Built to Sell News: Pura Vida Acquired For $75 Million ++

February 14, 2020 |  

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Griffin Thall and Paul Goodman, two Southern California friends traveling through Costa Rica on a post-college graduation trip in 2010, crossed paths with two bracelet artisans, Jorge and Joaquin, who were living in poverty.  Jorge and Joaquin made beautiful, colorful handmade bracelets that seemed to capture the essence of their journey.  Thall and Goodman asked the artisans to make 400 bracelets to take home with them.

To read a transcript of this episode, click here.

Griffin Thall and Paul Goodman, two Southern California friends traveling through Costa Rica on a post-college graduation trip in 2010, crossed paths with two bracelet artisans, Jorge and Joaquin, who were living in poverty.  Jorge and Joaquin made beautiful, colorful handmade bracelets that seemed to capture the essence of their journey.  Thall and Goodman asked the artisans to make 400 bracelets to take home with them.

Upon returning to San Diego, the partners got to work selling their bracelets. They built a simple website and took orders online. They promoted their lifestyle brand on social media and got well known influencers to ware their bracelets.

Over the next nine years, the partners-built Pura Vida into a $68 million company with supply continuing to come from Jorge and Joaquin who now employ more than 1,000 people. The amazing growth of Pura Vida culminated in a sale process which attracted 25 bidders in 2019.

Twenty two of the 25 suitors were from private equity groups while three were from strategic acquirers (i.e. other brands). After a round of management meetings, six of the private equity groups and one strategic acquirer made formal offers.

As is often the case, the bids from private equity were focused on the numbers and required the partners put a larger share of their money “at risk” based on the future performance of the company. By contrast, Vera Bradley was willing to pay roughly 75% of the money up front and offered the partners years of experience building lasting brands.

In July 2019 Vera Bradley announced their acquisition of a 75% stake in Pura Vida Bracelets for $75 million in cash plus a $22.5 million earn out which equates to a little more than 9 times that year’s adjusted EBITDA.

Listen to the entire episode and learn:

  • How Thall & Goodman created a subscription model (and why it worked)
  • How the partners built a brand ambassador program on campuses across America eventually topping out at more than 100,000 guerilla marketers promoting the brand
  • The typical differences between an offer from a private equity group and strategic acquirer
  • The trophy Thall bought himself after the sale
  • How to create a persona to help employees imagine their customer

Pura Vida created a novel subscription program which offered loyal customers a new selection of bracelets and other goodies each month. At the time of the Vera Bradley acquisition, Pura Vida had more than 15% of its revenue coming from recurring revenue. If you’re trying to figure out your subscription model, a Certified Value Builder™ can help. Fill out the form here and we’ll get you matched up with an advisor in your area.

Thall and Goodman held 100% of their equity in Pura Vida at the time of their exit which is a hallmark of a different kind of owner we call a “Value Builder”. These Value Builders prioritize building wealth over personal recognition and often turn down outside investment for fear of diluting their equity. Learn more about how these Value Builders think by downloading your copy of the ebook Famous or Rich: 9 Ways Value Creators Prioritize Wealth Over Recognition.

Our guest

Griffin Thall is the Co-Founder and CEO of Pura Vida Bracelets. Since launching the brand in 2010, Thall has established himself as a leader in growth and content marketing and helped grow Pura Vida into a multi-million dollar company with over 1.9 million followers on Instagram, providing jobs to more than 800 artisans around the globe and raising more than $1.9 million for charitable causes. Pura Vida Bracelets has been featured on Inc.’s list of "5,000 Fastest Growing Companies in America,” and Thall was also included in Forbes’ 2015 “30 Under 30” list.

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Transcript

John Warrillow:

Oh man, I had so much fun with this interview. Griffin Thall and Paul Goodman leave university and go to Costa Rica on a trip. They buy some bracelets. They decide to take some bracelets home with them. 10 years later, they sell their bracelet company for roughly a hundred million dollars. It’s an amazing story about a couple surfers done good. I’ll let him tell you the whole story.

John Warrillow:

A couple of things to be on the lookout for. Listen to how he describes his subscription model. Although relatively small amount of revenue, I think it was key to providing his acquirer that sense of recurring revenue. So, interesting about that. Listen to how they built their brand using their ambassador program, like 100,000 of these ambassadors across campuses. There’s a really nice juxtaposition between the private equity deals he was offered, and the strategic deal he ended up accepting, so listen for the differences between those. I love the trophy that Thall bought himself, so have a listen for what he chose to use part of the money, part of the proceeds to do. And also, the persona that he describes as his ideal customer is really important, especially when you’re growing. If you can propagate that across your organization, it really helps visualize for everybody, right down to the rank and file employees in your company, who you’re trying to serve. Here to tell you the entire story is Griffin Thall.

John Warrillow:

Griffin Thall, welcome to Built to Sell Radio.

Griffin Thall:

Thank you.

John Warrillow:

I want to hear about this fateful trip to Costa Rica. I’ve been there, but I want to know more about the one you took 10 years ago, or so.

Griffin Thall:

Yeah. So me and my business partner Paul… We weren’t business partners at the time, obviously. We went on a surf trip to Costa Rica after graduating from San Diego State, and we were there for five weeks just to surf, and party, and explore, and backpack, and just put ourselves in danger as much as possible. Then one day after we were surfing, we met these two guys on the beach making bracelets. We walked up to their little table. They probably had a little wooden tray with maybe 20 bracelets on it, and we asked them if we could buy a couple. So later that night we went back to our room, we looked down at our wrist and we said, “Hey, I think we can sell these to our friends and family.” I don’t know what triggered from buying a couple to selling them to friends and family, but something clicked.

