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The problem is that most boots are designed for men. And most companies still apply the shrinkage and thinking constant where they take a men’s shoe and make it smaller and sometimes add pink color to it or purple, whatever, that might be. And that is not what professional women want to wear. I always struggle with it.
Jay Clouse 0:20
The startup investment landscape is changing, and world class companies are being built outside of Silicon Valley. We find them, talk with them and discuss the upside of investing in them. Welcome to upside.
Eric Hornung 0:47
Hello, hello, hello, and welcome to the upside podcast, the first podcast fighting upside outside of Silicon Valley. I’m Eric Hornung, and I’m accompanied by my co-host, Mr Midwestern plaid himself, Jay Clouse. Jay, how’s it going, man?
Jay Clouse 1:02
I love the return of the fall. I am built for cold and potentially even Arctic climates. And so I’m excited to bring back the flannel, the plaid flannel shirts. This is my time of year.
Eric Hornung 1:14
I feel like this is the time of year where you go out anywhere in the Midwest, and there are 19 guys all wearing the same shirt.
Jay Clouse 1:22
Yeah, yeah, it’s all a mix of red and black or almost black striped flannels. It’s everywhere, it’s obnoxious, but it’s also comfortable. And I don’t know if it’s still in fashion or not, but it’s closer than most things I wear. So I’m going to stick with it. And I appreciate you noticing.
Eric Hornung 1:38
Yeah, that’s true. I mean, normally, you’re not dressed this nicely. So this is definitely a step in the right direction for you.
Jay Clouse 1:45
You’re not a flannel guy, are you?
Eric Hornung 1:47
Oh, no, no way.
Jay Clouse 1:48
I feel like I never see you in a flannel.
Eric Hornung 1:49
Yeah, Colleen bought me a flannel because she really likes them. And I very much don’t like that shirt, but I wear it for her when we go out on dates because I know that she likes it.
Jay Clouse 1:58
You spent so much time in Corporate America wearing collared shirts. What do you have against flannel? It’s the casual collared shirt.
Eric Hornung 2:06
You can just wear a casual collared shirt. You don’t, it doesn’t have to be a flannel.
Jay Clouse 2:10
But I feel like I don’t see you wearing casual collared shirts either. I feel like in your non-work attire, collars aren’t a part of it.
Eric Hornung 2:17
That’s generally true. I think that the classic–anything that like the majority of people wear, I’m not into. So the idea of like, when we were in college and everyone wore those like checked Brooks Brothers and whatever else, button downs that 95% of the people at the bar were wearing, not my style. So now in the corporate world, and in the professional world, the flannel is very in or the just classic buttoned down and pair of slacks going out look is in. Not into it.
Jay Clouse 2:52
So it’s more that you’re being contrarian and not that you are rebelling against the fact that you are required to wear collars, most of the time.
Eric Hornung 2:59
I’m just a pretty standard looking white guy with dark hair. So the idea of wearing something that the majority of the rest of the bar is wearing, it’s just like, Alright, I look like everyone else in here. So let me just be myself a little bit, Jay, you know, let me be unique.
Jay Clouse 3:16
All right. Well, speaking of workwear, today we are talking with Anastasia Kraft, the founder and CEO of Xena Workwear. Xena Workwear creates high quality, relatable shoes and apparel for professional women in STEM, starting with stylish steel toe safety shoes. Eric, got to say, this falls firmly into the category of I never would have thought about this, and, oh, duh, why doesn’t that already exist?
Eric Hornung 3:42
That’s two categories, just so we’re keeping track here. Unless that’s a singular category for you. It could be okay. Maybe it is. Yeah, it makes a lot of sense. Just even on the face of, we don’t know anything about this company yet. But there are women who are engineers and work in STEM, they need specific types of shoes. Why don’t those shoes look nice? Like very simple, logical problem here.
Jay Clouse 4:09
Xena Workwear was founded in 2018, based in Milwaukee, Wisconsin, another company in the list of Milwaukee companies that we’re talking to on the show that has a tie to GBeta. And they’ve received $750,000 in funding to this point from our friend Ezra at Starting Line, who recently closed a new fund himself. I’m excited about this, Eric. We always get a little bit excited when we get a ecommerce or direct to consumer company. Haven’t been there in a while, but we’re going back today with Xena Workwear.
Eric Hornung 4:38
Oh, does this fall into the blitz?
Jay Clouse 4:41
Ecommerce and retail blitz, a new year a new season.
Eric Hornung 4:44
The Blitz. Season two is shout out to Scott Chain for sending us the introduction to Xena. Scott Chain is of Comeback Venture Capital in Youngstown, Ohio.
Jay Clouse 4:58
Anastasia also goes by Ana for short, so you may hear us referring to her as Ana throughout the interview. And as we go through that interview, if you guys have any thoughts, you can tweet at us @upsidefm or email us firstname.lastname@example.org. If you’re not already following us on Twitter, I encourage you to give us a follow. We talk about, obviously, the companies and things happening on the show, but also things that are trending in the areas that we cover across the country. So give us a follow @upsidefm, we’ll get to the interview right for this. Eric, let’s pretend that you’re going to take initiative and start a company. You following?
Eric Hornung 5:31
Never done that.
Jay Clouse 5:32
All right. Well, you helped start the up company here. So a little concerned.
Eric Hornung 5:36
Just kidding, Jay. Of course I, let’s, let’s pretend let’s go down your hypothetical path.
Jay Clouse 5:41
And let’s pretend that you are trying to find some of the most talented engineers to help you get that company started. How many engineers do you think you know?
Eric Hornung 5:49
Jay Clouse 5:50
Not enough. And that’s why I would recommend you work with our friends over at Integrity Power Search. Integrity Power Search is the number one, full stack, high growth startup recruiting firm between the coasts. They partner with venture capitalists, private equity groups, and CEOs, like you, Eric, to build amazing teams for the world’s most disrupting companies. If I’m hiring, if I’m trying to find good engineers, I’m not going to rely on my small group of connections. I’m going to go to a group like Integrity Power Search, who has thousands and thousands of potential connections, potential hires for my company.
