Gymboree: Joan Barnes. How Building a Beloved Brand Nearly Destroyed Its Founder

26:03Yeah. By the way, there was a model like that, which is Jazzercise. I know Jazzercise. Yes. Yeah, still to this day, that's their model. They, you know, the instructors work out of community centers. Okay, so you write a business plan for this investor. I do. I go to him with a business plan. He says, you got it. And he just makes me an offer. He tells me he's going to put up$300 ,000 for 30 % of the company. He values the company a million dollars, which is sort of ridiculous, I think, but whatever. And he put up the$300 ,000 and said, you go for it. And so then Bud's now working for me. We're putting up a strategy to run franchises across the country and get a foothold in the media market of New York so we weren't labeled some crazy California phenomenon.

26:50And$300 ,000, 30%. So the business is being valued at a million dollars, which in 1982 is a pretty – I mean it's a pretty good valuation for what was at that point you had no assets. We had nothing and no leases either. I mean, it's like I like jazercize. I mean, any one of these churches or synagogues or whatever could say, OK, see you later. You know? Yeah. OK, so let's talk about the the initial plan, because from what I understand, the model that you you and Bud put together was was somewhat different. It wasn't like, hey, you want to own a Taco Bell or a McDonald's? It was you really wanted women actually to be the franchisees.

27:30Correct. Particularly women maybe who were not working. at the time. Tell me a little bit about that model that you start to develop. That was sort of, I think, one of our brilliant moments. What we were trying to do is really replicate people like me, but a little bit younger. Now I'm in my early 30s. So we're looking for women in their mid to late 20s who were raising a family, but also had ambition for some kind of professional focus. And this was like the perfect business. And so we had a unique strategy because, again, this is also pre-social media. We knew that the local newspapers were the next best thing to anything.

28:12I mean, paid ads, none of that was going to work like having a press endorse you and write a big story on you. So we just went about going to the local press in every community that we were thinking about going to and saying, we're thinking about going here and then some story about the neighboring community with the local franchisee and blah, blah, blah. And then people started running. We also ran kind of an interesting strategy. We ran advertorials. Like editorials that looked like editorials, but they were actually advertisements. Correct. And the Wall Street Journal so that daddy could read them on his commute to his real job that he had to do to pay for the family.

28:51And he'd say, oh, my God, this is perfect for my wife. and then they would fly out to California on their own nickel, maybe him too, but definitely her, and we would sit and we would spend the whole day with them. They would go to a center, then the management team and me, we'd all have lunch in my office together. And if any one of the management team of the company thought that this person was not a good fit for us, that was a veto. That was very collaborative. Yeah, and was there a certain energy or attitude you were looking for? Oh, yeah. We were looking for somebody charismatic, who was bright, who understood that this was like a marriage.

29:30The success of Gymboree was the interaction between the franchisor and the franchisee. In addition to that, we would also discuss with them how big of a business they wanted. Some of them would have six, seven, or eight locations. Some would only have one or two. And from what I understand, you really focused on the East Coast initially. Even though you were based in California, you really wanted to push the New York market from the beginning. Why was that? Well, first of all, we built out already the Northern California market because I was able to do that on my own even before we were growing.

30:08But when we opened in LA, it was a different story. And the LA franchisees were extraordinary. And they knew how to get all the press and they were part in the film industry. And so they were on all the fancy TV shows and they got all the movie stars in their classes. And they had about eight locations. And because of their success, we were able to build up the Southern California market because people who were in their classes would say, I want to do this. So that grew naturally. So the East Coast was where we needed to put our energy, which is when we did the Wall Street Journal ads. I hired a PR firm.

30:45They helped us get some big stories. And, you know, we're happening. And, I mean, this, like, was hot. I mean, starting in 1982, it was like you were getting all kinds of crazy attention. I mean, because it kind of coincided with this new trend around like child development and better understanding of like play. And I mean, this was becoming a thing, especially in affluent communities in the U.S. like, right? I even at some point, People magazine wrote, move over romper room. All the best babies come to boogie at Joan Barnes's Gymboree. That was a great. It wasn't. How about that? Yeah. We were in U.S.

31:28World News Report and Time and Newsweek. And I mean, it was like, I just had to pinch ourselves to realize we were getting all this press. Okay. And so, and basically tell me what kind of, you know, sort of blueprint you gave to the franchisees. Presumably you gave them like, here's how you run a class for this age. Like, were there different classes that they would run for different ages? And was there a script? Exactly. So we, first of all, had a week-long training program and all the different people on my staff trained different things. I trained them how to find a location. Somebody else would train about how to set up the equipment.

32:04And we also had quality assurance people that flew out to their locations and hung out with them and, you know, made sure they were doing everything well and whether or not we could be more helpful to them. All the marketing material, everything was that's that's what they bought. Yeah. All right. So you get you're really exploding. I think by in 1986, I read you had 25 employees in your corporate office. You had about 15 million dollars in revenue and about 400 of these franchisees about these local play centers in all across the U.S., even abroad in some countries. And I guess they were paying you like 20 percent or a percentage of what they were bringing in.

32:46Correct. Well, we had – in addition to the U.S. franchisees, we had sold Mexico, France, and we'd done those as master franchises. So they replicated who we were and then they would sub-franchise to things. And all under the Gymboree brand. And I remember seeing this movie in theaters. It was even mentioned in Baby Boom, the Diane Keaton film. She mentions Jimbery in that movie. I was at that movie and I heard them say that. And people pay, as you know, millions of dollars to have their airline put in there. And I started screaming, oh, my God, you know, because Diane Keaton's sitting there talking to a bunch of women in some Upper West Side Park.

