Alicia McKenzie (00:00.928)

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A lot of people I know that have succeeded, the ones that, you know, last the longest and have the best success are the ones that are the most humble and the ones that are willing to listen to other people's ideas. Maybe I do need to bring in that consultant or I do need to bring in that executive coach or that co-CEO or hire a great COO or someone that's going to help me achieve the goal that I want for the company versus I need to maintain and control power.

and wield it from the position of authority so that no one can potentially undermine me or take away from me.

Welcome to Married to the Startup. I'm Alicia McKenzie, a wellness entrepreneur and digital creator. Alongside me is my amazing husband, George, the CEO who's always ready for a new challenge. We've been navigating marriage and running startups for over a decade, and we're here to share the real, unfiltered journey with you. Join us for insights and candid conversations about integrating love, family, and entrepreneurship. This is Married to the Startup, where every day is a new adventure.

Alicia McKenzie (01:28.654)

Welcome to episode 53 of Married to the Startup. I'm your host, Alicia McKenzie.

and I am the co-host, George McKinsey.

First, let's talk about the challenge or the, guess it was like a test for our kids at the dinner table the other night about Christmas.

yeah. I thought it was a good exercise. Unfortunately, it didn't work out the way we It didn't work out. But it was, the thought behind it was really good.

So I saw on TikTok, TikTok taught me, there was a mom who was driving her daughter and she was like, name four things that you got for Christmas last year. And she could not think of anything. And her daughter would say maybe it probably like 15, 16 years old. Could not think of a single thing that she got for Christmas. And then she was like, name one place we went on vacation. And the daughter was like...

George McKenzie (02:00.504)

TikTok taught me.

Alicia McKenzie (02:28.438)

Like Tahoe. Right. Right. So the meaning behind this was that children value experiences more than they do material things.

Yeah, I think that's probably true for humans in general versus just narrowing it to children. But I thought it was interesting because that was my take. like, oh, our kids are not going to remember what they got for Christmas because, and then from a vacation perspective, we've had so many amazing experiences over the 2025. So it was a good experiment.

So we were sitting at the dinner table and I'm like, all right,

I think you started with the word you start with Maddox or

think I started with Michaela and she's like, I've seen this before. And I don't know how, she doesn't have TikTok, she doesn't have social media, but I'm sure her friends do. But she was like, I've seen this before, I know what's gonna happen.

George McKenzie (03:19.714)

Yeah, and she immediately knew the answer.

Yes. And she was able to tell me four things that she got for Christmas.

Yeah, I thought the one because I'm in the whole era of Sephora kids. She was able to say that she got Sephora and then explained what was in the bag. Like, it was this and it was that and it was this and it was a bar of that and it was a stick of it. And you're like, holy shit.

She knew what she got. And then the two boys have not, they didn't have the, they didn't have the pre-knowledge that she had, right? They weren't prepped for this. So I was like, Maddox, name four things that you got for Christmas last year. And he was able to tell me with detail four items that he got for Christmas. And then we went to Maverick and he was able to tell me four items that he got for Christmas, which...

Yeah, four distinct items.

Alicia McKenzie (04:10.526)

mind blown because our children literally want for nothing. have, if they have one of something, they have six

Yeah, I think the Christmases are always hard because there's no big gift of the year or something they've been pining over or really really want. It's kind of just up to us to come up with things. The Christmas lists are like completely bogus.

But then I was like, all right, let's name a vacation that we went on. The first thing everybody said, they're like... Right? Maverick was like, we went to Hershey Park. Yeah. They were able to name multiples of the vacations that they went on this year. So basically our kids helped us not at all. When it came, when it comes to our plan for Christmas, we still don't. We were supposed to go somewhere, but the house was messed up in the hurricane, so it has to go under renovation and we cannot...

Disney Cruise. Disney Cruise.

George McKenzie (04:51.738)

Eggs.

Alicia McKenzie (05:04.258)

Go to set house anymore.

So it was a little late in the game to try to find a house that would accommodate nine people.

Yeah, we travel heavy. Yeah.

well, I think we'll have Christmas and our kids are spoiled in that way. They want to wake up in this house next to their tree. He's very adamant. I wanted to be next to the tree to be right there next to the fireplace next to this couch sitting right there. I'm going to sit right there. And that's where I'm opening my presents on Christmas.

He was very specific. And we were going to try to do Christmas super early, like a 7 a.m. Christmas, and then make a 1 p.m. flight to head to where we were going to go. But sadly, that's not going to happen anymore. Am I bored?

George McKenzie (05:44.014)

I'm just I don't know. I'm stranger things kept me up last night. I Know you fell asleep immediately. It's like you always do

It did not.

like stop because beds are meant for sleeping right like you go to bed

No, rent for a lot of things. Sleeping as well.

When you go to bed, it simulates bedtime.

George McKenzie (06:04.472)

For some people, yes.

right? And then as soon as my head hits the pillow, I'm out. So anytime you're like, let's watch a movie in bed. I'm like, all right, I know I won't be watching the movie.

You are out like a light.

George McKenzie (06:14.534)

Exactly. Yeah, I watched it to completion.

