How Larroudé Scaled From $4,000 to Nine Digit Revenue in Five Years

0:00I ran the New York Marathon and I'm going to do it again. And you have to understand that like you are running a marathon if you want to like accomplish great things. Welcome to Shopify Masters, your companion for starting and building a business. I'm your host, Serena Smith. Breaking into the footwear industry is no small feat, but one brand is making major strides. Since launching in 2020 with just$4 ,000 and a Shopify site, LaRudet has scaled into a do-it-all fashion powerhouse with 550 employees and full control over its production. It's also been crowned one of the most innovative companies by Fast Company and Brand of the Year at the Footwear News Achievement Awards.

0:39Here to walk us through the journey are the visionaries behind the brand, co-founders Marina and Ricardo Larude. Welcome to the show. Thanks for having us. Hi, Serena. Thank you so much for having us. You launched in 2020, which is like in the depths of the pandemic, as we all recall. Was that by design or did you launch out of necessity? Oh, completely out of necessity. It was, you know, month one of the pandemic. Both Ricardo, Ricardo was furloughed. I was like full on fired. You know, we were home and we're like, what are we going to do now? Right. What can we do to make a better future for like ourselves?

1:20So then, you know, I had a vision of what I taught that the white space was in the market, right? As a woman, as a client, as, you know, experienced through my Barney's years and seeing clients there. And then Ricardo did a deep, deep dive into the foodware industry. And we came into a realization that the white space was real, right? that there was this super high-end brands and then the lower-end brands, but nothing in between that was talking to the clients that we're talking today. And so we started, you know, out of our living room, the two of us working nonstop. And we had so many incredible stories to share.

2:10And you were fully bootstrapped in the beginning? Oh, until today we are bootstrapped. Wow. Well, we never got big funding in the beginning. I think we took an approach that we started doing things gradually. So we built the website. We got some samples done. Some retailers started picking us up. We didn't do any digital marketing in the beginning. We did some very good PR. and I think because we're at the depths of the crisis of the pandemic also that benefited because no one was out there we felt like crazy folks it was very you know we were launching in December everyone was looking forward to get it over with the pandemic you know looking to for spring looking for flowers and so we were a great story and I do think that whenever everyone is like very afraid of doing new things.

3:02That's usually the best time to doing things. And I think Ricardo and I, you know, we lived through the 2008 crisis, right? We were already working in New York and we saw what that effect had. And then we also saw that 2010 was one of the best years in retail. So once we were putting the brand together, there was nothing else to lose. It was everything was a plus. If we sell one shoe, it was great, right? In our second month of La Verde, we sold$5 ,000 and we were celebrating. And now we do that in a matter of like minutes, right? And we are still celebrating. So like, since we were starting from zero, everything is a celebration.

3:48And that's the beauty about like a startup, right? And how you were able to do new things. and every day it's a new achievement, right? Thank God we are in a skyrocket, like problem that it's just like growing, growing, growing and not like in a submarine that it were like a sinking ship. But it's still like, there's a lot of growth because we did that out of our dining room with two people. And then now Ricardo, it's, you know, in the facility out in Brazil where we have 550 people and that we bootstrap and we are very scrappy and it was a lot of work and still is, you know, to make that possible.

4:32That's a dizzying amount of growth in less than five years. I mean, it really is a remarkable story, right? It is. It's not normal. It's not supposed to be this way. There's a lot of work and a lot of luck too. That is for sure. That's an argument Marina and I have all the time. I think there's more luck involved in things. She thinks it's pure hard work and talent. I strongly believe that just trust the lock and see where that's going to lead you. Do you understand? That's the joke. For like someone like me that wake up at 5 a.m., he sends some emails. It's like working 14 hours a day. It's every day.

5:08There's no Saturday. There's no Sunday. And then you tell me, oh, it's lock. I'm like. No, but that's the minimum. That's what I say. The hard work is the minimum. I mean, we're both Brazilian and American. and you know tapping into the American market is obviously an amazing you know market to grow into having the an industry that was dormant for so long that's that's luck I didn't do anything for that to happen you know that's just an opportunity that presented itself being both Brazilian like I can come here I speak Portuguese to everyone I understand how things work having the experience of 20 years of Marina combining with 20 years of operating and finance with me we didn't we didn't have to work hard for any of these things that we said now I think that as an advice for like entrepreneurs, there's just some things that have been handed to you.