33:28And they go, you don't even know what Jimbery is? I mean, come on. And so this really – and it sounds like you were targeting sort of affluent places initially, New York and Los Angeles and San Francisco. But you were also in Kansas City. I mean you had – you were mainly in cities, right? Mainly in cities, yes, or suburban markets. We were all over suburban Detroit, suburban Minneapolis, Atlanta, Florida. Yeah. All right. You get to 1986. This is now four years after you start the franchising. You've got franchisees operating all over the place. You've got$15 million coming in in revenue, which is from the outside sounds like you guys are doing great.

34:14But on the inside, you know that there's a problem that actually what seems to be a wildly out of control success had some serious underlying structural problems. What did you start to realize? I realized that the franchise model was flawed, that no matter how many franchises we had, it wasn't about scale. The revenues that the franchisees generated, therefore the percent that they would give us of their revenues, was never going to be sustainable. How? Is that just because a franchisee might have three or four days a week and only bring in a certain amount and you could see that there was just – you couldn't squeeze them for more?

35:01I mean we already were doing it, so I'd seen. We'd had several hundred of these things and each location would maybe pull in – a good one would maybe pull in a quarter of a million maybe. A year, yeah. Yeah, and we'd get 8 % of that or whatever the percent was at the time. It was 6%. Who knows because it kept growing. And in order, because of what I said earlier, Guy, that the success of the growth of the business was how well we supported the franchisees. So, yeah, we could not support them and then we wouldn't sell anymore. And so the cost of actually supporting them and sending out a team to be with them and run trainings for their teachers locally and all that stuff, it was all well thought out and really beautiful, except that it cost too much money.

35:44So essentially, the only way to even break even was to sell more franchises. In order to sell more franchises, you had to spend money to service those franchises. So it was like a catch-22. too flawed and i i realized it was flawed but i didn't know what to do about it because i couldn't i couldn't figure it out because there was no way i could charge more or give less service i mean i thought of all the possibilities now my question though is couldn't you do things like just raise the price like say to all the franchisees okay it's no longer five dollars a class you got to charge eight dollars a class well by that time we spawned competitors um and that's that's good news because if you don't have a real business, you won't – competitors validate the validity of the business.

36:36So they charged about the same thing. So we really – it wasn't really sustainable for us to get to a fee where our 8 % was really going to make a difference to us. Because it would have been a race to the bottom. Yeah. Just undercutting. It's amazing because on the one hand, publicly, you're getting national media attention. You're in Baby Boom. You're in People magazine. and everyone's talking about this thing. Every mom's going to it. Everyone loves it. It's so fun for the kids. But the business is barely treading water. Yes. You could have said it better myself. That must have been really, really stressful.

37:14It was, I mean, I'm usually pretty good at fighting it myself out of a paper bag, but this was, the only thing I could do was just be honest with the board and say, the way we're doing things is never going to have a return on investment for you guys. We could probably move along as a nice family business. I'd get paid. The employees would get paid. The franchises, but they would never see, they'd never see a return. And they didn't go into this to fund a little family business. I knew that. Of course. Okay. So you say this to the board and what do they say? They say, go figure it out. Just no more money.

37:52We're not giving you any money. Go figure out some other way. And, you know, that was like, okay, I'll figure out another way. So I guess you have to start thinking about, okay, maybe there's a product, maybe there's retail, maybe there's other things we could do. Well, the first thing I thought about was what can we do that doesn't cost any money because they're not giving us any money and I'm not going to be able to go out and raise money when our board is all invested in this thing and they're not putting up any more money. So I thought licensing. I was sophisticated enough to know licensing, you know, You know, Gymboree had a really great name, as you said.

38:26And a brand and a logo, right? Everything. And we had a great press and we were national. And everybody knew it by this point. Everybody knew it. You would go some places, what do you do? I run Gymboree. Gymboree, I love Gymboree. If you were a parent and didn't know what Gymboree was, you were like really out of it. Living on Mars. Yeah, exactly. And so we were able to secure some very, very prestigious licenses. We had Random House doing our books. Health Techs, which was kind of a cool brand for clothing, they did a clothing line for us. We also had Connor Toys did some really like a big climbing gym that you'd put in your – Oh, that you could buy like a – your own climbing gym for your house.

39:06Your own climbing – Oh, cool. And really colorful and nice looking and it was sold in Toys R Us. I mean it was like, wow, we really struck gold. It appeared. And you didn't need any cash to do this because you were just licensing your name. Exactly. But from the consumer's perspective, it appeared that Gymboree was even bigger. Like, wow, look what Gymboree is making. Yeah. But probably a year later, maybe a year and a half later, we were dropped by all of them. Because? Because we didn't have the sales. We weren't Snoopy. We weren't Garfield. We weren't Little Princess or whoever the cool product was.

39:40We didn't have a TV show. We didn't have nothing. We just had this live, living, breathing program, and it wasn't big enough. So even though parents were clamoring to come to the classes, they weren't walking into Toys R Us and going, oh, Jimbo Re toys. I'm going to buy them. Yeah. Well, they obviously were buying some but not enough because these licensing companies really want you to be the next gazillion dollar baby. And if you're not, they drop you. They drop you because there's always a million more TV shows that are with a new – so we were dropped. And so now licensing doesn't work. The franchising – we're still operating.