Okay, but anyways, my philosophy for Christmas is always something you want, something you need, something you wear, and something you read. Right? Like those are the four core things that... So my kids always get a book, they always get pajamas, they always get something that they really, really want, and then something that they need, right? Like tennis shoes or underwear or some bullshit. But your philosophy for Christmas is way different than mine, and this is kind of where we butt heads.

My philosophy is about volume, not necessarily into categories. And they don't have to be big gifts, just there needs to be a bounty under the tree. Why? Because.

Why? You need to work this out with your therapist because it's unnecessary.

Yeah, there's a lot of things that are unnecessary in my life. This one is probably not of the top of

Alicia McKenzie (07:07.59)

Because like our kids remember the thing they wanted. They don't remember the bullshit that you got from CVS the night before because you thought there wasn't enough stuff on

But they remember the things they got.

George McKenzie (07:17.026)

Hmm. I think it's Walmart. I don't think I've gone to see this device. But I have done a late night Walmart trip. I will concede on that one.

Yes. So we are two polar opposites when it comes to Christmas. I would prefer. But I mean, now if you do four times five, that's 20. There's automatically going to be 20 gifts under the present, under the tree.

Okay, yeah. guess so. And then you throw. So you made up for volume by children versus presence. Exactly.

You throw in Fitzgerald and Huck and Olive. So four times eight. There's at least 30 presents out of the tree every year. Yeah. Do you need a nap? a shot of...

I don't know what's going on. I didn't have enough coffee this morning.

Alicia McKenzie (08:03.722)

Okay, that was our little tangent, but actually today I want to talk about...

Speaking of travel, it blends right in.

Yeah, speaking of travel, good segue. When we were in Europe in 2019, we did, was it 2019?

2019 it was 20 Yeah, and we had planned it was a we yeah at you, but I thought it was a very We had spent a lot of time planning the trip from The locations we were and we had a budget and we were sticking to a budget and it was really good and planned all the the multiple legs of the trip and Then we even thought in advance about travel and packing

So we were like, here's the packing list. We're going to make them for the kids first. And we bought these big luxury.

Alicia McKenzie (08:54.69)

First, how long were we going for?

Six weeks, five and a half. Six weeks. And we decided we were gonna get these travel luggage from Toomey and we were getting, think they were the cruise series. Worldwide. Worldwide series. And they're like, hey, we get a couple of the big suitcases. We can put two people in each one so we have less suitcases to travel with. We still ended up with one suitcase per person to include the two big ones. Okay, carry on.

Why?

Alicia McKenzie (09:17.048)

big mistake.

Alicia McKenzie (09:24.366)

It was terrible. So first off, we're at the airport and this massive worldwide thousand dollar to me suitcase weighed in at 88 pounds. Holy shit, weighed in at 88 pounds. And she was like, all right, you can either take some stuff out. 80 pounds is our limit or you can pay the fee.

I think it weighs 10 pounds by itself.

George McKenzie (09:45.324)

No, I don't think it was a pay the fee. think they were saying 88.

So it was pay the fee and the fee was $800. She's like, if you don't take it out and get it below 70 pounds, 80 pounds, it'll be $800 to send that extra eight pounds. I'm like, are you fucking kidding me? needless to say, we are taking

okay.

George McKenzie (09:56.654)

80 pound.

George McKenzie (10:08.736)

It was a lot of baby stuff, a lot of diapers and other things that we just took out and shoved in kids' backpacks or just threw it away.

Like we should have just bought diapers when we got to Europe. I don't know why I didn't think about this, but I guess it was Maverick was still little, right? He was like, maybe 18 months old. Yeah. If that so it was like, no, he needs his.

classic overpacking.

complete overpacking, was egregious. So needless say, like, we had to take a bunch of shit out. We get over to Europe and we have seven massive suitcases and Europe is not travel friendly.

It's It's travel friendly. It's not a large family. Yeah, Alicia bring a lot of stuff with you travel. To include like the hotel rooms for families aren't that big and there's only one family room per floor. yeah, the vans that they pick you up in aren't like the size of US vehicles. So it was a learning experience for everyone. And what we found out by the second phase of that trip when we went on the train ride.

George McKenzie (11:15.884)

So car ride to train ride was getting all that fucking luggage off the train and my wife and mother-in-law and kids off the train and wheeling those fucking bags through the streets was a recipe for disaster.

It was terrible. So we ended up buying

Yeah, I think after the two days into the trip we decided Or was a week maybe a weekend. I think we made it a week and we decided one we packed way too much fucking clothes Because the only clothes we were able to get away was hot as shit in summer in Europe that year was like the heat wave of all heat waves and What we realized is there's no real washer dryer situation in any of these Airbnb's we were staying at so hang dry was the only solution yes, and when you

look at your wardrobe with that requirement. There's a lot that doesn't meet it. So you decide, okay, all of that we're shipping back.

So we took the two massive worldwide suitcases, we shoved them full of clothes that we could not wear or did not have the desire to hang dry, and we sent those back to the states. Meanwhile, I ordered... Somebody had told me about this company and it was popping up everywhere, and it was the Away suitcase. Someone had told us about it. I'd seen a bunch of influencers using it. This was right around the rise of...

