Banana Republic: Mel and Patricia Ziegler

28:53Neither of us were. Okay. Which was such a mistake. Right, mistake. Okay. Yes. So, and then I wore mine belted over some tight jeans and heels and made a sign that said Spanish short-armed paratrooper shirts,$12.95. Doubled the price. Doubled the price. Yes. I didn't think the price was communicating the value of this shirt. So we put up the sign, we're there looking stylish in these shirts. And now it's$12.95, which was a lot of money in 1978. We were swamped. Wow. We sold. We had a couple hundred dollars at the end of the day. I remember that. And we said, let's open a store. When we come back in just a moment, how Patricia and Mel create so much buzz with their safari-themed store that they hit a wall and almost smash into a bridge.

29:46Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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32:50Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1976 and Mel and Patricia have made a little cash by selling their Spanish short-armed paratrooper shirts at the farmer's market. And with that cash, they decide to open a store. And Mel decides to give that store kind of an unusual name. Banana Republic. It was irreverent. It was intentionally irreverent. It was going to get attention because Banana Republic is an unstable country where the military takes over the treasury. We were only going to be able to sell these kinds of things if they had stories attached to them. And so we thought, okay, well, where would these come from?

33:43They would come from a new dictator who moved in who wanted to – didn't want to look like the last army. He wanted to have his own style. So he would sell them the old ones to us at a good price. That was kind of our background story. And so – all right. So you have this name, Banana Republic. And Patricia, I mean what's great is that you both have very different skill sets, right? Like Mel, you were a writer and a storyteller. And Patricia, you're an artist and a designer and an illustrator. You've got this really creative mind. And neither of you have any business experience. You're totally useless when it comes to business and management at this point.

34:26Totally. All right. And children of the 60s, not much sense of – not much regard for business. But you can figure that stuff out. But you do have some important complementary skills and very different ones. So Banana Republic is the name. And then did you design sort of a logo or a symbol for it, Patricia? Oh, yes. That brought up the idea of two bananas and a star as a crest. A red star, I think, right? Well, the bananas were yellow. The background was green. And so the star was red. Which would look like a communist coup. It could. Coup, like a symbol. Our banker took it that way. Right. Okay.

35:13So the idea was let's open a shop. But what was going to be in the shop? I mean you only had short-armed Spanish paratrooper shirts. That was the next problem. We had to find stuff to put in the shop. And before you did that, was it like a chicken and egg thing? Did you find the merchandise first or did you find the shop location first? Well, now we knew where we could find some more things because we knew the jobber, this guy in Oakland. In your book, you call him Zim, I think. And was he like a tough cookie? Oh, as tough as they get. He was about 300 pounds, always cigar, always in his mouth.

35:50But you had to pay him and then get the goods. Yes. That was another thing we hadn't thought about. But yes, now we – the money was tied up with the store and we didn't have any money to buy anything. And how did you – how did you get a store, right? Because – I mean you still didn't have that much cash. I mean even with the sale of this stuff, you're – let's say you're closer to – you know, about 2 ,500 or something. Well, we found a store in the back street in Mill Valley that was available because the door had to remain unlocked because people had to go through the store to an Aikido studio, which was upstairs.

36:28As long as the door remained unlocked, it was available to – we could rent it. For how much? 250. 250 a month. OK, that's pretty good. And is it in a heavily trafficked part of Mill Valley? No. I mean downtown Mill Valley is very nice and cute and you can walk around and people have been there. And I was about two or three blocks out of the center of town. Out of the center. Okay. Okay. So now you've got a store, and presumably you start working on getting it ready. Tell me how you started to then populate it with stuff to sell. I mean, did you go back to this guy, Zim? Yes. I think first we went to the banker, didn't we go?

37:05Oh, we went to the banker first. That's correct. And we said, you know, we're starting a company. He said, oh, that's great. What's the name? Banana Republic. He said, hmm. You gave him your business card. I gave him my business card. He looked at it. He looked at it. He saw the crest, Patricia. And he said, hmm. I said, well, we need some cash because we need to buy some merchandise. And the crest, again, looked like you were, you know, it was like a Latin American coo or something. Two bananas and a star. Yeah. And he said, why the red star? He said, why the red star? Why the red star? We hadn't even thought about that.

37:37And I told him I thought it went well with the yellow bananas. It was a color choice. It wasn't anything to do with that. But yeah, he said, well... There's three C's. He said there's three C's to get credit. To get credit. Yeah. The first one is a capital. It doesn't sound like you have that. Second is capacity. I don't think you have that either. But the third one is character. And I have to admit it, you guys are characters. But he still didn't give us the money. You had no business plan. You brought up no business plan. No, we had no collateral. No collateral. No collateral. You did not own a place.

38:16We didn't own a home. And you thought you would get a loan based on the strength of this pitch? We thought we didn't know. Yeah, well, you know, we were. But he did. He said to us, you know, one thing you might not know is that there's something called credit. Terms. 30-day terms. And you can ask for these terms. It's quite common. Net 30 or net 60. Net 30. Which means you get the merchandise, but you don't have to pay them for 30 or 60, sometimes 90 days. So that was the trick. That's how we're going to do it. So we'll get the clothes. Try to sell them within 30 days and then pay. But we knew Zim would not.

38:55We just knew. We had paid him outright the first time, so we knew he was not going to give us credit. We knew there was no way. But he had told us about this other guy. He asked where else we were buying. And Mel just kind of cool. It just shrugged his shoulders. And he said, well... I hope it's not Shapiro in Sacramento. I'm making up that name, but I don't want to name it. I said, why? He said, ah, that son of a bitch. Don't buy anything from him. He's a crook. So we went up to Sacramento and we talked to Shapiro. And we convinced him. It was a smaller place. And there wasn't that, but you could see things more clearly.