40:15I'm not, you know, but we're not making any money. We're making, we're doing fine. We're supporting our staff, but we're never going to pay them back. The same problem exists. All right. So this is 1986. You've got this major problem with the business, but then it suddenly looks like you might get a lifeline, right? You get, I guess you get introduced to someone from Hasbro, which is one of the biggest toy companies in the world, right? And what, I guess they want to make like an investment, maybe even a quarry. What's the story? What happened? Yeah. So first they thought they were going to do a corporate investment and then they thought they would buy the company.

40:51Do you remember how much they were offering? I don't. I think they had an option. Maybe it was the first they put in an investment. And then if we hit certain benchmarks, they would buy it. And so with that, you started to get some confidence that you could at the very least pay back your investors or give them a return. I just felt like we had been bailed out of hell. Yeah. It's crazy. By the way, can we just pause at how crazy that is? Because everyone who knew you was like, there's Joan Barnes. She runs Gymboree. It's the most amazing company. And you're like freaking out. I'm freaking out and I'm trying to act like I have it together and I don't want the franchisees to be panicking that we're going under because this is their business too now.

41:34You know what I mean? And so I get this offer. I'm so stoked. I get the lawyer. They, you know, they and their lawyers, they're going back and forth on these documents. And I go to New York to sign the deal. One of the investors is on the plane, the lawyer, you know, whatever. They're all coming for this big celebration for us to be partnering slash being bought by eventually with luck. Hasbro. Wow. I get a call that afternoon. I'm sitting in the hotel room and she says, hello, my name is Carol Anderson. I'm the senior vice president of something at Hasbro. You don't know me. And I said, oh, hi, Carol.

42:10I'll probably meet you tomorrow. She says, actually, you won't. The deal is off. We're not coming. What? That's what I thought. What? I said, I'm sorry. I said, we have our lawyer and our other investors coming. Everything was set. Your lawyers are, I'm confused. She said, well, I'll straighten you out. She was really kind of a not very lovely person. It's all over. We're not coming. And you were like, sorry, can you give me any more information? She was not forthcoming. Just that's all I needed to know was that it was off. Was there anyone else you could call? That was it. She was the kind, I said, should I call, whatever the marketing guy's name, who I really originally connected with.

42:50I said, would I be able to speak to you? She said, nobody's going to speak to you. I am the ombudsman telling you the news. Wow. I'm sitting all by myself. These people are on the plane. I'm humiliated. I mean, I thought, okay, this is the end. I can't imagine what we can do from here. I mean, to me, this was the bailout. And the board was thrilled. They loved Hasbro. Hasbro was a big deal in those years. Still a pretty big deal. It still is. Yeah. And so I left a message in the room for the woman investor who came from Montgomery Securities who became kind of a friend. And I said, please come to my room.

43:28This is one of your investors who came out. One of my investors who was coming out for the closing. And she had been fantastic. You know, she was with Montgomery Securities and she was a peer my age. And so she came to the room and I just burst out crying. I said, I'm so embarrassed, Linda. I don't know what to do. You know, all these hot shots are coming. Our lawyer, you know, another investor. And she said, we'll deal with it. We'll figure it out. And I don't even really remember. I just remember. It's a blur, probably. It's a blur. And I remember finally flying home and going to the Jimbry office and telling everybody that this had happened.

44:04And I said, you guys, I know there's an answer, but I don't have it. And I'm completely spent. I'm going to go to my little cabin in the Sierra to restore. And I'd like it if you guys would take the weekend to get together without me so I won't inhibit you and come up with the winning strategy. You basically, you come back and you say to your team. Figure it out. I'm done. I'm done or I'm taking some time off. I'm taking, no, I'm not done. I just can't, I don't have any, I would be a drag on a creative meeting for what's next because I was the one that'd come up with the, all of it. You know what I mean?

44:39I was the one, the big leader. And with the insult of Hasbro walking away from the deal, I just felt leveled. I had nothing left. I knew I would, but I needed some time to go be in nature and, you know, whatever. I read that you guys, that Jim Roo was down to$50 ,000 in cash. Yeah. I think it was even less than that. My CFO came up to the cabin and we sat there at my little kitchen table figuring out how long we had to live. You probably had to lay people off. We laid people off and those of us who remained in the, I called it the life raft. We all took 50 % pay cuts. I took a 75 % pay cut and everybody hung in there.

45:16But this was all quiet. This was not in the papers. It was not publicly known. Nobody knows nothing. The franchise, nobody knows anything except for me and my people that work for me. The board knows, but I said, we're coming up with the final and winning solution, you guys. I kept putting on the happy face. I mean, it's kind of this classic dilemma. You had an amazing brand, but you didn't really have a retail product. We did not have a money-making business. And, you know, I always say to my franchisees, the price of admission into the play yard of building a business is making money. You can do it for a little while.

45:54It's, you know, a social venture and it's fun. But if you can't make money, you can't stay there. Yeah. So when I got back from my cabin, you know, trying to figure out how long or 50 or 25 grand was going to last and who was going to get laid off and who was going to take pay cuts and all that stuff. On my desk was a picture of a play center next to a retail store. A photograph? A sketch? No, it was a sketch. Somebody had something. This is what they'd come up with. Our play centers, instead of being in church halls, we'd rent a space. We'd open a retail store. Jimbry branded stuff. And then in the back of the retail store would be the play program.

