James Reinhart – Lessons in Process Power – [Founder’s Field Guide, EP. 32]

**Patrick O'Shaughnessy** (0:00)
This episode of Founder's Field Guide is brought to you by Dell Technologies. This month is Small Business Month, and Dell Technologies and Windows are celebrating your unstoppable drive. Save up to 45% on powerful PCs with Windows 10 Pro to work from anywhere, plus top monitors and docs for the ultimate business setup, all with easy financing options through Dell Financial Services. Speak to a Dell Technologies advisor who can help you find the right business tech, server, storage, and cloud solutions at 877-ASK-DELL. That's 877-ASK-DELL for small business month savings.
As you listen to Founder's Field Guide and learn from the best founders and operators about building great businesses, make sure you have the best tools to help grow your business today. This episode of Founder's Field Guide is brought to you by Eight Sleep. Eight Sleep's new Pod Pro Cover is the easiest and fastest way to sleep at your perfect temperature. It pairs dynamic cooling and heating with biometric tracking to offer the most advanced solution on the market. Simply add the Pod Pro Cover to your current mattress and start sleeping as cool as 55 degrees or as hot as 110 degrees. It also splits your bed in half so your partner can choose a totally different temperature.
I was so impressed after using Eight Sleep that I became an investor. To embrace the future of sleep and get $150 off your new mattress, go to eightsleep.com/patrick or use the code PATRICK.
Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Founder's Field Guide. Founder's Field Guide is a series of conversations with founders, CEOs and operators building great businesses. I believe we are all builders in our own way and this series is dedicated to stories and lessons from builders of all types. Founder's Field Guide is part of the Colossus family of podcasts and you can access all of our podcasts including edited transcripts, show notes and resources to keep learning at joincolossus.com.

**SPEAKER_2** (1:49)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:14)
My guest today is James Reinhart, founder and CEO of ThreadUp, an online thrift marketplace. ThreadUp's online store is distinct in how the company touches every product, processing every piece of clothing at their own facilities instead of focusing solely on being a marketplace, connecting buyers and sellers. We talk about the competitive advantages of building processing plants from the ground up, how James turned ThreadUp from having negative gross margins to very strong unit economics, and the future of retail more broadly. I hope you enjoy this great conversation with James Reinhart.
James, so I think the best place to begin our conversation is for you to level set the audience by describing what ThreadUp does specifically. Just paint us a quick picture of the business because I think many won't be familiar.

**James Reinhart** (2:58)
So ThreadUp is a marketplace for secondhand clothing. So we kind of do two things. One is we help consumers buy and sell high quality secondhand clothing, just women's and kids today, through a managed marketplace, i.e. we touch all the goods. And so you can send stuff to ThreadUp in our clean out kit. We'll process all that stuff, put it online and then sell it to buyers.
And what we think is this incredible resale experience online. The second thing to do is we're starting to do this for brands.
We have a platform called Resale as a Service. So we now work with more than a dozen brands, Walmart, Reformation, the Gap companies, Abercrombie and Fitch, throwback from my childhood. We're powering next generation resale experiences for them. So those are kind of the two things we do, core marketplace and resale as a service.

**Patrick O'Shaughnessy** (3:43)
Talk a little bit about how you came to this market, this idea 12 years ago.

**James Reinhart** (3:48)
Yeah, so the true founding story is I was in business school at the time. This was late 2008
And I was a teacher and an educator before that, which way of saying I went to business school and I had no money.
I went to try and sell my clothes at the local consignment store on Mass Ave in Cambridge, second time around. They wouldn't take them. They said, we just do luxury. And I kid you not, I was like holding a J.Crew cashmere sweater. I was like, this has got to be worth something.