39:35Yes. And we were looking for, we weren't looking for at that time, A lot of the U.S. surplus was poly cotton, and we were really into the natural fibers and the good quality. So we were looking for more European or foreign things. And we found a box of belts from Argentina and some Swedish gas mask bags. Swedish gas mask bags without the gas masks. And a few other things. Like a shoulder bag that would carry a gas mask? Yes. But the gas masks were no longer in it, so they were selling the bags. And the bags are cool? Yeah, like a purse. All right. So you see some things there. And what do you say to this guy?

40:15So we bring it all up to checkout. And he said, do you have a D &B, the Dun & Bradstreet report? Patricia said – I said, the family really doesn't like to expose its finances or something like that. He said, where else do you buy? We said, Zim. That son of a bitch gives you credit? All right. All right. So he gave you credit. Gave us credit. Based purely on this ruse. The fact that he hated Zim. But now that you had credit with this guy, you could parlay that with Zim. Exactly. So we went – next we went to Zim's and found – We're getting credit from Shapiro. Yeah. Yeah. So, all right. What were you finding?

41:01I mean everything that you were buying at this point because you had to populate this store. And first of all, I'm assuming that 90 % of this stuff was really for men because most military gear was made for male soldiers. So first of all, it was basically going to be a men's clothing store. And it was – you were going to differentiate it from an Army-Navy surplus store because of how you were curating it? Yes, yes, how we would style it. But also I knew that we'd really need half our customers to be women because they would spend more on clothes than I thought men at that time. I did try playing with the shirts, the Spanish Army shirts, taking them apart and finding I could put two of them together and make a safari dress or cut off the sleeves and make a skirt.

41:53But we needed a lot more. All right. So just to be clear, I mean, you weren't – like initially you bought the Spanish Army shirts, right? But then you go back to this guy's in. You go to Shapiro in Sacramento. These are surplus dealers. And you're looking for finished items you could just put on your shelves? Oh, that would be ideal. But we don't really see anything that I feel is wearable. But then I started – I went back and looked through several of the piles and realized that, wow, these mattress covers are really good linen. It could make a good blazer. And the sleeping bags were sheepskin.

42:34The sleeping bags are the sheepskin. These would be great vests that I thought would make good handbags. So you would basically – instead of look for clothing that you could sell, you were just looking at the material that you could then pull out and then you yourself would sew them? Well, I knew because we didn't have that much time, I'd need to find some help. A seamstress. Yes. And at this time, this was not like mass-produced in China. I mean this stuff was made in the US, made in the UK. Right. It was probably like wool. With no expense spared. Right. Wool from British woolen mills and Irish linen and American denim.

43:09Like it was really high-quality stuff. Very high-quality materials. OK. But now you've got piles of all this stuff. Now it's one store. Right. How many pieces of each thing? Like, OK, so you see a sheepskin-like sleeping bag and you say, OK, I'm going to turn this into what? Maybe 50 vests. A vest. Oh, not from one sleeping bag, but we bought 50 sleeping bags. But you turn it into a vest. Yes. But now you've got to, I mean, you're starting up a business. You've got to decorate the store. You've got to make the clothes. Right. How did you do that? Well, I hired, I ran an ad. I got one response.

43:44This Sicilian seamstress named Anna. And I showed her what we were going to do. I started cutting and pinning and she started sewing. And we just went nine hours at a time. You were hand making everything that you sold. Everything it is, yes. That's unbelievable. And so that we could have women's styles too. Mel, you are so lucky that you married Patricia. I know. Because you'd be screwed. I mean, you didn't know how to sew. You didn't know how to design. You're a great writer. But he knew what to name it. And you know your creative mind, but you're not a designer. Not at all. Not at all. Patricia designed every single, every one of those things.

44:26I mean, you're the luckiest guy in the world. Okay, so while Patricia and the seamstress are sewing all this stuff, what are you doing in this story? Well, we're going to have a business. So I was the lawyer. I was the accountant. Yeah. I set the business up basically by figuring out how to set a business up without hiring any professionals to do that. So you were learning how to – As we go along. How to basically stand on the business. And in the meantime, did you have to do any build-out in the store? Oh, yes. And the store was this small, dark, low-ceilinged place, knotty pine walls and ceiling.

45:08And the landlord said we could not paint the walls or the ceiling. So I needed light reflected. So I went to the meat market and bought rolls of white butcher paper because it was cheap. and then stapled that to the ceiling and painted like big palm fronds to make it look like a jungle, but also the white would reflect some light. And you could do all of that because you knew how to do that. Well, yeah. He's the artist. And then there were these big like telephone poles that were holding the ceiling up, and they kind of got in the way of looking. So I thought, well, these are unattractive. Let's turn them into palm trees.

45:51And so I drilled holes into the top and went to the flower mart and bought big palm fronds and stuck them in the top. And then – but I was worried that nobody would notice this store from the outside. So I painted the front door black and white zebra stripes. So they kind of popped. You wanted it to feel like a jungle. I wanted it to feel like a jungle. And this was – what you were selling was adventure gear. Not gear. Adventure clothing. Like sort of what Humphrey Bogart might wear. Yes, yes, exactly. So you're working on opening up this shop, right? And I think the idea is you want to get the shop open in time for the Christmas season because that's – and so we're talking about the fall of 1978.

46:40Meantime, help me understand. I think you also decided that you wanted to concurrently with opening up the store, build a catalog, make a catalog. Yeah, yeah. This is the era of catalogs. I mean this is – today it's direct to consumer or websites. Back in the old days, catalogs was – that's where the gold was. Yes. Patricia is an artist. I'm a writer. Let's do a catalog. It was the pre-Kinko's days and you would basically take it down and they would do an instant job. Like a mimeograph? Mimeograph kind of thing. But you'd paste it all up. You'd paste it all up and you'd paste all the pieces. And they photographed it.