Alicia McKenzie (12:39.15)

Warby Parker. That's huge. So Away Suitcases was your first direct-to-consumer suitcase brand. It's not obnoxiously expensive.

And I think that's

Yeah, and was marketed kind of they were the tip of the spear when it came to that sort of marketing of like direct to consumer hit the socials like really get out there and use the influencer marketing stream

Yeah, but talking about away, the workplace has been said to have been incredibly toxic. Yeah. Led by a woman who was not the nicest person and who dealt with her fair share of controversy and scandal when it comes to how she treated her employees. So we thought that this was a really good company to dissect.

Yeah, to jump in to talk about a little bit.

Alicia McKenzie (13:33.396)

And the first thing that I want to say is that I first saw away on social media, right? And it was the first real brand that focused on the aesthetic, right? They're calling away the millennial luggage. And it was geared to me, to women who...

travel a lot, but don't want to pay too many prices, but also don't want to have to buy a new suitcase every year because you're getting like a $50 Target bag and it's going to fall apart in the airport and your shit's going to be all over the floor and it's just going to be a disaster. Right. That's where this whole thing started. The CEO, my gosh, what's her name? Jen Rubio. Right. So she's racing through the airport and her suitcase basically falls apart. No, she was CEO. She was the founding CEO.

She's a CEO now.

Alicia McKenzie (14:20.27)

Her suitcase falls apart, her stuff's all over the floor, and she's just, I'm sure as you can imagine, incredibly pissed. And she's looking for a suitcase that is in that middle section, right? It's pretty, it's affordable, it's functional, it's bulletproof. And, something that was really novel was that they threw in a lithium battery charger to charge your phone. And it was sold as the little black dress of suitcases.

Right. Yeah, was very, yeah. And I think it was brilliant marketing, right? Like, hey, we're going to, the millennial is becoming a bigger component of the marketplace. And if you look at travel, they're probably even higher because they're the generation that really likes to travel and is less likely to settle down at that point in time. And you look at, okay, here's our target market and we've identified it. And now we know, okay, what are the...

functional.

George McKenzie (15:19.138)

know, purchase decisions of this target market. And it was really around women buy this luggage more than men. let's focus on women, the little black dress analogy, and we want something that, you know, is lightweight and bulletproof.

So you have Jen Rubio and she was doing, so the two founders, Jen Rubio, Steph Corey, they had originally worked together at Warby Parker.

so they had working knowledge of this direct to consumer market.

But not only that, Jen Rubio did the social media for Warby Parker. So she had that knowledge and that background of how do I make my product a commodity, right? And how do I get it into the hands of these influential women that are driving...

Yeah, and really, yeah. I mean, they came from a company in which was a market disruptor, right? You took the eyeglass industry, which was dominated by, still is dominated for the most part by, you know, a couple manufacturers and most of the brands that you would go to Sunglass Hut to buy, they're all the same fucking company. It's just different brands, but it's all the same thing. Yeah. And the cost to produce is

Alicia McKenzie (16:32.462)

same product with the different valence

George McKenzie (16:37.898)

minuscule to what you're paying for it. So they looked at that and said, hey, if we produce a similar product using the similar methods with an incredible margin, we can charge a lot less and still be incredibly profitable.

Absolutely. And Steph Corey had the operations knowledge from.

Right, so she understood the manufacturing process, understood who to reach out to in China to get these things built. So how do we get them

these two women and you put them together. mean, that's a recipe for a...

What happened yeah, and it was a runaway success, but I'm pumped no anyway So they went out to raise money because they obviously needed a little money to make you know the manufacturing

Alicia McKenzie (17:21.922)

Yeah, but they raised 150,000 from friends and family. Friends and family around, nice and easy. Started, they took their blueprints, went to production, but they could not produce the bags as quickly as they wanted. So they couldn't get them...

So think that's a big lesson for founders too. You see a lot of people that have unrealistic expectations for friends and family around. Like, I need to raise $2 million pre-money or $2 million pre-seed family. Like that's just a lot and you can't take salary in a friends and family around. Like you're working.

Can we talk about the people who try to take us

I know that's what I just think it's you're like, wow. Yeah. I mean, you're investing your time and the payout is going to be the equity value. Not a salary.

salary. You don't get to pull salary out of my friends and family. Yeah. The second I see that on the line item like

Alicia McKenzie (18:19.662)

But anyways, the product wasn't ready. They wanted to launch Christmas of 2015. They could not do it. So they got creative and they developed a book called The Places We Return To. And it was a coffee table book, right? It was beautiful photography, the places you want to visit. And with that book, they had a gift card towards the purchase of an away suitcase. And I think their original

So were they selling these books?

We're selling these books. Okay. Right. So they sold these coffee table books with a gift card for purchasing a suitcase and their original suitcase was $250. I think it

Okay, so they're selling the book the carry-on the book with for 250 which included the suitcase But something like that was something okay. I mean, it's a brilliant marketing plan, right really It's basically getting the suitcase but delayed satisfaction because you have to wait for it But in the meantime you get this awesome book you get this

I don't know the exact price.

Alicia McKenzie (19:16.974)

beautiful coffee table book and then got it in the hands of 40 travel influencers. So you take a book like that, you throw it on social media with people who have one to five million followers and travel influencers, and they blew up. Right? So they generated $450,000 of pre-orders prior to even getting a suitcase in anybody's hand.

