How a Frustrating Diaper Change Inspired One of Baby Fashion’s Biggest Success Stories

17:38Lawrence Scheer:So let's go back to the distribution. So boutiques and trade shows, at some point, you find wholesale partners, you then move into e-commerce, but you're not DTC first, right? When does e-commerce come into the fold?

17:50Lauren Levy:Well, I have to say first that like, in the beginning, our boutique store owners really didn't like brand selling online. So we were a little bit reluctant to, you know, upset them with the perceived competition. So we had like a placeholder website where people could learn about the brand and learn about, you know, our philosophy and our so safe. But we didn't actively decide to sell online. Eventually, we did a few years, you know, after that.

18:22Lawrence Scheer:But you benefit ultimately from the early days of Facebook ads, from Google advertising. I mean, you've been in the game for so long and so many things have changed drastically with respect to paid advertising. So could you just talk about your experience with the profitability of these various channels and how you view them today? We've been profitable since 2012, which was great. We just knew this was only going to work if we were able to pay for our own growth. Maybe in some ways that was limiting. But like Lauren said, we kind of took a conservative approach. We were planning, we were going to do this ourselves.

19:03Lawrence Scheer:So we tested Facebook. It was successful. And then we continued to kind of lever that up as we could afford to. And yeah, I mean, the boutiques are beloved and they always will be. I've always said they keep the lights on, they pay by credit card, so they're incredibly important for cash flow. And they've given us the freedom to be able to take some of that cash and reinvest it in other marketing channels. Of course, DTC creates more margin than the specialty business in that we are able to sell for a higher price on our own website. You know, the investment in acquiring customers is low, but it's low enough that we can still do that profitably and somewhat slightly more profitably than the wholesale business.

19:52Lawrence Scheer:So now we need to look for more types of activations. So we are looking, you know, we're sort of going back to old school marketing in a way. We are doing lots of in-person activations and community events. We like to meet parents where they are. and whether it's yoga classes or in doula classes or other kinds of community and real-world experiences where they live. We're getting into now doing subway advertising. We've tried billboards, mailers. So we're doing a lot of offline activations. You just got to find folks where they are because Facebook and Google became kind of a black box and a lot less efficient.

20:43Lawrence Scheer:So it's evolving and I'm sure it will evolve again. And now the focus is on how do you show up for AI? Because that's where everybody goes to find out product information. What about the role of TikTok going forward? We've been doing a lot of work with influencers. That's been really great because one of the things that's hardest to do that's always been a challenge for us is, you know, Magnetic Me being magnetic is a really tactile experience-based product, which, you know, translates, you hope, in a retail or a wholesale venue because people can see and feel and touch it. But on the DTC side, it's always been how do you translate that experience to a website or to Instagram or TikTok.

21:31Lawrence Scheer:Instagram and TikTok and other, you know, social media outlets have made that easier in some ways because they're just built for sort of demonstrative types of marketing. And so influencers have been really great there. And our team has been ultra focused on getting influencers to show people how the products work, what the advantages are, how fast you can change a baby to address the safety questions. So that's been an amazing tool for us. Lauren, you spent years on the product side before you become a parent. And then you have three kids yourself. My understanding is you have twins. What did becoming a customer teach you that you didn't know prior?

22:17Lauren Levy:So I have to say, yes, we developed this whole company before either of us had kids. And when my son was born, I was so happy when I realized that there wasn't anything I would change about our products. We had so thoughtfully and carefully, you know, designed them. And we were obsessed with feedback from people who used it. So when I put it on my son, I was like, wow, this is amazing. Not only do I get to use it myself, But there's nothing about it I would have changed. It was the most gratifying feeling in the world. Lawrence, early on, we were just talking about the division of labor and how in those early days, you didn't necessarily have defined roles.

23:01Lawrence Scheer:But today, could you just talk a little bit more about how you split time and what are the levels of responsibility you have versus Lauren? Yeah, I mean, it's a luxury now because we have so many people and so many competent people working for us. In the beginning, obviously, we were all doing everything, mostly Lauren, then me. And then we leveraged up people slowly as we could afford to. I mean, we had to decide, figure out what we were good at back in 2017 when I was coming on full time because it just became clear that we needed to figure out who was really who was doing what, even if we didn't have all the support we needed.

23:46Lawrence Scheer:And we were still both wearing lots of hats, but we figured out that Lauren, you know, is the visionary. She is our person of big ideas. And I'm the filter who tries to help her take those big ideas and turn them into the business. and so now she's really responsible for that and for guiding our design team and our product teams to you know solve problems find great products beautiful prints and I am focused on managing the business and the the P &L and the personnel to achieve those goals so we can ultimately step back and let them do their thing.

