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Heidi Zak, MBA '07 & David Spector, MBA '07

ThirdLove co-founders Heidi Zak, MBA ’07, and David Spector, MBA ’07, join Christopher Reichert, MOT ’04, to share how they started the online bra and underwear retailer. The pair also discuss their experience founding a startup as husband and wife and lessons they have learned about entrepreneurship.

Sloanies Talking with Sloanies is a conversational podcast with alumni and faculty about the MIT Sloan experience and how it influences what they're doing today. Subscribe and listen on Apple Podcasts, Google, and Spotify

Christopher Reichert: Welcome to Sloanies Talking with Sloanies, a candid conversation with alumni and faculty about the MIT Sloan experience and how it influences what they're doing today. So what does it mean to be a Sloanie? Over the course of this podcast, you'll hear from guests who are making a difference in their community, including our own very important one here at MIT Sloan.

Hi, I'm your host, Christopher Reichert, and welcome to Sloanies Talking with Sloanies. My guests today are Heidi Zak and David Spector, both 2007 graduates of Sloan's MBA program. Welcome to you both.

David Spector: Great to be here.

Heidi Zak: Yeah, thanks for having us.

Christopher Reichert: Heidi and David are founders of ThirdLove, the third largest online bra and underwear company in America, based in San Francisco. But before I start the conversation with them, let me give you a bit of a background on them both.

Heidi is a graduate of Duke University, a place near and dear to me, I'm actually renovating a house in Philadelphia that was designed by the same architect who designed the old campus at Duke University. So I look to that campus when I do some renovation work. She went into investment banking and joined McKinsey before heading to Sloan. And I can see Heidi has a longstanding interest in retail with an MBA internship at Aeropostale, and then a permanent position there after Sloan. This was followed by a role at Google and finally, co-founding ThirdLove with David.

David graduated from Tulane and of course, Sloan. David seems to be a serial founder of companies, there's VillageSat, Scuba-Track, where I love the funny description he has on LinkedIn where it says, and I quote, "We failed, myriad of reasons."

David Spector: Yeah, we celebrate failure in entrepreneurship.

Christopher Reichert: That's great. So, after that, he joined Google and he played a role in the Google e-commerce area with something that's probably very familiar with us now, checkout and the shopping experience. This led into Sequoia Capital and a role as, I love this other title, chief nothing at Delray Partners and Angel Investing.

So, first question I have for both of you, Heidi, you got cut off on the Sloan podcast in 2019 with Greg Batcheler, where you were both were answering the question of “how do you balance home life and work life with your husband?” And so, David was giving an answer and he was struggling with it and you cut him off and said, “I'll answer ...,” and then silence. So what was your answer?

Heidi Zak:  Oh man. I mean, somehow we just make it happen I think. I've always said having kids and having a startup, there's a lot of similarities of the unknown, of not having done it before, sleepless nights, lots of stress when things don't go well—there's a lot of similarities between kids and babies and a startup. And when we started ThirdLove in 2012, one of my mentors, I called her and I was like, "I feel like I should try to get pregnant, I'm getting older, but I just started the company." And she was like, "Just do it. It's going to be crazy either way." And that was really good advice. And so, I don't know, we've just rolled with it and it's gotten easier over time, both the kids and the startup.

Christopher Reichert: Yeah, I got some advice years ago from someone who said, I was debating getting married or this big life decision, and then my friend said, and by then she had been married for many years and had kids and had gone through that, she said, "You're never happy enough. You're never settled enough. You're never rich enough to make the decision with certainty, so you just have to do it and go with the flow." And I think that's probably true for a lot of things.

So the other thing that resonated with me when I was listening to that podcast and also I read some of your articles in Inc. magazine is, do what you love and I think that's something that's true for both of you and in your case, you're doing it with someone you love. So how much did that play in founding ThirdLove?

Heidi Zak: Well, I think neither of us would have started the company without the other as a partner and the biggest thing for us was really thinking about who's the right person and who do I trust? And the benefit obviously of starting a company with what we would say is like a roommate, whether that's your best friend, your brother or sister, or your spouse or partner, is that you really know them. And so I think what's been very, very important, is the trust factor and then obviously the shoulder to cry on, which happens all the time as a founder and it's really hard if somebody doesn't really understand that stress. So when things are great, things are awesome and then when things are bad, they're extra bad for us and so that's how it's gone, but it's worked for us.

David Spector: Yeah. I mean, I think that there's a very, very high percentage of companies started in America by family members and so in our case, it wasn't some sort of long thought out process. And people ask for advice from us about whether or not they should start companies with their spouse and they'll come up to us at conferences or send us an email and plenty of other Sloanies have as well, "Should I start a company with my wife?" And the first answer is always, no, you absolutely shouldn't. If you are asking us that question, you shouldn't do it. If you have to really consciously think about it and you're reaching out to me to ask if it's a good idea and what the benefits and the downsides are, you shouldn't do it.

In our case, there wasn't really a thought process, we had an idea, we talked about it a lot and all of a sudden, we were at work on our dining room table building something, and then we got a company.

And then it was like, "Well, the next thing we should do is form a C-Corp." "Okay, how do we do that?" Now we're still at our dining room table, we still have our regular jobs, cranking, cranking, cranking, building something. And then we're like, "Well, I think now we got something, maybe we should quit our jobs." So there wasn't just this process of, oh, let's call a therapist up to sit down and evaluate whether or not this is a good idea.

