798 Kat Dey and Phoebe Yu:

Kat Dey:

We don’t even realize that everything that we’re interacting with at home and what we’re wearing is contributing to climate change in a very significant way. And so, you could either ask people to consume less, but that’s very unrealistic. Or you can start using processes and materials that are more sustainable and have less impact on the environment. potentially even regenerate our earth and bring it back to the state that it was before.

Phoebe Yu:

We use innovative material to fight for climate change because our material is saving so (start much water, less carbon emissions, it’s high quality, and it’s better for the consumers and also better for the planet.

Phoebe Yu and Kat Dey are proof positive that you can build a fast-growing multimillion dollar business while helping to save the planet. Today we learn about their direct-to-consumer lifestyle brand and how it is using their proprietary clean bamboo to revolutionize the second largest polluter in the world – textiles.

MELINDA

Hi, I’m Melinda Wittstock and welcome to Wings of Inspired Business, where we share the inspiring entrepreneurial journeys, epiphanies, and practical advice from successful female founders … so you have everything you need at your fingertips to build the business and life of your dreams. I’m a 5-time serial entrepreneur and the CEO and founder of Podopolo, the interactive app revolutionizing podcast discovery and discussion and making podcasting profitable for creators. I’d like to invite you to take a minute, download Podopolo from either app store, listen to the rest of this episode there, and join the conversation with your questions, perspectives, experiences, and advice … Because together we’re stronger, and we all soar higher when we fly together.

Today we meet two inspiring serial entrepreneurs who are fighting climate change with a direct-to-consumer sustainable lifestyle brand best known for its bedding, bath and sleepwear made from their proprietary CleanBamboo® fabric.

Kat Dey and Phoebe Yu are the co-founders of Ettitude, a fast-growing social impact B-corp that is doing well by doing good. We’re going to talk about how to build and scale a social impact company and much more.

A sustainable purpose-driven mission isn’t just good for the planet; it’s good for business.

More and more consumers are choosing to buy better-for-the-planet products, and more and more they choose to buy from companies that authentically do good for the world.

Phoebe Yu had worked in textiles for 20 years and had built two successful international trade and sourcing businesses in Australia before she started Ettitude to transform the high-polluting textile industry with a proprietary new material called Clean Bamboo. But Phoebe knew that if she wanted to raise the capital she needed to live her dream of creating a global direct-to-consumer sustainable lifestyle brand, she’d need a strong co-founder with experience in branding to help her navigate the US market. On AngelList, Phoebe found serial entrepreneur Kat Dey, who had previously built Try The World, a DTC gourmet food subscription business bringing 5M+ authentic specialty foods from 30 countries to the US market. Named one of 35 People to Watch in New York Tech and EY Entrepreneurial Winning Woman in 2016, Kat’s company had partnerships with Conde Nast, Michelin, and Walmart and was recognized as the third-fastest growing company in New York by Crain’s NY Business and featured by the Wall Street Journal, Forbes, CNN, FOX, and other media outlets before she sold it in 2017.

Since they paired up, Ettitude has raised $6.5m in investment capital, earned tens of millions of dollars in revenue and been named twice among the Inc. 5000 fastest-growing private companies in the US. Ettitude is also a certified B Corp and member of 1% For The Planet, donating at least one percent of their annual earnings to environmental protection initiatives.

Today we talk about what it takes to raise capital, scale fast and how businesses can take the lead on solving the world’s most pressing challenges.

Let’s put on our wings with the inspiring Kat Dey and Phoebe Yu and be sure to download the podcast app Podopolo so we can keep the conversation going after the episode.

Melinda Wittstock:

Kat and Phoebe, welcome to Wings.

Kat Dey:

Thank you.

Phoebe Yu:

Thanks for having us.

Melinda Wittstock:

Well, I’m curious about what brought you both together to found Ettitude.

Phoebe Yu:

I think it’s both our passion for sustainability, and also make the world a better place. Ettitude, really we are a next generation textile material company. So we use innovative material to fight for climate change because our material is saving so much water, less carbon emissions, it’s high quality, and it’s better for the consumers and also better for the planet.

Melinda Wittstock:

And this, Phoebe, is called Clean Bamboo.