Eric Hornung 6:22
That sounds like enough to me.
Jay Clouse 6:24
Sounds like enough. Sounds like you’re gonna find the best talent when you can dip into a larger pool. They’ve executed more than 600 searches successfully, and they’re on track for more than 200 in 2019 alone. Their clients have collectively raised over $2.5 billion with a B, Eric, in venture capital funding and counting. So if you guys want to learn more about Integrity Power Search, go to upside.fm/integrity to get started with their team. This episode of upside is sponsored by Tresta. Tresta is a mobile app that lets you do business calling and texting from anywhere. With Tresta, you can set up your business phone number Download the app and start calling and texting unlimited right away. Tresta is the best business phone app on the market, whether you’re a founder or freelancer, just starting your business, or you’re already established, growing your network and your business is all about communication. You’ve got to be available no matter where you are. Tresta offers the call management features that empower you to communicate smarter and more efficiently, like auto attendance, call recording user groups, and more. And you don’t need any special equipment either, just a smartphone you’re already using. Tresta is easy to configure so you can set everything up yourself all online. It’s just $15 per user per month with no contract. So start your free 30 day trial today at Tresta.com/upside. That’s www.Tresta.com/upside.
Jay Clouse 7:50
Ana, welcome to the show.
Anastasia Kraft 7:52
Hi guys, thank you so much for having me.
Eric Hornung 7:54
On upside we like to start with a background of the founder. So can you tell us about the history of Ana?
Anastasia Kraft 8:00
Sure. And I have to start from the very beginning. I was born in Kazakhstan. That’s a country that borders Russia, China. Lived there for 10 years before my family decided to move to Germany. Yeah, I was ten, I moved to Germany with my parents, my, my sister and my brother. And I realized that Germany was so much better with so many more opportunities. Kazakhstan was an interesting country that is still Muslim and very traditional values where most women did not drive, learned to be good housewives. So that was a complete change in Germany, I realized that I could do anything. And when I finished school, I decided to study International Project Engineering, which combines engineering with Project Management. And that was something that our university came up for, for the–we have a lot of industry in southern Germany. A lot of manufacturing companies, they all came to our university and said, We need people who have an engineering background and know a few languages and know how to manage multimillion dollar projects. And so that’s what I did. And during this program, I had to go abroad, applied to different countries. And I always wanted to go either to Asia or South America, do something crazy. but got an offer to Waukesha, Wisconsin. Just, very interesting. That’s how I came to the US for the first time. I finished my internship, met during that time my husband, here in the US, and we visited each other a lot. I finished my degree and because he does not speak…he speaks multiple languages, but German is not one of them. And that’s why I decided to move to Milwaukee. Now I’m here, and when I, when I came to the US, I started working for a consulting company that helps manufacturing companies deliver multimillion dollar projects. So I was more in the project management site for many, many years.
Eric Hornung 9:56
What languages do you speak?
Anastasia Kraft 9:58
I speak Russian, because Kazakhstan used to be part of the Soviet Union. And that’s what I speak with my husband as well. German is probably my strongest language because I grew up in Germany. I speak Spanish. And yeah, I get into that later, it comes back when I go to Mexico and have to communicate for our business. Yeah, some English. I had, I had to suffer through many years of Latin, but Latin is dead, that just helps me to learn more romantic languages.
Jay Clouse 10:29
So being born in this traditional Muslim culture of Kazakhstan, how did you determine that manufacturing was what you wanted to study at university?
Anastasia Kraft 10:38
The way I selected my degree was I always wanted to be independent. I wanted to find a job that not only makes, where I can make some money, but also have a purpose behind it. I always look for jobs that could, could allow me both. And with this degree, I would say, it gave me great opportunities to have an impact and make a good salary.
Jay Clouse 11:02
So talk to us a little bit more about this moment where you decided to come over to the US and come to Milwaukee. You know, if you, if you follow the train of Kazakhstan to Germany to Milwaukee, it doesn’t quite seem like where I would guess somebody lands. So when you had that opportunity to come here for that job, what was, what was going through your mind? What did you think about that?
Anastasia Kraft 11:25
Oh, it was a tough decision. But I, and it’s so interesting, I never planned to come to the US, and I never even planned to live in the US. But when I came here, I was, first of all, yeah, I’m in my husband here, but we had the opportunity to live in either country. But I love the optimism and the opportunities you have in the US. It’s a very free country. In Germany, you have a secure network. If you lose your job, you have a system that picks it up. Same with health care. You have more insecurities here in the US, but also more opportunities. And I love this optimism, this, the positivity and the opportunities, and I love Milwaukee. So I decided, I told him, I will move here, but only if we can move to Milwaukee, which is one of the best cities ever. In case you haven’t been.
Jay Clouse 12:18
I think being raised in United States, we are taught that there’s more freedom and more opportunity here. But since I’ve pretty much only lived here, can you expand on what it looks like in Germany where there is fewer opportunities, as you call it?
Anastasia Kraft 12:33
Mmhmm. In Germany, I think I would not have started a business because it is more, more bureaucratic, and you have many people would not be as supportive as here. We have enough people who said, you guys are crazy, what are you doing? So you see more role models here that started businesses, some of them failed along the way, but the, they are successful, being successful in the end. In Germany, you, yes, they’re established companies that exist for hundreds of years, dozens of years. And it is so much more difficult to start a business. You could do something small, like a small hair salon or massage salon. But starting, we know how many successful big businesses come out of the US, aand that’s because of the environment and the funding and the overall support factor of the support network. Yeah. I’m impressed with how many, through G Beta and that is part of gener8tor, we received so much support through their network. It’s just people want to help you. People who don’t gain anything by spending their time with you will help you to succeed. And you would not see that as much in Germany, I would say.
Eric Hornung 13:56
How did you fall in love with Milwaukee?