All right, and those suitcases started delivering in early 2016. Okay. Right, then they went on to raise $2.5 million in additional funding to help spur up...

Okay. a seed round for mainly production, right? To meet demand. So I imagine, I mean, it's like cogs heavy, right? Because you have to pay the manufacturer to ship it. You have to get the materials.

Yes, but.

Alicia McKenzie (20:06.742)

He wants to start a direct consumer goods like company just so I can see the innards of

How about we just find someone who wants to be a guest of the pod that has that? And then we can get involved. Companies are not learning experiences, right? Because that's the recipe for losing money. It's not.

Why not?

Alicia McKenzie (20:29.666)

it. Yeah, but we figure out how to grow it and then we sell it.

Alright, or you can just, you know, be a part of a company that already exists and learn the ropes.

Anyways, anyways, so they made $12 million in sales in their first year, 2016. Huge.

Great. Yeah, it's a lot of luggage. $250 to $500 a pop.

And then they were profitable by the end of 2017. And then they made 150 million in 2018. And then in 2019, they got a $1.4 billion valuation.

George McKenzie (20:55.074)

Yep, all things going well.

George McKenzie (21:02.702)

on $150 million of revenue? Yes.

Right. They had to expand into that, which seems right off the bat, like.

So 10 X revenue. It's just a big valuation consumer product market. I guess, especially if you're making really good luggage. how often does a person need a new away bag? Like how do you keep selling to the same customer?

Exactly.

But not only that, there were other companies that were entering the market, right? You had VEIS, which is B-E-I-S, that company. Ava owns one of those. That's the bag that like zips and has the shoes underneath. And then you also had...

George McKenzie (21:41.048)

Yeah, once you once you've proven a market, right, and you're like, hey, this, this segment of the market exists, other people will follow.

Yeah, there were other like great state bags. That's another one. Our children own those. Okay. Those were geared towards kids and they have the backpacks and all that stuff. Right. So a $1.4 billion valuation just seems slightly aggressive. Just a little, little aggressive.

Yeah, huh?

It's worth what people are willing to pay.

But what they weren't expecting, what happened in 2020.

George McKenzie (22:14.05)

Yeah, COVID. didn't they have other, wasn't the CEO issues prior to that?

There was, yeah. There were other issues prior to that. Like the first one was in 2017 when FAA outlawed lithium batteries on the plane.

Right, so then they had to quickly develop a kit to get the battery out.

Yes. Right. But that was their differentiator. Yeah. Right. Like, look at our bag. It has a charger. They'll try it into it. OK. Now it doesn't. Now it's just a suitcase like everybody else's. What's your differentiator now? Right. So they have that problem. But then they had the toxic workplace.

Yeah, this is the one that I think it's the most interesting to me.

Alicia McKenzie (22:56.278)

Yes, so there was an article written and it was titled Emotional Baggage. And it was basically exposing the CEO of unrealistic employee expectations.

Ha, love it.

George McKenzie (23:11.246)

Yeah, and I think if you counter that with like how Elon Musk's, Musk addresses employees today, it's not so different. No. No, with his like, hey, you know, I sleep on the floor, everyone should be working just as hard as me. And, you know, vacations are optional, not required. And you need to, you know, the whole doge thing, right? Like, I think a lot of people are on that kick now too. And I think it's, it can work in an early stage startup, but I think it doesn't last very long in that zeal where...

you expect and you see it in job postings to where people like hey if you're looking for nine to five 40 hour a week this is not the role for you and like just expecting people to work 10 to 12 hours a day six days a week

just saw something recently now that Gen Z is entering the workforce, how they're working less and making more money because they've got such solid boundaries. I'm curious to see how that eventually plays out. of course, they've

Yeah.

George McKenzie (24:08.436)

I think AI is going to help get more work. They're going to be better at and more efficient at getting stuff done. For sure. let's go ahead.

14 employees went on the record, mostly anonymous, exposing an environment of intimidation, constant surveillance. And did we forget to mention that the CEO was married to the inventor of Slack?

Was it slack? Yes. nice. Yeah. It was slack.

Okay. So within this company, you were not allowed to email each other. had to use Slack. You had to use Slack and then you could not direct message an employee unless it was something about like, maybe let's go grab lunch.

OK.

George McKenzie (24:55.15)

You couldn't use it for work. All work stuff had to be because probably because of the settings, they weren't saving chats, but they were saving all the channels. Right. And, but yeah, I mean, I get it. She was pushing her husband's product.

Maybe, I don't.

Alicia McKenzie (25:09.718)

Right. And this was framed as transparency and inclusion, but in reality she was using it to see who was actually working one and was using it as a way to...

monitor employees, right? And monitor communications. mean, email people, you can do the same thing with email and it happens a lot, but Slack was better at, okay, are you actively logged in? Are you unavailable, available? Did it show you busy? Right? And then I think there was something in there where there was a group of underrepresented employees that, you know, created what they thought was a hidden channel to complain about their bosses and also commiserate. And then, you

Lo and behold, that was not a private chain.

