38. [Shoptalk Fall] ThredUp's CEO, James Reinhart: "A leader needs to love the problem"

Today, we are diving into a familiar topic here on Offbounce, a segment of the market that is not just growing, it's reshaping the entire industry. The recommerce market, which includes recycling, repair, and reselling, is outpacing even traditional retail, driven by consumers who are increasingly opting for secondhand shopping. I'm here in New York joined by the cofounder and CEO of thredUP, the leader in the online consignment and thrift space. ThredUP has revolutionized the way we think about secondhand fashion, offering a platform for buying and selling pre loved clothing, shoes, and accessories for women and children. But that's not all.

Thank you for having me. Great to be here.

Are you ready for all the questions I have? Because I think I have so many.

How much time do we have? Yes. I'm ready. I'm ready.

Alright. So let's just start with how you build thredUP because I nowadays is something that we talk a lot, secondhand, resell, recycle, repair.

Mhmm.

15 years ago when you started, it wasn't that much popular topic.

Yes.

How did you know it was the future already?

Yeah. Well, of of course not. But I it has been an interesting journey because there was a time when nobody wanted to talk to me. Right? Nobody cared about what I was talking about.

I bet. And yeah. Like, I had up an episode that we talked only about re commerce and how that's growing, and it's growing even faster than the retail market.

So For sure. For sure. Yeah. It's yeah. It's growing about 10 times faster than traditional retail at this point.

Yeah. Well, eBay has been doing this kinda, like, for a while. How are you different than eBay, for example?

Yeah. I mean, eBay, kind of the OG in in the resale world. I mean, what's crazy is eBay is now almost 30 years old. And so the big difference is that they wanna stay out of the taking product business. Right? EBay is a pure marketplace. They connect buyers and sellers. They don't touch anything. They don't really do much in the value added services. For us, our core thesis was that there's a lot of people out there that wanna buy and sell secondhand, but they don't wanna do the work.

Yeah. I don't buy a secondhand. Yeah. I'm sorry, guys.

Not yet.

Not yet. Because I find confusing.

Yeah. I

find hard.

Yeah. Yeah.

Right? Like, if I go to a secondhand, like, a thrift store here in New York

Yeah.

There's so many items to look through. Like, it's it's just difficult for me to find. Is that something you'll

One of the core reasons we started the business was that the average person doesn't love their thrift store experience. I'm not saying there aren't millions of people who do. Right? But when you pull a 100 consumers, nobody is like, man, shopping at secondhand stores is the most amazing consumer experience. Right?

We'll get into data soon. I'm interested. But, like, now I'm thinking that you have 2 different customer journeys.

Yes.

The ones that are selling. Yep. The ones that are buying. Sure. Which I imagine could be the same people too.

Yep. Some of them overlaps.

Yep. What is the seller experience? How does it work?

Yeah. I mean, so the for the seller, it's, you go to the site, you order a clean out kit. That's what we call them. And a clean out kit is a bag. And then the bag holds 30 ish items, 15 to £20 worth of stuff.

don't wanna do the work, we do the work for you.

Yeah. I mean, one of the things that's true, you know, about, I think, Americans is, like, people were getting lazier. Right? So, you know, I I like to think that ThredUp is on trend given that consumers are getting lazier and thredUP is really we position it as it's the easiest way, to get rid of the things they are no longer wearing. And I think the trade off the consumer makes, right, because not everything is free, the trade off they they the customer makes is they don't make as much money.

is worth of your time?

Yeah. That's exactly right. And so the minute people start to value their time, then I think thredUP is a great opportunity. I think for people who, you know, don't value their time that highly, right, then I think sell or they love the sport of it, I think selling on your own is better.

The business model is you taking care of the everything for the seller Yeah. And sending it to the buyer, taking the pictures We

do everything. Yep.

Checking each close description. Is that

Yeah. We do the descriptions, all the tagging. We use a lot of technology, to do all that. But, yeah, we do everything. The seller literally doesn't have to do anything. Now we give the seller some options if they wanna add information, but it's totally optional. And then, yeah. And then for the buyer, it's just like shopping on the Internet. It's pretty easy.

And I saw the news that you added a peer to peer experiences on the website. So that changes a little bit.