46:33So we'd rent one space and then all together. And I thought, wow, retail stores. Wow, that's a big deal. You know, what we'd have to manufacture our own clothes and, you know, sell them in our own blah, blah, blah. And I thought, OK, let's put this together. So just to be clear, the idea was let's have retail stores. We'll sell all of our stuff and we'll have the Gymboree place that are inside. Yeah. In the back of the – walk through the store, the back of the store. But the store would be a new creation. We would design and manufacture our own apparel and we'd also put some play equipment in.

47:09We'd have some – it would pretty much be all branded. Maybe in the beginning we'd have to bring in some other people's toys and things like that. But it would be a thing. So the idea would be, hey, they're coming in for the classes anyway, but let's make them walk to the gift shop first, right? Yeah, exactly. You walk to the gift shop, then you go to the class, and you've got to walk back out the gift shop. So the gift shop was going to be the business. Yes, exactly. But the classes are going to draw people into the stores. Right. And you liked this idea right away? I did. I thought it was – yeah.

47:41But I realized it was going to be – we'd have to really come up with the whole plan. We'd have to do a model of what the store looked like, some prototypes of the clothing. We'd have to do a whole thing and then sell it to the board. But again, I'm young and dumb and just – business was not dying under my watch. That's what I can say, Guy. It just was not going down. Okay. The board previously, like less than a year earlier, had said, go figure this out. No money. No money. Now you're going back and say, okay, we figured something out. I'm going to present this to you and I need money. Is that what you did?

48:17Yeah, I said, I think we really have come up with a winner to take the best of our reputation, the press, and all of that, and come up with something that is super sustainable. And it will need an investment, and I'm going to tell you how it works. So I just, I was all in sales mode. You know, we'd had a beautiful mock-up of the store, which is pretty much how it ended up looking, like a gym, and then some clothing. The woman who had done our clothing, her husband was the GM of the Gap. So he knew all these people in China that could manufacture for us. And she did a great job designing our first line.

48:54We couldn't design a boys and a girls because we couldn't make enough products. So we did a unisex line. Anyway, so I went to the board. Phil Schlein, who had been the head of Macy's, had just joined U.S. Venture Partners, my venture capital firm. And he asked the board if he could sit in on the meeting because he was like the retail guy and he wanted to hear what the deal was. And so I made the presentation. I could tell that it was going over well. And then he asked if he could speak. And he looks at the board. He says, you'd be crazy to invest in this business. First of all, they don't know how to run the business they have.

49:29True. They don't know the first thing about retail. And he just gave all the reasons why they should not invest. And by the way, the other question he must have asked was, haven't they already tried products with licensing? That didn't work. Why is this going to work? I think that question came up. But that one I had an answer for. That in our own environment, housed in our own world that we created, you know, and also the products that we were going to create were going to be really kid-friendly. These were three-inch cuffs and, you know, unisex. And unisex was kind of a thing then. I guess the argument you could also make was our customer base is affluent.

50:04They've got money. They're educated. Yep. All of that. Anyway, so they said, well, they would think about it and let me know. And the next day, the lead investor called me, the guy that put in the first$300 ,000. And he said, Joan, I always believed in you. We'll give you a bridge loan. Get over to Hong Kong, produce the line. And when you get back, you'll find a location. We'll open up a test store. I said, OK, Stu. Just as an aside, you were based in the Bay Area. There happens to be two massive apparel brands based in San Francisco, Gap and Levi's. and I think at the time Gap was starting to work on a kid's line as well.

50:44Like did you ever approach them or try to – You're going to laugh. Stuart Muldow, my lead investor, was on the board of the Gap. He was quite close friends with Don Fisher and he said, Joan, I'm going to get you in a meeting with Don Fisher. I think maybe – this was before I made the presentation about the retail to them and he said, I'm going to get you a meeting with him and I think if you presented to him, maybe they would take it and they would develop your whole retail So we talked retail. So I did. I went to Don Fisher's office amongst all the artwork that's now at MoMA and stuff like that.

51:15And he said, it's a great idea, Joan, but you need to know we're opening Gap Kids in six months. And I'm thinking, great. Even if we ever get this started, we're going to go up against the most formidable retailer in the world. This is great news. When we come back in just a moment, the clothing line goes forward, but Joan has to step back and leave the company for good. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

52:00Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1986, and just as Jimboree is about to launch its own line of kids' clothing, The Gap says it's going to do the same thing. But despite the threat, Joan doesn't back down. And she takes off to Asia to visit a clothing factory. Yeah, me and the woman who was being my designer, you know, were in the back of the bus of the airplane, you know, one of us sitting blind on the floor, the other on the two seats, you know. And we go, and then they say they can't make that few quantity because of what we need for one store. So I called Stuart, and I said, Stuart, they won't make this few of quantity.

52:40The factory needed a bigger order. Yeah, they needed it. And he said, I double it, you'll open two stores. So I did. I doubled the order. I come home. I get rolling. I look around. I find a location in San Jose and one in San Mateo. Are these in shopping malls or are these in - Shopping malls, yes. Top level malls between the Nordstroms and the Macy's. And these are, what, 10-year leases that you had to sign or three-year leases or what? 10-year leases. And they were at that time with only a thousand square feet. They were small stores. And we were ready to roll in the holiday season of 86 going into 87.