It was not a private channel. I fired six people. Yes. And which was really funny because one of the women, I think it was a woman, one of the people that they fired was a person of color and they accused her of being racist.

Right. mean, I'm sure there was probably inappropriate comments about whatever race, gender that they felt was, you know, overrepresented in the company that was probably being, yeah.

Alicia McKenzie (26:25.464)

Probably. I'm sure shi- people said things.

People said things and I think that's a great thing you should realize as employees in terms of the workforce. If you're your corporate communication channels, you better believe they're looking at that. Absolutely. So don't say shit. Yeah, don't say it. Don't say it. Use the text messages to your friends if you want to say inappropriate things. Or use the fucking phone. Just call.

None of it's

Alicia McKenzie (26:49.164)

Right? Do you remember like

But do you remember like, we'll be in meetings. I remember this like clear as day, like I'll text you something and then I'll look at you.

Yeah. Yeah. I still do that. Don't use Slack or anything to say, cause those things will always come back to bite you. Yeah. Email, chat, all that shit will come back to haunt you.

It's like, it's fucking guys.

Alicia McKenzie (27:07.946)

Especially if you're gonna talk shit

Alicia McKenzie (27:12.654)

So, all of this, employee intimidation, very toxic work.

Yeah. And then I think she was openly like calling people, um, know, mindless and brain dead publicly berating people like in town halls, she would call you out. Like, and I think that, you know, for me, um, corporate culture and the workplace culture is always super important. And I think it's undervalued and a lot of startups and it's undervalued even in big businesses. Cause at that point, you know, you become a tribe of tribes. And if you, if you don't have a good

Positive culture in the beginning and you don't set the tone as a leadership team and with your direct reports of what it is expected and why people would work for more than just the paycheck then You're never gonna be able to institute it later. So you have to have it right off the bat of what do you stand for? What's your culture? What do you want everybody to be and? To represent and then as you get bigger, you know You can only have a tribe of up to maybe a hundred hundred fifty people and then you know, you need new leaders

So then you become a tribe of tribes. And if you don't have a strong enough culture to permeate that second layer, then it'll all fall apart. But apparently her culture was bad from the beginning.

culture was bad from the beginning, but one thing I always go back to is that when you were running DPS, everybody wanted to be a part of that community, right? Like working late, you would hold overnight hacking hackathon.

George McKenzie (28:45.102)

Yeah, I think it was, we tapped into something kind of rare. We just created a culture around passion for what we did, one, and I think most of us embodied it. But it was also, we were in the right time, right place, and it kind of created where cybersecurity was burgeoning out of a lot of these bigger IT companies to being just cyber services. So you ended up with a lot of really smart people.

that didn't feel like they belonged in the IT crowd. They didn't really belong in this crowd. So we created a kind of a community, a place that they felt... we did. And we labeled it capital C community because it was, you know, a noun. was our community. It was our community. It was a formal thing. And, you know, everyone, you know, embodied it. And people were not, you know, upset to work longer hours because they believed and they felt appreciated. And I think when you...

Like what she was saying is, expect you to work these long hours at the same time, you know, I'm gonna criticize you in public. And, you know, the lashings will continue until morale improves. Like it's like one of those kind of memes. was, you know, you're not gonna get the result you're looking for. She wanted dedication and people to work long hours and be, you know, committed, but at the same time, you're berating them.

Exactly, like if you're gonna treat me like shit, I'm just going to work

Or find another job, right. Or just get a job. But that's something that I think as leaders, gotta understand that going in. What kind of culture are you trying to build? And I don't know, mean, some of it could have been her being a woman, an underrepresented community, and a woman, and in probably a male-dominated industry, and taking capital from...

Alicia McKenzie (30:18.668)

Yeah.

George McKenzie (30:34.69)

Probably private equity groups or VC groups that are probably mostly male oriented. Yeah, and they were probably pushing her Yeah, she had something to prove and I worked this fucking hard Why isn't everybody else and yeah, it's because you have tons of fucking equity and no one else does so yeah You should be working harder than everybody else. That's just the because you have more to gain. Yeah And more to lose

like she had something to prove.

Alicia McKenzie (30:57.326)

But eventually it got so bad that she resigned, right? You're right. Okay. They brought in the COO, the former CEO of Lululemon to be the CEO of Away. Okay. But then she came back

changed my mind. No, thanks. I'm not leaving

I don't want to leave." And she bowed out due to pressure and she really, her heart wasn't in leaving and so on and so forth. And she claimed that the Verge is reporting, so that's the article, the piece that outed her. She said it was inaccurate and she wanted to sue for slander, all these things, hired defamation lawyers. Right, but...

But I guess she must have had enough votes to keep her in at that point because it must have been good on her that she structured it with taking on the equity that she still maintained control of the board so she couldn't get voted out.

than 2020 happens.

George McKenzie (31:58.434)

Yeah, not up, you know, when the travel bans happen and no one's flying or traveling anywhere and you're quarantining your home, imagine luggage isn't the top of priorities for people.