Well, it's funny. So we've not added peer to peer. It's it's kind of amazing. So back to your first question around 15 years, like, what have we learned? I think one of the things we've learned is that people pay a lot more attention to what we do now.

to the item wanna know who's gonna

buy. Right? Or they know that there's something quirky about it or they know it has more value than we might understand about it for whatever reason. And so we wanted to test, like, hey. Would there be a complimentary offering in peer to peer?

If I wanna sell through your platform to someone else, I can't do it today.

We have no peer to peer offering. But but look, I think what's shown us is that there is some interest and now I'd figure out does that make sense as an offering to our sellers and on what timeline.

And I think a lot of the questions I told him this before the interview. I think a lot of my questions that makes me, like, stop and think, like, how does it work? Yeah. It's a lot on the operation side. Sure.

It's crazy.

Because one thing is having a fashion brand where you have a 1,000 items for 1 excuse.

Yep. Yep.

And you have a 1,000 excuse for a 1,000 items.

Correct.

And, like, you have to take the picture. You have to add a description. You have to do everything You do

it all.

Including the website. That is ridiculously a lot of work. Yeah.

Yeah. Yeah.

Yeah. How do you manage that? Like, can does it even make sense?

Yeah. I mean, so I think at this point, we're a 150 to 200,000,000 unique SKUs, you know, through the platform. So that's just like that's a massive number of unique items. And yeah. So, you know, we how do we manage it?

Sounds very inefficient.

Yeah. Yeah. But but it turns out that, you know, like many things, once you standardize the process and you use technology to assist people, you can make it work. And so I think what we've done what we've seen over the last probably 5, 6 years is we look at the processes that are really labor intensive. Right?

So you you first see the need Yeah. Yeah. We should make this faster to make it more efficient.

Absolutely. So if I if you take the top that you're wearing, right, there was a time probably 5, 6 years ago where there would have been an associate in our DC who would have tagged it, right, sleeveless, you know, mock or turtleneck. Right? It would have put stripes or it would have added a bunch of stuff. And now we're doing all that using the photos in AI.

that a chrome, baby?

Right? So but, like, the but, you know, the technology we're using might have been able to identify, hey, it's Abercrombie. It is something that's targeted at city going millennials. Right? Or, like, it then is able to tag all of these things that's fascinating, stuff that we would never have been able to do with one of our associates in the DCs. And so, again, that's how we're evolving our techno our use of technology in the DCs.

That must be I imagine, like, when OpenAI launched Yeah. You were, like, oh, yes. That, like, this is exactly what we needed.

Yeah. I mean, I think it's it has been a lot of the stuff we thought we would build ourselves. Right? So I've always imagined you could use visual technology. My cofounder, Chris, technology entrepreneur, we always knew we'd be able to build something that we wanna tag that top, like, the way that we've we've talked about it.

many millions?

Yeah. A couple 100,000,000 items, 50,000 brands. Right? And then just instantaneously, it enabled us to do more than we ever thought possible, and I think that's what's been, pretty exciting.

But the employees can also focus on other things.

Yeah. Quality inspection. Right? Processing more goods, you know, packing out orders. Right? All the things that that we really do need, you know, associates working at a high level to do. But there's things that the technology can do, the human eye, right, just cannot do as effectively. I'll give you, like, another example. Like, we're now starting to use technology to inspect flaws. So potentially, like, somewhere on that shirt, right, is a loose thread somewhere. Right?

Yeah.

For a human, right, eye to find that would take so much time. But if you run that through a visual AI technology that, like, is evolving, it can say, oh, it's got this small flaw on the lower back hem. Right? And now we're not there for all the items. So you can imagine a world where your photos, they can they can find, you know, stains you might not have seen, pilling you might not have seen, loose threads you might not have seen, stretched out colliery, like, all this stuff that that I think is really hard for people to do.

I'm excited to see how the future is gonna develop for that too.

Yes. Me too. Me too.

We talked before. Right? Like, that everybody wants to talk to you now.

Well, yeah.

Everybody every like, every brand now, they're having resale.

Yeah. Resale as a service. Yeah.

How do you offer that to brands? We had Vera Bradley here

Oh, great.

A few weeks ago. Yeah. And she was like, oh, we work with Retta.

Yeah. Sure.

Sure. How does he work? What what is this partnership?

So there are basically 2 ways that a brand engages with us. So one is that, so that clean out kit that I mentioned, the take back program, one of the things that brands are really committed to is, you know, how do they get their product back. Right? So how do they take back product in their store, online? So we power scaled take back programs for brands.