Anastasia Kraft 14:00
Milwaukee has a lot of German influence. I think in the 1800s, the largest number of German immigrants settled down in the Wisconsin and Michigan area. So there are so many buildings that are built based on German architecture. You have German street names, German restaurants, German beer breweries. It’s a great city that there’s always something happening. It’s, you have a great, it’s great for millennials or any people who are, like to be active. There’s a lot to do, but you’re not always stuck in traffic. I love Chicago when I don’t have to drive. So Milwaukee’s just a hidden gem. We have a beautiful beach, so much to do, great breweries. And you can be in any part of the city in 20 minutes and find a parking spot.
Eric Hornung 14:49
So you mentioned that you were doing this consulting gig and there were these multimillion dollar projects. Can you tell us a little bit more about the work that you did there?
Anastasia Kraft 14:57
I worked for Caterpillar for many years. And some of the projects included either building, and we built massive, massive machines for global mining. So one of them would be, you have to deliver products within a year, and you cannot miss a deadline. That’s something I appreciate working for a company where you have an actual deadline. So I would get together with the team of engineers, and we would develop a project plan together. First we write a charter, which includes, what are your goals that are measurable for the people that need to be involved, and how do you measure success. And then we develop a project plan together, we use software to plug it all in that actually shows you your finish date. And on a weekly basis, we’d get together, update the schedule, and identify issues and see how the, there will always be problems that happen along the way, and you always identify how, how it impacts the finish date. So that was also very helpful to start my business as well. And we, it’s very rewarding to work for clients and help them deliver multimillion dollar projects no time. One of the most fun projects that I worked for was the planning of the FIFA World Cup in Moscow. That was the 2018 World Cup. That was a lot of fun. So you have, you planned for two weeks with different teams and then integrate all plans together, and you have thousands of activities that are somehow connected to each other.
Eric Hornung 16:33
Did you get to go?
Anastasia Kraft 16:34
Yeah, I was there. And probably also because of my Russian skills. I did not see anything of Moscow. I was excited to go check out all those cool museums and see the city, but we worked. We staye at a very nice hotel, would work everyday until the evening. Had the opportunity to see St. Petersburgs for a weekend. You guys have to go if you haven’t seen the Hermitage.
Jay Clouse 17:01
What year did you get to the US?
Anastasia Kraft 17:02
Six years ago for the first time, so 2013 for the very first time to do my internship,
Jay Clouse 17:10
Did it, did it feel any different being in America after the 2016 election in sort of the US, Russia, geopolitics?
Anastasia Kraft 17:19
I, yeah, I do see a difference. I was–and it’s always interesting when I watch news in Germany, American news, and my parents have a Russian TV station. And you see three different opinions about one event. It’s always, always shocking. Yeah, I could see a difference that the hostility now between Russia, which I think is not your beneficial, but people are so the same. If you get the chance to connect, you will, you will find commonalities between Americans and Russia.
Jay Clouse 17:58
So talk to us about, you, you’re in Milwaukee now and you’re working for caterpillar. At some point, you start getting the idea to start, what becomes Xena Workwear. Can you help us walk into that transition and where that idea came from?
Anastasia Kraft 18:09
Yeah. That started already with my first internship. Many, many people who work in manufacturing will, will, especially women, will be able to relate. So, when you’re working in manufacturing setup, you have your office, or you have your cubicle, and you have the manufacturing floor that is either attached to the building or you have to walk to a separate building to check on parts or just get to enter the front room. And when you’re in the office, you can wear your regular shoes and it’s usually expected to look, to dress professionally. Well, we all know that, so either business casual, and business depends on the company. And as soon as you walk up on the shop floor, you have to wear steel toed boots, or safety shoes. Doesn’t have to be steel toes. So those shoes have a protective toe cap built in, have to be slip resistant, and in many cases, we need to have many other safety features. The problem is that most boots are designed for men, and most companies still apply the shrinkage and think it’s constant where they take a men’s shoe and make it smaller and sometimes add pink colored to it or purple, whatever that might be. And that is not what professional women want to wear. I always struggled with it, because especially in my consulting role, it was almost part of my contract that I have to dress professionally on a client side, and I wanted to dress professionally. And wearing a nice blouse or a nice blazer with clunky hiking boots–you have to imagine the options wear hiking boots, super big and clunky; tennis shoes, ;rarely clogs that not all women like to wear. And that was just so frustrating. So most women were forced to dress down to match hiking shoes. So you see on the one side men looking all professional and their button down shirt. And women who in most cases look like they just came back from the gym or a hike because they’re wearing a hiking jacket to match their tennis shoes or hiking boots. So I complained about the same problem for so many years. And it’s just crazy the way it makes you feel. And you get, there’s statistics out there, what you wear has a major impact on your confidence and other job related factors like promotability and long term career success. And that’s why complaining to myself and hearing my engineering friends from Germany complained about the same thing and my coworkers. So I decided to do something about it and started developing safety shoes that look nice and have all the needed safety features.
Eric Hornung 20:49
What was step one of designing a shoe?
Anastasia Kraft 20:52
Oh, step one was to learn about American safety standards, because there are so many, and they’re so, so many gaps that I wish will be close sometime soon, just certain things not being defined. And then, after you learn the safety standards and have an understanding of what you want to develop you, you find a designer, you have tell them roughly what you want, maybe find five different shoes that you like, and combine different features together. You say, I like this on this shoe, this on this year, and then you create the design together. I did the sketches, terrible sketches, myself, and then asked professional designer to actually add the measurements and do them on computer.
Jay Clouse 21:33
How did you find a designer?
Anastasia Kraft 21:35
I think we used upwork. And we worked witha very talented and reliable designer that traveled all around the world. So every time we had a Skype call, she was in a different country. I just loved that. And I love to support that lifestyle. As long, as long as people deliver, I think they don’t have to be in one location sitting in one office from eight to five.
Jay Clouse 21:58
What was it like deciding that you were going to start a company, you know, given that growing up, that wasn’t as much a part of the culture as it is here in America?