47:18And they photographed it. And they were able to print it from that, like the early Xeroxing. But it didn't look like Xeroxing. And so we found a place to do that. I remember we had enough money to print it, but not enough money to stable it. And the idea was you would illustrate the clothing. And then you'd have maybe the prices. Yes. And then a little story. Was anybody doing that? Was anybody telling stories? Nobody was naming. We were naming every product. And you would just tell little stories about each article of clothing, like from the depths of the jungles of Burma. These were worn by Gurkhas or something like that.

47:59Yes. And where are you going to mail them? Well, we didn't have any mailing lists. But coming from the media in those days, I realized that the only way we were going to get this story out without advertising is to sort of see if we can get anybody in the media interested. Yeah. So what we did is we got – we printed, I think, 500 catalogs. 500 catalogs. Yeah. Sent them to every friend we had. And you guys put them together and stapled them yourselves? Stapled them at the kitchen table because we didn't have enough money to staple them. And hand wrote the addresses. Yes. Hand wrote the addresses, yeah.

48:32On each catalog? Yes. Wow. Yeah. And so who did you identify to send 500 of these to? Well, we just – we went through mastheads and looked at who the – Wow. Who was – who we would send to at any given place. So you would send them to editors at newspapers, mainly in New York? And by the way, were you getting any orders? Because, I mean, what's a hit rate on a catalog back then? Two, 2.5 percent, 3 percent? Two percent would be great. It was usually – a good hit rate would be 2 percent. But I think you made some – even though the catalog is beautiful, you made some major errors, at least according to the rules.

49:11We did everything wrong. Mel went to the library after and got some books on direct mailing and what you should do. And we found out that we just did everything wrong. You're supposed to have product on the cover and the back page and maybe page three. We had a leopard print front cover, a cartoon on the back page, and I think an interview with me on page three. And the people we sent it to were not mail order buyers. They were just our friends or whoever's name we had. So, all right. So you send these catalogs out and around the same time, you're ready to open the store, right? Yes. OK. And from what I understand, you open the store right – I think around Thanksgiving.

49:59Yeah, the day after Thanksgiving. Black Friday. The Friday after. Which is obviously a very important shopping day. You are on a sort of a – out of the center of town in Mill Valley on a side street. You've got the shop. You're ready to go. You've got the zebra painting on the door, the zebra stripes. Day one, Black Friday, what happens? Nobody comes in. Nothing. Nothing. There's very few people on the street. A few people going to do their laundry next door. At the laundromat. At the laundromat. Maybe a few other people going to the health food store up at the corner. But nobody, outside of a few glances, nobody is coming in.

50:40Until the guy at the end of the day. Guy at the end. Who bought the gas mask bag. Yeah. For how much? I think it was$6. $6.50. And he gave us, I remember he handed me a$10 bill, and I realized, we don't have any cash register. We have, how do you, wait, I had to dig it in my pocket to give a change. We had no idea. We didn't even think about getting a cash register. So what did you do when nobody came into the store that day? We just kept adjusting the outfits that were hanging on the walls. To slightly move things. Yeah, and I opened the door. It was cold, but I opened the door and kind of sweep outside, hoping to catch someone's eye and just, oh, drop in, you know, just anything we could do to attack people.

51:26Were you worried? Oh, yes. We were starting to worry. Everything we had was in here. It was the end of the month. We had to pay rent December 1st. And you had net 30. And we had terms, net 30. That was going to be due a week after. Right. How close were you to, I mean, did you have the cash? We had no cash. We didn't have anything. No, everything was in the store and in the product. So you've got a week to pay, what, rent and the net 30 on the goods. And what if you didn't have the cash? What would you have done? Would you have to return it or I don't know? We didn't even think that far. We didn't go that far.

52:02We just kind of kept going. And then this woman walked in the store, looked around and said, you know, I'm from the Independent Journal, which is the local newspaper. In Marin County. In Marin County. And said, you know, I'd love to get the story on this place. Can I bring by a photographer? She was back in like two hours. Right. They interviewed us. We tried on different clothes. They took pictures. And that was great. And so we kept— I think two days before the end of the month or three days before the end of the month. We went, I think it was a Saturday, that Saturday, to open the store in the morning.

52:43and there was a line of people outside. And somebody holds up the front page of the style section of the independent journal with a picture, like three quarters of the page, of the two of us in Safari Gap. Wow. And so all of a sudden you get a crowd at the store. All of a sudden it was a crowd. That, presumably, they spend a thousand or more dollars a day. Enough to pay the rent and pay Zim. And pay Zim two days early, I think. They're good to go. And is that it? Is that like now you're— A couple of days, and then it dies. Maybe a week or two. Yeah, it died again. It wasn't much. So wait, it was a week of really excitement, people coming in, and then crickets.

53:26Nothing. Nothing. Nothing. What was the problem? I mean, did the two of you at night ever say, what are we not doing right? I don't think we ever questioned what we were doing. I don't think we ever questioned it. But we just were trying to think of new ideas for how we could start up sales again. But we had to keep, it was a store. So I had to be there, you know, 10 hours a day or something in case someone came in and wanted to buy something else. Failure was not a possibility. We would make this work. We'd buoy each other up. We would make this work one way or another, and we were determined to do it.

54:00It's, you know, whatever we did, there were no mistakes. You just keep going. Anybody who called, I'd answer the phone, of course, Banana Republic. And if they said, oh, wrong number, I'd say, oh, well, you didn't know about Banana Republic? I'd try and engage them in conversation. And then one day, you got a wrong number early in the morning. You thought it was a wrong number in the early morning. You pick up the phone, and this guy says, Hi, this is John Gambling from WOR Radio. WOR Radio in the tri-state area, and you're on the air. Right. Who was that? He was a DJ in New York. A DJ of a very large radio station in New York.