Griffin Thall:

Then next day we went back and sure enough, Jorge and Joaquin were still there selling bracelets off the little tray right by the beach. We asked them to make us 400 bracelets. They said they couldn’t do it. It’s just too much work. Little did you know, we found a way for them to do it.

John Warrillow:

How did you find a way for them to do it?

Griffin Thall:

We paid them cash upfront. It was more money than they’d pretty much ever seen from one customer because they’re selling the bracelets for a couple of bucks on the beach. So for us to give them a couple of hundred dollars at that time, it was pretty eye-opening for them. We asked them to make us the bracelets. They packed up their things, and they never sold bracelets on the beach again.

John Warrillow:

How did you know they were good for the money?

Griffin Thall:

Honestly, I don’t know. I think it was just kind of a risk we were willing to take. They were there pretty much every day. We were at this little hotel, so we knew that they were going to be back the next day. It was probably some of the last couple hundred dollars in our bank account at the time.

John Warrillow:

Love it.

Griffin Thall:

You’ve got to think, this was a college graduation trip, so after graduating we got some money from our parents and our friends and family as a celebration present, and we used that money to go to Costa Rica. What we paid them was pretty much the end of our bankroll.

John Warrillow:

So for folks who haven’t seen a Pura Vida bracelet, what does it look like? How would you describe it to me?

Griffin Thall:

It’s nine strings, wax-coated polyester. It’s waterproof. It’s adjustable, and it doesn’t change colors in the sun.

John Warrillow:

Do you have one on right now?

Griffin Thall:

I did. I just gave one away, actually.

John Warrillow:

I was going to say, hold it up on YouTube.

Griffin Thall:

I know, I know. I’m either wearing them half the time, or not wearing them half the time. It’s for a generous marketing opportunity that I want to give it to someone.

John Warrillow:

Got it. So, I’m assuming that it’s not terribly expensive to create one of these. If Jorge was selling them for a couple of bucks, I’m guessing they’re pretty inexpensive?

Griffin Thall:

Yeah, they’re pretty inexpensive, but as much as we’ve scaled the business, we’ve never really negotiated our rates with Jorge. We’ve never tried to penny-pinch him. We’ve never tried to maximize or risk the relationship. It’s been very trustworthy. It’s been very consistent, and I think both of us feel that we need each other to succeed.

John Warrillow:

Are you still getting the bracelets from the same guy?

Griffin Thall:

Oh, yeah. Jorge and Joaquin, they run the operation. They have almost 1000 employees now, hand-making every Pura Vida bracelet.

John Warrillow:

Okay. Hold on a second. This is the craziest story. So you’re taking a guy that’s selling bracelets on the beach. 10 years later, he’s running a thousand-person organization?

Griffin Thall:

Exactly.

John Warrillow:

That’s insane.

Griffin Thall:

It’s insane. I mean-

John Warrillow:

How do you teach somebody to literally run a thousand-person company? Did you train him?

Griffin Thall:

Honestly, I think it was just… That was part of the luck that crossed our path is that we both realized there was an opportunity to be had, and we both ran with it. This was mine and Paul’s first job out of college. We’ve never used our resume. We’ve never raised funding. We’ve never done anything like this, so it was a big learning curve. I think they had the same learning curve, in a third world country, to be able to scale a business. To say that we taught them how to grow their business is completely not true. They did that on their own. So, we run two separate businesses, and it’s been extremely successful.

John Warrillow:

What do you mean you run two separate businesses? Help me understand that.

Griffin Thall:

So, we don’t own his company.

John Warrillow:

Got it.

Griffin Thall:

Technically, if you were to go manufacture our products, you wouldn’t own the manufacturing plant as well. You’d be buying as a cost. That’s just kind of how we set it up in the beginning.

John Warrillow:

So, when you sold the company, how much of a liability was it not to control manufacturing? Was that something that came up in the discussions?

Griffin Thall:

I mean, yes and no, more just like quality control and making sure that the operation is safe, and passes tests, and all that stuff. I think that it’s something that was not a red flag, but it was a discussion point.

John Warrillow:

Got it. Got it. Take me… We don’t have time for the entire story, but if you think back over the 10 years, you go from buying 400 bracelets… Well, let me get into the next part. What happens next? You come back to the states. Give me the next part of the story.

Griffin Thall:

We came back to the states and we had a trash bag full of string. Technically, we’re $400 less rich and had a bag of string. Me and Paul were just basically bumping our heads together being like, “All right. Now what do we do?” That was the next big question.

Griffin Thall:

So what we realized was we just graduated from college. Facebook was pretty much just starting, with maybe a year or two in. We built a Facebook Fan page for our business. We called it Pura Vida Bracelets. To backtrack really quick, the reason why we named it Pura Vida was because when we were surfing that day after we bought them, we looked down at our wrists and we’re like, “What do we call these things?” Rainbow bracelets, beach bracelets, trendy bracelets, trying to think Google search terms that might work. Then we realized that Pura Vida was the slogan of Costa Rica. If you go to a restaurant and a server takes your check they say, “Pura Vida.” It means basically, “here life,” or some sort of symbol that says “thank you” or “I’m glad you’re here.” Something to make you feel kind of welcome and homey, similar to “Aloha” is in Hawaii. So, when we looked down at our wrists, me and Paul were like, “Hey, why don’t we just call them Pura Vida bracelets because the name makes us feel good.” We looked at the trademark and it was open, so we bought the trademark, and that’s how we started.