Anastasia Kraft 22:08
My husband and I gave ourselves a year to figure out what we wanted to do. So he said, well either go stay in the corporate world, which we both didn’t want to do. We don’t think that we fit in well, lack of efficiencies, and just being being kind of stuck in an office and feeling like, okay, I could be, I want to do something, and you don’t always have a lot of work or have to deal with inefficiencies, and people who don’t want to follow deadlines, different cases. So we, we said, in one year, we will either do a master’s and I would have done a master’s in mechanical engineering, and he would have done his MBA, or we’d start a business, and if we find a good idea, if we find something that we’re both passionate about and interested in. And so by the end of the year, we, I think we booked the cabin up north, and swatted out six different ideas for the weekend. And really like there’s a lot of potential with this safety footwear or workwear idea that we wanted to give, give this a shot.
Jay Clouse 23:12
What were some of the other ideas that almost happened that you decided to ex?
Anastasia Kraft 23:17
Oh, maybe I want to do this afterwards. No, not I could talk about it. One cool thing was, it was close. You know how we all go to, to the gym to work out and train our bodies?
Jay Clouse 23:35
Well, I don’t.
Eric Hornung 23:38
Muffin tops are really in now, in case you’re wondering.
Anastasia Kraft 23:41
No, you train your body, but there’s nothing that you find where you can train your mind and challenge your mind for adults. So we go to schools and universities and that’s the way we’ll learn. We still have YouTube and fun videos, but to actually haven’t interacted environment where you, where you work on your brain, that would be something cool. And you can do in a fun setting. So that was another idea. But we would have to be, it would have been a little bit more difficult to scale. And I was more passionate about this. This was my husband’s idea. And I was super passionate about solving the problem for women.
Eric Hornung 24:20
I want to ask one clarifying question. You said the first step was the safety standards. Is there a specific safety standard and like is there an approvals process? Kind of give me some more detail on how safety standards work for footwear in this space.
Anastasia Kraft 24:35
So, all shoes have to go, have to be sent to an independent lab that tests them for different things that you can get the E STEM label. And the the things that all safety shoes need are a protective toe cap–and I’m talking about the manufacturing construction environment. It’s a protective toe cap. It could be sealed. Could be a composite material. I know now they’re coming out with many new other materials. It needs to be slip resistant. And a few additional things that you can test your shoes for is chemical resistance, oil resistance, static dissipative, which means that it conducts your static charge from the body to the ground. You cannot cause a spark that will, could then cause a fire when you work with highly flammable materials or work with a microchip that costs $1 million to develop. One tiny spark could damage that part. So it’s static dissipative that is actually and will be released in a weak electric hazard resistant when you step on on open cable that you will not get electrocuted, so it’s insulating. You have to have metatarsal guards, so there are so many different safety features that you can test for. And how we do the development of this, we gather requests from women in different industries and develop one by one based on that what they need.
Eric Hornung 26:01
Do you ever fail those certificate… certifications and like have to go back to the drawing board on stuff?
Anastasia Kraft 26:06
Yeah, unfortunately. With the last one with the static dissipative boot, we failed the test twice, and it was very frustrating but we didn’t give up. So you need to have the, interesting part is it can’t be all conductive. So you have insole, you have the midsole, and you have the outsole. And it needs to have the perfect combination that it conducts your static charge from the body to the ground, but still provides a sufficient level of resistance that in case you step on an open wire, it’s so protects you. So we had to find that range. So we played with different mixtures for the, for the insole, different mixtures for the outsole to find the perfect combination to pass the tests.
Eric Hornung 26:50
How many months or years of r&d has gone into like getting this first shoe?
Anastasia Kraft 26:57
For the first one, it took a little less than a year, which is still long. But because it was, it was so new to us, and we both have, had full time jobs. And it was a new thing for our manufacturer who previously focused only in men’s shoes, suddenly had to make something nice for women. So it took us almost, almost a year to go through, through the development, multiple rounds of prototypes and the testing. Now, we, we’re much, much faster and more efficient.
Jay Clouse 27:29
How did you go about–I’m always fascinated by people who get physical products manufactured, because it’s, it seems like such a, such a new inaccessible process, especially if you manufacture any of it overseas. So how did you go about figuring out your actual creation and supply chain the first time? And do you think that being in manufacturing helped you do that?
Anastasia Kraft 27:52
Yeah. So we, we decided to do manufacturer in Mexico for multiple reasons, because we wanted to have better control over the supply chain process and quality. We still think that it was a great decision not to go to Asia but work with someone who’s in the same time zone, we can jump on a call with our manufacturer a few times a week, if something comes up, they’re always available. If we have to fly down there, it’s a $400 flights and you’re there in a few hours, which is nice. And they were incredibly helpful with this, helping us to figuring out the supply chain, which materials to use, because they all have their preferred vendors. And my background in manufacturing definitely helped, especially with quality control and solving problems. There are many ways to find a solution, and I always, when I fly down there, when we develop together, I’m always the one hanging out with the engineer, testing out different things, how to make it work. And it’s a lot of fun.
Eric Hornung 28:55
What kind of questions do you ask when you’re vetting a manufacturer in a supply chain?
Anastasia Kraft 29:00
You have to find out if they have the capability to do what you need to do. And then the second question is, do they have, how, how quickly can they scale with you? What are their, what is their capacity? And how quickly can they grow? And I always asked how they’re, I was want to see how they’re, how they treat their people. I want to see the factories and know how how they pay their people, I want to make sure, that’s always a problem when you work abroad, you can’t always be there, and it’s nice not to just be at the nice office when you talk to the manufacturer but actually see the manufacturing facility. And I also tour the tanneries because to me it’s important that the tanneries are certified and treat their–the tanning process is very messy and chemical intensive. so I wanted to work with tanneries to treat their water before it’s being discharged since LWG-Certified. These are the main questions I would, I would ask.
Jay Clouse 30:01
So how long has Xena Workwear been in market and available for consumers to purchase?