Phoebe Yu:

Yeah.

Melinda Wittstock:

And it’s in bedding, it’s in sleepwear. What else is it in?

Phoebe Yu:

Towels. And we also just launched a vegan cashmere bath robe, if you like cashmere. But it’s also made from clean bamboo. And you can hand wash it, not just dry clean. It’s super soft, it’s warm, cozy. Our customers love it.

Melinda Wittstock:

And Kat, of course this obviously has so many climate implications, of course. And textile production… sorry. And textile production, I’m interested to learn, is the second most polluting industry in the world. So you’re disrupting that, Kat.

Kat Dey:

Yes, absolutely. Textile is, like you said, the second largest polluter after oil in the world. And actually it’s also the second largest consumer of water globally. This is freshwater, so that diverts freshwater from agriculture and other uses. And it contributes 10% of total global CO2 emissions contributing to climate change.

Melinda Wittstock:

So to think that the textiles, what we put on our bodies, what we use in our homes, that this is solving climate in a way that’s maybe… we all think about EVs, but this is potentially more impactful.

Kat Dey:

Absolutely. And we don’t even realize that everything that we’re interacting with at home and what we’re wearing is contributing to climate change in a very significant way. And so, you could either ask people to consume less, but that’s very unrealistic. Or you can start using processes and materials that are more sustainable and have less impact on the environment. And not even just having less impact, but actually potentially even regenerate our earth and bring it back to the state that it was before.

Melinda Wittstock:

I see more and more women entrepreneurs, particularly women entrepreneurs disrupting whole industries with massive moonshots in a way that is aimed at saving the planet. Is this emerging as, this is where women are really going to change the game of entrepreneurship? Phoebe, what’s your take on that?

Phoebe Yu:

Yeah, definitely. Definitely. I think women is 50% of population, so there should be 50% women entrepreneur out there. I think the statistics also show female-led companies actually doing better financially. Make more money. And also a lot of the female-led businesses also are more environment and socially-conscious. So I think that’s great. Just hope to see more of us out there.

Melinda Wittstock:

Yeah. Well, the more of us that there are, the more will be. It’s kind of like be the change we want to see in the world.

Phoebe Yu:

Yeah.

Melinda Wittstock:

So when you set out to found this, Phoebe, back in 2014, what did it feel like then? because you’ve had a lot of success. You’ve raised $6.5 million dollars so far. You’ve earned tens of millions of dollars in revenue. Twice in the Inc. 5,000 fastest growing private companies. That’s an amazing accomplishment. Did you envision all of that back in 2014? I can’t imagine this journey wasn’t easy.

Phoebe Yu:

No, it was never easy. I think that’s for any entrepreneur. It’s never an easy journey, but it’s a fun journey because I learn something new every day. In 2014, back then I started the company in Australia. It’s a relatively smaller market. A little bit more conservative. I think the support for entrepreneurship is not as great as the US. I think that’s one of the reason we grow into the US market. Definitely there’s more support for entrepreneurship here.

All the money we raised, we never raised in Australia. It’s all from US or Europe investors, which is a bit sad. Yeah. But I think things has changed a lot in the last nine, 10 years. So definitely it’s more friendly environment. Still difficult. I think the statistics say only 2% of the female-founded company get venture money. So that needs to change.

But I just think 10 years ago, it’s probably even less. Less than 1%. So if you consider it from less than 1% and 2%, that’s 100% increase. So if we can just keep the momentum. But I also think statistics said, because of COVID, that number dropped a little bit. And now everyone’s talking about recession. Maybe investors go a bit more conservative or go back to the status quo. I think that’s not good. But I think as female entrepreneurs, we just have to show them that it’s a good business to invest in. It’s a strong business.

Melinda Wittstock:

100%. Really, really. Because on this podcast, it’s almost 800 episodes now, the theme comes up quite frequently. What stops women from playing a bigger game? You can create a small business where you’re going to have a lot of the same challenges as creating something that’s a massive, global moonshot. What was it within you that made you feel, “Yeah, you know what? I got a big moonshot. I’m going to play big.” What was the mindset that you needed, Phoebe, to be in that kind of mode back in 2014?