5:51Some things you got to work very hard to build, but some things you just happen to be in the right place at the right time. Look for those. That's something that I think it's good advice for entrepreneurs. Obviously you got to do things, but maybe look at things that you have a unique point right now, because that tends to be a good thing because you're going to be unbeatable on that thing. And what were those things that you were able to identify as either giving you guys a unique leg up in the industry or things that just felt like they might be coalescing into something that was kind of lucky for you and LaRude.

6:24Like obviously the name, I didn't have to work hard for this name. It is a name that sounds good. People get curious about it. They don't know if it's French. They don't know if it's Spanish. They don't know if it's... It does sound good. That's one for sure. And I think value comes from being able to cross borders and find things that could do well in one place and sell well in the other thing or vice versa. And we happen to be dual citizens of both countries. So Marina's experience of working 20 years in fact, she had been to, I think she did the math once. It was like 3 ,000, 4 ,000 fashion shows.

6:55She has met maybe all the big designers. She has a sense and a feeling for how the industry works. And she's also a very nice person. She built an amazing goodwill across the industry. And now we get to collaborate with a lot of these folks. Right. And I would imagine that there's this feeling, given your background in the industry, Marina, with Barneys and Teen Vogue and Style.com. I mean, you've got your bona fides for sure, that there's also this sense of like cachet with like bringing in all the people. And so I would imagine it's like a bit of a mindset shift to then say, actually, we actually don't need any of that.

7:33We can do this on our own. And listen, I do have, you know, my creative person has worked with me for 10 years. And then And we were like, OK, what can we do here to make it happen? So we use all the training that I had at these amazing places. And then we made it work within our universe. Right. And this is what I tell the team. I'm like, we're still going to do the best that we can, but we do not have Barney's budget. Like, you know, and it's funny because we won brand of the year last year. with On Running. And we did one campaign that it's like a Muppet saying La Rude. And then later on, I think three months later, On Running did a similar campaign, but it's Roger Feather.

8:24I think it was with Elmo. And Elmo, it's like, it's the same vibe. But then ours is a newcomer model with a Muppet that we bought on Amazon, right? And it's the model and her like La Rude. day. And then three months later, it's Roger Feather and Elmo having a conversation on how to stay on running. And I was like, listen, the concept, it's identical, but I do not have Roger or Elmo. And this, I say it for the entrepreneurs out there. And even if you see like Alex Cooper, right, she don't start being Alex Cooper. She start doing podcasts from her house, you know, So it's so possible. You know, I'm sure you guys are aware of the concept of lifestyle creep, right?

9:15Like, you know, you're in a certain bracket and you're scrappy and whatever, and then you start to make more money and you're like, okay, well, I'm going to go to the fancier gym and I'm going to get the nicer car and maybe we'll upgrade the house, right? But it sounds as though you've managed to maintain this really scrappy mentality despite this pretty meteoric growth. Does that feel right? Serena, we chose wisely, right? Because we didn't have, let's say, investors' money. And when I say that, not disrespectfully, because I think we would spend everyone's money as wisely as we have spent ours.

9:53But for two years, we didn't have an office in New York. It was out of my living room. And believe me, I want everyone in the office. So people would come to my house and we would have like this office that was there, right? And so it wasn't like, oh, I work from home situation type of thing. I had like three people coming in at the time. But we invest in our first factory in Brazil and we had 70 people working there. So we were very diligent with the money on where we would allocate better. Right. So we have always been very wise in those decisions. They were like, OK, it does make sense right now to invest in a factory and not in a showroom in New York.

10:36I want to dig into this a little bit more because when you initially launched, you were not entirely vertically integrated, but you made that decision to make that shift at a certain point. So what was the thought process around that and why did you start to make that transition when you did? Beginning of last year was that, yeah, this needs to happen. But when I first started the business, we're like, OK, let's see if there's a product market fit and we would make the shoes with factories. the moment that we would sell out of things that we needed to replace and i would call the factory and say hey you remember the ones that you did 200 of i need now 600 they would say hey it's okay i'll give it to you in 120 days or 90 days by that time the summer's over it's not quick enough and there's a well but i gotta order the leather and then i order the thing i said why don't you have black leather in your things well because i order for a bunch of people as well how do i get this guy to align with me and i tried with the factories to say let's do a model that i open up my finances and you open yours so we can be aligned.