53:17All this had happened within a few months. Wow. Okay. So you get the clothes being made. You get the leases in shopping malls. which is a little scary because a 10-year lease, man, you are locked in. And the shopping malls, of course, this is the 80s. I mean, today shopping malls are in crisis, but this is like boom times. This was the top of the line. And also the fact that everybody's tried to get in and we don't have any history of any retail stores. How did you get in? I got in telling them that we have 10 franchise locations in the area. These people know the brand. And I implored them with all the statistics that I was aware of and that those people, you know, and they're going to bring other business to the mall.

53:57They come anyway to walk their kid, you know, just something to do. They'll come to the classes. They'll come to the store and then they'll spend money at the rest of the places. They'll go to lunch. And they bought it. And it turned out to be true. Okay. And tell me about the openings of these places. They were on fire. People were lined up. We did the highest dollars per square foot in both malls of any other store during that holiday season. What were people buying? Clothing? They were buying clothing, yeah. And actually, I'm looking at my wall here. I'm looking at a picture of the first store because we were voted the best new design in 1986 or 1987, as well as doing the greatest dollars per square foot.

54:39It's incredible. It must have been such a validation for you. It was such a validation. And we did it all on our own. I didn't have to go to the board and I hired all the people. All of our staff went down and merchandised the stores. We opened up the boxes all damn night. And we greeted the customers the next day and it was just a blowout. And you must have been on cloud nine. I was so ecstatic. And then, of course, the board, just like all businesses, they saw it as a winner. And now that we would go out and raise money. So within the next year, we raised$6 million. People were coming to you to give you cash.

55:14Yeah. And because Stuart knew all these people. So he went to Harvard Endowment, Chemical Bank of New York, and they all came in. Wow. And so now you're on fire. You've got something really hot. You've got a hot brand, but you're also making money. We're making money. We're doing well. And I also realize that I'm in over my head. And I'm assuming the board is like, expand, expand, expand. Let's go. Let's go. Let's go. Let's go. Let's put down a business plan. And I want 50 stores by year three or something. And now they're telling me I'm aware that I had what I call my origin team, the people who've been with me from the beginning, which we wore every hat.

55:52Okay, put your marketing on. Okay, put your this hat on. Because that's what you do when you're building. You well know when you're building something. And now we needed the specialists. We needed someone who did this and someone who did that. And so my main investor said, Joan, and I knew too, it's time to let go of those people. Start hiring people. start letting go of firing the people that the generalists that have been with you forever took the pay cuts did everything and I thought I can't do this they wanted you to professionalize basically quote-unquote yeah they wanted me to do like like run a real business and I thought you know what I should go too I'm over not only should the origin team be cut I should be cut because I I don't know what I'm doing either we need somebody that really knows how to who's done this before.

56:38It's one thing. I'm a visionary. I could conceive what the store would look like. I can get it operating, but I'm not going to be the right person to replicate this in, you know, up to hundreds of these things. I'm just not. Okay. This is 1988. And again, from the outside, you are just one of the most successful female founders in America. You've got this incredible brand. It's expanding like crazy. All this money is coming in. The board wants 100 stores in the future. And you yourself are like crumbling inside, like you are actually physically unhealthy. Yeah. And also, you've talked about this and written about it.

57:23You had an eating disorder that was serious. I did. And I managed it by building a gym in the Gymboree headquarters and making everybody come at lunchtime to a neurobiased class so I could settle myself down. It was just not a good time for me. Everything looked great on the outside and on the inside, I felt like I couldn't do this anymore. And you were exercising like hours a day just to cope with the stress. I was an exercise addict. Uh-huh. Yeah. Were you talking to anybody about this or were you keeping this all in? At that point, I think I was still keeping it in. I was just embarrassed. And I knew that I had all these franchisees that depending on me, and I wanted to keep it together for them.

58:07And I said to the board or said to my main investor, I am going to let these people go as we both know they need to. Do you think it maybe it's that you want to replace me too? Because I'd be down for this. No, the press loves you. Everybody thinks you're going to run it all the way. And I'm thinking, okay, I'll do my best. Meantime, Joan, you were working like crazy, right? Yeah. And you also had a family. I think you had two kids, right? I had two kids. And your husband was busy. Tell me about your relationships at home with your husband and with your family. I mean... Well, I had hired au pairs from the time my kids were little because I was working so much.

58:52And, And I'd be like, well, what's for dinner? You know what I mean? I just, you know. Yeah. So I was, you know, basically hired someone to kind of raise my kids, except for on the weekends and the vacations. I was there. And my husband was, you know, he was now, you know, major. He was a big-time editor? He was a big-time editor, but he morphed from that to running campaigns, running Bill Bradley's campaign and Jerry Brown's campaign. Oh, presidential campaigns. Yeah. Or Mayor Oral, like Bradley in L.A. He morphed into another business where he parlayed all his know-how into that. So he was running – and so neither one of us were manning the store.

59:31He was more involved than I was. And you had two kids. And we had two kids, and we were both very much committed to our professional lives. And we were drifting apart because I didn't have the energy to hear him about his day-to-day shit, and he didn't have the interest in mine. And, you know, so I don't just I could tell that this wasn't going well. You around this time were hospitalized. You had a panic attack. I can understand. I mean, it's so crazy because on the one hand, the business is really succeeding. You're under a lot of pressure from your board to fire people, to run new people, and also to double down on how much you're working.