Phoebe Yu:

I think back then the startup culture, a lot of the entrepreneurship, but even back in Australia, it’s a hot topic. So there’s a lot of success story we see from the US market. People start very humble but can grow very fast because of the internet and also the globalization. That there is opportunity there. If you have a great idea and you work really hard, you can grow fast. So I think that concept has been seeded then. But of course there’s some unhealthy culture there.

But I think that overall, yeah, if you have a great idea, chase it. And the internet and also the development software really helped productivity, make a lot of things much easier or less like… you don’t need a lot of capital to start to execute on your ideas. That definitely helps. So every people think, “Oh, I can try it. What’s the worst can happen?” Okay, it doesn’t work out. You go back to find a job. So there’s not much. There’s a lot of up there, less risk you would consider. So that’s why, I think, okay. And also as a female immigrant entrepreneur, you develop new products, your new brand, it’s difficult to sell into big retailers at that time. So by going direct to consumer and get that quick feedback, use the internet, definitely grow faster. So I think that’s also because a lot of infrastructure at that time helped facilitate entrepreneurship.

Melinda Wittstock:

Right. So Kat, as a co-founder, and you’re a serial entrepreneur as well, you built up Try the World, a gourmet food subscription business. And you raised money for that as well. When you came to Ettitude, what was your vision? Has it grown faster or slower? Or what surprised you along the journey with Ettitude?

Kat Dey:

Yeah, it definitely grew. The size of our ambitions grew over time. So when I joined, I really fell in love with the wellness aspect of our initial products. I really came from this wellness perspective of using non-toxic organic products that we consume, both in the food space but also in clean beauty. But then textiles is the next frontier because your skin is actually touching textile 24/7. You’re sleeping for eight hours in sheets, or you’re wearing pajamas. And then during the day you’re wearing clothing. And your skin is your largest organ, so from a wellness perspective I wanted to make sure that I am surrounded by non-toxic textiles. And that’s what really attracted me to the initial idea of Ettitude, that it was made in a completely non-toxic way as opposed to the previous generations of bamboo fabrics.

And that it felt so, so comfortable. I had the best night of sleep when Phoebe sent me the sheets, and that’s really the reason I joined, because I realized, wow, it’s helping people sleep, which is a core foundational aspect of health. We can make a big difference here. And we knew we had a clean, sustainable method, but we didn’t know quite how sustainable it was until last year when we did a scientific lifecycle assessment with a third party agency that actually proved that our technology saves 99% of water and 38% of CO2 emissions versus cotton, as well as 57% water and 22% of CO2 emissions versus the most sustainable fabric that’s out there, which is lyacel, made from trees.

And so when we realized this, we understood that there is a bigger mission for Ettitude, which is not just to grow a sustainable lifestyle brand, but also to help transform the textile industry by replacing harmful textiles like cotton, viscose, polyester, but also silk and cashmere. They’re actually quite bad for the environment. With better for you but also more sustainable, plant-based versions. And so now that is our bigger mission, which is to partner with brands that use a lot of textiles and help them use more sustainable alternatives that are based on our clean bamboo technology.

Melinda Wittstock:

The fact that you can do well by doing good is still a relatively new concept. It’s definitely a theme that’s emerging more and more on the podcast. Like I said before, more and more women are launching businesses that are sustainable from the beginning, the triple bottom line became more popular, more demanded by consumers, there are a lot of more established brands that kind of tack it on as an afterthought.

And so this was something that was core to your whole business model right from the beginning. So what advice would you give? Kat, I want to get your perspective first, and then Phoebe, on an entrepreneur starting out in this space. Wanting to do something for climate. Wanting to do something to solve any of the 17 UN global goals, for instance. How to incorporate that in their business model from the start.

Kat Dey:

Yeah. I think the first thing is to educate yourself in the market that you’re in. What is causing impact, and what are the solutions that you can already deploy in your product or service that are better for the world? So start with education before you launch into making a product, because it is possible that there are many better for the world solutions out there that actually cost-competitive to the conventional way of doing things. And it just takes a little bit of effort in educating yourself and looking out for those solutions. So I would just say start from the very beginning with just education. Learn as much as you can about the space.

Melinda Wittstock:

And you can bake this into your model right at the beginning. How about you, Phoebe? What advice would you have for female entrepreneurs in this space beyond just getting educated? How do you practically go about it?

