Parachute CEO on DTC boom

Parachute founder and CEO Ariel Kaye on the company's recent success, and what's next for the sleep and lifestyle company.

Video Transcript

[MUSIC PLAYING]

ADAM SHAPIRO: Let's talk about something that will bring a smile to the face of not only entrepreneurs and business people, but if you need to update the stuff you got in your house, you want to pay attention to Ariel Kaye. She is the founder and CEO from Parachute. We bring her back into the stream. She's a return contestant here.

I always love to make that analogy, the game show contestants. But there's no games with what you're doing. You've built a successful business over the last seven years, which-- and I was reading some of the metrics, that this year you're projected to have $150 million in revenue. Year-over-year growth has been tremendous, over 60%. As you go forward, what stuck out to me, the old timer, why are you expanding into brick and mortar?

ARIEL KAYE: No, that's a good question. I have been really bullish on retail since we launched in 2014. We today have 12 retail stores. Our plan is to have 30 by the end of next year. And retail for us is a place to really build relationships with our customers. They're profitable.

And we see this continued high-intent customer coming to our stores and wanting to shop in that way. So our goal is to be where our customers are. And we do actually see a 50% higher conversion rate in in markets where we do have a retail store. So they really work for us.

ADAM SHAPIRO: I'm glad you just talked about that conversion rate, 50% for a company. Help us understand, is that a tremendous number? Or is that what everyone should expect? Because if I'm a retailer watching right now and I don't have brick and mortar, I'm thinking I might want to look at that.

ARIEL KAYE: Yeah, absolutely. No, it's certainly a high number. And we just see this real omnichannel experience that happens. Our retail stores, they're made to sell, but they're really all about the relationship. And so we do see people that want to come in, feel the products, and then go home and buy online.

We also have allowed our customers to buy online and pick up in store, to do curbside pickup. We use our stores as places, as mini distribution centers. So we ship from store in order to shorten the lead time that our customers are getting their products. But yeah, it is a very high number. And we just see that these stores really open us up to the community in a way that is really quite effective.

ADAM SHAPIRO: And one of the statistics that you shared with us was that there was a recent survey showing 70% of us in the United States plan to do some kind of redecorating. Now, when I think of Parachute, I was thinking of just bedding. But you're much more than that. So there's a huge potential. And what are some of the products that you see gaining in popularity?

ARIEL KAYE: Our homes are working on overdrive. So many people are redecorating. We are spending more time at home than ever. And I think people are really thinking about how they can invest into creating a more comfortable home, a room that is more purposeful and intentional in the way that they need to spend their time.

So, I mean, to your point, we have expanded into many different categories. We now have furniture and window treatments and rugs and tabletop. But we really do see people wanting to create spaces that work for their everyday needs, which have evolved quite a bit in the last two years.

ADAM SHAPIRO: I was listening to a radio program where they talked about the supply chain issues and getting materials and how long people wait, especially when it comes to furniture. What are you seeing? Are you sourcing from within the United States? Or are you sourcing from across the globe?

ARIEL KAYE: We source both in the United States and globally. We've been pretty fortunate that our supply chain has not been affected as much as many companies. And we have created a relatively quicker ship program with our furniture, which we believe does make us competitive in the space, as people are waiting quite a long time, in some cases almost a year to get their products. But that was a really big initiative for us when we launched our furniture in September, was how could we get these products into people's homes in a shorter amount of time?

But certainly, like most companies, we do feel effects of the global supply chain issues. And we work closely with our manufacturers and leveraging technology to make sure that we have the right supply and on hand to keep up with demand. So we've been pretty lucky there.

ADAM SHAPIRO: You also just hired Drew Sheriff, right?

ARIEL KAYE: Yeah.

ADAM SHAPIRO: I think you got this individual from Amazon, was it?

ARIEL KAYE: That's correct.

ADAM SHAPIRO: What is he going to do for you? Is it more in line with the brick-and-mortar buildout?

ARIEL KAYE: That's a big part of his role. So he will be leading and spearheading all of our retail initiatives. We are also building our trade program, so our program where we work with interior designers. And so he will be overseeing that as well.

But he oversees a number of parts of the business. But those are two big parts of our growth initiatives for the coming years. But yeah, he's got lots of experience opening stores and being really innovative with retail growth. So we're very excited to have him on board.

ADAM SHAPIRO: I do have a personal selfish question to ask after this next question. In 2014, when you launched this, in your wildest dreams, did you ever think you would be this successful? And I suspect, I hope your dreams are big, because I think you're on a trajectory to be even more successful.

ARIEL KAYE: Our dreams are very big. We've got big plans for 2022 and beyond. No, I have quite a few pinch-me moments, if I'm being totally honest. It's been amazing to see the growth. I've got an incredible team. And we've been really committed to investing in our products and making sure that they truly are the highest quality on the market.

And it's paid off. Our customers keep coming back. We've got a 90% repeat rate over three years, which is impressive. And it's something that I'm very proud of. So we're going to keep doing what we do and build a really big business.

ADAM SHAPIRO: OK, I don't know if you can answer this, but if you can, you will end fights and prevent fights for couples across the country, whether they be married, just together, or even friends. Pima cotton, Supima cotton and thread count-- does it matter? And what does it mean? I remember once a discussion where they said if they tell you 800-thread count, they're really just splitting the threads and that's foolish.

ARIEL KAYE: That's correct.

ADAM SHAPIRO: So what should we be aiming for with the sheets?

ARIEL KAYE: That's correct. There's a lot of marketing gimmicks when it comes to thread count. So do not think that the higher the thread count, the better the quality. Really focus on the quality of fibers. Look for things like Oeko-Tex, which means that there's no toxic chemicals or artificial dyes.

But really, you want the purest fibers. So all of our fabrics are made from 100% long staple Egyptian cotton. We really focus on thinking about where we're getting the products, the finest fibers, and making sure that that becomes really a beautiful product that will be long lasting and timeless and make you feel very comfortable at home.

ADAM SHAPIRO: Real quick so I can hit the home run here, what's the ideal thread count in a real world, as you've just described it?

ARIEL KAYE: So really anything really anything over 400 is a result of manipulation over the fabric. So anywhere between 250 and 400 is really the sweet spot.

ADAM SHAPIRO: You have made me so happy right now, because I just won an argument. Ariel Kaye--

ARIEL KAYE: I'm very glad to hear it.

ADAM SHAPIRO: --Parachute founder and CEO, all the best to you and continued success into 2022. Look forward to an update on how you are growing your business.