But not only that, 2020 happened, but she also was on maternity leave, right? So, as a female who has given birth five times and gone through the postpartum phase five times, you were so fucking irrational. Nothing is logical. It's all hard. You're leaking out of every place you could possibly leak out of. You've got something that is clinging to you 24 hours a day, and then you're trying to run this company.

through the biggest rift in the travel world that they've ever experienced. Sales have dropped 90%. I guess she went on social media and went on a little tirade and...

And then sent emails at like 3 a.m. or something. All right, so it all went to Helena Handas. And she stepped down officially.

Yeah, just all bad.

Alicia McKenzie (32:59.756)

She stepped down officially and she left by the end of the year. And then the founder, they brought in another CEO and the revenue went from 150 million to 135 million, which doesn't seem like that big of a drop.

10 % 10 % decrease right? Yeah, maybe more 20 % Yeah

I mean, nobody was traveling. And they tried to get innovative and come up with different products, but...

I think they're still in that phase today, but I think that's the commonality of when you're on this rocket ship, right? And you're, it's like, we were just talking like the Silicon Valley, like, oh, no revenue. You don't want any revenue. Once you have revenue, then, you know, whatever revenue number you have, it's never enough. And they always want more. And the valuation will be on revenue, not on pre-revenue, which could be anything. And I think that's, it's a stupid thing, but...

Like the investors that came in that valued this company at 1.4 billion, like they want 20 to 50 % year over year top line growth. And they want revenue because they're betting on your future. They're not, the 1.4 billion valuation wasn't on the 150 million in sales. It was on the potential to be 500 million in sales to whatever in sales. And when you aren't growing 20 % to 50 % year over year, it's incredibly difficult to go to the number that they valued you at.

George McKenzie (34:25.826)

So yeah, I mean, there's two sides to everything. One, the investors want the return. And they're like, if I bought in at 1.4 billion and your revenue goes down, that means my valuation, my shares went down, they're worth less. But at the same time, you gotta be realistic with growth expectations as well as everybody aligned on what the end goal is. If the end goal is a $2 billion valuation, how do I get there and when do I get there?

And then what are the lead lag indicators to show that I'm on a successful strategy?

And then I think to Steph's defense, Steph Corey, she's the CEO. In her defense, this company went from nothing to like this massive juggernaut in under four years. Like that's huge. think if it were me, I think maybe the company outgrew her and she needed somebody to come in, but she also needed to have the self-awareness to say, okay,

Yeah, and this massive valuation

Yeah, it's incredible.

Alicia McKenzie (35:30.742)

We're at a point where I cannot take this company any further and then bow out. That wouldn't be the smart thing to do versus no, this is my baby. I'm going to drive it all the way into the fucking ground.

Well, I think that it's different personalities, but it's true. Like the person you need as the leader you need to be when you're a startup to 10 million in revenue is not the same leader you need to be when you're, you know, $50 million in revenue to 300 million in revenue. And yeah, the delegation that needs to happen and yeah, and the people you need to hire under you, those tribal leaders, you know, there's so...

The people management.

George McKenzie (36:12.618)

And she, there's no chance anybody's equipped for that, right? To say that, okay, I was the market, social media marketer. I was the operations lead for Warby Parker. And it was already a big company that already had infrastructure. And then now I'm going to create all that myself and I'm going to have this incredible rise in valuation as well as revenue and status, and then be able to.

the operator.

George McKenzie (36:42.03)

grow a company and learn at the same time. It's like recipe for disaster.

There's some people that are saying, maybe she should have gone to executive leadership training. One.

Yeah, or brought in a, you know, like a part-time CEO to be a mentor for her and to help out and things like that. I think the problem comes is that imposter syndrome, right? Where I'm sure, I I know, but that's no better way to describe it. I think you have all this success and you immediately are like, well, you know, did I catch lightning in a bottle and this shit is in...

Will it continue like this? What do I need to get better at or what am I not doing? And then I really don't know what I'm doing. It just sort of happened. And what if it doesn't happen? And what if people know that there's no magic recipe? And what if, what if, what if, and then you start to say, okay, now if I bring in this more seasoned CEO, is he gonna expose me that I don't know what the fuck I'm doing? So obviously I don't want that. So I'm gonna have to.

bucket that and I'm gonna have to sign then if there's these employees that are criticizing me I need to know about it because I got to able to squash it so that they don't go to the board and I got to be able to control it all because this house of cards will fall if it gets exposed.

Alicia McKenzie (38:01.602)

I blame the time in which this happened because you know it also was huge on the rise.

me too

Stop it. No, it was like the girl boss error. You're not on social media. You really don't understand. There was a point in time, exactly, where everybody was like this boss bitch who could do everything and was expected to do it all and could run the company, could have the family, could overwork, and so on and so forth. This error, that was huge during this time, right? So it was probably a little bit of that self-imposed pressure that...

Girl

Alicia McKenzie (38:40.138)

I'm doing all of this. I said I could do this. It's hustle culture. I'm gonna work myself to the bone. I expect all of you bitches to do the same. Like, it was just...

Yeah, recipe for where they ended up. And I think it's some lessons. mean, I think they're still chugging along today. The last I read about it before that was, I think they were trying to have some sort of acquisition in 23, 24. They were either going to go IPO or exit and they brought in some higher powered executives to try and get them over the hump. And now they're laying off.

There was some talk.