11:35But you ultimately, when you transfer risk from one party to the next one, you kind of break the business down. So I said, I need to learn how to make these things. And I would come down here and it was one of my employees at the time. I would go into a factory, but how much did these cost? And it was just a bunch of white machines around. And it took me a few months and eventually people gave it to me. And I said, but how much do these people make? And when I put the math together and I was like, so if I built one of these i literally in one order i pay for all of this like one order i was like do it now and i called the guy with the used machines and i said i would like to buy all these machines the guy put a list of like all everything that was needed it was like two hundred thousand dollars to do it then but that's what i would pay one factory for one small order to do shoes that was like the first one and then he came home he was like we're doing this and i was like excuse me what I'm like I was just like so nervous because I and then and then I we grew to the point that I had four factories so all the developments I would go to all these different ones and whatever I developed in one I couldn't get it to produce the other one I thought man this is not working so I got to get it all together so then um I was like I need a new office anyways because we were six people at the time when I first started in Brazil and then we were already going to like 12 people and I couldn't fit them all in the same room again.

12:51So I started looking for a bigger office and I was like, well, maybe I can find an office that has a place that I can put these machines in and I could do some samples, maybe 50 pairs a day or 20 pairs a day or something. And then I got like a place that I could do. And then we started with, you know, 16 people we hired. Um, and then we started producing and then I was like, okay, we got to reorder. And then I went to the factory like, yeah, it's going to be 120 days. And I called my guys and said, how long will it take if you guys use it? Ah, we can do it in three weeks. I was like, deal. So I started to make more things inside the factory.

13:19And then we got to like do 300 pairs inside the smaller factory. And then I, and then I still had my, my factory could do maybe 20%, 30 % of everything that I needed, all the samples and everything that I reordered. I was like, okay, let's go all in this building, which is a hundred thousand square feet became available. I came in, I leased it. I moved that other place here and I tripled the number of machines. And that's when we hired all these people. So I just buy a bunch of leather and I sell shoes. That's basically what we do. So that's where Serena, the luck really plays. We spent 20 years as an immigrant here, really working very hard in America and understanding what it is to work in America.

14:03But then when we had to outsource shoes, Brazil, it was where we grew up. It's the largest producer in the Western Hemisphere, yeah. Yes, and then like this region alone produced three times more than Italy, right? So we know how to navigate the cultural there. So it was easier than if you had to build it from scratch in a place that you don't know anything. And we still had to build it from scratch with people that we don't know, but at least we understood the language and could open a bank account in Brazil, let's put it this way. You guys are fully vertically integrated, which just means you're doing everything in-house.

14:41As you said, Ricardo, like I buy the leather and I make the shoes. Is there also a case to be made for other entrepreneurs out there who are in the fashion space for not doing it via that approach and keeping things to some degree outsourced? Some things you should have outsourced for sure. But I highly believe that if you want to be in the digital space and you're in fashion, which has a lot of variability, and by nature, it's going to have things that change. you gotta be vertical integrated in some degree or you gotta have a supply chain that's super tight so i think vertical integration allows you to have a very differentiated product and that's key so if you just do like a mba brand that someone has a palette color you know that pastels and does a bag or something if you're good 10 people are going to pop up and they're going to call the same factory that you're doing and it's going to be very hard to compete when you're doing that.

15:34If you're going to be a product first company, which is most good companies do, you've got to come up with something that you're the only one that gets to do that. So shoes are pretty hard to make. So whatever I'm learning on how to do, whatever I'm learning how to bend leather a certain way, whatever I'm learning how to make a specific role of a shoe, I should try to keep it in place. The second thing that's worth to do vertical integration is that the explosion of the platforms that you can do through TikTok or for Instagram or for any accessing people, You don't know if eventually your thing goes viral.

16:06And if that does happen, if you are able to ramp up production at that velocity, you're going to be able to capture it. If you can't, someone else is going to do it, and you're not going to have a competitive advantage. I did not know how complicated it was to do it. Thank God, because ignorance is a blessing sometimes. If you're willing to put the work in, you can do great things. For us, it was baby steps, right? It's not that we built a company with 550 people, then we went to market. We tested out the market and we tested out products. And so it's possible. That's all what I'm saying. It's like as long as you have a vision and the execution later on.

