A Multimillion Dollar Deal, a Product Recall and a New Chapter: Gwen Whiting on the Good, the Bad and the Ugly of Acquisitions

0:00Today's episode includes descriptions of sexual assault. Please take care while listening. For a lot of founders, selling your company is the ultimate dream. But for Gwen Whiting, that dream was actually a bit of a nightmare. Gwen's the entrepreneur behind The Laundress, the cult favorite brand that turned laundry into a luxury business without a single dollar of outside funding. Gwen sold The Laundress to Unilever for a reported$100 million. But after she left, the recalls started. We talk about how she built it, what really happened during the Unilever acquisition, and the fallout that followed.

0:35In the show notes, I'll also link the articles that Unilever responded to so you can see their side of the story. Gwen also shares what she wishes she knew before she signed on the dotted line, and why she's back now in the game with her new venture, The Fill. We also talk about how Gwen manages professional challenges while dealing with personal ones. At the end of our conversation, Gwen shares her experience as one of the 567 known survivors of a now disgraced Columbia OBGYN. It is a brave and important conversation about personal trauma, public accountability, and reclaiming your voice. Interview right after this.

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3:21Looking to get started? Find a co-host at airbnb.com slash host. Gwen Whiting, welcome to Money Rehab. Thank you. I'm so happy to see you. I'm so happy to see you. It's been a hundred years, it feels like, but it hasn't. It's been seven? Six and a half. That's kind of in dog years, it's a hundred. I know. The pandemic happened, you built, you grew, you sold, you broke up with. Rebirthed. A lot of things have happened. We got a lot to catch up on, sister. So let's start with when we met, you were building laundress. We met actually, I think I just sold. The way you described it to me made me a believer.

4:07Your passion about laundry, I had never, not once, not ever really thought critically about my laundry. And I completely just wanted to buy whatever you were selling. So I did. But tell me why you decided to sex up the laundry business? I mean, to me, it was just such a personal need. The landscape of products and options for cleaning in 2002 when I started and I launched in 2004 was super limited. It was the garbage at the grocery store and a dry cleaner. That was it. The vocabulary for me, I was a designer, apparel designer. I had a textile background, but there wasn't the terms was a white space or this, you know, it wasn't until after 2008, nine, when people just like woke up and were like, Oh, here's an opportunity.

4:58I'm going to do mattresses. This was my own personal need. And it was so obvious that it could be better and it should be better. But you were not an entrepreneur before, right? Or I mean, that also wasn't really a word in 2002. You were a business owner where you started a business where you ran a business. My dad had his own small business and ran a company. So I came from a house of that was a lifestyle was creating a business and, you know, a life for yourself. And in college, I had lots of ideas. And I was started, I started a Thai business in high school, I had a business plan in college that I, you know, did a lot of research and went down the road, but needed a job.

5:44I think there are a couple kinds of founders, one who wants to be a founder, so they are out there hunting for a business idea, and another one who has a business idea, so they become a founder. It sounds like you were a little bit of both. I wasn't like, oh, I need to start something. It was like, I want to get a job. I want to create, I want to do all these things. But then this was the idea that was worth going for. And I did it on a smaller sort of cottage industry level, all those other ways. But this was really the big business idea versus like a small side hobby or a passion or something fun to do.

6:21Yeah. And when you started, also the idea of raising money and taking on VC was not as popular. Yeah, it wasn't a thing. It wasn't a roadmap. It was something that I didn't know how to do. I built a very small, responsible, bootstrapped company very, very differently. I built with credit card debt instead. Hmm. Well, so you never raised money for the launchers. You had a SBA loan? Yeah. I launched with a hundred thousand dollar SBA loan. That was the money that funded my first production run in the launch, but that doesn't last very long. No. And, and when you were in those early days, how did you get into the credit card funding zone because a lot of entrepreneurs, if they're going to bootstrap, there are good days, there are bad days.

7:18You have to get scrappy and creative. I say that my 16 years of Laundress was a never-ending startup. It was scrappy through and through the end and self-funding and that's just the nature of the game. You don't get money thrown at you to build a luxe office or throw money just out there that to just to spend it because you have it. It's a very different approach. So there's, you know, bottom line and the responsibility and a compromise for every spend. But I never carried a credit card balance in my life. That was not something that our family did. Our family didn't even use credit cards. We had a credit card for rental cars, like to travel once, you know, once year.

8:05It wasn't a thing. And I was raised that credit card debt was the worst thing you could ever do possible. But the money, the$100 ,000 went quickly in an inventory-based company. You have to buy your inventory. And I needed access to cash. And it's very comical because there's this small mini female founder movement, like a very mini movement. And they're like, oh, you're a woman, you can get money. And that was like really small loans that were at 9%. And the interest rates then were like two, 3%. So it was, it was, it was better to get a credit card APR and like a$20 ,000 line of credit. And then that continued.