1:00:14Your marriage is crumbling. and you are feeling overwhelmed. Yeah. And so one of my employees who became a friend took me to the hospital and they said, yeah, you're having a panic attack, you know, gave me whatever they give you for that stuff. And it just wouldn't go away. Then I decided to talk to somebody and then I hired a therapist and I told them about my eating disorder and they said, oh, we'll solve it here in the thing. And, you know, it's not solvable that way when it's as extreme as what I was doing, I mean, you know, I was, you know, I was a bulimic and I was an exercise addict and it was just not.

1:00:51And I was, you know, just I was not in a good place. Let's just put it that way. And I decided I was going to go to a treatment center. You were going to need to step away from the from obviously from the business. Yeah. So I told the investor that I was going away for 30 days. And would he, you know, would he cover me? I had hired. I think by that time they'd already kicked me upstairs. I was chairman of the board. So you weren't operationally. I was already hired somebody who's operational. But, you know, from the press's point of view, I'm chairman of the board. You know what I mean? And I went away and they told me at the treatment center that I would never recover if I went home after 30 days and I needed to go to a long term.

1:01:30Where was this treatment center? Georgia. I was up in the Blue Hills of Georgia. It was one of the one and only eating disorder 30-day programs. There was millions of alcoholic programs, but this was for eating disorders. So you basically go – it's kind of a place where you go and you live on this campus and they have a structured program for you. Yes. But really 30 days is not going to be enough. Not enough. They said you're going to need to go to long term because it's not like you plug the jug like an alcoholic. You have to create a whole new relationship with food because you need to eat. You just need to do it in a different way.

1:02:03But the thing that I really learned about it was that you recover because you're with like-minded people and it's not the therapist thing. It's your other, quote, colleagues that were also suffering from eating disorder are going to bust you. And eventually when I did get home, I went to that therapist. I said, if you ever have anybody like me in your office again, get them to treatment because that's where it happens. John, did you feel like – so I mean on the one hand, you're this role model and you're strong and you've run this business and all these things. On the other hand, you're doing something very vulnerable, right?

1:02:39And people had to know about it because they need to know where's John going? I told Stuart I was going and then I called him. He's your main lead investor. Stuart, my investor. And I called him because I thought my marriage wasn't going to make it either. And I told him that I wanted him if he would because it wasn't public company or anything at that point. I wanted him to buy some of my stock or all of it because I wanted to have some financial security because I didn't think my marriage would make it. And he said, Joan, this is your business. You made this all happen. I don't want you to ever think I took advantage of you and you were vulnerable.

1:03:09You go away. I will definitely buy you some of it or all of it, whatever you want. But I want you to really think about this. He was such a great guy. And I said, okay, I will. He paid me the whole time I was gone. I got my salary. and I called him halfway through that time and I said, Stuart, I need to sell. He said, how much do you want? How much would you be willing to sell? I said, Stuart, I'm like any other entrepreneur. I want a million dollars. And he said, okay, well, there is no public market for it. I'm going to leave you with 30 % and I'll take 70%. So you get a million dollars for 70 % and you keep 30%, but you're really focused on your recovery at this point.

1:03:51And you would stay there for almost a year, 10 months, I read. Yeah. And I guess after you left that rehab facility, you didn't come back to California right away. You actually spent quite a bit of time on the East Coast. And then eventually you moved back in 1993. But by then you'd been away for quite some time, like almost three years, right? Yeah, about three years. And you moved back. And I guess – and now your daughters are – they're grown up. I mean, I think they're close to my age. So they're in college. And you would come back to try and – and you say this. You've written about this to kind of repair your relationship with them.

1:04:31There were some challenges. Yeah. Well, I mean I left them when they were – one was a freshman in college and one was in high school. And I left. And I never came back. I mean they thought I was gone for 30 days and I was gone for almost three years. I mean I came back periodically but I wasn't living with them. You know, fortunately, their peer groups and their friends were much more important to them at that time than their mother. But I definitely needed to do some repair work. And we did. Did that take some time? Yeah. Yeah. So you come back to California in 1993. And that year, Jimboree announces it's going to go public.

1:05:12Were you even involved? Like, did they communicate with you? Did you have any connection with them when you came back? I was, I'd gone to a restaurant in Los Gatos where I went to move. This is like around, again, in the Bay Area, yeah? Yeah, the Bay Area. This is in the South Bay. And I go to this restaurant and I heard a bunch of, you know, sort of entrepreneurial types, young sort of wannabe Silicon Valley go-getters talking. And I heard them say, you know, a consumer company went public yesterday for quite a valuation. It's Jimboree. And I overhear this and I thought, what? Jimbory went public?

1:05:52And I'm sort of half-assed interested, really interested. And I go up to where they're, you know, and I see a bunch of New York Times sitting on the little bench next to where you cash out. And I took a paper and I opened it up. And sure enough, in the financial section, I see one of those tombstone ads that Jimbory was going public. Wait, how were you not informed of this? I mean, as a shareholder. Nobody told me. But as a shareholder, I think they have to find out if you're going to sell your shares before they're going to go public. Like, I don't understand how you were not made aware of that.

1:06:20I was not. Maybe I had signed something originally. I don't even remember that when I sold my shares to the investor, maybe I signed something that if there was ever an event that I would agree to. You know, I was sort of still out of it whenever that was happening. So I did not know. I looked it up there. IPO price was$20 at the end of the day. I think it closed like$38 a share. It went up 58 % on the first day of trading. And so you had 30 % of your shares remained. So you probably still had some considerable number of shares. I had some money. I mean, it was nothing like what I would have had.