16:45Can you explain Larude's direct-to-demand model and what that allows for both internally as a company and on the consumer end? The direct-to-demand is really making my whole factory setup of the leather, the soles, the uppers, and standardized like this shoe here. I can cover it with denim. I can cover it with raffia. I can cover it with whatever. I can change this upper to be a boot. I can change this, you know. So for me to stock this piece inside and these soles, that's nothing for me. And then just like when you walk into a McDonald's, you can order a Big Mac. And if the Big Mac is not done, they'll have the upper bun, the patties, everything.

17:24And it's the same patty that goes in the cheeseburger. So there's pieces in common, you know, buttons and hardware and stuff. You just plan it that way. You know, it is a more sustainable business model because we're not producing excess inventory. Right. But it is in a way that we present to clients, you know, the up-and-coming collection or the up-and-coming drop. people start ordering you know within that you know six weeks a time frame and and then we ship it to them as soon as we start getting the orders then we start like producing it but then it also give us you know if a client really like a certain type of shoe we go and we design more shoes that are similar to that and we're able to launch those new shoes like in a week from that day So we launch new things on a weekly basis based on the data of what the customers are responding immediately.

18:26So our turnaround to launch new things internally is around like a week to two weeks, depending on what we are working on. I don't want to use the word fast fashion in that sense, because what we're doing is, let's say that the customer was really responding to the raffia with black piping way above any other ones. So we're like, oh, my God, the clients really want this material. Let's take this material in our best selling styles and recolor them right now. And then we do a drop just for that. Right. So then we chase the demand to what the customers are responding to. If you were comparison, let's say like everyone last year, there was about like the jelly sandal, right?

19:14Or the jelly ballerina. And if you can chase reorders and do the demand, you can do that in that month or that summer. What happens is for all the big houses, they are placing their orders in China or Italy, and they can only chase that demand for the next year. So a year from this summer, you're still going to see that because everyone is placing their orders at the factory based on last summers. And we do that based on the last five days. Yeah, it's like it actually allows you to operate in a much faster and more nimble fashion from an iteration process and being able to produce new items based on the direct feedback that you're getting from your customers.

20:02but it to me also feels like almost the antithesis of fast fashion because you're also asking your customers to invest in something and buy into something and then wait a little bit. And in a universe where it feels like our entire world has sort of been bred on instant gratification, it kind of requires a shift in psychology for the customer to say, this is worth it. And I'm going to wait for it a little bit, a little while before I get this thing. And for the client, right? We also offer them, let's say we launch fall, all the boots at 30 % discount. So it's like, you know what? Instead of you waiting for Black Friday to then buy your boots, why don't you buy in July or August at that premium price?

20:48And we're going to make that for you, right? So you can buy your shoe at the price that you would buy, let's say, at a Black Friday ahead of it. If Prada did that, I was like, you know, Miu Miu or all the other brands, don't you want to buy from them? Talk about privilege and luck, right? I was able to buy from my designer friends at wholesale price throughout my entire career. And then so my friends would be like, oh yes, yes, you only got this because you had that wholesale price. And I was like, sure. Yeah, that's true. And Ricardo was saying the same thing. I could get home because he knew that I was buying at a discount.

21:29And it was like, let's offer that to the client. How thrilling to be offered that discount. Yes, exactly. It's phenomenal, you know. And then we were like, okay, so maybe we can have more women being able to buy our shoes. Just like airlines, you can't just make more flights. So the supply is limited. quality shoes and quality products have a limited supply. So what do you do if a lot of the buying you're doing is for an occasion that you actually can plan ahead or something that you should be planning ahead because you're dealing with very expensive materials. So when you're buying a ticket and you need to go to Miami or you need to go to the beach, you're buying three months in advance because you want to get a cheaper price, right?

22:07If you're buying less minute, you should be buying a much higher price. Now, I know we always mess up, but the truth is when you have a limited supply, you should incentivize people to buy early. And it actually is more profitable to do it that way. And I think it's a lot more environmental. It's just more ethical to do it that way. Yeah. Well, that's, that's exactly what I'm picking up on here. Like there's obviously a very clear business case for this, but there is also, there's a philosophical component to this as well, which is like, be mindful of where you're spending your dollars, invest in the things that really matter, have a sense of excitement around it.