8:55And this is the day when you actually got the applications in the mail. And I would probably get a, you know, I got an envelope up almost once a week. And if you just filled it out, they actually gave you a card and a line of credit. So I was like, I became a pro at rolling over credit card debt from one card to the other and jumping APRs and jumping credit limits. And, you know, quarter million dollars later, that's how I funded the laundress. And that all came down in 2008 with the financial crisis. Yeah, I mean, the way you talk about that is similar to how my husband, who's an entrepreneur, talks about it.

9:32Just getting through COVID, like through credit cards to try to make payroll. I bootstrapped my business. Like it's a slog every day. And it sounds like there's a lot of memories that probably stick out to you of things that you did to try to save money. I don't know if you've seen the Instagram trend that's like the unhinged things I did early in my career, but do you remember any? Oh my gosh. I mean, it was unhinged for the whole time. You know, what I put myself through and that carrying that debt and living hand to mouth all those years is incredibly unhealthy. And, you know, everything's trending and on Instagram, and people see and think this is like such a sexy, luxurious lifestyle to be a founder and get money thrown at you.

10:21And you got, I go to these events and it's like, I'm series C and series B and series, series, series. And it's like, A, I don't know what you're talking about. B, like, that's not impressive to me. Like that's such a badge of honor. And I'm like the outlier who walked away with selling my company with the majority ownership. So it's a very different landscape of at the end of the day, what presents as sexy versus the reality of keeping your company and keeping your equity and having that versus giving it away all those years. Totally agree. It's something that I get asked all the time too. And I'm like, I, I don't understand how this has gotten to be the thing that every entrepreneur wants to do, because I started, I'm sure you started to be your own boss.

11:16Exactly. It's like the minute you raise money, you just gave your, you just gave that away. You're not your boss anymore and you have stakeholders and you just gave your autonomy and authority and away independence, the whole thing. Were you tempted at times to take on outside capital or? No, because it no, because as horrible as it was, I knew that I couldn't give any part away for my own protection. So did you have an idea of what you ultimately wanted the outcome to be? I mean, I loved what I did and I'm so passionate about it, which you experienced. I was so focused on just getting through the day and the week and the month and the year.

12:07And so I had a concept of the business plan that I wrote was like a five-year plan of you do it for five years and you exit and at the time when writing that in 2002 the only other brands that had like a niche or a small brand or a creator brand outside of the giant corporate structures were acquired really quickly it was like bobby brown and bliss spa and Frederick Fakai. And there's a Bumble and Mote. There's a handful of really small niche prestige brands that was like the birth of something non-giant CPG. And their track records were like really quick acquisitions. So I just assumed that that was like the lifespan of this kind of journey.

13:04Not because I wanted to exit or understood what that even meant. I just thought That's how that worked. And then the 2008 financial crisis changed that. And then, you know, you wake up one day and it's 16 years later and you're still doing it. But I did expect to exit, not from a financial perspective, not like, oh, I'm going to cash my chips and have a windfall. And like, woo, that was never part of my understanding or sensibility of it. But my feeling was that I could only take my brand and my company so far and a giant or a larger parent company. I needed that for my brand to like go to the next step.

13:52Why did you think that? Because it just seemed like it was needed to be bigger and get into different distribution categories and things that I didn't necessarily have experience with. Maybe I didn't have that much also interest in like getting into the grocery store business. but I just was like, okay, that's for someone else who does that. And again, this is also sort of the understanding of what happened in the landscape, what other brand trajectories were. And knowing what you know now, what would you tell? I mean, that no one is more qualified or competent or passionate or the vision of the brand than me, period.

14:33But I was also in a complicated situation. I'm saddened by what happened, but I can't regret it because I was in a very, very complicated, toxic partnership work environment. So I kind of did what I had to do, but I didn't expect the outcome. So how did we even get to that outcome? So 16 years later, spoiler alert, Unilever acquired the Launderist in 2019 for a reported$100 million. I heard that they first approached you. They came into my store on Prince Street. I had a retail store on Prince Street. I started talking to my sales associate. It was so bizarre. It was completely unprofessional.

15:19And you kind of always are like, what are you doing here? Are you sussy now? Are you copying? or you're like looking at the competition like what are you doing and you're having a dialogue with with someone from my team which is also strange but they're not like wearing a unilever polo no but there's like like what are you what are you doing what can i help you what are you looking for where are you from and he's like oh i'm from unilever i flew in from ohio like is gwen is gwen here i was like that's crazy it's crazy so this woman calls me from the store at my office 30 blocks away. And she's like, go on, go on.