54:43And he got a copy of your catalog somehow? Yeah. Somehow or another, we sent him a copy because we sent the radio stations, television stations, anybody, any media we could think of. And he got one. And he said, I've been telling my listeners about reading them parts of the catalog and I have a few questions for you. what happened to those Italian camouflage jackets without the hood. And he asked me several questions, and I went on about mostly quoting the catalog. And at the end he said, and so what about anybody who's more interested and would like to get a catalog, you know, one of these catalogs?

55:23And I said, well, you just have them send a dollar to PO Box 774 Mill Valley, you know, 94942. And I was like, thank you, Patricia from Banana Republic. That was it. That was it. And then a couple days later, did you start to get letters? Sacks of mail. Sacks of mail with a dollar bill. Every single one of these. The post guy comes in dragging these huge canvas bags. The post office was across the street in those days. Radio stations, wow. Every single one of them had a single dollar bill in them. And so, Anne, amazingly, because you were sending the catalogs out, not charging people. Of course, you needed them to get the catalog.

56:05Now you were getting paid. Right. Yeah, we charged. Because the catalog probably cost you about a dollar to make. Less than that. Less than that. I know it was – But we did put a dollar even on the first one. I think we put a dollar on every one. We knew we were going to charge for the catalog. We wrote it, but we sent them free the first 400 or something. But we did. So now you've got all these dollar bills, plus you can send out the catalog. But now you've got a mail order business. And an even bigger mailing list that's growing. That's amazing. So – but the store in general is still pretty sleepy, still kind of quiet.

56:35Yes. Yes. After that radio station in New York did a profile, did you start to get other media organizations approaching? We began to realize the power of that. Absolutely. And more and more. There were more and more media. Then there was the fashion editor of the Los Angeles Times. Mary Lou Luther. Who basically said, these shorts in Banana Republic, the Banana Republic, they're perfect for this summer. And those shorts were really a breakthrough. And so she says, this is the short. This is the short for the summer. And were these shorts that you were making? No, no, no. These were surplus shorts.

57:11These were a short that we found in Zim's warehouse. One of our trips over there, as we're going through, I see out of the corner of my eye this pile of khaki that almost looks like the same fabric as this original jacket that he brought back from Australia. And so I went over and picked up this short, and it had two buckles hanging off the side, a really wide waistband. But they were fantastic. Oh, my God. You could see they were fantastic. And so you bought these. Mel kind of, I think, gasped a bit when I said, OK, we'll take them all. And the L.A. Times fashion writer calls them in her column the shorts of the summer.

57:57But they were styled. When I did the drawing, rolled them up and with some clever little phrases. Believable. Belt them correctly. Yeah. So women could wear them. So women could wear them, belt them tight. Right. And so she caught the style of it and they sold out in like two weeks. So you bought these for like two bucks a pop or something. I think they were$2.50. $2.50. And you sold them for? $15,$16. OK. Now, there's a lot going on, right? You've got catalog business and you're trying to grow and all these things. And from what I understand, Patricia, you were getting pretty overwhelmed because you were making a lot of the clothing and running the store and sending out the – and doing the illustrations and the catalog was a lot of work.

58:48I think you guys were also – I mean you're a married couple. You didn't have kids yet. But you were fighting too, right? We were both stressed. We didn't really mean to blame each other for it, but we were both just really stressed and not sleeping enough. We were so, we went from dawn to dusk working. We were always working, trying to keep this thing going. Yeah. I don't know, because we didn't really disagree. We trusted each other with whatever we did, totally. And we were just cranky because we were tired. Yeah. And I remember once, I remember going to the East, or San Francisco to the printer to put out our latest catalog.

59:35And I hadn't slept in like three nights, I think. I was just up around the clock, just trying to get it all pasted up and ready to go and then supervise it on the printing presses. And I was driving home across the Golden Gate Bridge, and all of a sudden I hear this honk. I wake up and realize I've veered into the oncoming traffic. You were falling asleep. I was falling asleep. I was so sleep starved. And I went home and I just broke down. And I just told Mel, you know, I just, I can't do all this. We can't do the catalog and the store and make the clothes. I just can't, I can't do this. You felt overwhelmed.

1:00:16Yeah. All we knew is that for years we ate from the dollars in the envelope. We would basically open enough envelopes. My goal was$500 a day, though. Yeah, that's what it is. So we didn't know. We didn't do anything conventionally. All we did is kept it going. The idea was to keep it going. Somehow or another, we were going to figure this thing out and make it work. Okay, so you go to Mel, and you're saying, we need to stop the catalog. It's too much. Yeah, the catalog adds a level to this business that I just can't manage. Meantime, you know that the catalog business is your really best hope.

1:00:57Yes. How did you respond? Why don't you take a day off? Why don't you take a walk on the map? That's what you said. You said take a day off. Yeah. Just go out because I knew she would replenish. Patricia's not a quitter and I knew that she would not want really to shut this thing down. I knew we couldn't go backwards. We knew that we needed, at this point, we needed help. We definitely needed help. I mean, this wasn't, in these days... You didn't have the volume, but you were able to visualize, well, if this little store can bring in this much, if we got a store in a more populated area like San Francisco, we could, that would make up the difference because we'd have the margins, probably the same margins there, but a bigger volume.

1:01:44and that'll get us through this. And so you said to me, we need to open another store. And I'm there saying, oh my God. When we come back in just a moment, Patricia and Mel get a very attractive business offer that they can't turn down, but then wind up regretting it. Stay with us. I'm Guy Raz and you're listening to How I Built This.

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1:04:37Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1983. and despite the fact that Mel and Patricia are totally overwhelmed with their first store, Mel manages to convince Patricia to open a second one, this time in San Francisco. Same safari motif, same zebra stripes on the outside, but also some of the same problems. So one of the challenges of your business was that pretty much most everything you were selling was a one of a kind, especially the things that you were remanufacturing because you were buying weird articles of clothing for the fabric. You were turning them into articles of clothing.