Anastasia Kraft 30:06
Mmhmm. We just launched in May of this year with one design in two colors and received a lot of requests from women for additional width, additional certifications. So in a week we will be shipping out the static dissipative model. In December, we’ll be releasing a boot that has a lower heel and ankle coverage and will be electric hazard certified. And we’re actually already working on apparel because shoes is the biggest pain point for women, but there are also needs for more functional workwear in general. And we are right now developing blazers actually here and only that will have, will be machine washable, because you’re constantly walking from a nice conference room to sometimes a dusty, dirty, manufacturing floor construction site. They will have pockets where you can actually put in your, your phone, your safety glasses, your earplugs, have a nice hook where you will be able to hook in or earings because you’re not allowed to wear rings on the shop floor. So just a more functional jacket and blazer that will be released soon as well. And we’re, we have a list of additional things that women requested, but we’re, we’re doing one thing at a time.
Eric Hornung 31:23
How do you balance both the operation side and the branding side of Xena when you think about the difference between shoes, which is your kind of flagship go to market, and these additional products?
Anastasia Kraft 31:37
We have, we have an operations manager and the marketing manager, my husband helps on the operation side, and he does all the fun stuff like getting the shoes shipped from Mexico to the US and shipping them to the customers on time and counting all, all this fun stuff. And we have, we just hired a marketing manager who’s incredibly creative, has been helping from the very beginning, before we even launched. His name’s Eugene Furman. He is, he was so excited about this idea. And when he still had his other job, he helped us out in the evenings. and on weekends. He’s super passionate about this, growing this business and has a very creative mind. So it’s nice to have people who focus on different things. And I’m always in between trying to, sometimes I have to be in 10 places at the same time, which is always interesting. But if you have, if you like, we have a good team. And I’m the one who’s always meeting customers, communicating with customers, meeting with manufacturing companies, trying to learn more about different needs, going to conferences. So. Recording podcasts.
Jay Clouse 32:45
Can you tell us a little bit more about your team and how big it is, what those roles look like at this point?
Anastasia Kraft 32:51
So we have, we have a very small team, and everyone covers different roles. We have me, we have Dimitri, who’s our operations manager, Eugene, who’s leading marketing. We have an amazing woman, Haley Albright, who’s our social media manager, and Courtney, who’s our writer, she writes blogs about women in manufacturing construction. So we have a small team, but we, we think that we have all bases covered.
Eric Hornung 33:22
Who would be your next big hire? Like what position?
Anastasia Kraft 33:25
I think that would be sales. Because we right now, we all try to do sales in many ways. And it’s, we have a few perfectionist on the team, which sometimes can be a problem. Me being a perfectionist, I’m on the product side trying to develop more and trying to get to the perfect product. And I know that at some point, things will never be perfect, and sometimes you have to test it out before you can make improvements. And we have Eugene is an amazing, creative mind. He’s more perfectionist on on the customer experience and how the website looks, and how the whole experiences. But we were both aware with on have no help that we have to release things early and test them out and go that way. I think the next hire would be someone who’s, will help us out more of sales to keep that going.
Eric Hornung 34:16
What is your go to market strategy look like?
Anastasia Kraft 34:19
Yeah, right now we’re building a strong direct to consumer business and have orders to 40 different states, in Canada, Australia and New Zealand. We’re building a brand including our customers in the process, because they are the ones who have been incredibly helpful from the very beginning and help us understand what, what they value about this brand, and give us honest feedback, what we need to improve. And at the same time we’re building, trying to build a b2b business because so many manufacturing companies provide safety shoes. Instead of going through a middleman, a retail store, we want to build strong relationships with companies that want to support their women and want to provide a better product, better personal protective equipment for their engineers and their employees. So, but it takes a much longer time to go to build relationships with big manufacturing companies. We already had three conversations with Rockwell Automation, they invited me to their global headquarters. Milwaukee, we were invited by GE. I had this last conference at the Society of Women Engineers conference here in Anaheim. I had amazing conversations with General Motors, Oshkosh, we had Linda, there’s so many companies that were excited about our product. And we will be, it just takes a longer time from the first concept to go through the whole process to become a vendor for them.
Jay Clouse 35:43
What does it cost to manufacture a safety issue?
Anastasia Kraft 35:47
Right now, it is more expensive than a regular boot, because there’s a lot of pieces that go into for the safety features. So right now it costs about $50 to make a safety shoe. Then you add on, that does not include all the testing that goes into the shipping, the packaging, so it’s, right now, much more expensive than it would have cost in Asia. But we want to make sure that we have a good quality control and we have a partner we trust.
Jay Clouse 36:22
I saw that you guys had a seed round led by Ezra at the Starting Line. He’s been on the show. At what point did you guys start exploring investment or at what point did he say this is something I want to get behind?
Anastasia Kraft 36:35
So we went through a Gbeta accelerator program, even before we launched, and the last week of this accelerator program is a pitch week where you go to a different city and you pitch to different people all day long. And the goal was to just build relationships. Gneta is for early stage company, and at that point we just launched and had a lot of pre-orders which was nice. But instead of just building relationships, we had two investors who were very excited. So Ezra gave us a call and said, Hey, I saw you saw your business and he sent us an email and said, I want to talk to you guys. So we had a great conversation with Ezra. And then two weeks later, we have, we talked to Scott Chain from combat capital, and he was incredibly interested as well. And that kind of helped to speed up the process. And we were, you know, so many people will tell us, still tell us you guys are so dumb that you accepted money that soon, you should have waited, waited for a better valuation. And for us, so many said, congrats, this is amazing. We were two months in after launch, and it’s receiving a term sheet and having an investor, an amazing investor like Ezra behind us, and we have an amazing team of investors in general. It’s fantastic. And you just have to understand if you make the decision for yourself, you will always have people who say one thing or another if you make the right decision for your own business and roll with it. So we’re, we’re happy about the seed round that allows us to move, move faster, deliver products quicker. We can say a tiny Milwuakee basedbcompany for a long time; we have to get the word out nationally. And that’s why we think this is, this was fantastic.
Eric Hornung 38:24
You mentioned earlier that you had all unique customers. How many customers are coming back to buy a second pair in a different color?