John Warrillow:

How do you buy a trademark?

Griffin Thall:

You have to know someone who is a trademark attorney and basically work with them. That’s one way. Our friend’s dad was actually a trademark attorney, so we didn’t really have to search much further than just asking him to do the search for us.

John Warrillow:

Got it. So, you trademark the name. How do you start selling these bracelets?

Griffin Thall:

We came back, trademarked the name, did as basic business stuff as possible. I think we used LegalZoom in the beginning to just kind of get simple things set up. We have an S Corp. We opened a bank account at Wells Fargo. Basically, the stuff that anyone would really think that you have to do to open a business.

Griffin Thall:

So then, after that, we realized that we needed to make a website. That was our first thing. So, we looked on YouTube how to build a website, and I think we built it on WordPress. It was not mobile-friendly. Shopping on your phone was really not a thing 10 years ago, which is crazy to think. So now, after that we have non-mobile friendly website. It probably takes 12 to 14 seconds to load the homepage, and we have a Facebook Fan page, and we have a bag of string. So, how does someone take all that and start selling?

Griffin Thall:

So what we did, we started to go around San Diego. We pass out bracelets at the bars and restaurants. We were big into the kind of 21-year-old music scene in San Diego, so we would go to the clubs and pass out bracelets to deejay’s and the people that went.

John Warrillow:

When you say, “pass out,” you’re saying freebies?

Griffin Thall:

Freebies, yeah. We only had 400, so picture 400 goes down to 200, and our bank account still doesn’t go up, but now we have 50% less inventory. What do we do? So, once that started happening, people would text us and say, “Hey, thanks for the bracelet you gave me last night. Is there any way that I could get another one?” Then we’re like, “Okay, just come by our house.” At the time, we’re one month into the business, so we basically told these people that hit us up to come to our house and grab a bracelet out of this trash bag. Once we did that enough times, now our inventory of 200 now went down to zero. So, we basically barely made any money. We sold a couple of that 200, and then we emailed Jorge for another batch.

Griffin Thall:

A day goes by, a week goes by, no response. On day 10, he finally writes back. He says, “Hey, guys. Sorry for the delay.” This is all in Spanish, obviously. “Hey, guys. So sorry for the delay. I would love to get you the bracelets. Please let me know how many you need, and the address.” He never shipped to us before. Before we left Costa Rica the first time, we actually set him up with an email address, a PayPal and all this just in case. I mean, I don’t even know why we even thought that far, but we just did. Once he wrote back on day 10, it was just like fireworks. We were just ecstatic. Now we have our manufacturing locked down. He wants to make more bracelets, and we can go to step two.

Griffin Thall:

So now, we send him money for the bracelets. Obviously, we fronted the money again. We took that risk. We negotiated the price, and two weeks later, now we have 1000 bracelets in my bedroom floor. So what do we do? We repeated the same thing, passed out bracelets around San Diego, and then finally-

John Warrillow:

You’re slow learners, man.

Griffin Thall:

I know. Then during this time, we built the website, too. We watched videos on YouTube. We built the website. I took product photos, didn’t even know how to do that. Didn’t have an iPhone back then, had a Blackberry, so I had to get a camera. Just as basic as you can, and then orders started to come in the website. We started seeing people that we were passing out the bracelets to around San Diego would order from San Diego and L.A., and SF, and then they would start going to the East Coast.

John Warrillow:

What’s the margin? What are they paying, and how much do you guys pay?

Griffin Thall:

We get them for a good price. It’s similar margins to other brands that are in our accessory category. I would say that’s probably as accurate as I would be.

John Warrillow:

I would interpret that to be massive. Okay, let me… What’s a Pura Vida bracelet cost if I were to buy one online, at this juncture in history?

Griffin Thall:

You could buy them anywhere from $6 to a pack of bracelets is $45.

John Warrillow:

Okay. So at this time though, when you’re just starting to sell your first 1000, what are you selling them for?

Griffin Thall:

We’re selling the bracelets for $5 on our website. To kind of branch off what I was saying before, Paul and I just graduated from San Diego State. We were both in fraternities. We were close to our Greek organization. So then what we did, we hit up all the sororities, and we hit up all the fraternities. We asked them if we could come in and give a talk about our new brand. We would knock on the door with a scheduled time to come in. We would go to the front of the chapter meeting, and we would talk about what we just did after graduating college for three reasons. One, to inspire people. Two, to market the brand. And three, to see if we can get some more people to like our Facebook page.

Griffin Thall:

So, after did that, we would go to sorority, sorority, sorority, and fraternity, fraternity, fraternity, and then our Facebook Fan page was starting to explode. We went from zero likes, to 1000 likes, to 50,000 likes, to 100,000 likes, and this is with 100% organic reach. Then what we would do, I would get new bracelets in from Costa Rica, I would take a photo of them, I’d put it on the fan page, and I’d say, “Like this photo if you want this bracelet.” We would get 1000, 2000 likes in the first hour. It would just… Everyone wanted this bracelet. Then they’d say, “Where do you get it?” Then we’d put a link to the website. The website would explode. We’d sell out, and that’s how we’d placed the second order of Pura Vida.