22:40When it comes, then it's a thing that you actually want to hang on to. It changes your whole relationship with the way that we engage with stuff, you know? Yes, a hundred percent. And we don't do everything pre-order. Like there's some things that we know it's always coming so we can keep some minimal level of inventory, but we're not taking massive risks ahead of a season. So that's the, that's how we do it. Okay. I want to ask you guys, because you went from the two of you, husband and wife with kids to now 550 employees, it's like almost hard to even wrap your head around how massive that kind of shift is from a team perspective.

23:17And your operations are partly out of New York and partly out of Brazil. So what's your approach to hiring and retaining talent? And what is the culture of La Rude? We have learned a lot of things along the way, But as founders, we are very hands-on and we build the company, right? From ground up, literally like designing the website ourselves. And we pass through every era of the company, right? So culturally, to work with us, the executive knows how to get done themselves. else. It's not a company that you can just like delegate and do the PowerPoint. It's a good fit with us if that leader can lead and execute at the same time.

24:11I think that the people that did better and became leaders at Labrador are the people that also can recruit. I'd sit down and say, listen, I love you. You're great. But if you're only yourself, you're useless to me. You've got to find five people like you. And then some of these people actually get to cross-pollinate. So that's the thing that we do to grow. I do a lot of recruiting myself. Marina does a lot of recruiting. I think founders are responsible for gathering capital for the business. But it's gathering human capital. That's super important. I'm always scouting people from the region here, people in New York.

24:44I actually became better at identifying talent and people that can work with us very well. Can you identify a few of those traits or a sense of aptitude that you can now recognize in somebody that makes you realize that they're going to be successful? People that are not embarrassed not to know things are definitely a thing for us. Like people in the GASC and say they come up with answers and stuff, that's usually not a good trait for me. So for a moment that says, you know what, I ask somebody, I have no clue. That's a good person usually. I say that's also the person that gets thrown off a boat.

25:13You know, there's a bunch of sharks. There's some people just scream, scream, scream. and some people just put their hand down in the water to look for sharks to punch them in the nose. People that can deal in price as well, that they kind of go into their zone, those are good people too. I think that ethics is a very important thing for us. If I start to see that they have bendable about what's right and what's wrong, that usually doesn't work with us either. I say that's usually people with good energy, very smart and very ethical. If you have those three, that's perfect. If you have one of the three missing, Usually it's a bad thing.

25:47But for sure, the one that you shouldn't miss is the ethical one because you're going to get robbed if that happens. Totally. How on earth did the two of you navigate being married and also working together? And also this thing that you're working at together is your business. We have all the very hard conversations, right? So we have been married for 22 years. So there's nothing that is left unsaid. It doesn't matter if it hurts the feelings of both of us. So having honest conversation really helps. We are co-founders, right? And we want the same goal for the company no matter what. And we want to get there no matter what.

26:33But he is the CEO and I am the creative director. He's still a co-founder. So I know my space within the company. But then, of course, if something in any area, right, it's not working, he's like, Marina, you're a co-founder, go there, like, you know, help me out here. So I use that co-founder energy to go to every department that it's needed. Right. But I know my area. And then when you are growing to such a tremendous amount of growth that we are having, right, that it's this hyper growth. I'm not going to lie. It's difficult. It's very challenging. It's challenging on the body. We were in LA.

27:20Then he went to Brazil. Then I'm going to Brazil again. That it's like, it's a lot. So like, that's what it takes, right? It's like running a marathon, you know, and I ran the New York Marathon and I want to do it again. And you have to understand that you are running a marathon if you want to accomplish great things. Between the two of us, we've always been very connected since the day we met. We talk a lot. I think we're best friends also. We trust each other a lot. And we have honest conversations. So not having taboos or stuff that you don't talk about is a good thing. And then as you described, having clear roles, not only to the two of us, but for the rest of the company to understand is very important.

28:01That mutual trust is so incredibly key in any co-founder relationship and also in any marriage. And also, Marina, five years is like a really long marathon. Give me! And like, I've not seen the end of the tunnel. I'm like, okay, let's keep on doing it. It's just like beyond the triathlon right now. I tell her the last 12 months have been really transformational. And listen, one of my favorite books that I ever read, it is Shoe Dog from the founder of Nike. And one line stuck to me that it's him at the end of the book when he did the IPO for Nike and he was already like older, whatever. When he saw that everything was perfect, right?