Anastasia Kraft 38:33
Yeah, a lot of them. I would have to quantify it. But customers are either buying a second color after a while or they’re waiting for next month’s to come out, so they sent us already notes asking, Hey, what’s, when’s the next model coming out. So, and many of them might wait for the next year, for January because they get a stipend every year from their companies that ranges between $80-150 that they can use for safety shoes. So some of them are just being a little patient waiting for the next allowance to come out.
Eric Hornung 39:09
Everybody in manufacturing gets that?
Anastasia Kraft 39:10
Mm hmm. Yeah, almost everybody in the factoring gets, it’s still out to spend between the ranges, in most cases is really $80-150. Some don’t have a limit at all. But that’s what we have seen so far.
Jay Clouse 39:24
Is there any difficulty–I saw on the website that Xena Workwear issues are $160 right now or $180 for the next model, I think I saw. So if I have even the high level, $150 stipend, is there any difficulty in me augmenting that with my own money to get the Xena Workwear boot?
Anastasia Kraft 39:41
No, you can, you can purchase the boot for 160 and the company will reimburse you for 150, and you paid 10 out of your own pocket, which is still a good deal.
Jay Clouse 39:53
What are we not asking or what, what still keeps you up about running a DTC footwear, I guess apparel company?
Anastasia Kraft 40:03
The one of the biggest challenges that we’re going through is we launched a new product that did not exist before. And we’re following all the rules. But it’s still different. And women get asked, wait a second, are you allowed to, are you allowed to wear a heel on the shop floor? And the interesting part is that we’ve discovered there’s not a heel height limitation in the US, but there’s one in Canada and Canadian standards are much, much stricter than American standards. So we decided to go with the Canadian limitation. And certain companies in the US, they decide to implement some heel height have limits. And when they pick the companies that select one inch, create a double standard for men and women, which leads to discrimination, because most men’s shoes are over an inch high, they’re between 1 and 1.5 inches. But interesting thing is that nobody would ever question the guys because the, the shoes don’t look as nice as the women’s shoes that we provide. And the women get the question like, Hey, wait a second, like, what’s, what’s happening here? So we’re working right now on a white, wide paper that will be released soon. And I’m part of the, what if the ECM committees say I want to apply certain changes. I want at least a standard that applies to everyone for men and women. And I would love to close certain gaps that exist right now in the American safety industry. That’s just an interesting fact that many people ask.
Jay Clouse 41:40
Well, this has been awesome Ana. If people want to learn more about you or pick up their own pair of Xena Workwear boots, where should they go?
Anastasia Kraft 41:48
They can go to XenaWorkwear.com and Xena spelt X-E-N-A. Or iyou can, can find me on LinkedIn under Anastasia Kraft. Please follow us on Instagram, Facebook, Twitter, send us ideas and suggestions. If you know at least one engineer, female engineer in your life, please send her the link, they will really appreciated. Women love, love our products, and we’re so happy to, to receiving feedback from them and seeing pictures of women wearing our shoes in manufacturing, construction, and even their free time. This is so rewarding.
Jay Clouse 42:28
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Jay Clouse 43:06
Alright Eric, we just spoke with Ana of Xena Workwear. Work-where would you like to start?
Eric Hornung 43:12
Oh my god, that was terrible. I’m sorry, that threw me off.
Jay Clouse 43:18
Eric Hornung 43:20
Alright, that wa pretty good. So I think we can start somewhere that’s familiar to us, which is the business model, because I think this is somewhere we can kind of breeze through rather quickly with a couple of nuances. This is a DTC business, which stands for direct-to-consumer with some potential for some b2b sales. But at its heart, they make a product, they sell that product for a large margin. That margin covers their growth and operating expenses going forward. Fairly standard business model.
Jay Clouse 43:51
Pretty cut and dry.
Eric Hornung 43:53
So one of the nuances I want to hit is the thing that stuck out to me most from the interview in terms of the business model, in terms of the opportunity, which is this subsidy that I’ve never heard of that every manufacturing worker gets an $80-150 per year subsidy that usually hits in January for safety footwear. Have you ever heard of that?
Jay Clouse 44:16
Never heard of that also is like wow, love that.
Eric Hornung 44:19
Especially if you’re selling shoes that are essentially free if you’re on the top tier of that program. If you’re a woman, you just get a new pair of shoes every January, which gives them almost like a recurring revenue model, where the consumer is paying $10 to $30 on the top end, or less than $200 for sure.
Jay Clouse 44:41
$10 to $80.
Eric Hornung 44:43
Which means that the consumer has to make the decision to buy the shoes, but it’s being funded by the business. So it’s like a hybrid direct-to-consumer choice, but b2b payment. I don’t know, it’s weird, but it’s very cool.
Jay Clouse 45:00
Very cool. And it seems like if you can get into the bloodstream or the vein of these manufacturing companies who are offering a stipend and say, as Ana put it, if you want to support and respect your female workforce, then maybe making available these shoes that are in a category of their own, as far as I know, thus far, is a good way to do it. It seems like everybody wins. Now, granted, I’m sure more competition will enter the space if this does go as well, as it sounds like it could. But right now with this first move for advantage, and the subsidy, getting in with these companies themselves and saying, Have you seen Xena as a safety shoe for women? Seems like a no brainer.
Eric Hornung 45:48
I think we can move a little over to the opportunity. And this kind of fits into the business model, into the trend. But if they can really get a foothold here, it sounds like..
Jay Clouse 45:58
Ooh. Oo, was that on purpose?
Eric Hornung 46:00
Yeah, it was, I thought you were gonna, I didn’t know you’re gonna catch it. If they can get a foothold here, I think that they can, that there’s probably a lot of unmet demand in this space. If you think about this industry, manufacturing, really since the Industrial Revolution, has been a men’s game. And in the last few decades, we see a bit of a pickup in women in engineering and women in STEM. There are currently something like 200,000 women in the United States to, that are in manufacturing as compared to 1.5 million men. So you have to believe that if people are building for the manufacturing engineering space, they’re optimizing everything for what is 85% of the market, as opposed to this niche part of the market. So they can really create a brand here for a very specific consumer that doesn’t just take what is being offered to men, and what did she say, shrink and pink it? Was tht the phrase?