1:06:58And I didn't even care. But did you – so when you found out about this, what did you – did you want to liquidate your shares right away? Well, you – no, I did not. I was so focused, Guy, on maintaining my recovery. That was the most important thing to me was that I could do that. But the company, I kept my stock because it was like, this is my baby. I can't sell this stuff. And the company went split a number of times. So it was kind of smart that I kept on to it. It was not smart knowingly, but it turned out well for me. Right. Okay. So the company IPOs, and that's really – I mean you'd already kind of been out of it.

1:07:34But that's really kind of your end with Jimboree. Meantime, you are now back and you are divorced. Right. Got divorced that same year, a big year. The company, the company went public. I got divorced. And you are fully recovered? Yeah. Although some of us like to think that you're, you know, they're always doing push-ups in the background. So you need to be vigilant. But I was really committed and I've been in full abstinence for 35 years. So I feel like it's behind me now. And fitness was always part of your life anyway. Yeah. You were a big fitness person and still are. I guess you were never really into yoga, but this is when you start to get exposed to yoga in the mid-90s.

1:08:20That friend of mine that I had that was in the dance company with that we shared the job at the Jewish Community Center, we stayed friends this whole time. And she called me, she said, come do a yoga class with me. And I said, I'm not a yogi. I'm a mountain biker. I'm a this, some of that. You know, that seems silly, but okay. Friendship trumps, I'll go. And my first class, I fell in love. I just, it just, something cracked in me. I was able to access my emotions. It was just the way those poses were put together. I just loved it. And I became a yogi right from the get-go. And then people came up to me and said, oh, you're the Jimmery lady.

1:08:56You should open up a chain of yoga studios. Of course they would say that because you already proved what you could do. I've already done this, right? And I said, you know, I don't think I can do this again. I just kind of – and they said, well, how about just a Bay Area chain? Who were these people saying this to you? These were students in the class that I had known and people – fellow students with me or people I'd known from the community and stuff like that. And I thought, you know what? I guess I'm going to – you know, I just – I softened to the idea because I'm an entrepreneur. I love the idea of growing.

1:09:27I love service businesses. I love a business where you go in one way and an hour later you come out another way. And I thought, okay, we'll do this. So you basically decide that your next act was going to be... Yoga studios. It's amazing because it's basically Gymboree for grownups, right? It's exactly that. That's what I would say to myself. I'd say, here you go. Because I start businesses for the phase of life I'm in and I still want to do like a A senior living center because that's the stage of life I'm headed towards. But I'm not fully there yet. I don't want to go live in one of those places.

1:10:00But if I do, I want to start it. And this was going to be a chain of yoga studios only in the San Francisco Bay Area. That was the idea. That's what I thought. I can't do this nationally. I can't do that. I can't do a big rollout again. But maybe I could do a little Bay Area chain. And so where did you open the first location? I opened the one in Mill Valley where I lived. And I thought, gee, I want to be just like a little franchisee. I just want to have a little location, go home, have this thing, you know, blah, blah, blah. And then I opened one in another area of Marin County, Larkspur. And then I opened one in the city.

1:10:33And then I realized I can't, the same stuff is coming up for me again. What? Like what? I'm feeling completely obsessed with this business. I can't think about anything else. I don't want to see my kids. I don't want to talk to people. I just want to make this business work. I don't have that ubiquitous thing called balance. I don't know how to do that. I just don't. And I didn't want to have another breakdown. I just, so I said, I'm going to sell the business, which I did to YogaWorks, which was a national chain. They had at the time when they bought me, they had about 25 locations. They were in LA, but they buy other studios like me and change the branding.

1:11:09So now it went from the name I called it to YogaWorks. Your business was called the Yoga Studio, right? Yes. And you had, how many locations did you have? I had three locations, but they were really significant because they weren't like these old school places that were up upstairs with purple walls. They were in real malls and we had like three studios and we had a retail thing. They were significant businesses. Was it breaking even? It was not. Yeah, it's a tough business. It was another Jimbo-Ree franchise business. The service business, even though the classes are packed and everybody thinks it's super successful, it's just not.

1:11:47That's the thing. It's like restaurants. You go to a restaurant, it might be packed, but the margins are thin. And you go to a yoga studio and it might be packed, but it's just the capacity is limited. You can only fit a certain number of people in and they're really hard businesses unless it's a super efficient model. Really hard businesses to make profitable. Right. And here I had been selling my teachers all these years and were partners. So I would give them 50 % of the revenue. That was never going to fly. And the truth is I was not going to be able to make it work because unless I changed the way they got paid, which was too scary for me, I wasn't going to do it.

1:12:29So I sold it to YogaWorks. Yeah, and YogaWorks eventually would go on. During COVID, it went on. During COVID, yeah. And so this really begins the next chapter in your life to start focusing on just different things. I mean, tell me a little. I mean, here you are. It's 2008 time period. You're in your 50s, right, at this point? Early 50s, yeah. And I mean, were you done with entrepreneurial ventures? What did you think you wanted to do at that point? Well, Jim Marie now had a new chapter. And first of all, YogaWorks, I consulted to them for about a year and a half after they bought me. And then I decided that while I had lost my privilege to be an entrepreneur, it didn't mean that I didn't love the whole idea of other women building their businesses.