Phoebe Yu:

Yeah, there is a lot of ways. I think sign on in industrial good newsletters. Often talk, we have a couple ones. They constantly will have good [inaudible 00:14:22] about the progress, especially in the textile material space. Or you can do online courses and join conferences. There’s various ways. But you just has to keep a lot of… spend time. I use a app called Clockify to track what I spend time. So I’m also very conscious how much time I spent on educate myself, on learning.

It’s non-negotiable. You have to set a couple hours a week for learning. Not just, “Oh, I’m so busy. I don’t have time.” But then learning is important. So you are on the right path. Another thing is, yeah, have that true conviction. So set up certain guardrails that, if a product does not hit those sustainable goals, it’s just like non-negotiable. We cannot. How we improve it. Or we have very strict guidelines, what type of material we will never use, like stay away from virgin plastic. For things all printing, we’ll also look at, is the printing material on products, is that sustainable? So all these little things. But your internal guidelines has to be very strict to not budge in if sometimes, “Oh, but there is an order asked for that.” But you just have to say no.

Melinda Wittstock:

So this applies to all sorts of things in any kind of consumer goods, from packaging to the actual materials. It applies to cosmetics, it applies to so many different things. And in the concept even of my company, which is a fast-growing podcasting platform for instance, we just set out from day one to be carbon-neutral just in our operations, but we also set out to be the first app where people make a social impact just by listening to podcasts. So congratulations, you’ve listened to 10 podcasts. We’re planting 10 trees for you. So there’s lot of ways to go about it. Or just really partnering with brands, for instance, to create their podcasts to advance these kinds of ideas, educate consumers, all of this.

So there’s a lot of different ways to play. And you chose to become a B Corp. So tell me your thinking of that. Why did you think it was necessary to be a B Corp? Can you do this without being a certified B Corp? Does being a C Corp push you in the wrong direction? Do you need to be a B Corp to do it?

Phoebe Yu:

I don’t think you have to be a B Corp to do it, but there’s definitely a lot of benefit. I think what I like about being a B Corp, because they provide a framework. A lot of free education to how to get better, instead of just give you a score and a stamp and forget about it. I think the whole process of getting B Corp took us 18 months. But using that 18 months, we actually then refined a lot of things. Like, okay, tidy up more our vendor management and also get more certification on products and supply chain, and also better HR practice because they really judge you overall, not just on product sustainability, but also how you treat your customer, how you treat your employees. Do you have corporate governance?

So I think overall basically it’s a blueprint. If you follow that, you will do better. I think it’s very valuable for a small business. Startup doesn’t have a lot of resource, or you have to pay expensive consultant to give you those information. So by follow that, it’s almost like a self-guided platform to do better overall on all aspect.

Melinda Wittstock:

Yeah.

Kat Dey:

And also, just to clarify, by becoming a B Corp you’re actually staying legally as a C Corp. B Corp is literally a certification on top. And it’s just really difficult to get. You have to go through, as we did, went through the details of all the certifications you need to provide and to prove that you’re really ethical and sustainable. But it doesn’t actually change your legal status.

Melinda Wittstock:

Right. Right, right. I like this idea. I’ve never really understood before that there is sort of a manual blueprint. That it helps you learn how to do this rather than just trying to figure it out on your own.

Kat Dey:

Yeah. Yeah, so it’s been a really helpful roadmap to follow.

Melinda Wittstock:

So Ettitude’s also a member of One Percent for the Planet, and that involves donating at least 1% of annual earnings to an environmental protection initiative. So how does that manifest for Ettitude?

Phoebe Yu:

Yeah. I think that’s, again, you set up those commitment right out of the gate because we think it’s important to support those organizations that are working on fighting the climate change so that we dedicate 1% of our earnings to them. But every year we might choose different partners. So I think we have worked with cherry water. Because we save a lot of water, so definitely the water crisis is one of the cause we care a lot about. I think during the bush fire crisis a couple years ago back in Australia, we also donated a lot to Australia since the company’s out of Australia. So definitely we donate to organizations that we feel their cause are really aligned with our value and the team’s interests.