John Warrillow:

Wow. Many people who are sort of into marketing know that Facebook over time, or recently, has sort of demoted and no longer shows those organic results anymore. How did that impact your business?

Griffin Thall:

So once the Facebook page went from 100% organic, and then pretty quickly started to just almost go to 50%, then zero-

John Warrillow:

What does that mean, 100% to zero, for people who don’t really know what we’re talking about?

Griffin Thall:

Yeah. Basically, when we first started our fan page back in 2010-11, the reach was 100% organic. So if you had 100,000 followers, all of them would see a post because they’re signing up to see the page that they want to see your content. As Facebook started to release their Ads platform, it started to reduce the organic reach, and require you to pay for the reach. Once that shift took place, then we had to be creative with our marketing, which allowed Pura Vida to drastically scale on the paid platform.

John Warrillow:

So maybe walk us through, what did that involve, the evolution from the kind of natural to paid?

Griffin Thall:

So once we built the brand as quick as we could on the organic side, we were able to use Facebook Ad Manager to start creating Facebook ads. What that means is we would get our product shot from influencers, from in-house, from anywhere we possibly could, to create the most jaw-dropping images that would people would click on and go to our website and make a purchase. We would create different ad sets for different product categories. We’d have an ad set for the original collection. We’d have an ad for specific style packs, which is a pack of four or five bracelets combined. We’d have a Facebook ad for a ring, or for something like that. Once we would have all these different types of ad sets, customers from all over the world were starting to come into our website from these ads, and that’s when Pura Vida really took off.

John Warrillow:

Got it. Got it. Again, I’m a complete neophyte when it comes to social media. I don’t have an Instagram account. I’ve checked Facebook like three times in my life. When you say advertising, are describing about promoting a post, or are you really talking about ads that we think of in the traditional sense, as sort of thumbnail ads?

Griffin Thall:

Yeah. It’s not really promoting a post. It would be more like going through the Facebook Ad Manager, and uploading a photo as an ad. Basically it’s… You could do a post promotion. We’ve never really done that just because the way that we do it is so at scale. I mean, I need to have a little bit more control and the ability to be uploading different ad sets and variations of maybe, tests.

John Warrillow:

Got it. How did you track the emergence of Instagram? I understand Instagram is basically taken over from Facebook as the primary platform, certainly in that age group that you’re after.

Griffin Thall:

Yeah. For us, once Facebook bought Instagram, that’s kind of when it really gave popularity. We use Instagram as our gallery to showcase the best that Pura Vida can offer. You’ve got to think why someone likes or follows an account. It’s because they truly want to see the content. They want to see your products. They want to hear a story. They basically want to have any way to engage with your brand in the most creative way possible. For Pura Vida, if you look at our Instagram, at one point nine million followers. We’re the most engaged jewelry brand on Instagram. Between our likes, our comments and everything, we’re bigger than most brands that are triple our size. That all comes down to content. Our team in-house, and our team of influencers and content creators are the best that they possibly can in their industry. We send people all over the world with bracelets. They put them in their backpack. They go to the top of a mountain and they take a picture. They do a back flip off a cliff. They bring their GoPro. They dive deep underwater, snap a picture. That’s the type of experience and the type of lifestyle that we create.

Griffin Thall:

We branded a string bracelet, and most people would think that’s impossible to do. We’ve done that through photography, through videos that inspire people to travel.

John Warrillow:

Do you pay people to wear your bracelet?

Griffin Thall:

Some of them, now. We have some bigger brand ambassadors that we work with kind of on a monthly basis, so we’re paying them to create content for us, to post about us. We also host these influencer trips. What an influencer trip is, is where our in-house social media team will pick a location. They’ll pick the faces and the personalities that we want to be a part of this experience, bring them to a location, have a bunch of photographers, and just photograph them having a fun time, and that’s it.

John Warrillow:

It’s an amazing story. I want to get into your decision to sell, but before I do, it’s a 10 year run. We went from 400 bracelets, to 1000 bracelets, from Facebook to Instagram, as you would look back over that 10 years, and it’s I’m sure very difficult to do this, but is there one decision that you made that has really enabled a lot of the growth that you enjoy today? A lot of people are sitting here saying, “I’ve had an Instagram account for three years and I’ve got 200 people that have liked…” You know what I mean? These numbers of 1.9 million, it’s just mind-blowing for folks. Could you point to a decision you made?

Griffin Thall:

I would say a couple things. For us, inventory was always an issue, so we had to know how to scale a manufacturing facility in a third world country, the beginning stages only speaking Spanish. I would say the biggest factor to perfect that was hiring an in-house supply chain expert. We brought in someone from a bigger company. She’s been really helping in Pura Vida’s growth because she’s really secured our manufacturing, our relationships with the vendors, but also making sure that quality control’s there and the scalability is there. If you are a fast growth company, making sure that your supply chain and logistics is dialed, that’s more important than the marketing from the beginning stages.

John Warrillow:

The guy on the beach with the tray of bracelets was Jorge?

Griffin Thall:

Jorge and Joaquin.

John Warrillow:

Jorge to Joaquin. What did you tell your supply chain management about your relationship with those two guys? You bring in this executive from a big company, he or she knows their stuff, and you kind say, “But there are these two guys on the beach that we really like.” Did you say, “No matter what, you’ve got to use them?” Did you give them that kind of instructions?

Griffin Thall:

Pretty much. Pura Vida is built on a story. You can’t replicate it and you can’t remove it, so as long as the story lives on and we’re working with the people that we’ve been with since day one, then I think that she’s doing a great job.

