategies have been really strange and wonky. Like it seems like, you know, at one point they were trying to do like a licensing play and now it seems like they're really trying to push them into like off price, like TJ Maxx and Ross and all that stuff.

19:06And it just doesn't seem like that's ever gonna help with brand equity or ever gonna help you be competitive. Obviously that's, it helps with volume, But it has been a true mess. And it doesn't seem like there's really a workable strategy to get them. Because, again, I'm curious to get your thoughts on this, Lauren. Because it doesn't seem like it's not impossible, but it doesn't seem like it's dead. These companies can turn around. They can find their way back. I'm curious what you think. To me, it seems like they can get a good leader and they can figure out their differentiation and why they should matter on the market.

19:43But I'm curious if you feel otherwise. I think what's your definition of success? We have a very narrow definition of success in the world, which is that you have a cool brand that also makes money, a brand that is cool and that also makes money. So will it ever be that? No. and I think there are many reasons one is the name like Skims is such a great good thank god that Kimono almost got them cancelled remember it was going to be called Kimono Skims is such a good name it's an elegant name for this era but I think Spanx look like can they just be like a Marshalls TJ Maxx off price shapewear yes I think that like since it launched I believe in the 90s or early 2000s.

20:36I don't know which. Early 2000s. Early 2000s. Yeah. Like the world has changed so much. People get tummy tucks now. You know, like not, but seriously, like there's also what is, what like what you need for compression or whatever, like culturally is different than when they started. It's funny. Every once in a while, Rachel Strugratz is obsessed with Spanx. leggings. People are still wearing it. I had lunch with one of my best friends and she was like, yeah, I got my Spanx on. And I was actually watching Running Point, the really good show with Kate Hudson. Oh yeah, I like that too. And I love Oh my God, what is her name?

21:21Macaulay Culkin's wife. Anyway, she's in the show too. Brenda Song. Love her. Gorgeous. I mean, amazing. And she was like, she's the staff and she was like, girl, don't worry, I got your Spanx in your bag like it still is culturally relevant you know yeah i think it's an interesting it's also like what do you experience and like yeah the kind of like world i grew up in it was like not cool to wear spanks so like you i mean i just i don't know it's just not i'd never have i'm not interested i rather i rather just wear a bigger size but anyway i think that like yes i think it can be a nice business.

21:59Do I think it's going to like be, it's interesting. It's like almost like Kleenex. Yeah. Like I have my Spanx on and that is very impressive. It is. But I think like what ends up happening with these businesses, they're so poorly managed for a variety of reasons, usually because they've raised too much money or, or they are not owned by the right people. And to, to kind of clean it up, like who they should get is Cammie to less to do it. that's so good yeah they should hire her she is really good she's really good brand yes she great taste she has great taste and she but the thing is like it doesn't it you're people just need this stuff so like could they do a rebrand and it would look i mean i'm shocked that they i'm sure they've tried to do a rebrand and we just haven't seen it but like yeah i don't know i think whether or not it will work out is questionable, but it's interesting.

23:00Speaking of skims, a friend of mine posted, she had these like very cute bike shorts on and I'm on a shopping freeze. Okay. Which has been amazing. Like I haven't bought anything new for like a month, but the hilarious thing is the two kind of allow you're allowed to, then this is like clothing, accessories, whatever the the two things you're allowed to and and we have like we can go and ask for permission like a friend of mine had to buy really nice shoes for a meeting that type of thing but um our vin is vintage which like i basically only shop vintage now anyway so that's not helpful but um and then workout clothes and my friend had these cute bike shorts on i said can i just ask where they're from they just look so good i mean she's also has a great body so that helps she said they were skims nike and she said honestly they give you the same sort of lift that skims gives you and i was like oh i'm gonna go and try them on at least because i haven't bought anything from nike skim jet and so i think yeah i think that there is still there's definitely always room for more than one player in any competitive market i think the interesting thing is like rachel likes their workout leggings and she actually influenced me to buy a pair that's the kind of category fritzy baby i'm on a call wow it looks amazing that looks amazing he's so cute he's so cute fritzy get out of here boom boom um back to sphinx i yeah i think um i think it's possible it it's just it requires and it will it will require new technology and and what you know what do people want in the culture right now do i think sneaks sarah blakely's follow-up that the the sneaker heels that look like a nicola jescare balenciaga shoe from 2007 are gonna work no i mean best of luck to her i assume she made a ton of money in in all these deals so i hope yeah and she well that's the I think she exited the board and she was, you know, kind of since the deal, not really around much from what I've heard.