16:00I think you need to get down here right now. There's a guy from Unilever. And I was like, please pass the phone, put him on the phone. And I was like, excuse me, what are you doing? Like you're in my store, in my space, in front of my team. Like if you want to have a conversation, like, do you want to call me back? You want to step outside and call me back? And then what happened? So then the dialogues, he stepped out and called me back. But I guess in retrospect, I should have been like, what is up with these people? Like, this is their process. I mean, it's it's wild because, you know, I think some people have this delusion that they're going to be like discovered on the street back in the day.

16:36Right. Exactly. Like modeling scouts or something. But that's not a thing in entrepreneurship. I mean, you joke about the idea that you didn't know about an exit. Of course, you you knew more than you're giving yourself credit for. But like typically a sale process, you get a banker, you do a process. the whole thing. Like somebody doesn't just, you know, undercover boss show up. Exactly. Exactly. And I always said, because the store was sort of like the last thing on the business plan to do list, because it was important to me to feature and showcase my whole vision in a brick and mortar place that you could understand what the whole world of the laundress was.

17:15And I came from Ralph Lauren. I was a designer for Ralph Lauren. So we were very much in this, like creating of a world and an environment. And so my, my whole vision was on the website. It was, you know, you could be on a shelf in the container store, Bloomingdale's or whatever. And I had stores in Asia, but I was like, I need to have my own showcase. And I joked that it's like hanging the fly paper. And one day someone would walk in. I didn't actually like mean that literally, but it happened that's exactly what happened so without talking about specific numbers i know you can't look so this guy steps outside he goes into your store you start a negotiation so yeah the next the next call was like come to new jersey and like kiss the ring that was the week after so a meeting with the executive team it's correct what was the opening offer or what But then that started the dialogue of, of like, do you want to be in the family?

18:16And, you know, the Unilever family and like drinking the Kool-Aid. And I always believed that my brand acquire or ideal like date for the prom was seventh generation. I thought we shared, we shared a value system. And I was just the prestige version in a shared ecological product value system. So then when seventh generation was acquired by Unilever about three years before us, I was like, okay, like they care. And so that started the discussion, but the negotiation went on for like 13 months. It was quite disastrous. Their first offer was like a joke. And the response was like, this is a joke, correct?

19:06You know, like we are a incredibly profitable business and there was no value in our valuation to them of being profitable. And I was like, you just paid this like stupid ketchup company who's not even profitable like this amount. Like, are you kidding me? Like we're a perfect, pristine, clean, profitable business. Like, where's the value in that? And they're like, oh, we had to pay that investor guy. And like the Belgians and like they were jerks. I was like, oh, I'm sorry, because we don't have a pool of investors. So you think you can like get off cheap over here? Did you think about saying no?

19:47I did say no. I was like, yeah, no, I don't think so. But they kept coming back. Yeah, it was a it was a long process. So it sounds like they got to the terms that you wanted. Yeah. And were you truly willing to walk away if they didn't? Because I think that's where the strength in any negotiation lies, when you're truly, truly willing to walk away. Yeah, I do have to give credit to our female banker who made all that happen. And she knew the terms and she got them where they needed to be. And that was really her doing of getting that done. How did you find her? Or like if another founder, probably not in the same way that it happened to you, but if they get approached for some sort of M &A transaction, what do you do?

20:50Really clanky, awkward situation because we weren't ready for market. And because we had never raised money, we never had any of this like system set up where if you raise money, then you kind of have done a little bit of, you know, you have this deal structure, you have like your lawyers, like you have some of that slightly put together or way more put together than me just operating a normal business. and my business partner and I were not on the same page in any shape or form. So that was like a whole nother layer to this. So we like fumbled with a lot of not great fit in the very beginning and trying to get to the right team.

21:34This banker was actually recommended by Unilever because she had done the Dollar Shave Club deals. And so she had done big deals and my business partner didn't understand. She was like, that's like taking a divorce attorney recommendation from your husband you're divorcing. And I was like, you don't really get it. They like to do business with who they know. Like, that's that's how like a lot of these companies are like they want to work with the people that they know. And certainly her precedence was like she shook every penny for the dollar shave club. So she's this woman was like not giving businesses away.

22:13And I know there was so much ick that followed, but at that point, if we could go back, I'm sure, or I'm hoping that you celebrated when the acquisition happened. Yeah. So the night before the deal closed officially at nine o 'clock on Monday morning and everything was so touch and go and a nail blighter to like the last minute. But on Friday afternoon, I like it was all set up. The wires were set, like the press release was set, like everything was set. So on Friday afternoon, I called the guy who did my like New York wedding dinner at the Waverly Inn and set up the back room at the Waverly Inn on Sunday night.