Jay Clouse 47:01
Shrink it and pink it. I’ve never heard shrink it and pink it, but makes a lot of sense, unfortunately.
Eric Hornung 47:07
Right. So I love that part of the business model. I think that creating that brand awareness around, We’re for women, by women, designed for women in the manufacturing engineering space. And also there’s not a lot of competition for it.
Jay Clouse 47:20
And they’ve already gotten some traction. Forty different states in the United States, Canada, Australia, New Zealand. So provided that they don’t slip, it seems like they have a real not even just national opportunity here but global opportunity.
Eric Hornung 47:32
And from what I can find online, all of their reviews look great. So, Jay, you’re not a fashion expert. We know that. I won’t consider myself an expert in women’s fashion, or really men’s fashion, to be honest, but more so than you, I would say, I get the fashionable one of the two. Is that fair?
Jay Clouse 47:48
Eric Hornung 47:51
Either way, neither of us are qualified to talk about the merits of the fashion of the shoe. However, I found something like 50 different reviews on line through different sites that have very positive, glowing things to say with an average of five or five stars. So people seem to like it. Those could be manipulated, sure. But people seem to like it from what I’m seeing. And it seems to be solving a problem.
Jay Clouse 48:15
You wanna do some math on the fly here, Eric? We got a little bit of cost data, we’ve got pricing data, you have a number of women in STEM. You’re the math guy, so, the factory floor is yours.
Eric Hornung 48:26
So if we do the 200,000 women in STEM at $160, let’s call it, just call it $200 a shoe. Is that fair? It’ll be a little high, but we’ll do it.
Jay Clouse 48:37
That’s definitely high.
Eric Hornung 48:38
Do you want to do 160? Do we need to do exact math here?
Jay Clouse 48:42
I think we should. We could do a $170 because their second shoe is $180. First shoe is $160. I think we should do exact math here.
Eric Hornung 48:48
Okay. So if we’re going to do exact math, and it’s 192,000 female engineers, and now you’re making me get out my calculator.
Jay Clouse 48:57
192,000 times $170 is $32.64 million. Now, she mentioned that the costs are about $50. But that’s not all intensive. Let’s do an estimate of $80, which is a 50% margin, which is about you divided by two, that’s pretty simple math, Jay, about $16.3 million in profit, if they’re on every woman’s foot.
Eric Hornung 49:23
That assumes that everyone only buys one pair of shoes as well, which is likely not going to be the case. I’m sure that number is somewhere north of one, on average. That being said, that’s only the US market. So you can scale that up. Is it a billion dollar revenues just on shoes? No, it’s not. Is it at 100% of every female engineering manufacturing employee? Is it 100 million a year? Maybe. But that’s not, that’s not the business model. Here. The business model is you start with shoes, and then you expand and you become a brand. So they’ve already talked about blazers, they’re talking about other areas, and they said that they have a request list from women in the space. Probably just like how Ana was complaining about shoes, these women have been complaining about some other aspect of their job where they haven’t been heard, and they just haven’t gone out and created a product. But now they have a list of products that people want in this space, which goes back to my original point of this being 200,000 of the 1.7 million manufacturing engineers in the United States. It’s an area that probably just hasn’t been heard as much.
Jay Clouse 50:35
love that they’re already going into blazers. I love how quickly they’re expanding into different skews here. She said it took a year to get the first prototype and everything ready to go, but, and she said that was long. I don’t know if that was long for the industry or just felt long to her. It seems like they’re moving pretty quickly to me to have this many different unique skews and moving into blazers already, which opens up the market beyond women in STEM in my opinion. So that was really promising. I also loved hearing that from just giving their Gbeta pitch, not even the Gener8tor accelerator, their Gbeta pitch, she had two inbound calls from Ezra and Scott Chain, two men investors that we respect very much in this space, looking to back her early. To me, that is a non-trivial signal of you’re onto something.
Eric Hornung 51:23
So let’s do our reversed deal memo here and jump back over to Ana as a founder. Jay, you said it in the interview. It is always interesting to hear how people create products and deal with the ambiguity that’s out there around creating a product. I thought her approach overall was, she almost made it seem simple. Like I just went on Upwork, hired a designer, we did it a bunch of times, and then I flew down to Mexico, learn Spanish, and dealt with everyone and asked the right questions, and then we had a product. I know it wasn’t that simple, but the ability to just do that, while you have a full time job, I respect a lot.
Jay Clouse 52:03
She has this history she shared with us of basically going against the grain. You know, to say, where I grew up, this was not the way things were done. This is not the supportive nature of what was available for people to think aboutm, starting businesses. She is a woman in STEM, which we just went through the math, is the minority in that population. And despite all of that, you know, she decided to jump in and start a company, start a physical goods product that she had to learn how to get manufactured, how to design, and yeah, she she really made it seem easy. And not because you said it was easy. Just the way she approached it was easy, which I think is a positive sign for Ana as a founder and somebody who will have countless challenges as she grows her company as founders do. It doesn’t sound like she gets fazed by those challenges. It sounds like, you know, she creates her own personal charter to use the manufacturing language, decides her goals decides who needs to be involved, what success looks like, and goes and makes it happen.
Eric Hornung 52:59
Any shadows pop out to you?
Jay Clouse 53:00
The only shadow that pops out to me is given that she’s going against the grain–a woman in STEM, a woman in manufacturing, now making a women’s wear product line for other women in STEM. I’m sure there’s just a lot of societal and industry hurdles that she has to get through that may just be ignorance and discrimination, potentially. So I’m sure that there are more hurdles than we even realize. But she she definitely seems like somebody who will fight through these things. So no, no, no shadows in Ana herself as a founder, just acknowledging that the road she’s choosing to walk down is a difficult one.
