/ The Future of Retail

It’s a simple idea, executed with thoughtful precision: making socks cool again. Jeff Kearl brought together a vision for something better, with radical design and the best material scientists in the business, to redefine an overlooked market. Eight years later, Stance has grown from a small startup in San Clemente, California, to a global phenomenon with products found in stores across the world—and on the feet of pop culture icons like Jay Z, Nas, Justin Trudeau, and Rihanna.

In this interview with CEO.com, Kearl talks about Stance’s journey, the data behind the business, building teams, and the key to good strategy.

You’ve built impressive growth at Stance over the past few years. How did your Stance journey begin?

I was the chairman of Skullcandy, and its founder, Rick Alden, always asked one question: “Why do people buy our headphones as opposed to our competitors?” I did some research, and one of our biggest buyers told me he would always stock our products because we were so different from the competition. The incumbent brands, Sony, Sennheiser, and Bose were all black and silver, had similar packaging, and were positioned around sound quality. But Skullcandy stood out—it was a stark contrast, fresh, and edgy. That buyer taught me that when the market is homogenized, there’s an opportunity for someone to stand out. So, I started exploring other product categories to see if I could find another Skullcandy—jewelry, luggage, school supplies. We walked up and down the aisles of stores and asked, “If we were going to do sunscreen, how would we position it differently? And if we succeed, how big is the prize?”

But with so many options out there, how did you choose a category?

I looked at five criteria. The first was market size—I was looking for something larger than $10B. The second was categories with sleepy, homogenized competitors. The third was high-gross product margin—at least 60%. The fourth was what I call “high rate of repurchase”—it didn’t have to be a category where customers bought weekly, like razor blades, but I wanted them to purchase more than every five or seven years, like with a mattress or a car. And the fifth was a category that was Internet-friendly—something people would be comfortable buying online that was easy to package. A product that could be gifted, or part of a subscription model. With that in mind, we dove in. Socks, for me, weren’t the leading contender at first. But then, I started buying socks at various retailers to understand the buying experience and that is when I saw the opening. The sales associates knew nothing about socks. I saw an opportunity to do it better.

I looked at Under Armour, Lululemon, and Tory Burch, as well as a few other apparel companies whose growth I admired, and I noticed that they didn’t really start as brands, per se.

Each started with great product and market fit. Under Armour had first-layer compression, and this solved a problem, initially, for football players, but later for any athlete. Lululemon’s success with yoga pants unlocked a whole new category—not just yoga, but a lifestyle of health and mindfulness. Tory Burch reimagined the ballet flat. While the brands existed before the initial products—the hero product, as I call it—the greater brand awareness happened after the hero product went mainstream. I asked myself if socks could be that hero for us.

And how did you create that differentiation?

We have an incredibly creative design department that’s constantly reimagining how we can bring art to life on our products, and a world-class team of material scientists and knitters, which we think is the perfect mix for both sides of the customer’s brain. We’ve learned that customers buy emotionally and rebuy because of quality and value. If we ask someone at the counter why they chose our product, they’ll say, “Oh, I love the yellow,” or, “I love the Utah Jazz logo.” But if you do a survey about why people repurchase Stance socks, they’ll answer with, “they last so long,” or mention the comfort or fit. We as consumers rationalize our purchases intellectually, but emotions drive that first buy. Stance is designed to be a great combination of those two things.

How do you think the retail industry needs to evolve?

The recipe for success hasn’t changed: If you have a differentiated product and experience, you’ll probably be around for a long time. If I look at the stores surrounding us in our retail locations, I can see this. Lego is across the street from us at one, and there’s no one else like Lego. They’re going to be around for a long time. On the customer experience side, if you look at Nike’s new flagship store in SoHo NYC on Broadway, they have treadmills, gym equipment and a basketball court. You can try the shoes on and shoot some hoops. Having that kind of experiential retail is a big deal for the modern customer. Stores are combining espresso bars and dining with shopping, and I expect to see more of that in the future.

“We as consumers rationalize our purchases intellectually, but emotions drive that first buy.”

As a CEO, what data do you need to do your job well?

Trended financial data, unit economic data, and inventory. We invested in Domo, and getting a unified look at all of my data all in one place with one login, consistent visuals, and alerts makes it easy to see exactly what I need to see. As a CEO, I only want to look at the things I need to know, and that’s been the great part of having one unified system. We also do a survey every quarter to measure culture. We ask how clear the company vision is, if each employee’s role in that vision is clear, and how effective our leaders are at developing our people. Like all companies, we just want to improve.

How do you rally a team around your vision?

First, we have a vision for what we’re selling. We want to make the very best basics—socks, underwear, t-shirts—in the world. With anything that touches your skin, you trust Stance. We have a product sensibility here that is unique. In addition, we have a very creative culture, and that’s inspiring to people. If we showed up at Nordstrom with black, nude, and white bras, Nordstrom would have told us they could buy those from anyone. Instead, we created an aesthetic for women’s intimates that really stands out, and suddenly, they’re one of the top sellers. Our people get excited about that kind of approach to quality and being part of a premium brand.

We also work really hard to maintain a company culture that’s built on trust; we believe it’s the leading indicator of brand strength. A place that’s fun to work, where people can feel comfortable in their jobs, and where they can be creative and take risks. We invest heavily in our community, in the local schools and organizations—from sponsoring the local surf contest to providing socks for the high school football and volleyball teams and doing beach cleanups. We also do a major yearly event for an organization called “Socks for Heroes” that gets fresh socks on the feet of our troops who are overseas, and we are the main sponsor of the ISA World Adapative Surf Championship, where surfers with physical challenges from all over the globe come to compete in a world-class paralympic style competition. These are the kinds of projects that we built the company to do, and it makes Stance a fun, rewarding place to work. I like to remind people that we’re about three miles from the Pacific Ocean, and if you can find a way to make a living in San Clemente, you probably should.

How do you find balance in your days, and balance for your teams as well?

Life in a startup means you have to be pretty resilient and flexible. You have to be willing to roll with the punches—there are certainly days where I don’t want to get on that airplane or check into that hotel. That goes with the territory. The best thing I do for balance is to build a great team around me. Literally everyone on my team is better than me at the thing they do. We don’t do the command-and-control type of management, which means people are open and willing to share information about the decisions that they make. I know I can leave the office when I have to, and the business will keep working when I’m not there.

You serve on a good number of boards. What have you learned about the relationship between a board and a CEO?

I’ve seen all these studies about the perfect startup blueprint out there, but what I’ve learned while serving on boards in different industries is that there’s no one right way to do things. There are really two important things that a good board does. First, they choose the CEO, although with most of the companies I work with, the CEO tends to be the founder. Second, they help reaffirm the strategy that the CEO and leadership team have developed. With strategy, you’ll usually hear, “these are the three or four big objectives we’re going to do this year.” But the most effective question I’ve heard is, “What were the objectives you chose not to do?” If a board has visibility into the other alternatives that were passed over, they can then understand the context. So don’t give the board the top three. Give them the top ten, and together, you can get rid of seven. I define a great strategy as the things you didn’t do, versus the things you did.

Tags: retail

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