23:02And I just started calling people and I said, hey, are you any chance you're free for a dinner on Sunday night? And so all these people showed up and they just thought it was my husband and I invited them for dinner. And I got my mom in and there was like 35 people. And, you know, my mom walks in and sees like my best friend from Boston is like, what are you doing here? Everyone thought I was going to roll in with like a baby. I was like a baby. My mom was desperate. It was a baby announcement. And instead it was I had just sold my baby. So it was a surprise cell party the night before. that's cool and when the wire actually hit how did you feel it was a very unbelievable gasping moment so just and I was sitting at my desk chair and my open floor plan and my team didn't even know yet and I'm just like having this moment of like holy shit holy shit and trying to keep it together.

24:09And my business partnership was so toxic. There wasn't even a hug, high five, we did it. Did you feel at that moment that you did it? There are a lot of founders who go through a depression after selling their company. You refer to it as selling your baby, which a lot of founders do. So was there mixed emotions at that point or were you just on cloud nine? I didn't really comprehend what happened or was happening. I was in such like adrenaline mode for all those years. And then, so I had a trip planned right after. So I like literally left right away and went to France with some girlfriends that was planned and had like an amazing girls weekend.

25:00And then was in Switzerland. And I, I remember I like couldn't breathe in Switzerland and I was like, what is going on? And I had so much adrenaline that I, I could like, it was pumping and I had nowhere to put it. And it was like giving me this gasping, unbearable chest pain that like, I couldn't breathe. Cause I was like, I don't need all of this anymore and I have nowhere to put it. So there was that initial physical response, but I had a two-year contract and I understood my contract that I continued as is. And it was very awkward of like, what is my role? How does this work in my like mama bear protect everybody mode?

25:48So I went from like, you know, we were all a team and then I pivoted to mama bear. Like I got to protect everybody and protect my tribe here. But I kept waiting for like, where's the system of Unilever? Like, where is it? And this is where things went off the rails, which was, I said, we had this perfect plan in the deal room to execute, follow. like it was so perfect it was just like here's like the path to success like this is amazing and then that literally got like left in the deal room never surfaced and there was no one in charge or like this is your person or this is the process there was this like enormous like ambiguity of you don't own it but we don't have anyone you're not in charge but you are in charge but it was like a disaster.

26:45There was no process at all. And that basically the same ish. It was the same, but you're like floating in the Unilever sea. Like if they were just like, you are here and just like, we'll call you, we'll have like a monthly call. So it was like, where's the lane? And then they start like throwing garbage at you, like unqualified people and processes that make no cents and like accounting firms for like no reason. Like it was just this like never ending toss of processes that were pointless and had no value. And if anyone is listening and goes through an earn out, like you will never get paid because of all that crap that they throw at you that you have no control over.

27:37Luckily, I didn't have an earn out. But if I did have an earn out, I would had zero takeaway within the first three to six months because they like throw out this layers and process and nonsense that like I was incredibly profitable but after the six months of Unilever nonsense no and just for layman's terms can you explain what an earn out is sure it's when they It's like the salesmanship when they dangle the carrot and tell you how much more you're going to make because they're so awesome and they know everything and you don't. And they're going to make you so much more money. And then you're like, OK, great.

28:21I'll keep an upside for all that amazing money that you're going to make and bring into our organization. And so you only take a certain percent off at the table at the sale and you leave an open amount for your future upside. But from my experience and what I know of other Unilever deals, no one gets an upside because they say it's not based on sales or EBITDA or whatever. But fundamentally, they throw all this expense at you, which then affects your bottom line and your EBITDA. And you have, as a seller, generally have no control over what they throw into your organization. Yeah, it's similar to book sales.

29:05So like you can earn back your advance, but you also have to pay for a lot of the publisher's overhead and marketing expenses and la la la la. Yes, yes, yes. The ad and the paper and da la la la. Yeah. Did you think that once you were done with that two-year obligation, you would just retire? I was in my early 40s. 40s, like retire. What does that mean? I was so, my head was so like in the moment that I really wasn't thinking what life would be like after the fact. And the second year was 2020. So my second year was like three, like three months in the office. And then I walked out of the office with everybody else in March and never came back.

29:55So I had actually planned a very intentional last year of how I would wind out and step back and, and pack up and like off board, which never happened. So, and then I'm like with everybody else in like crazy COVID times, which is hard enough for everybody, let alone in this incredible career shift, identity shift. What am I doing? What now? what like what's going on there was so much change and shift that I was so personally intertwined with the brand that it was a personal identity it was what I did it was my life's work it was my legacy I knew that I needed to create space from that chapter into before the next chapter and sitting in nothingness for someone who's been like on the move, it was really difficult.