Eric Hornung 53:43
My only shadow comes from the fact that this is a very old legacy industry. And if there is the potential for b2b sales, that there could be some large legacy competitors who can leverage distribution over innovation and figure out a way to come in at a, at a decision point that isn’t the end consumer, but is the business. So for example, if you had a large workplace equipment manufacturer or workplace uniform manufacturer came in with a new women’s line that they innovated, and instead of charging $160 to individual consumers, they charged $25 per pair of shoes to Caterpillar, because they have that relationship that they’ve had for the last 150 years, that’s somewhere I would be hesitant to rule out as a risk. But the way that you combat that is with excessively fast growth, word of mouth, and branding. Because if these shoes become desired by women in STEM and talked about by women in STEM, it’s going to be harder to say, Oh, no, we have to go with this knockoff version.
Jay Clouse 54:55
The other shadow I may have, but not really, it’s just kind of a first that we’ve heard on the show, she alluded to the fact that she’s gotten some criticism that she took investment too soon at a valuation that was too low. We’ve never heard a founder say tha. It might not be that we’ve never had that situation on the show; we just never had it come up in an interview. And she didn’t seem to have any regrets for that. But if I’m a later stage investor, and she gets to a point where she needs higher levels of investment, if that cap, cap table is a problem for me, then maybe that’s a shadow. NBut we don’t have enough insider data to say. All right, Eric, so what are you looking for from Ana 6-18 months from now?
Eric Hornung 55:35
I don’t think it’s a metric they track. And I don’t have a good number. I tried to do some research to find it. But there has to be a number of manufacturing centers in the United States. I don’t know what that actually breaks down into. Is it distribution centers, manufacturing centers, factory floors? Whatever it is. Maybe OSHA has the number of actual facilities where people work. I would want to know their penetration rates into facilities. So that means one individual per facility. Because once you kind of get into a facility, I think you get natural organic search by wearing those shoes around, and someone complements them, and then they get a pair, and then someone else gets a pair. So I don’t think that’s a, I don’t think that’s a stat they keep. But I think a proxy for it would be just penetration rates in general on that 192,000 women engineers number.
Jay Clouse 56:30
I got that may surprise you here.
Eric Hornung 56:33
Does it rhyme with brevenue?
Jay Clouse 56:35
It rhymes with brevenue. Looking for revenue growth, because they’re at that point, but also looking to see how that sales growth affects their unit economics in may build a more defensible moat for them as, I would expect, other competitors enter the market. So the more favorable unit economics they can get, the more they can compete against some the most big incumbent players you’re talking about. How quickly can they get to that level of scale? And I like your point about getting into unique factories so that they can start to get a literal foothold, to use your good pun that I didn’t acknowledge, into these factories.
Eric Hornung 57:13
One last thing that I should have mentioned earlier on. That subsidy, which is where we started this deal memo, is a subsidy for workers that are already making significantly high, higher salaries than the average consumer. So there’s probably a lot of room for the price point to increase upwards over time as well. Ana said herself, she wanted to get into engineering because it’s where you make the money. And I remember when we were graduating from Ohio State, all my friends who went into engineering were signing six figure deals right out of college. So the consumer is probably less price conscious, and the fact that they have a subsidy makes them, hypothetically, even less price sensitive. So when we’re looking at those unit economics that you brought up, I think they can get much, much, much better based on the kind of consumer that they’re targeting, and based on this subsidy, and based on the fact that they’re going to get economies of scale as they grow.
Jay Clouse 58:10
All right, dear listener, we’d love to hear what’s on your mind and what’s on your feet. You can tweet at us @upsidefm or email us email@example.com. Let us know what you thought of this interview with Ana. If you’re listening to this podcast on iTunes, we’d love for you to leave us a five star rating and review in iTunes. It helps us bring high quality guests to the show. Or if you know a woman in STEM, send her this episode. Forward it on, text it to her, let her know that there are options for her out here in the workplace. And we’ll talk to you next week. That’s all for this week. Thanks for listening. We’d love to hear your thoughts on today’s guest. So shoot us an email at firstname.lastname@example.org or find us on Twitter @upsidefm. We’ll be back here next week at the same time talking to another founder in our quest to find upside outside of Silicon Valley. If you or someone you knew would make a good guest for our show, please email us or find us on Twitter and let us know. And if you love our show, please leave us a review on iTunes. That goes a long way in helping us spread the word and continue to help bring high quality guests to the show. Eric and I decided there were a couple things we wanted to share with you at the end of the podcast. And so here we go. Eric Hornung and Jay Clouse are the founding parties of the upside podcast. At the time of this recording, we do not own equity or other financial interests in the companies which appear on this show. All opinions expressed by podcast participants are solely their own opinion and do not reflect the opinions of Duff & Phelps LLC and its affiliates, Unreal Collective LLC and its affiliates, or any entity which employ us. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. We have not considered your specific financial situation nor provided any investment advice on this show. Thanks for listening, and we’ll talk to you next week.
Interview begins: 7:50
Debrief begins: 43:06
Anastasia Kraft is the founder and CEO of Xena Workwear.
Xena Workwear is a footwear and soon-to-be apparel company dedicated to designing stylish and safe apparel for women in STEM. Based in Milwuakee, Xena Workwear’s first products launched less than a year ago, and since then, they already have impressive supporters and plan to soon expand their apparel to include other items.
Originally from Kazhakstan and Germany, Anastasia first realized her business idea while working in project management manufacturing, where she noticed a disconnect between the professionalism of the women in STEM and the safety apparel they had to wear. In today’s interview, Anastasia details not only the process of creating a shoe but also her frustration with the inequity between women’s and men’s safety apparel.
- Ad: Finding experienced employees for your new business with Integrity Power Search (5:27)
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- Growing up abroad and moving to America (8:00)
- Experience at Caterpillar and consulting (14:49)
- Inspiration for Xena Workwear (17:58)
- Designing a shoe (20:49)
- Decision to start a company (21:58)
- Safety apparel standards and certifications (24:20)
- Manufacturing process (27:29)
- Xena’s team (31:23)
- Direct-to-consumer vs. b2b strategies (34:19)
- Unequal standards in women’s vs. men’s safety apparel (39:53)
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