John Warrillow:

What was her reaction to those handcuffs? That puts a pretty serious restriction on her doing her job.

Griffin Thall:

I think it’s pretty well known that the brands, and word-of-mouth, Pura Vida is so strong because of the story. It’s the story of two college grads going to Costa Rica. It’s what’s engraved, and it’s what allows the word-of-mouth to be so viral. I think it’s pretty known that that just kind of had to stay.

John Warrillow:

How have you found staying relevant? Before I ask that, what’s the target market for Pura Vida? How would you describe the sort of typical customer?

Griffin Thall:

They typical target customer?

John Warrillow:

Yeah.

Griffin Thall:

I would say high school, college female, someone that loves the charitable component of a brand, loves the recyclable water bottles, loves the sandals, loves the kind of oversized T-shirt, kind of the laid back lifestyle everywhere you go. So, whether you’re at the beach, whether you’re at home, whether you’re at the movie theaters, you’re never really wearing makeup, and buttoned up, and wearing heels. That’s not the Pura Vida customer. The Pura Vida customer is someone that is relatable, that cares about the environment, someone that is health conscious, eco-conscious, and someone that really is truly into giving as well.

John Warrillow:

So here’s a goofy question. Again, I’ve never been involved in a business to consumer company, so I’m asking this with genuine ignorance. I’m imagining when you’re right of college, kind of knowing how college-age or high school-age girls think is pretty easy because you’re interacting with a lot of them, I’m guessing, through the Greek stuff and the fraternities. I mean, it’s kind of like your everyday life, right? 10 years go by, how do you kind of stay inside the head of that target customer? How do you… Do you know what I’m asking? How do you stay kind of, I don’t know if relevant is the right word, but to know how they’re thinking?

Griffin Thall:

So, I think that we solved that problem on year one, and we’ve continued to engage with that solution. What it is, is creating a platform that allows me and Paul walking into the fraternities and sororities, and going in, and going to each one and telling our story. How do we do that at scale, and how do we do that with thousands of people across the U.S.? We created a brand ambassador program. Basically what that is, is a way for people to sign up on our website to be a voice of Pura Vida on their college campuses. Right now, we have over 100,000 brand ambassadors that represent Pura Vida on their universities. If you do the math, that’s probably a couple dozen per college campus in the U.S., which is insane because this army of brand reps is the most organic guerrilla marketing strategy possible, and it’s easily done at scale.

Griffin Thall:

I would say this is probably one of the biggest things of Pura Vida that allowed us to grow organically so quickly before Facebook Ads, because we relied on the brand ambassadors to get the word out. We’d give them stickers. We’d give them bracelets. We’d give them a T-shirt. We’d give them a banner, flier, whatever they wanted, and their passion for the brand, and to promote it and feel like they’re in the cool club is just priceless.

John Warrillow:

I love it. How did you take the value… They get free stuff. They get stickers, swag, obviously bracelets. What is it you ask them to do?

Griffin Thall:

Basically, what we ask them to do, on our website they have a rep code. It’s basically their name, their last name, and a 20. They share Pura Vida with their friends, they get 20% off, and then they also get 10% back as a reward. It’s kind of a double-ended thing. As they’re going through their tiers, if they make one sale, they get five free bracelets. If they make three sales, they get a rep charm. It says Pura Vida rep. If they make five sales, they get a Pura Vida staff T-shirt that only people in our office get to have. So not only are they promoting a brand that they’re so passionate about, there’s a financial reward, and then there’s also gifts as you’re going through the tiers.

John Warrillow:

I love it. It’s awesome. What would kind of an average or above-average Pura Vida rep make a year? How much would they make on their commitment?

Griffin Thall:

It’s not that much. Maybe they’ll do a couple sales during the year, but it’s not just about the revenue side. They’re talking about the brand. They’re giving Pura Vida another impression that’s outside the Facebook Ad, that’s outside the Instagram page, that’s outside the retail presence. They are giving that other impression that other brands would have to pay for otherwise.

John Warrillow:

Love it. Awesome. All right, take me up to present-day because you just sold the company. Vera Bradley has bought it. Tell me how you and… You and Paul are the only shareholders. Did you raise any money before the sale?

Griffin Thall:

No. We started with $100 each and never took on funding.

John Warrillow:

Fantastic. What an amazing story. What was it that triggered your decision to sell?

Griffin Thall:

I don’t think it was a decision that just triggered to sell. We were getting hit up by private equity pretty much every week at this point. We were taking calls, meetings, and we kind of felt that the brand was at such a pivotal point that adding some strategic expertise, and a little bit more guidance, would really bolster the brand for continued rapid growth. Yes, we could’ve done it on our own, but I think having a partner like Vera Bradley, that’s helping out with 35 years of experience versus our nine and a half, is just priceless. So think about, they’re talking on from accounting, HR, payroll, accounts receivable, helping out with legal, some of the financial stuff. So all that stuff, instead of us continuing to build our headquarters with a bunch of back-office operations, we’re scaling more with the marketing team, the sales team, and the creative people. That’s what’s really going to bring Pura Vida forward, and then we can leverage Vera Bradley for their 35+ years of expertise in the back-office functions.