George McKenzie (39:17.762)

more people. So think there's another 20, 25 % staff cut, mostly at the back office executive level. So I think they're coming off of that and trying to get back to profitability. I think they're cashflow neutral. So trying to get to cashflow positive, but I mean, being private equity backed, they're, they're going to have to exit at some point. it's just interesting. think they're, they're one of those companies probably caught in that middling, right? Where you had the rocket ship growth, you got valued at the...

tremendous valuation and you don't want to be seen as having a down round at this point, but you're maybe not reaching the max potential that you thought. So you're trying to get back to what got us there and get back to, what got you there is being that market disruptor and you've already captured a large lion's share of the market. you're not going to beat the Toomey. You're not going to beat those guys on the luxury side. Like people that buy Toomeys and buy Louis Vuitton and all these other

luggage they buy it for that name not because they want value or they you know the coolest product that

there. Which can we talk about how Toomey is not as strong as they say they are? We've had multiple Toomey suitcases get beat to shit by TSA. Okay.

But they always replace it, which is good. So that's the positive. They always replace. They'll replace the handles, they replace the dents. They stand behind their products, which I think is if you're gonna buy luggage, it's great. But I think they captured, their Psalm is probably as big as it's gonna get. Maybe they can get into different places around the world where maybe a way is not...

Alicia McKenzie (40:42.467)

I take it back.

Alicia McKenzie (40:46.241)

I don't

George McKenzie (41:05.984)

As not as I know maybe they're not as dominant and those as they may be in the US in this market segment. Yeah. Or they are. I just don't know what kind of R and D advancements you can make in luggage. Maybe.

There's not that many ways to make a difference.

I know, but maybe they will. Maybe they'll find it. So, I mean, yeah, I just don't know how much upside is still there. So they're, you know, trying to get back to what made them them of being, you know, maybe more nimble, smaller company feel, focus.

I'm not innovative enough to imagine anything other than what they have. They've got this, I love their product.

Yeah, I think the suitcase and the little bag maybe they build better trough duffel bag stuff

Alicia McKenzie (41:47.788)

We spent 10 days in Hawaii. Yeah, right. Carrier with their little duffel bag. It worked fine. Like it was fantastic. And I have all of their like little travel kit products. Like it's perfect, but I don't need anymore.

There was.

George McKenzie (42:00.962)

Yeah, well that's the we've had the same luggage now since Europe I think and we bought those for the Hawaii trip. I just yeah So anyway, I think there's a lot of lessons in the from away one, you know Watch what you do on social media and then be careful of growing too fast, right? And you know getting these gigantic valuations and I understand you want the big valuation so you can do a big raise. Yeah, and it makes you feel good because hey my

If I have 10 % of the company and we just got valued at 1.4 billion, now I am worth 140 million. That's my 10 % is worth 140 million. And it feels great, but maybe raising a lower evaluation would have been more prudent because then you wouldn't have as much pressure for that continued growth and the continued revenue drive to get two billion, two and three billion in valuation. And I think that's...

you know, a lesson for founders is watch that valuation. mean, I understand it's, it's always great to raise it the biggest valuation you want because it sounds fantastic. the expectation management at that point, and once you have professional money involved in the company, they care less about investing for the future. Most, most care less about investing for the future because their time horizon, let's say if it's private equity time horizons three to five years mostly. So they want

How am I going to get the most exit I can in these three to five years? And it's not investing in some product launch three years from now. Right.

$1.4 billion valuation. I can't imagine trying to grow into that. That's what it is. want...

George McKenzie (43:44.034)

You have to grow into it. You have to grow into this. Yeah, so mean, I think that's you got to understand you have to understand what's realistic Yeah, what's your obtainable market? How are you gonna go get it and What's realistic and you see saying a lot of pitch decks when people do their Psalm and Tam and they're like Like there's service obtainable market and be like, this what are we're gonna be able to obtain from the marketplaces? Let's say the total addressable market is two billion

George McKenzie (44:13.838)

I'm just using it. $2 billion market space. We think our product and our service fit, we can obtain 10 % of that market. Sounds small, right? Only 10 % of the market. That's 200 million in revenue. All right, you're at zero revenue now and you're gonna get 200 million in revenue tomorrow. And that's what you wanna be valued on. That's how big I can get. I could obtain that 10%. So that's a big fucking target. Like how are you gonna get from zero to 200 million?

You're not.

Maybe you will. I mean, there's a lot of rocket ships people that do it, but you know, I think it'd be easier to say, hey, you know, I'm going to raise. But that's the thing is it's that balancing act is you want a big enough number that people go, Hey, there's a lot of upside here. So if I invest on a $20 million valuation today, he says the obtainable market is 200 million. So I'm going to 10 X revenue, which, you know,

If the multiples stay the same, I'll 10X my money. Yeah. And then I think the other thing is, is to be confident. Most of the best leaders, most of the best leaders. I don't know if that's the right thing. A lot of people I know that have succeeded, not, let's say not entrepreneurs, or some entrepreneurs, but some executives, the better executives, the ones that, you know, last the longest and have the best success are the ones that are the most humble and the ones that are willing.

I don't know.