1:13:19So I became a mentor slash consultant or whatever to other women who were running their businesses. And then I went on the speaking tour. I became a keynote speaker and was flown all over the place to speak to women's conferences. But you didn't like that? Well, I liked the fact that I would tell my story pretty unvarnished, as I'm telling you, about the whole eating disorder thing. And women would come up to me afterwards and say, I've never told anybody, but I have an eating disorder too. It feels so good to know that there's someone like you who I looked up to and thought I wanted to live your life.

1:13:52And I always say, well, wait till you hear the story before you want to be me. You know what I mean? And so that felt good. But it was lonely. It was even more lonely to fly across the country and then lead a workshop and then fly home. I just – I didn't love it. Meantime, the Jimboree world – I mean it went public. It was public in the 90s. And by 2010, it was acquired by Bain. Yeah, for$1.8 billion. Which is incredible. I mean the shareholders I'm sure did very well out of that and you're certainly – you were nervous about paying your investors back. But of course they did very well. Yeah. Many millionaires, many multimillionaires.

1:14:35But this really begins or maybe it was in the midst of a decline, a significant decline for Jimboree. I mean that was sort of its high – probably its high watermark in terms of its value because then eventually I think Bain then buys it for$1.8 billion and then sells it six years later for$127 million. And then recently the brand name was bought for$75 million. Clearly people still see value in it because someone paid$75 million for it a couple of years ago just for the name. Exactly. And there's still – I have friends that live in Oakland and there's still a franchise on Oakland on Lakeshore Drive and kind of the kind of hot area over there.

1:15:17I mean they're still around. Joan, you are in your 70s. Yep, late 70s. And you're very – people can't see you, but you're very vibrant and clearly very fit. Tell me a little bit about your sort of regimen. How do you – what do you do? I pretty much go to yoga every day or maybe four times a week now. And I hike every day. And well, it's not like I haven't had my fair share of things. I'm a cancer survivor. I mean, I've had my stuff too, but I just - When did that happen? I got my first cancer, my first and only cancer, actually, six years ago. I'm six years in remission. So when I was 72. Wow.

1:15:57I had major ovarian cancer and it comes on very quickly. I figured it out quickly and they put me into surgery and it was heavy duty for a lot of years. Wow. Yeah. But I think I'm a little bit naive guy, to be honest with you. It just never occurred to me that I would really die from this thing. So I just kept keeping on. And then I knew that because the oncologist kept telling me, you know, there's going to be life before cancer and there'll be life after. And what did that mean for you? Well, I thought she meant like, don't expect to come back to your old self. You know what I mean? And I was like, okay, well, I'll deal with that when I deal with that.

1:16:39But I pretty much have. I mean, I'm older, so I've got regular aging issues, but I'm pretty much myself. I wonder when you think about, you know, starting at the Jewish community centers just with, you know, part-time job and then turning it into a really big cultural thing, right? It was People magazine, baby boomers, centers all over the country, eventually bought for$1.8 billion from Bain. When I put it in those terms, do you reflect on it and think, that's a lot to be proud of? Yeah, I'm proud of it. I mean, it's not my defining, actually, my recovery from cancer. I'm more proud of that and how I came through that.

1:17:22I hear you. Yeah. Yeah. I mean, I guess, you know, I ask this question to everybody because I'm the show and, you know, it's more of a chance to kind of reflect. But do you think that your success came from all the work you put in the grind? Or do you think some of it had to do with luck and just the timing of all this? the both and absolutely the both and um i think you have to definitely be on the right street corner at the right time when the bus comes by and know which one to get on and there were many of those moments but i also think that um if i had given up where many people would have and probably i would have too if i was a little smarter different periods of time you know just walked away like oh god the franchisee doesn't work oh god the licensing has crumbled Oh, God, Hasbro's killed us.

1:18:09You know what I mean? Just a million exits should have happened. But I was, as I mentioned earlier, I refused to let the damn business die. I'd let my marriage go. I'd let my kids fall. I mean, and I still don't know. 25 years of therapy later, I still do not know why I put that kind of effort into it. It wasn't like I had a lot of money into it. That's$6 ,000, you know? I mean, that was the total sum of my investment in this thing. I mean, it's part of me, and I loved building that business until it was just over my head. But I really loved the camaraderie of the team and the women I built it with.

1:18:46And I feel like what a privilege it was to be able to dream up something and have the right people at the right time and get the right investors to be able to make this a reality. That's Joan Barnes, founder of Gymboree. By the way, even though Gymboree is nowhere nearly as big as it once was, it's still doing pretty well overseas, especially in China, where there are hundreds of play centers. As for the clothing line, the retail stores closed down in 2019, but the brand still exists. It's owned by a company called The Children's Place, which recently reopened its first Gymboree brick and mortar store at a mall in New Jersey.

1:19:31Hey, thanks so much for listening to the show this week. please 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 totally 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 or on Substack. This episode was produced by Chris Messini with music composed by Ramtina Arablui. It was edited by Neva Grant with research by Ramel Wood. Our audio engineers are Patrick Murray and Jimmy Keighley. Our production staff also includes Alex Chung, Casey Herman, JC Howard, Sam Paulson, Catherine Seifer, Carrie Thompson, John Isabella, and Elaine Coates.

1:20:10I'm Guy Raz, and you've been listening to How I Built This.