John Warrillow:

Got it. So, you guys got to a point where you were kind of craving some of that advice, or that expertise, if you will? Was that…

Griffin Thall:

Yeah. I would say that’s probably the biggest thing. You can network with other founders. You can hire consultants. You can go to these networking events, but to have someone that is invested the same way you are for success is way different. I think once we interviewed… We interviewed 25 groups. We had seven offers, and we chose Vera Bradley because it was the most strategic. It was the smartest partner, and we were confident with the people that we wanted to do business with.

John Warrillow:

Got it. So at some point, it sounds like you initiated sort of an M&A, mergers and acquisition mandate of some sort? You hired an M&A firm and they went out and sort of talked to-

Griffin Thall:

Correct. We hired a firm to help represent us and help pitch us.

John Warrillow:

How did you find that M&A firm?

Griffin Thall:

We’ve been going to trade shows for a long time. There was this one guy that would come up to our booth all the time and chat with us, and basically just kind of formed a relationship. About five years ago, he would come to our trade show booth and be like, “Hey, you guys aren’t ready, but when you are, I’m here for you.” Year over year after that, he kept kind of continuing the relationship, and just kind of looking after Paul and I, and Pura Vida, and when we were ready we picked up the phone and he was ready to go too.

John Warrillow:

I get the idea that there was expertise that you were looking for, but I want to dig in on the timing a little bit more. Can you think back to what happened at that last trade show that made the decision different for you, that it was actually now time to proactively get on your front foot and start a process? Was something going on in your personal life, or were you… You’ve been courted for a while, and you clearly knew you were sort of a hot commodity, so you could’ve flipped the switch any time, really. But, there’s something that must’ve happened that made you think, “Yeah, okay now it’s the right time.”

Griffin Thall:

I don’t think it was a big life event. I think it was more just knowing that it’s healthy to de-risk any investment, and it’s also healthy to know that you’re not the smartest person in the room. I think when you blend both of those together, that bringing on a partner, taking some cash off the table is just a smart move. It also is a moving target. You can never time it. You could always say, “But next year, but next year…” I think the way that we kind of set it up, along with our kind of un-tiered earn-out, will allow us to continue having motivations for Pura Vida, but also have another healthy exit as well.

John Warrillow:

Yeah, yeah. I’d love to get into that. Before we go though, you had 25 interested parties that sort of signed an NDA, I’m guessing of some sort?

Griffin Thall:

Yeah.

John Warrillow:

Got it. What were some of your reflections when you think about those? Were there any sort of themes that came out of those meetings that might be helpful for your listeners?

Griffin Thall:

I mean, yeah. It was a huge learning process. I feel like just going through that, I went to grad school or something. I mean, we’re sitting across the conference room table with billionaires. We’re sitting across the table with CMO’s of public companies. It was pretty awesome. The fact that they wanted to take a meeting with us, we were honored. I think it’s really cool being in this position because you’re basically… Both sides are interviewing each other because you either both want each other, or you both don’t want each other. I think a big learning was knowing that there is fad risk with any company? You know what I mean? People want to know, “So how long is this going to stick around for?” Or, “Is this brand cool in five or 10 years?” Or, “What happens if X, Y, and Z?” Or, “How are you going to fix these issues?” It’s really like a poking and prying type of interview, if you will, but you got to know that their questions are valid. It’s probably the first time we’ve ever been challenged with those questions, so there is a little bit of discomfort when you’re asked.

John Warrillow:

Yeah. So you were asked questions. What were your questions of them? You said it was a two-way street, so what sort of questions were you asking those 25 companies?

Griffin Thall:

I would say our point of view on private equity is that… There’s private equity and then there’s strategic. Strategic is a brand. You know what I mean? Private equity is more of, kind of a bank, if you will. The way that we viewed both of those is the private equity is more they want your business to grow. They want to pump money into it, and then maybe after a couple years, have another exit. We felt that going with a strategic company was better fit for Pura Vida because we wanted this brand to be around for five, 10, 20+ years. We know that with Vera Bradley’s expertise and their longevity, and how long they’ve been a brand for, that’s what we were aligned with most.

John Warrillow:

Got it. Again, some of our listeners would’ve explored the private equity versus sort of strategic. What other sort of conclusions did you come to about the private equity offer, and how it differed than a strategic.

Griffin Thall:

I think the private equity was more of a math and calculation, and more leverage on continued quicker growth, where the strategic decision, the strategic buyer for us was more on longevity of the brand, and basically making sure that Pura Vida is going to be around for a while, and that together we want to build this into a household name. I guess my kind of summary is private equity in my eyes was more fix, and flip, and lean out kind of model, and then the strategic is more create more structure from within, grow this brand, and continue to kind of scale it for the longer term. That’s kind of my plan.

John Warrillow:

Got it. Of the seven offers, how many of them were from strategic, and how many from private equity?

Griffin Thall:

We had, out of the 25, we only met with three strategics and 22 private equity. So out of the seven offers, there was one strategic and six private equity. The private equity is obviously more common. It just has its different risks associated with it.

John Warrillow:

Got it. I looked at the Pura Vida/Vera… Actually, I guess it was a Vera Bradley press release, so all kind of public information as I understand it. Some of the details here, I’ve got you guys were doing 68 million in revenue, 13.7 million in adjusted EBITDA, so the overall value cash was 75 million dollars for 75% of the company. Is that right?

Griffin Thall:

Exactly, yeah. It’s basically, for the 75%, it’s right under the hundred million mark for that 75%. Between 75 million and the adjusted earn-out that will trigger from the 2019 sales, and then after that there’s another earn-out for the 25% purchase. So, it’s a put/call agreement. If Pura Vida wants to sell the remaining 25% to Vera Bradley, then they’ll buy it, and vice versa.