George McKenzie (45:39.64)

to listen to other people's ideas and willing to admit they don't know it all. And I think that that's the lesson too from her is like, if you're that CEO and you are, you do have the lion by the tail and you're just getting swung along less about your own ego and this is all because of me and my success versus maybe I do need to bring in that consultant or I do need to bring in that.

executive coach or that co-CEO or hire a great COO or someone that's gonna help me achieve the goal that I want for the company. Versus I need to maintain and control power and wield it from the position of authority so that no one can potentially undermine me or take away from me. And I think that that's that balancing act of understanding that about yourself, know, to bring somebody in to help push this thing forward, especially as you're growing that fast, because no one's ready for that.

When I was reading the Verge article, there was a lot of talk about how she wanted 100 % of the customer service messages, phone calls, instant messages to be addressed. The phone calls immediately, instant messages immediately, emails within four hours. There were six people on the team.

That's a great goal.

It's a fantastic goal, but

George McKenzie (47:01.43)

And that goal is achievable when you have your first 100,000 orders. But when you have millions of orders. Right, if you scale your customers 10x and you scale your workforce 1x, how do you expect that delta to maintain?

so unreal.

Alicia McKenzie (47:20.43)

That's what I mean. The manpower just was not physically there.

Right. Do it. So you have the goal. Great. But you don't berate people because you missed the goal.

she's canceling PTO. She's sending all these Slack messages at 3 a.m. Why isn't anybody doing this? I'm to be able to do this.

Yeah, yeah. And I think maybe if she Or I mean, if she'd have had some coaching of, look at the numbers, like how many complaints can one person handle within that SLA? And, yeah, and then do the math. Okay, we have 10x more complaints than we had before, and we were barely able to do it then. We haven't increased our workforce. There's no way we can do that. And the messaging of, you know, chastising is not the way you...

I've always believed that you publicly praise and then you privately criticize. So town halls and you're just all about the greatness. this person did such an amazing job. Let's highlight this achievement. And then when you have something negative to say, you do that in a one-on-one, not in a public forum.

Alicia McKenzie (48:25.944)

Are you trying to tell me something?

Yes, exactly. The compliment sandwich.

She brought in somebody to help her manage the team, right? The customer service. Brought in somebody. Last six months before they fired him. Because he was not managing the people the way she would. Which is exactly why she needed to bring...

Right exactly. Yeah. Yeah

And when he left, her team was really sad because they were saying that it's the first time we felt like somebody cared about it.

George McKenzie (49:00.0)

Yeah, and heard and they had the buffer between. Yes. And that's another thing like the scaling up book talks about and other things when they interview these companies, the ones that are successful and then the ones that aren't successful. A lot of times what they find is the leader, the CEO of the company, you know, if he is, let's say he's a marketing specialist, that's where he came up. He was a marketing specialist and became the CEO of the company. Often, more oftentimes than not.

It's the worst marketed company, right? That company's marketing is the worst because they don't delegate the marketing to someone who's focused on marketing. They are trying to be CEO and do the marketing and do everything all at once versus having someone who's in and giving that autonomy and, you know, giving that power and, you know, accountability to that person to say, okay, you are in charge of marketing.

Why?

George McKenzie (49:59.146)

I am the CEO, in charge of the P &L, I'm in charge of investor relationship, I'm in charge of strategic goals and direction, you are in charge of marketing. And then I will manage you according to the KPIs associated with marketing.

Which apparently I learned that marketing and branding are two completely different things and should be managed by two completely different people. Did you realize that? Did you know that? Yeah. Marketing is one thing, branding is another. Yeah. There's some, but it should be managed by two separate people. Should not know that.

I think if you're a large company, makes a lot of sense. When you're in startup phase and you got 10 employees, you can't have a brand person and a marketing person. Right? So, and I think that's the things you realize as you scale. Like those things are two different things, which I mean, as you scale fast, a lot of times you get caught in that mindset of, no, Johnny's been doing brand and marketing since the beginning. Why do we need two people now? He's always done it. And you realize that, no, you gotta change the hat that you have on about, you know, what you see in the mirror.

true.

Alicia McKenzie (51:05.4)

Yeah. So I guess know what you

then you have to grow and your management style has to grow as the company grows.

And if it can't, it's completely okay. Do you bring somebody? That's not a failure. You grew this baby from zero. A huge juggernaut. Like be proud of that.

Exactly.

And remember to

George McKenzie (51:22.86)

Yeah, and focus on what it is you want to do. Like for me, I don't personally, I found I don't like running or being a part of, you know, running a very, very big company. It's not fun for me. Yeah. Right. That's not where I strive. That's not where I feel like my messages are the best. I like the mid-size. It's kind of where I feel. you know, it takes a while to learn that though. Like, and I think as a founder, figuring that out.

Now

George McKenzie (51:51.638)

early on as to what it is you want and be honest with yourself. worst lies are the ones you tell yourself and I think that is true in business as in life.

Indeed. All right, we'll be back next week.

Thank you for tuning in to Mary to the Startup. We hope you enjoyed today's episode. If you did, please take a moment to like, rate and subscribe to our podcast. Your support helps us reach more people and keeps the conversation going. If you have any questions or topics you'd like us to cover, drop me a message. I love hearing from you guys. Until next time.

George out.