Melinda Wittstock:

That’s fantastic. Well, I say because I think my company Podopolo will check it out. As soon as we’re cash positive, we’re committed to either giving away or investing or doing micro loans with 10% of our earnings.

Phoebe Yu:

Oh wow. Great.

Kat Dey:

That’s great.

Phoebe Yu:

That’s great.

Melinda Wittstock:

And that was just an intent right from the beginning. There’s lots of reasons to go into business. You can go into business for wealth or just because you can’t not do it, the entrepreneurial gene, which, as a five time serial entrepreneur, that’s definitely me. I think that’s all of us talking here. You can’t not do it. It’s your vocation, it’s your life’s work, it’s your mission. There’s an independence but there’s also a really big mission-driven impact. So having those ways to do it, and seeing people doing it. And really, you are both part of this blueprint for others, which is very inspiring. So congratulations on that.

But you’re also growing really fast as a company as well. So talk to me about the growth and how that’s happened, and how you’re sold. Because I know you have partnerships with different companies. You mentioned earlier in the show that it was really kind of difficult to get retail partnerships to begin with. Is it mostly e-commerce or do you have some of those retail relationships now?

Kat Dey:

Yeah. This is Kat here. We definitely have the majority of our traffic and sales coming through our website, but we do have partnerships with other brands such as Growth Collaborative, for example, is one of the most brand-aligned partnerships, I would say, where customers can buy some of our products through Growth. And we’re also in a few well-known retailers like UrbanOutfitters.com, for example, and we’re trying to grow our presence in different stores too.

Melinda Wittstock:

I’m thinking there’s so many different ways in which you could grow. Like partnerships with fashion designers, for instance, in terms of how they make their clothes. Is there an element of you guys that’s a bit Intel Inside, or is it just all stuff that you’re producing from the beginning to the end?

Kat Dey:

Yeah, absolutely. This is a second part of our business, which is B2B and partnerships with apparel brands, where they can use our patented fabrics in their lines instead of conventional fabrics. So it’s in the works.

Melinda Wittstock:

That’s hugely scalable. So what is your ultimate vision? Where do you think you’re going to be in five years, 10 years?

Kat Dey:

Yeah. In the next five years we really see ourselves as continuing to push innovation in the materials space and become one of the leaders in next generation materials.

Melinda Wittstock:

Right, right. And how big a company? Do you sit and talk about, you’re going to be $1 billion company or a multi-billion dollar company? Do you think about that?

Kat Dey:

We’d love to be a multi-billion dollar company. It probably will take longer than five years. But certainly the vision is to get there. And there are players in the market that are certainly that size that, we have a compelling solution to compete with them. So at some point I think we will get there. It’s just probably not five years.

Melinda Wittstock:

Yeah.

Phoebe Yu:

Recently I posted an article on LinkedIn, celebrate our nine years. And I think this year Patagonia is celebrating their 50 years. So I think we are nine years down and we have 41 go.

Melinda Wittstock:

Yeah, but everything moves faster these days. We were talking a little bit earlier in the podcast about this. That the business cycles are just much faster now. I also think there’s a lot of disruption going on. A lot of brands that seem like there’s no way they could ever falter are suddenly faltering. It seems like a really interesting time, ripe for very, very fast disruption. I want to get into the funding piece because everybody on this show wants to know, what’s the secret to actually raising money?

So talk about your journey, getting that $6.5 million into Ettitude. What did it take? How hard was it? How long did it take? And what are some of your tips? What are some of the things? Mistakes you made, maybe, that you can share with people so they know how to do it right from the get-go?

Kat Dey:

Yeah. I think it was not easy for us to raise our $6.5 million in the last four years. And it was really just one at a time, proving out your milestones and convincing people that this is an amazing product, amazing technology with a big opportunity. So early stage, you start out with accelerators and, super early, pre-seed accelerator stage investors. And then you try to get business angels to come into your pre-seed round.

Typically at the seed round you might get some institutional investors. So you’re starting to really show some traction, that investors are looking to invest in a good business model as opposed to just great founders. And seed extension is what we have done. Was really about introducing this bigger vision of partnering with apparel brands and transforming the textile industry, that we were able to attract additional capital.