It. You are a tech company then.

Yes. Absolutely. I mean, I think probably almost to a fault. You know, I think sometimes I didn't grow up in the fashion industry. I think sometimes we over index on the technology and the operations and, you know, we probably need some better merchandising, you know, at the company. And so, so I think a lot around how do we balance being a fashion company with being a technology company and

That's the next step.

Yeah. It it is, actually. I think that the power of of some of the AI tooling that we're doing and sort of where I think the customer wants us to go is is I think better, stronger visual merchandising.

You started 15 years ago. Yeah. You already had eBay. You had other bigger players. Sure. What takes from the leader to build something that is disruptive?

Oh, I think that we have been I mean, look, look, over the last 15 years, you've seen a lot of businesses come and go, right, who, you know, positioned as disruptors or innovators. I think for us, we have been obsessed about the problem. And I think a lot and so the problem is how do you get clothes out of consumers' closets as easy and as effectively as possible? How do you make it the shopping experience for secondhand feel indistinguishable, you know, from shopping new? And so I think what gets me out of bed every day and I think why I still love the business, like, to, like, truly love the business is I love the problems because the problems are still really hard.

They're still there to be solved.

They're still there to be solved. Right? There's no question that we can process more goods. We can make it easier on the seller. There's no question our merchandising and how we use, AI tools to improve how the customer shops can definitely get better.

Yeah. I interviewed the author of the book, Fall in Love With the Problem Not Solutions.

Oh, really? Well, there you go. I mean, yeah. Like, I didn't even know that book existed. But, yes, that's how I think about

the world. That's a book. Yeah. He founded ways. So he's trying to to

solve Yeah. Yeah. Yeah.

But, yeah, he said, like, the easiest way to add value to your customer is to focus on the problem and not the solution.

Yes. Yeah. I know. And it's easy. It's easy to get so solution oriented. And I think the other piece is to really to build products that or build features that customers don't need. Right?

Just because you wanna build it.

Just because you wanna build it. Like, I love Waze. I use it all the time, and it, like, fundamentally solves, like, my how do I get from point a to point b as as effectively as possible. But it also does all this other stuff I don't really need. Right? And so, you know, it's funny how, like, I'm sure that there are lots of people who use the how do I find gas feature on Waze. Right? But, like, I was looking at that. I'm like, I don't need that. You know? Yeah. Yeah. Anyway

Well, we are here because of Shop Talk Fall Yes. Which is gonna be their first event happening in fall. And in Chicago, we don't have to go to Vegas. Yes. Which is a plus.

Yeah. It is

a plus. I know that they have a lot of exciting new things happening. Yeah. One of them is that a lot of women are gonna be on stage, which is very exciting too.

You are you were I'm not a woman, but I will be

You're not a woman, but technically, you're working in fashion. I think you see how few of us

Yes. Yes. Yes. Are

in the leadership position, which is super exciting. What are you looking forward to see at Shop Top this fall?

I think what, you know, what I've gathered from the fall event is that it is gonna be smaller and more curated, like, set of content. I think the quality bar on, you know, the people they're putting on stage, sort of the inclusion, you know, of more female leaders. I think all those things are really good. For me, the power of the conferences is how do they build intimacy into these bigger events? And I think, you know, talking to the Shopdog team, I think that's one of their core the core pieces for this event.

How much can you grow and still be intimate?

Yeah. And I think that's really it's a challenge for all all events. Right? And, and so I'm looking forward to that.

Me too. Especially because it's in Chicago, you're gonna eat the pizza.

I'm always. Always. In fact, there's a pizza place right by my house called Zachary's Chicago Pizza, which has been there for a very long time. And, so I'm very familiar with, Chicago deep dish pizza.

I haven't eaten that yet.

Oh, you're missing out. You're missing out.

Yeah. I asked other people here, like, if they have a store to visit. Do you have you worked with the stores, like, pop up stores for thredUP?

Yes. We've done pop ups. We actually did a pop up in Brooklyn here a few years ago, with Madewell, our resale partner. We've had stores we had some stores in Texas. We had some stores in California. So we have experimented with stores. Unfortunately, so much of our experimentation was happening 2019, like, into 2020, and then the pandemic obviously really hurt that experimentation. And so I ultimately think we'll get back to some of that, but right now we're we're storeless as they say.