1:05:18But that was it. Once they were out, that was it, which is exciting, but it's challenging if somebody comes in. That's when we realized that was the flaw in our business plan. That was a flaw. That was it. We were selling something that was not – you couldn't replenish it. The surplus – the surplus we were selling largely was from the Second World War and it was still around in the early 70s, in the late 70s. But we were fast depleting it and we realized, whoa, what are we going to do? We have a whole business that's built around this. So you start to think about let's make our own line. Let's just design this because I'm assuming you were putting a Banana Republic label.

1:06:05Yes. You were sewing that into everything. Now you want to scale it up. Did you start to explore potential? Well, what we had to do, first we tried to find manufacturers who were making things that were similar to the kinds of clothes we would make. And by the way, this is the early 80s. I think 70 % of clothing sold in America was made in America at the time. Yes. Yes. That's true. We did find some of the places that made the original fatigues for the Army in the South and find that if we didn't change anything with them, they could make us a small order. Maybe like in North Carolina or Georgia or places like that.

1:06:45But you still need capital to finance that. Did you have the capital? Well, I think we were pouring every penny that we had back into doing that. So yes, not to do it on any scale, but enough to make the clothes that we needed to make. And we had great credit by then because we paid everything within 30 days or 60 days. We learned that that was the trick. And by the way, how did the San Francisco store do compared to the Mill Valley? It did really well. It was like three times. Three times. Just because it's San Francisco, that's critical mass. Who were the kinds of people going into your shop in San Francisco?

1:07:28Because it was a very particular style. I mean safari and travel, adventure gear, khakis, browns, olive tones. I mean who were the people coming in to buy the stuff? Well, I think we originally created the business for other people like us, ourselves. I mean we really were trying to sell to other creative people. and writers, artists. But I think it caught on. It caught on. It went beyond that. I mean, it went to everybody. It was amazing how many people. There were kids to grandmas. And also there was a reaction against how much polyester was coming into fashion. And we sold only pure fibers.

1:08:13You were selling wool, cotton. Wool, cotton, silk, rayon, anything that was real. Your prices were like sort of between the sort of middle and uppermost tiers. I would say it's middle and lower. Well, at that time. In those days, we were selling – But double what they would sell for in a surplus. I see. OK. But it was still affordable. It was affordable. Less than what they would pay for in the gap. Right. All right. So you've got the store in San Francisco and it's doing pretty well. And in your mind, I mean, did you have any time to kind of reflect on what was the next step? Or I mean was it just let's get the catalog.

1:08:56Let's just stay on this. Opportunities were presenting themselves by this point. There was a real estate developer who opened shopping centers and he was a customer. He loved the brand. He said, I want to put these doors in my shopping centers. Aaron Ross Powell He wants to put Banana Republic in my shopping center. Aaron Ross Powell I think this is Merritt Sherr. Aaron Ross Powell Merritt Sherr Okay. Sure. Yeah. Aaron Ross Powell And so Merritt was a customer who came in frequently and he's a very lovely man and we liked him. And he said – I said, Merritt, I can't. We're doing everything. We're too busy.

1:09:34We don't even have time to figure out how to get this business staffed correctly. And he said he kept – he'd come back again and again and again. And I think one day he came back and he said – it was just a bad day. I said, no, no, Merit. Not only will I never open a store in your shopping center, I'd sell this company tomorrow if I could. He looked at me and said, do you want to talk to Don Fisher? Who at that point was the owner of The Gap. The Fisher family was basically – he's the guy who started The Gap. I said, sure. Let's talk to him. So before we get into this part of the conversation, it sounds like, I mean, you were just – it sounds like that's the kind of response of somebody who was just overwhelmed.

1:10:24Yes. Overwhelmed. Totally overwhelmed. We're almost four years into it at this point, I think. We didn't – we never put the initial systems in place. The business just kept happening so fast that we could never stop for long enough to just sort it all out so that it all could work. And we didn't have – we didn't even know where to go to find the kind of people who could run this sort of thing. We just – we were so busy paying the bills, getting the salaries, getting the job, getting the orders in the mail. We just – we didn't have time to withdraw and figure this out. And both of us were working around the clock.

1:11:09All right. So you kind of offhandedly say, I'd sell the business before I do this. And this guy, Merit Scher, says, let me introduce you to Don Fisher, the CEO of Gap, which by that point in the early 80s, it wasn't what it is today, but it was already a pretty significant – Yeah, they already had 500 stores. So it was pretty significant. And Don had started that himself. And they were public. They were a publicly traded company on the New York Stock Exchange. And he had started with a single store in 1968, I think, on Ocean Avenue, selling jeans and records. But Fisher wanted to come meet you.

1:11:48Yeah. So he comes to the store in San Francisco and you meet him. And what did you – first of all, was he – did you get the sense that he was interested right away? He was fascinated. He went through that story reading very carefully every hang tag, looking very carefully at every single garment. Right, because we had the story on a hang tag on every item. Which fascinated him. You actually named the clothing and you wrote about this clothing and this and what's this and how's that. I remember him picking up. We had these Falkland bathing suits for men. Remember the British war in the Falklands in the 1980s when England invaded Falklands?

1:12:33Which is down by Antarctica. But for some reason, they made these cotton tied on the side little – Swim trunks for British soldiers. Swim trunks. And so he looks – Don picks one up and looks at it and he says, wow, do your customers really buy these? And I remember our store manager said, well, I haven't seen anyone come out of the dressing room wearing one lately, but they are buying. They're like a piece of history. And I could tell he was impressed with her. He was kind of blown away by the craziness of this item and fascinated. So how did Don approach you about seeing if you were interested in selling?