Melinda Wittstock:

Right. This is so important. So aligning on mission. So part of the thing is, yeah, finding the right investors that are aligned. And that’s a lot of hard work, to even just find the right people to be talking to. So what was your system for that?

Kat Dey:

Talk to as many people as you can. It’s really a numbers game, so a lot of it is trying to fit, what do they say? a square peg into a circular hole or something like that. A lot of the times it’s just not a fit, and it has nothing to do with the quality or the potential of your business because each fund and each investor has their own thesis, has their own focus. And you might not necessarily know what they’re thinking right away before you start the introduction or the conversation.

And it kind of comes out after you do that conversation. Obviously first make sure to talk to the people who have invested in similar companies to yours. Don’t talk to SaaS investors if you’re a consumer goods brand. You can do that vetting yourself before. And then ask everybody for introductions. Everybody on your cap table, but also your friends and family, advisors. You can get really great conversations and great leads just through that kind of networking.

Melinda Wittstock:

100%. So were there any heart-stopping moments along the way that were just like, “Oh man, how are we going to make payroll?” Or those kinds of things? What were some of the biggest challenges that you guys faced and had to overcome?

Kat Dey:

Yeah. This definitely happened right at the beginning of COVID. We actually received a term sheet a few months before COVID really started. And it takes a long time just to go from term sheet to signed deal. In our case it took three months. And so in that phase, COVID broke out and everybody panicked. So we almost lost the round because investors were so concerned about the uncertainty of the future. And so we had to figure out, okay, if this round doesn’t actually come together that we’ve been working on for the last six months and were really relying on coming through for the last three months, it might not happen.

So we had to make some really fast decisions in terms of how we could survive for an unforeseeable amount of time, because nobody knew what was going to happen with COVID. So we had to also convince our lead investor, like, “Hey, we can do this. We are going to survive. We’re going to do whatever it takes, even if the economy tanks and…” nobody knew that actually e-commerce brands would do super well during COVID. So with this uncertainty, we were able to convince our lead investor. But we ended up raising half of what we initially agreed on, and at half the valuation. We were happy with that and moved forward. And then the business really took off. People were staying home, they were purchasing home goods, and they were definitely buying it online. So we benefited a lot during that year. And we tripled our business the following year. So it ended up going well for us, but it was definitely a scary moment for a few months.

Melinda Wittstock:

Oh gosh. I know that. I’ve lived that. That time between term sheet and then… and your whole team is like, “Are you really getting this money?”

Kat Dey:

Exactly, exactly. Yeah.

Melinda Wittstock:

“Is it really happening?”

Phoebe Yu:

I think it’s also about making fast decisions, and ethical, quick. So at the time we were running a pop-up store at [inaudible 00:30:19]. Actually doing pretty fine. Because COVID hit, so we quickly then closed down that. And also Kat and myself took a salary cut so we can just maintain lucky at that time. Our team is pretty small. It’s like five, six people’s payroll. So to the extend our runway, whatever we can cut, we cut. But not on the team, but more on just leadership team. Yeah, and then the investors saw that we can execute very fast, and then convinced that, yeah, we were going to win this.

Melinda Wittstock:

Yeah. When investors see that you can walk through and you’re going to do what it takes. That you’re not just going to shut down and wait, you’re going to figure it out. I think a lot of investors at the end of the day are really investing in the team. Because all kinds of stuff is going to happen that you can’t control, invariably. And so how do you react in those circumstances? That’s really, I think, at the end of the day, the art of entrepreneurship. You’re sort of an alchemist. They give you some coal and you turn into diamonds, or in your case bamboo into a fast-growing… so what’s the best way to find and connect with both of you and buy your clean bamboo products?

Kat Dey:

Well, the best ways to go on our website, which is ettitude.com. And Ettitude stands for eco attitude. So it’s like attitude with an E in the beginning. E-T-T-I-T-U-D-E.com. And we’re both on LinkedIn. It’s Kat Dey and Phoebe Yu.

Melinda Wittstock:

Fantastic. Well, I want to thank you both for putting on your wings and flying with us with your inspiring journey. I can’t wait to watch what happens next. Thank you so much for joining Wings.

Kat Dey:

Thank you for having us.

Phoebe Yu:

Thank you for having us.