John Warrillow:

At what price? Explain that put/call for me and others you don’t understand the intricacies.

Griffin Thall:

Yeah. It’s pretty nitty gritty in the terms, but kind of just for simple terms, the value of Pura Vida will be determined as the future multiple and the future EBITDA of the brand at year five.

John Warrillow:

Okay.

Griffin Thall:

The same way they calculated it in 2019, they’ll do a similar calculation in 2024. It’s kind of a moving number.

John Warrillow:

Got it. Got it. The multiple I’ve got, I just derived it of 7.3 times adjusted EBITDA. Is that about right?

Griffin Thall:

It was 9.5.

John Warrillow:

9.5. Oh, I must’ve done it against the up front.

Griffin Thall:

Yeah. The enterprise value was 130 million.

John Warrillow:

Okay.

Griffin Thall:

You kind of work backwards. The enterprise value was 130, and then 75% was for 75 million plus, up to 22.5, and then the remaining 25% is for the future value in EBITDA.

John Warrillow:

Got it. So, you guys have got some skin in the game, and motivation to continue to grow the business. How did that valuation compare across the spectrum of offers? You mentioned you had seven. One from the strategic. What were the other six’s offers like?

Griffin Thall:

Yeah. I would say I think there was two that were a little bit higher, and then the rest were lower. It was definitely like mid to high range. It definitely wasn’t the highest offer, which did come in from a private equity. We did feel, like I said before, that it’s not just about the dollars. It’s also about the longevity of your decision, because this is the biggest decision we’ve made in a decade, the biggest single decision. So, I think it’s important to know that Pura Vida was never started to make money and just to become a profitable business. We started out of a college trip that turned into a business, so with that type of mentality, and us not choosing the highest dollar amount offer, they kind of go hand-in-hand. We truly wanted to go with the partner that we felt would bring this brand around for 10+ years.

John Warrillow:

What was it about the private equity offer, the one that was for a higher amount, that didn’t quite sit well? Was there anything about the terms that didn’t quite match the Vera Bradley terms?

Griffin Thall:

I would say maybe of the terms. I think our alignments on the brand growth and how quickly we wanted to grow it, and also the potential risk at a three or five year earn-out, it seemed more secure on the Vera Bradley deal when the other one was, “If we don’t hit this, then it’s less likely you’re going to hit this.” It’s more of a, once again, kind of a de-risking strategy.

John Warrillow:

Yeah. You were being asked to shoulder more of the risk in the private equity deals.

Griffin Thall:

For example, if we went with the other deal, it would’ve been more money up front, and if we blow past all our numbers for the next three to five years, then yeah, that second earn-out could be more. But, we felt that the Vera Bradley deal was a little bit more strategic, a little safer, and a little bit more conservative for our type of mentality.

John Warrillow:

What did Vera Bradley see in you guys? Why was it strategic for them?

Griffin Thall:

Well, I think it’s strategic for them because Pura Vida, a lot of people consider it as kind of an eCommerce expert, in terms of our website performance, our social media presence. We’re a dominant player in the tech space for Shopify, so I think that they really viewed us as kind of a coach to help them with their social media strategy along with their eCommerce strategy. Vera Bradley’s going to be switching over to Shopify, which is the platform we’re on, so we’re going to help them set up all the apps that Pura Vida’s on. We’re going to help, whether it’s producing some of our costs, because both brands are signing up for a similar service. There’s a lot of benefits with aligning both brands on the Shopify platform, and I think Vera Bradley’s eCommerce team really looks at Pura Vida as a coach for that transition.

John Warrillow:

What was… Maybe you could describe the subscription model you guys have, and then I’d also love to ask you how that played into your conversations with Vera Bradley.

Griffin Thall:

Yeah. The subscription model started, I think over three years ago, and we basically wanted to solve the issue for a couple things. One, how do we have another revenue stream? How do we have a predictable revenue stream? And, how do we create a way for customers to buy more than one to two times? We did that by getting people hooked on a subscription. It’s called the Pura Vida Monthly Club. It’s $14.95 per month, free shipping, and three bracelets that come in this package every month that you can only get if you subscribe. You can’t buy them anywhere else. Every single month there’s a new package, and every month comes with a sticker that you can only get in that order.

Griffin Thall:

The emphasis on the sticker is pretty mind blowing. Pura Vida, our best keeper new Facebook Ad is free sticker pack with every order. So, you’ve got to think about that. Who loves stickers more than anyone? It is people that are in high school, in college. They put it on their water bottles, their laptop, their binder, their window, their dorm room, whatever it is. This free sticker pack with every order, and the exclusive sticker in the monthly club is almost more of a draw, if not the same amount of draw as the product itself.

John Warrillow:

That’s wild. That’s wild. What percentage of your revenue was coming from the subscription offering at the time of the acquisition?

Griffin Thall:

It was about, I think 15%.

John Warrillow:

One, five?

Griffin Thall:

Yeah, 15 to 20.

John Warrillow:

I think in the public disclosure documents from Vera Bradley, it was like 18 point something. You can Google it, but something in that 15 to 20 range. Got it. What role did the subscription offering play in your dialog with Vera Bradley leading up to the sale? Is that something you guys talked about?