1:13:19I think we went to lunch, and in the midst of the conversation, we realized he says, well, how much do you want for the business? And I thought, what? What? You couldn't answer that question. I had no idea. Do you remember what your revenue was at the time? Oh, it was a couple million dollars. It wasn't very much. But that's pretty good. Two stores, a couple million bucks. 1983, it's not bad. So that's, we were thrown back. thinking, what kind of a salary would you like? We looked at each other. I know. Salary? We never had a salary. We just basically took the money out of the cash register and went to dinner.

1:13:59Right, and he said, how's$150 sound? And we thought, does he mean for both of us? Yeah. Did we share it? Yeah, we didn't get it. Was the hope that he would give you a check and you were set for life, or at least for the next 10 years, or whatever? We didn't think that far. Yeah, gotcha. We wanted out. We wanted out. We wanted to go back to painting and writing, and we wanted out. And so he took us right down the path. And then at the last minute, he took it to his board. And the board said, you can't buy this company. He says, you can't buy this company. It's not going to really— It's a trend or something.

1:14:42It's a trend. And so he basically backed – almost backed out of the deal at that last minute. At that point, we had a huge – I mean the accountant who was figuring this out with us. We had bills that we had to pay, accountant bills and legal bills and other kinds of bills for all this negotiation. It was just – Frustrating. Frustrating. We were spent. But Don still wanted to buy the business. Even though his board said, don't buy this business. The board said no. So this is when we went over to his house, right? Yeah, I want to buy this business, but there's one thing. He said, you need to run it.

1:15:21I said, no. No, I don't want to sell my business. I'm not looking for a job. No, no. Basically, that was my reaction. It's like, oh, my God, after all this, this is where we are. Back to go. He said, as long as you're profitable, I will completely fund it and you're on your own. I'm not going to tell you what to do. You have complete creative control. You won't see me. It's your business. I will give you every dollar you need to grow this business as long as you keep it profitable. And you agreed to that deal? Reluctantly. I think Patricia wanted it more than I did. I was sort of a maybe. But I thought, well, gee, if all of a sudden we have the money to do this, to design our own line, to build the stores we want, we could have fun and we could travel.

1:16:19So we agreed. As I said, by a vote of yes, one yes and one maybe, Banana Republic Board decided to sell to the Gap. So 1983, you become employees of the Gap. No, employees of Banana Republic. It's owned by the Gap. I got it. Okay. But you guys are still running the company. And with Gap's muscle, you're able to start working with factories to make clothes for you so you don't have to make them yourself. Yes. And then, of course, you start opening more stores. Right. I think the first one, I think, was in Palo Alto at the Stanford Mall, which is pretty fancy, pretty upscale. And Patricia, you still got to design the store, right?

1:17:06Yes. First, before we go down there, I remember the requirements for the site. Yes, all the requirements. That you had to have an approved color for the awning and no neon and very low-key front. I remember that. It was suffocating to just read this thing. And I looked at it and thought, oh, no. And you said, just pretend you haven't even seen it. Just design it. Go ahead. Which she did. And so I did a drawing of a Jeep coming through the front window, a tin roof with a giraffe's head sticking out at the top, and two palm trees growing in the ground. That was going to be the facade of the store.

1:17:53It's a facade in a place that was two doors away from Tiffany's. Wow. I mean that looks like almost like a theme park look, right? Yes. It was theater. We couldn't possibly fit into their requirements. So we decided we were just going to do what we do. Yeah. But you didn't have to paint zebra stripes anymore. Exactly. Now you could really hire people to make like a giant elephant or a giraffe or a jeep. Find the jeep. Hire someone to go find the jeep and drive it there. OK, so you bring this proposal to this fancy mall at Stanford. We sat down. We sat down. I'll never forget this day. We sat down around the table.

1:18:33It was almost – this was exactly opposite of anything that they could possibly want in this mall. And we show her the drawing, the woman across the table. I remember her name, Rosemary McAndrus. McAndrus, yeah. She's the design director. We slipped the drawing across the table to her. We're sitting there looking. There's a minute of absolute silence. And she looks up at me and she says, I love it. I love it. I absolutely love it. We look at each other. What? And that changed everything. Yeah. That changed everything. Because then the next thing, several months later, the store opened. There were lines there.

1:19:18It was the highest grossing store in the mall. Wow. Everybody came into this. It was everything. And these malls, we started getting calls from malls all over the country. They just, can you build one here? Can you build one there? Because malls, as you know, are percentage rent. Yeah. So the more money we made, the more money they made. So where was the first location you opened outside of California? I think it was New York. I think it was New York. Not the 59th and Lex store yet. So how many stores were you opening a year after the acquisition? We were opening 15, 10 or 15 stores a year. Wow.

1:19:57So it really was expanding. By the second or third year, yeah. It was fun for a while. I loved designing the stores. I loved the possibilities of it. We would not, no two stores could be alike. Every store had to be different. We had different designs. Some were embassies. Some were safari camps. We were just designing whatever we could in the genre, but no two stores would be the same. And you were the CEO? Yes, I was the president. The president, and you were the head designer? Chief of creative officer. And so really this proposition was working out well. I mean by 1986 or so, I think you had dozens of stores.

1:20:34You were doing by one estimate like$60 million in sales, which is pretty great. But also at a certain point, I guess some tension started to emerge between you and the higher-ups at the Gap and I think may have come to a head around 1987 when the stock market crashed. Yes. We had this huge conference at the Claremont Hotel in Oakland where we brought all the store managers and regional managers from across the country and we were celebrating the company. And in the middle of a break, I walked out and I looked at a paper, a newspaper that was in the shop there in the hotel and it said Dow Falls 22 percent.