Alright. I

will figure it out.

I will visit 1. Just just check it out. Like, if you if you manage to not have the complex

Yeah. I know. Well, I know. You already told me how much you wish in your store, so we won't we won't build it like that.

We'll see. We'll see. And who inspires you in your leadership journey?

Yeah.

And should be here with me as well.

Yeah. You know, I think look, there's lots of folks I think in the technology world that I've gotten to know that are inspiring me. Reed Hastings and Netflix immediately comes to mind because when you said a story career, he has reinvented Netflix multiple times. I think increasingly back to our prior conversation, I've become more inspired by merchants and fashion leaders who've stood the test of time. Like, I'm I continue to be inspired by what Ralph Lauren's doing.

Yeah. You have to be really good to understand the new consumer, especially now that you're into super

And and the yeah. The price I mean, if you think if you're a technology leader, you're managing the evolution of technology in a technology company, whether it's Netflix or it's Waze. In fashion, like, you have to be cool every year. Like, the pressure, right, to be cool and relevant every year, I think, is wild. And so, so I think I'm increasingly inspired by that.

Exactly what people want.

What people want to invent trends that, you know this is a fan, Sarah from, founded Spanx. Right? She's a new company out building, like, a new, like, sneaker heel that I just saw. And, like, who knows whether people will love it

or not?

But I love the fact that, like, she's out there taking a risk to try and be you know, invent, like, a new thing and be relevant. And I think, like, people like that are so cool.

I'm sorry, sneaks. I'm waiting to see if that's gonna pick up.

Yeah. I don't know. I mean, I at first, like but at first, you're like, oh, I don't know. But, you know, that's true of just about every That's

the first thing we've seen like that.

Don't I mean Maybe it'll be the Yeah.

The next trend.

I mean, I remember when when like, when when Apple launched the AirPods, like, right? All it's like, oh my god. It looks like your ears are dripping. Right? That was, like, the first, you know Who wants

who wants these watches?

And so, you know, I there's there's so much history around kind of how form factors have evolved and, I'm I'm certainly rooting for it.

And I think there are a lot of brands that are asking themselves now, how can I be more sustainable? How can I join the circularity programs? How can I serve my customer better on that Yeah? On that level? Yeah. What would be your advice to someone that is to a brand that is still wondering how to do it?

Yeah. I mean, I think that there is a the risk that I see in the industry broadly is that is really a race to the bottom around fast fashion and how do I make things cheaper to price things cheaper. I think brands, like, if they can figure out how to go the other way, I think making better stuff that consumers are willing to pay a little bit more for. I actually think that's probably the answer. And I think that, again, that's what I think Ralph Lauren has been it's amazing to see a brand that has continued to raise price.

hard to compete with Shein. Yeah.

Yeah. But the quality the quality is real. Right? Like, I just bought something the other day and, like, I got it. And I'm, like, it is meaningfully better, right, than other commensurate products. And so, I don't know. I think brands need to find out how to balance that quality because once everything is crappy, then that like, once the product quality is crappy, then it truly is like a race to the bottom on price. And so if there's any way

to differentiate too much on discounts to make you work.

Yeah. And I you know, and I just think it's I think it's not a I don't I don't think it's a good place to live. Right? You mentioned Abercrombie. I think Abercrombie is, like, a good example. Like, it has reinvented the product. Right? And

I'm obsessed. I wasn't. No.

You know? And so, I think that the quality of the product does matter. And and so anyway, I think that that's sort of the advice I give folks.

Very good. And my last question

Last question. Okay.

What is your advice because you built something from you left college and you built it.

Business school, but yes. Yes. Yes. Yes.

What is your advice to someone that is starting now and wants to to build something that is relevant in the world?

I don't know. For me, I think it's somebody we talked about the problem. I think, you know, finding a problem that you love. I think finding a problem that's big. I think sometimes, like, if people wanna build stuff, asking themselves, you know, is this a problem worth, like, worth solving?

Very inspiring.

Thank you so much. Thank you. Next time,

we're gonna see each other probably is gonna be in Chicago. I'm very excited to see you on stage there.

Yes. I'll be there. I will see you. We'll eat some pizza.

We we we should we shall have the pizza.

Sounds good.

That's our Chicago plan. That's awesome. So much for coming, and see you then.

Thank you.