Griffin Thall:

Yeah. I think they view it as another channel. You know what I mean? Each channel for Pura Vida has kind of a different math behind it, from the gross margin of profit and the EBITDA. We have our wholesale business. We have our eCommerce business, and we have our subscription business. When you kind of put all those together, those channels create top line revenue for the sale.

John Warrillow:

Yeah. This is a goofy question, but I have to ask. I mean, you’re a young guy. If you’re watching this on YouTube, you can see Griffin’s got a beanie hat on. You look like you just come off a surf trip of some sort. Started with 400 bracelets 10 years ago, and here we are, like a hundred million dollar company. What does that do to a guy?

Griffin Thall:

I mean, I don’t know. You kind of just got to roll with it. You know what I mean? You can’t let money change you? You’ve got to take care of your friends and family, and you’ve just got to enjoy life. I come into work every day with a smile on my face. I walk around the office inspiring the staff to continue working hard. We just had the opportunity to build our own custom office, so whether it’s the cold brew on tap, the waiting room that we have, the ocean view from everyone’s desk, or the food delivery that happens pretty much every day, I think people just love coming into the office, and that’s what makes me happy and wanting to continue to work hard.

John Warrillow:

What’s been the most surprising thing about that amount of wealth that quickly?

Griffin Thall:

I think probably just preservation from the beginning. You can hear these stories about people hitting the lottery and then losing all their money, and they’re filing for bankruptcy. That’s something that I would never do, but I feel like that’s the worst case scenario. I think it’s really important to know that by coming up into wealth, you have to know how to preserve it. You have to know how to protect it and set it up for longterm growth so you can build wealth for your family and your kids’ kids.

John Warrillow:

Where do you get that wisdom from? Where have you received that wisdom from? Again, I go back to the fact like I’d expect that answer from someone who’s 60 years old, has grandkids, and has been around the block for many, many turns. Where did you get that kind of wisdom from?

Griffin Thall:

I think just always watching the news and having a good financial advisor since I was 18, and just kind of being very in-the-know of what’s going on in the market and just knowing how to really live a lifestyle, and prepare for a lifestyle for the rest of my life that I kind of have in my head. I mean, I grew up in L.A. in Agoura, Calabases, Westlake area. I would surf Malibu pretty much three or four days a week, and I would see all these people driving around in nice cars and live in these pretty nice houses. I was like, “What’s the difference between me, 17 year old Griff with a surfboard and sandy feet, and that guy rolling up in his Bentley to his mansion?” It’s just, how do you paint that picture, and how do you create the bridge and walk across it? I think after going to college at San Diego State, joining the Greek system, finding the bracelets in Costa Rica, and just somehow figuring it all out, it’s tough. I don’t really have something else to say. It just kind of…

John Warrillow:

How has it impacted your relationship with the guys you knew at school?

Griffin Thall:

I mean, I’m still best friends with our same crew, the same guys that I graduated college with. We all live on the same street in San Diego. It’s kind of like the dream scenario. We all live on the same street. We surf as much as we can. All the surfboards are stored in my garage, so every Saturday morning all the buddies show up in my driveway, sunscreened, waxed, blasting music, and then Monday morning comes and we’re all back at the office.

John Warrillow:

But it doesn’t have a… I mean, isn’t there an elephant in the room now with the relationships? If I’m just kind of going to work for my kind of everyday job, and there’s Griffin rocking up on Monday morning, having a very different situation, isn’t it sort of an elephant in the room?

Griffin Thall:

No. I mean, I think it’s just because Pura Vida and my lifestyle, along with Paul’s, has always been blended into one thing. I think that as our success grew over the 10 years, we’ve always given to our friends. We’ve given to our family. We’ve hosted parties, hosted Thanksgiving. We paid for a taco guy. We paid for a trip. We got the extra hotel room. I think that those kind of things just kind of go along with it, and I don’t think that there’s an elephant in the room because we’ve always been so grateful along the way.

John Warrillow:

Did you buy yourself a trophy?

Griffin Thall:

I mean, I got a Tesla.

John Warrillow:

There you go.

Griffin Thall:

I feel like that’s a… Got to help Elon’s stock price.

John Warrillow:

Yeah, that’s not having many problems these days.

Griffin Thall:

I know.

John Warrillow:

Good for you. What’d you buy? Which one?

Griffin Thall:

I got the Tesla, the Model S.

John Warrillow:

Nice. Did you get the P-100?

Griffin Thall:

Yeah.

John Warrillow:

Got it.

Griffin Thall:

It’s fun. Fun car.

John Warrillow:

Nice. Well listen, I just… You have a fairytale life. I’m sure you hear this all the time, and I’m sure it was hard work, incredibly hard work, but you have an amazing story, and it’s just an amazing authentic story, and I’m really grateful for you sharing with us.

Griffin Thall:

Thank you. Well, I appreciate it. You definitely asked some great questions, so I feel inspired, too.

John Warrillow:

Awesome. Griffin, where… If people want to reach out, do you want to send them to a website, or do you accept LinkedIn connections?

Griffin Thall:

Yeah.

John Warrillow:

What’s the best?

Griffin Thall:

I would say not LinkedIn. I get tons of spam on LinkedIn, as most people, but just email me, Griffin@puravidabracelets.com or I’m pretty active on Instagram, so just @GriffinThall and send me a DM, and I’d be happy to pick up the phone and chat.

John Warrillow:

Griffin, appreciate it. Thanks for joining.

Griffin Thall:

Thank you.

John Warrillow:

Peace out. Thanks.

 

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