1:21:16This was Black Tuesday. Black Monday. Black Monday, sorry. Wow. 1987. Yes. It so happens that two or three weeks before that, the gap had reported earnings and they missed earnings and the stock had taken its own dive. Yeah. So it was already down substantially and then came a crash. Black Monday. Yeah. It went down further and suddenly they were – the gap became interested in Banana Republic. Everything was going fine. We were doing quite well, but the gap suddenly became edgy. Don became a little nervous. They didn't quite know where things were going. And so we were beginning to contribute to earnings.

1:22:07And they began to have some ideas about how we could squeeze more earnings out of the company. And it created some friction. Right. OK. So what were some of the – as they started to look into your business and started to presumably say, hey, we think maybe you should expand out beyond adventure and safari and travel gear. Is that what they were saying? Well, that was part of it. There were two different things. I think that one was the way we were merchandising. The way we were merchandising. It was a shirt we sold, an Indian cotton shirt that was beautiful. We called it the Bombay shirt. and we sold tens of thousands of these shirts all the time in various different colors and they were doing spectacularly well.

1:22:57But at a certain point, Patricia said, enough, we should stop selling this. It's time to move on to something else. Well, I could see that other companies were copying the shirt and selling it for lower prices. In fact, there was a whole, the Limited started a line called Outback Red that was really a copy of Banana at a lower price. And so they were copying a lot of styles, but especially this shirt. But I was saying, okay, now is the time to stop this shirt because our customers aren't going to want to wear something that's being sold cheaper by another company in cheaper fabric. So Bob Fisher was running our merchandising department.

1:23:44Bob Fisher was Don Fisher's son. Okay. And he was a really by-the-books, data-driven merchandiser. Yeah. So he said, well, you're crazy because you can't – how can you discontinue one of our best-selling items? Yeah. And I explained to him that this was – it was a best-selling item, but it wasn't going to continue to be a best-selling item. And I knew that. and that's something that's driven by intuition, which he did not get. And so there was a tension between us and a tension that was kind of breaking up the spirit of the company. And was there – I mean from what I understand, some investors were also raising questions.

1:24:36Some of them were saying, hey, this is – what you guys are selling is a trend. The analysts because the gap stock had fallen dramatically. And they were looking at Banana Republicans saying this stuff is just a fad and people aren't going to buy this stuff. Yeah, they're saying it's too hot and it's too wild. And we were now grown to a point where we were not a tiny company any longer. Data did matter. But we weren't entirely reverent of data. we thought that there were other things that had to be considered in our intuition. This company was part of our DNA. It was part of our fiber. We knew when something was right and when something was not right.

1:25:21And so we were getting suggestions when, first of all, we had an agreement that would stay out of our business. We were now getting sort of more and more urgent suggestions that we should make changes that didn't feel correct to us. I mean Don came into the office one day and said, you know, I think it's time that you're not going to be reporting to me anymore. You're going to be reporting to Mickey Drexler. And just to explain, Mickey Drexler had been brought in earlier by the Fisher family to do some major rebranding at the Gap. And he had just become the president of the company and then eventually become CEO.

1:26:02And he's kind of a legendary guy in that industry. But I guess you didn't want to work under him. You said no. I said no. And our COO at the time, his name was Ed Strobin, was a real classic merchant. And the moment he saw Mickey Drexler, he said, beware. He's a grabber. And I think what was going on is that Mickey was eyeing the success of Banana and wanted to get his hands on it. And somehow or another, that happened. Now, Mickey Drexler is not here to defend himself and this is not a documentary show. We're just taking your oral account. So I will just say in his defense and not even in his defense but to say that he was probably – from his perspective, he thought I could do a better job and I want to take over.

1:26:56And he does have a pretty good record, a successful record in running big retail businesses and some were better than others. And of course, he's considered – That came later by the way. Came later. But he's considered to be a pretty important guy in the apparel industry and I just want to say that in his defense. But I understand. You did not want to work – this was your brand that you started. You did not want to work for some – Yeah. And the way he approached it wasn't civil. Yeah. And when you – you both decided we're out. Well, at that point, yes, because this isn't what we bought into. Yeah.

1:27:34We started this business to travel. We started this business to more – not to become rich but to be free. And we did travel. And we were free. And we traveled. We were free. We had made enough money to be not terribly wealthy but independently wealthy. And that was enough. Enough is enough. And so you leave this company. At this point, you had two kids, two little ones, right? No, just one. Just one, okay. And Banana Republic is now – you wash your hands of it. And it goes its own way and you guys – And I should say that it went for years. They realized they made a terrible mistake. They had no idea the devotion that the customers had to the – Original.

1:28:28Authenticity of the brand. And for years, they just kept bringing one crew after another after another. And the company just kept flailing for years and years and years. Yeah. I mean today it's – Today they're sort of resurrecting it and they're going back to the tradition originally, which is interesting. But – They're bringing back some of that. But it still – it became like an office clothing company. Gap clothes at a higher price. Yeah. From what I understand, in 1988, you guys decided to focus on being parents for a couple of years. And what a gift. Yes. You could now – I mean you had enough money to, as you say, not be fabulously wealthy but enough money to actually have a comfortable life and to not have to worry about a paycheck at least for some time.

1:29:24and you could be with your kid. Yes. And then you had another child, I think. Four years later. And did you think that you would do another business or did you think that you were? We weren't looking to do another business. No, we weren't looking to do another business. I had this sense that when I left, first of all, the whole thing was about 10 years from start to finish for us. 78 to 88, yeah. 78 to 88. And I felt at the end that I had somehow been on a track to succeed, achieve, succeed, achieve, succeed, achieve. And I thought, whoa, I want to just back up from this. And so I went away to a, I'd never done anything like this in my life, a Vipassana meditation.

