This CEO made a small mistake that cost him $700,000, but later realizing it helped transform the company into a $4 billion behemoth

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  • One of the fashion items that has propelled the Encinitas, California-based firm to a $4 billion value are Vuori’s well-known joggers, which you have definitely seen social media advertisements for.

Yet, less than two years after Vuori’s CEO Joe Kudla left his consultancy position to start the company in 2014, “we were starting to understand that we were going to run out of money,” he tells CNBC Make It.

Being a trained accountant, Kudla founded the business as a sort of Lululemon for men because he liked to surf and practice yoga but didn’t find any high-end sportswear brands competing for his business in gyms and yoga studios.

Following a “friends and family” investment round in which $700,000 was raised, Vuori distributed its wares to nearby yoga studios and fitness facilities. They remained there, hardly making a sale.

Customers Vuori did have responded when he asked for their opinions, stating that his vision was flawed and the clothing was just as useful—if not more—in all-day circumstances. Using a direct-to-consumer e-commerce model and social media marketing that aimed at a larger audience with broader interests was the only way to fix it.

We had few choices left, and our resources were dwindling quickly, according to Kudla. “I was truly afraid we were going to lose the company,” the speaker said.

It was difficult to swallow his pride, and investing his final cash in an unproven plan was extremely dangerous. Yet, his business was still operating. If this didn’t work, it would be permanently lost, and his investors might never trust him again.

Kudla claims, “[The impact] was nearly immediate. Within a few months, the business realized a $2 return on advertising investment. We reached a three-to-one ratio very fast after that, and then we were approaching a four-to-one ratio, he continues.

2017 came to an end with Vuori becoming profitable. With the $400 million it raised in 2021, the company, which currently runs 30 retail outlets across the United States and the United Kingdom, expects to establish 100 more. Here, Kudla talks about his nervousness, how he realized it was a make-or-break situation, and what he wishes he had known before making that vital choice.

I didn’t want to go back to my old ways, so the thought of failure was terrifying. We had to decide whether to go into the unknown. Both our free time and our financial resources were limited. It is unsettling to consider spending thousands of dollars when you don’t have much money left and there is no assurance that you will receive a response. Without any sales after spending your final $20,000 on advertising, you won’t have demonstrated to your investors any repeatable procedure or clear path to growth.

It’s challenging because, in my opinion, many entrepreneurs have a reality that is somewhat distorted. That gives people the courage to embark on these unlikely journeys and pursue their aspirations. How can you go outside of yourself to consider your company’s current state and how it is connecting with clients critically and objectively?

I firmly believe that an entrepreneur is an entrepreneur forever. You acquire this bug for making a concept come to pass. It’s quite difficult to get rid of the addiction that comes with having a vision in your head and making it a reality for those that chose this path.

By doing that, you’ll gain a more impartial, objective sense of awareness that will enable you to spot trends in your company’s operations. It’s crucial that you carve yourself some time for solitude, whether that involves practising yoga, meditation, or breathwork or taking a solo nature walk. When I started this journey, I started incorporating yoga and meditation into my everyday life. These helped me a lot when I needed to just be still, sit with my thoughts, and concentrate on that clarity.

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