24:34Lauren Levy:I mean, it really helps Lawrence's colorblind. So I, it was easy for me to help with the design. It was like a natural fit for us.

24:44Lawrence Scheer:That didn't stop me. That didn't stop me from trying to have an opinion, but it took me a few years to give that up, but we landed. You've turned it into a strength. Okay. So you started in baby, you eventually venture into products for toddler and kids, and then ultimately into adult, how do you decide on these various category extensions?

25:07Lauren Levy:Well, so it helps that we designed as our kids were growing up, but during COVID, we really pivoted. That was like really the time when, you know, family pajamas really got popular and we realized that we needed to participate in that as well. But, you know, Nursing pajamas was always on my list of things that we wanted to move into. And it's just like these products literally are game changers. When you're nursing and you have like a crying baby, it's such a stressful time and you're juggling, you know, a million things in your hands. And so to be able to just have quick access and get that baby fed easily and quickly is, you know, such a help.

25:53Lauren Levy:And so when we launched those, that was for me just an amazing, amazing thing. Also, I still wear them. I mean, I don't nurse. I wasn't a nursing mother. I just happen to love our pajamas. They're really soft and comfortable. And so that's been great. Also, we launched No Drama Pajamas for the toddler and big kid set is also a game changer because with my kids, they have, I don't know, I think it's just my family. we have pretty big heads and getting pajamas over their head. Everything is tight fit per our government regulations. So they have to fit pretty snug. And so that was a real pain point, getting it over their heads.

26:37Lauren Levy:They would cry and it would just add like another layer of stress to an incredibly stressful period when your kids are tired and you are getting ready for bed and you want everyone to calm down and relax. So we put the magnets on the shoulders, which gave the opening, the head opening, just a bigger space and you could put them on nicely. And then, you know, kids can play with the magnets and feel like they're doing it themselves. And that's just been incredible too. I mean, some of these things are just natural, you know, just great for magnets where they can really solve. I call them like the quiet workhorses, but they can just solve these like little pain points that we have in our daily lives.

27:19Lauren Levy:So, you know, the product leads, our parents lead, we had requests for toweling. So like when you're taking your kid out of the shower or the bath and it's like, you know, they're freezing and you want to get them warm quickly, we've come up with a product line for that or the pool or bathing suits. I mean, there's all these natural product extensions, daywear, baby daywear, right? Your child's in a footy, I would say most of their day and night for the first nine months. And then you start wanting to put them in baby clothing, like actual clothing. So we develop just an adorable line of clothing that's easy for parents to get their baby dressed.

28:00Lauren Levy:And then as they grow, we focus on do-it-myself type of dressing where toddlers are empowered to get themselves dressed.

28:09Lawrence Scheer:When you think about product development, are you ultimately developing product to solve your own pain points and your own problems? Or are you also doing diligence on an entire category and asking yourselves like, how big is the TAM? Is this a market that's trending? Is it growing? How are people searching online for this stuff? Like what goes into the thought process around product development?

28:31Lauren Levy:I mean, we do all things. We have a lot of parents who work at Magnetic Me and we are constantly, you know, crowdsourcing from them. It's not just also solving problems with getting dressed. We really focus on the quality of the fabric, the softness of the fabric, durability. in terms of design. We hire, we have in-house designers doing original artwork for us, but then we also source art from female independent artists around the world. And then on top of that, we also use eco-friendly fabrics. So there's so much that goes into, you know, one Magnetic Me item. And we're incredibly proud of that.

29:13Lauren Levy:In terms of like looking at categories, we really look at, especially like in store, what our boutiques are carrying and is it, you know, kind of a natural extension for Magnetic Me. And for some it is, for some it's straight like gift shops, for some they carry baby and toddler. We have a whole Magnetic Me raincoat collection, which is so cool. And for the toddler set and, you know, when they take it to school, they're like showing it off and they, you can get it easy on and same, same with our jackets. These are just all natural extensions for these, you know, early years.

29:52Lawrence Scheer:Do you want to talk about the fidget pocket?

29:53Lauren Levy:I love our fidget pocket. So we came up with this fidget pocket and it came from the, you know, the whole fidget space, the fidget toy space, I guess. And they're basically like little pockets with magnets in it that kids can fidget and play with. And it has like a great sound. And some of them actually are pockets where you can store stuff, which like we know from our kids that I used to carry around like, you know, toy trucks and rocks and gems. Their pockets are always full of junk. Yeah. Full of stuff. And then some are just like flaps where you lift them up and it reveals a cool surprise, but it's just like a cool thing.

30:30Lauren Levy:It makes a great sound. It's very satisfying.