25:18But it's kind of like these companies that are built by a person with a singular vision, like what happens when they leave? Like it also has to grapple with that as well. But yeah, I mean, again, the cool factor maybe won't reclaim is cool, but you're right. It could just become a licensee play. It could just become, you know, an off price play, whatever. And the real task is to just increase profits and get, you know, growth back on track. even if it's not the first or last name in Shaper anymore. Totally, yeah. Speaking of brand, on the subject of brands, what else would we be talking about?

25:52But this brand has been managed incredibly well. We just received word this morning, on Monday morning, that the Reformation, I guess Reformation filed its 10K and that they are targeting a$1 billion IPO in the US. Congrats to Hallie, the CEO of Reformation. Congrats to Yael, the founder and former CEO. Congrats to Premira, the private equity firm. And I don't know if our friend Nick Brown and Jesse Daris and all those people who started are still in it. I don't know if when Premira bought a majority stake that they, like the previous investors all exited. I have no idea, but I guess we could look on the imaginary website to see.

26:38But whatever. Reformation, this is a success story. It is. Oh, for sure. It's absolutely a success story. It's funny you saw when Premier, I was just reading through the updated filing with all the numbers. And, you know, I believe they took out, they did like a recapitalization. So basically it took out a$92 million loan to make sure that at least$90 million they were paying to Premier. So like, it's all just, it's, listen, the PE backed, you know, startup ecosystem isn't always a bad thing, you know? No. And this is an example. I think Premiere is interesting because they've been in a lot of different fashion stuff.

27:15I've been writing about them for so long. They were at one point in Valentino and Proenza Schooler. Wow. And also Hugo Boss. And they had some successes, some real big failures. They were also in Doc Martens, like many things. And so it's an interesting, it's a London based PE firm, but they have a big company. They have a big office in New York too. And they went golden goose too, right? That makes sense. Yeah. Which I'm sure was very successful. I think you can't, it's interesting, like these, these investment firms, some of them are really based on taste. Some of them are really based on just like making sure you have the right exit.

27:52I think you have to have a sort of mix, but the reformation and the way that this business has been managed is, and it will be interesting to see once they're public, like it will be harder to can't hide that all the mistakes. But, um, I just think like, I don't know if I ever confirmed this with Yael, but there was one point where she needed to raise money and it would have been a down round. And instead she took a second mortgage out on her home or something like that. Like she was extremely savvy about how much of the business she let go and how much control she let go. Hallie, who succeeded her as CEO, worked there for a really long time.

28:29And it was like a really managed succession. Like they had some like workplace culture stuff during crazy COVID, but that was sort of like as an aside, it wasn't really the reason Hallie took over and Hallie's real smart. And I think it's so hard with a trend driven fashion business to keep moving and keep relevant and fresh and keep people interested because you cannot be like the center of the world. Like when Reformation was making every single bridesmaids and wedding guest dress, like you just, you can't be that forever. But if you keep making good product and you make it, they've done a good job of, of having a personality.

29:08Like the brand is funny and kind of smart, sharp, but it's not like Glossier, which was like this brand that was the center of people's worlds they just make cute dresses and so people still buy them good jeans yeah like like my bud mandy more she wears reformation dresses all the time she can wear whatever she wants but she looks hot in them and she's like this is cute and it's rough it's like i think um they've done a really good job of not i usually am more impressed by brands that have like a real brand identity like a doe and i think is really smart but i think what reformation has done is like they have a very light brand identity but then the stuff is good like they make really good jeans they they hired the that guy ben to do their jeans because he's good and even though he mostly does designer jeans like they just are they've done a good job they have really good brand affinity based on the actual product yes and that's a hard thing to achieve you can have great brand affinity because people like the founder or they like the models you choose but like they have it based on people actually like the clothes and believe the clothes are good.