Serena & Lily: Serena Dugan and Lily Kanter. They Built a $20M Brand—Then One Investor Almost Destroyed It

**Guy Raz** (0:00)
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**SPEAKER_2** (2:09)
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**Lily Kanter** (2:18)
Alexa, take me to Vanguard Investor Choice. Got it. Texting you a link where you can set your proxy voting preference for your Vanguard Index Funds and be heard by the companies you invest in.

**SPEAKER_2** (2:27)
Just say, Alexa, take me to Vanguard Investor Choice and make your voice heard. Vanguard Investor's own shares of our index funds, which own shares of the companies they invest in. Available for Vanguard Index Funds that participate in Investor Choice, Vanguard Marketing Corporation distributor.

**Lily Kanter** (2:51)
We need to work in capital. And so I asked a friend if they had any ideas of the valuation of this company. And they said no, but I'm going to introduce you to a CFO at a private equity firm.
So Serena and I went to pay them a visit, just literally to get their opinion on the valuation. And in about 10 minutes into the meeting, the CFO went and got one of the general partners of the firm. He literally patted us on the heads, like we were dogs or puppies or children. He took a seat at the table and said, you girls sure have been busy.

**Guy Raz** (3:44)
Welcome to How I Built This, a show about innovators, entrepreneurs, idealists and the stories behind the movements they built.
I'm Guy Raz and on the show today, how a tiny baby boutique in Mill Valley, California grew into the luxury home goods brand, Serena & Lily.
One of the hardest decisions that almost every entrepreneur faces is not what to build. It's how to pay for it. Because for a lot of companies, success actually creates new problems. The more customers you have, the more inventory you need, the more people you hire and the more cash you burn.
And suddenly, a company that seems like it should be printing money is desperately short of it. That's exactly what happened to today's guests, Lily Kanter and Serena Dugan. In 2003, they started a company called Serena & Lily, selling beautifully designed baby bedding. And almost immediately, they caught a huge break. Their first catalog landed in retailers' mailboxes at exactly the right moment. And within weeks, they had close to $100,000 in orders. There was just one problem. They hadn't actually made the products yet, which meant they had customers, but no inventory. Demand put no cash to fulfill it. As you'll hear, they found a pretty clever way through that first crisis. But it was only the beginning. Over the next decade, Serena & Lily expanded from baby bedding into furniture, home decor, wallpaper, lighting, eventually becoming one of the country's best-known luxury home brands. But getting there required round after round of financing.
Somewhere along the way, the people writing the checks began to have very different ideas about what kind of company Serena & Lily should be.