30:32Lawrence Scheer:See, that's one of those things that just comes straight out of Lauren's head.

30:36Lauren Levy:Yeah.

30:37Lawrence Scheer:You can see right away that it's a great idea and it's going to work and you, you put the resources into it. And then sometimes, you know, we've got our specialty stores, that's like having 1200 salespeople working for you and lots of great ideas float up from them to the sales team. And our DTC team will have ideas. Our design team will have ideas. Everybody here is just always thinking about doing better. It's one of our core values. How can we evolve? How can we, you know develop the hero for this category and i like to when we have a new idea i it's it's as much an art as it is a science but we try to ask ourselves you know is this something that people want is it something that people want from us you know can we provide our unique solution and is it you know the same distribution channel are we going to have to invest in a new channel and do we have the resources to pull it off so that's kind of the framework we try to look at new ideas.

31:36Lawrence Scheer:Lawrence, you and Lauren have been friends longer than you've been business partners. What are some things that you can share with founders that you've learned about working with a friend? Because, you know, the general advice out there in the zeitgeist is to not go into business with a good friend. Obviously, you know, you two have bucked the trend here. So what can you share?

31:58Lauren Levy:I trust Lawrence with my life. There's no decision he makes that I don't fully believe in. We sit next to each other, literally steps from each other on a normal basis. And we could hear what we're up to and we could cut out like on a lot of meetings. But also so that we could contribute because I trust that he, if I'm working with somebody and he has something to say, it's going to be valuable and vice versa. Although I think I bother him a little more. It's really incredibly important to figure out who's accountable for what.

32:33Lawrence Scheer:And we, you know, discovered, slash, I had a friend who knew an awful lot about this system called EOS, which is the Entrepreneurial Operating System, which is essentially, for new businesses, a really high-level overview of how to organize a business. It doesn't give you all the details. It gives you the high-level details. And you need to work through it on your own, or you can hire somebody to help you do it. We work through it on our own. And one of the key things is just figuring out who's responsible for what and accepting that and giving people, you know, giving each other their own space to operate and do what they're best at.

33:14Lawrence Scheer:That's pretty critical. I mean, at Magnetic Me, we're pretty proud of the fact that we really have no egos here.

33:21Lauren Levy:And that's like when we're hiring, we, you know, impress that upon people. We want people to do their best work. You know, we all make mistakes. That's human. Um, we like to say it's not show friends, it's show business. So like if a lot of people hear like a print that I find to be just incredibly ugly, I say, okay, if people are going to like that, we're doing it. You know, it happens.

33:44Lawrence Scheer:It happens.

33:44Lauren Levy:It happens. I love being surprised. Trust me. We don't come from, you know, the garment space. We had to learn this on our own. So if somebody has a better idea, we're very happy to listen and implement.

33:56Lawrence Scheer:Just for listeners, that EOS system is loosely based on the book Traction. by Gino Wickman, and people can buy that on Amazon if they want to take a DIY approach. Okay, so looking back, what's the biggest key to building a company that's lasted 15 years? We'll go to you, Lauren, first. I think, you know, we've really never, there's been certain times as we've been in business where,

34:22Lauren Levy:you know, raising outside money but not making money has been a thing. We've never done that. We've always been, you know, let's be profitable. Let's, you know, support ourselves. We're not taking on anything that we can't afford. And we plan carefully. We don't really want to be a company that has to lay anybody off. We want to have measured growth. And I think we, it's a little bit old school in our approach in a way. And I think that's kept us really successful.

34:52Lawrence Scheer:Gosh, no, I think Lauren really captured it. just looking at the fundamentals cash flow is incredibly important uh you know if you're starting new business cash flow may be more important than other things like paying all of your bills on time not saying don't pay them they're going to get paid but you really got to manage it and balance it so you stay solvent i can't think of anything more important than that And there's just a few sort of key rules that we've tried to follow around just fundamental business principles that you just can't get out of.

35:28Lauren Levy:And I think just going back to that, going back to that original like women's conference that I went to where they said take calculated risk. I think that's basically what we do every day.

35:38Lawrence Scheer:Lauren Lawrence, thanks so much for being here. That's CEO and co-founder Lauren Levy and co-founder Lauren Scheer of Magnetic Me. Shopify Masters is produced by Alicia Clark, Hyacinth Parker, and Schwang Esther Shan. Our engineers are Matt Schwartz and Miku Betlam. And Rachel Reich is our senior content lead. I'm your host, Adam Levinter. Come back every Tuesday and Thursday to catch a brand new episode of Shopify Masters. And be sure to check out our YouTube channel for those video interviews. Until next time, thanks for listening.

36:17Thank you.