1:30:12Silent meditation. I went away to this retreat. The rules were no reading, no writing. You sit and meditate for all day. All day. And it was shocking to me. My mind goes so fast to ever have to go through something like that. And by the second or third day, I was sitting there and I had the worst headache of my life. You were going through caffeine withdrawals? Caffeine, deep caffeine withdrawals. Because there's no coffee. No coffee. No coffee and only herbal tea at this place. And so I thought, my God, I never want to have a headache like this. So I spent the rest of the meditation dreaming about a tea company that I would start.

1:31:00Tea? How did that – it just came into your mind in that sound meditation? Yeah, because if coffee did this to me, I'm not drinking it anymore. And I happened to mention it to – I went to a – at that point, I was on the board of a group called the Social Venture Network, which is about socially responsible businesses. In those days, that was a new concept. Yeah. And I went to a conference and I somehow found myself on the plane with a fellow who was there. And he was sort of talking to him. And I said, well, what would you do if you did another thing? I said, well, I do a tea business. And I started – I found myself talking about it and getting excited about it.

1:31:36And I sort of dove in trying to learn about it and understand it. And so I decided let's start – let's do this – let's start the Republic of Tea and learn it. You were going to call it the Republic of Tea? From the day – Just like Banana Republic? Were you worried that Banana Republic would come after you? Well, Don called. Don called. As soon as he heard. What's this thing called the Republic – in other words, should I sue you or should I not? And I explained to him. We had a nice relationship. He understood that we were not going to sell clothes at the Republic of Tea. He was OK with that. And you wanted to do full-leaf tea and to have it – And so I'm assuming once again you're recruiting the best illustrator you know, which is your wife.

1:32:21Who's now pregnant with our daughter. To start to think about designing what this would look like. Right. Because you wanted it to stand out on the shelf, you know, just like our clothes would stand out. How did you finance it? Did you self-finance it at this point? Yes. It was wholesale. So it was a lot lighter on our hands. We weren't going to do retail. It was wholesale. It was another business altogether that we hadn't done before. The fun of it was, as it was with Banana Republic, was inventing it, starting it. This is where the excitement came from for us. As it began to grow a little bit, it was back to the same old problem, which is basically you have to buy the tea before you sell the tea.

1:33:07So you're always short money. You always need more money. And at this point, our son was just a couple of years old. Our daughter was on the way. Our daughter had just been born. And we did not want to plunge back into that business. We said no. So I guess you only kept the business for like three years and then you sold it to a businessman and a beverage guy, like a guy who was in wine and sparkling water. Right. And this was Ron. This was Ron Rubin. Yes. Unlike Banana Republic, he stayed reverent. Yeah. The Republic of Tea stayed reverent to the original concept. We really loved that. I mean, the tea business, we're very proud of what Ron and his son have done with that business.

1:33:59And they still own it. They still own it. His son owns it now. His son owns it now. It's about as authentic as ever. It's a pretty decent-sized brand. Yeah. It's always very, you know, he's told me many times. I said, well, in a couple of years, this thing is going to be, and I named a number. And he said, well, we've exceeded that many, many times over. So he's a very happy new owner. From what I understand and from, like, the conversations, the brief conversations we've had before this interview, you've been, you know, sort of, you know, kind of retired isn't the right word, But you have chosen to live a life that I think is actually kind of the dream.

1:34:38I mean you're still married. You're about to hit 50 years of marriage. You've got two kids who – your daughter is a designer. Your son is an artist. She's a fashion designer. She's got her own label that she started. And you guys have been able to do what you want, which is to get – to have the freedom to travel and to – you paint, Mel. and obviously, Patricia, you paint. And, I mean, it sounds like a pretty awesome outcome. We're very lucky. We're very lucky. I mean, you didn't walk away with billions of dollars or hundreds of millions or whatever, you know, but you didn't need it. What do you do with all that money except have problems?

1:35:20I mean, who needs that kind of money? Yeah. Nobody needs that kind of money. We have each other and we have a good relationship with our kids and it's just a delight to go through our days together. Being through 50 years of this, you go through so many phases. But I would say I'm more in love with my wife now than I've ever been. I love that. And I'll go diddle with my husband. You've got to say that. Yeah. Now that he said it. Yeah. She's got to say that. We'll have trouble when we walk out of here. Mel, when you think about everything that you've achieved and all these amazing brands that you've been part of and created, But with Patricia, how much of where you got to do you think has to do with the work and your intelligence and how much do you attribute to luck?

1:36:10Oh, I would say mostly luck. We say go with the flow but don't forget to row. I mean in a sense, being in the right place, being born at the right time. I think that's really true. But just on the side of luck, I want to add that I think you can encourage luck by if you're willing to see that there's really assets and liabilities. There really is a silver lining of some kind in every crowd. I guess I'm just an optimist, but there's always a possibility to work with, at least in our more lucky, sheltered world. And I think one of the biggest lessons, we talk about it, meditation retreats and what comes, is that to me the biggest epiphany was that not knowing is the greatest strength because then you're open to everything.

1:37:15That's Patricia and Mel Ziegler, co-founders of the Republic of Tea and Banana Republic. By the way, their original store in Mill Valley, California, is no longer a Banana Republic. It's now a rug store. But if you're nostalgic for vintage banana, you can always check out the website Abandoned Republic. It was put together by old-school Banana Republic fans. And on the site, you can find the old catalogs and sketches of the original clothing, like the Spanish paratrooper shirt, the Egyptian cotton short-sleeve bush jacket, and, of course, the authentic Bombay bowler. Hey, thanks so much for listening to the show this week.

1:37:56Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And as always, it's free. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at GuyRoz.com. This episode was produced by Kerry Thompson with music composed by Ramteen Arablui. It was edited by Neva Grant with research help from Malia Agudelo and engineering by Kweisi Lee. Our production staff also includes J.C. Howard, Sam Paulson, Catherine Seifer, Alex Chung, Elaine Coates, John Isabella, Chris Messini, and Carla Estevez.

1:38:34I'm Guy Raz, and you've been listening to How I Built This.

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