Christopher Reichert: Right, that comes later.

David Spector:  Let's call Christopher or Bill at the [MIT] Entrepreneurship center and sit down and have this long dialogue, whether or not this is a good idea because frankly that's just a waste of time and you could be building a company during that time.

Christopher Reichert: Both of you were at what I would call plum positions and plum companies, that people are jumping over the parapet to get into, Google and Sequoia, and all the benefits that come with that, even the small things like food on tap and laundry on tap and all the things that we hear about, or at Sequoia, I'm not sure if they have that, but access to incredible people, ideas, cash, history, and all that. How do you take the confidence? What gave you the confidence to make the leap, to say, "We're going to leave that cocoon and go do something our own?"

Heidi Zak Yeah. I mean, I think for me, I'm more risk averse than Dave and so for me, it definitely took me a little longer to get there. But basically when we talked about it, where we netted was that Silicon Valley in 2012, 2013, a lot of jobs, good market, really good market and if it didn't work, we could always go back and find something. And we felt like it was the right moment, we didn't have children and we had enough savings that we could bootstrap the company for six months to a year. And those things were really, really important and would we regret not trying. Then we came to the conclusion, yes and that was really the impetus. And so I think it's really about, will I regret this if I don't do it?

That being said, the other part of the story is really when I called my parents to tell them I was quitting Google to start a bra company, they were like, "You're doing what? What in the world? How would you ..." the whole thing and so that didn't go so well. And interestingly, when I called a lot of friends who are in New York, on the East coast, who I think tend to be a little more risk averse, they were like, "Why would you leave Google?" And everyone out here in San Francisco was like, "That's awesome. How can I help?" And so obviously there's a variety of opinions when you tell people you're going to go try to do something a little bit crazy.

Christopher Reichert: So that's interesting. I mean, yeah, David go.

David Spector: What was going to say, I had a similar story as well, because I had a job that, very few people leave venture to go start a company. There are plenty of stories and it is a very, very strong career path to be a founder and then go be a VC, but very few do it in reverse. And so not only did I have people that were asking me why I was doing that, then I had also had people saying, "Wait, you're going to go start a what?" just like Heidi. And in many ways I think the people telling us it was a bad idea, almost really encouraged us to push harder. I think a smart investing strategy, certainly in startups, is to go against the herd.

If everybody is running in one direction, AI is super-hot or a certain sector or a certain company, in many cases, the ones that have been the most successful and you can look back, are the ones that a lot of folks pass on. The companies that a lot of people say, "This is crazy. It's never going to work." And in the case of raising money, you really just need one. And once you get one, then other people come in and then other people trust that person and they tell their friends and it grows and grows and grows to raise the first round. But we had a lot of people that told us it's a bad idea. In your case, about our career, I think what helped certainly is that we had some savings from those good jobs, that if we're honest about it, that enabled us to go and start something with no salary for a little while. But I think the other side of it too, is the fact that we live in an amazing country that has the best bankruptcy laws in the world.

This country encourages failure. The way bankruptcy works here, you can wipe everything off of your record and start over again fresh and rebuild. And there's really no other country in the world like that. We encourage failure in this country. A lot of people have savings, we had a little bit more to be able to build something a little bit larger in the early days, but still, every single entrepreneur that takes that leap, usually does so with almost no money at the beginning, and with this idea that failure is encouraged in this country and I will be okay. So we were very fortunate, more than anything else, to be a part of America.

Christopher Reichert: That's great. I agree. I think everything but student loans, in terms of getting out of student loans, although that might change, who knows? So, Heidi, when you left college, you went into investment banking for a year or two, but retail seems to have been a strong thread in your pr- ThirdLove resume area. Tell me about that interest and is that something that helped you decide, I want it to be not so much bricks and mortar but clicks version of it, but it's still a consumer-based product?

Heidi Zak: Yeah. When I did banking out of college, like a lot of people who are 21, I didn't really know what I wanted to do with my life, but banking seemed like a good option of getting a good skillset and retail just spoke to me. So that was the group I chose and I really liked it. And when I was at McKinsey and part of the reason I went to business school was I really wanted to get back into retail, but on the operational side. Working for a retail company, it was so hard to find a job and everyone was trying to put me into finance and strategy roles, and I really wanted to do more operations and so that really led me to MIT, to Sloan. And yeah, certainly when I was at Sloan, I was president of the Retail Club, I organized a lot of retail speakers, I did the retail track, I did all of those things and yeah, the job at Aeropostale interestingly came out of me cold calling and getting that summer internship, leading to a full-time job.

When I went to Aero, what was really interesting is that I was working on new projects, so launching and running their international business, but I sat within the broader e-commerce team because that was the growth team at the time, it was 2005, 2006, so a while ago, was really around actually launching and growing digital. So that was something I was really close to there, so certainly that did lead me down the path of thinking about online. And again, online has always been an afterthought to every retailer out there because they weren't built with digital and online at its core. And of course, over the past five years with the influx of D-to-C companies, that's totally changed, but 15 years ago that wasn't the case at all. So definitely saw a lot of opportunity and how a traditional retailer ran versus what I thought made a lot more sense if you are building something from the ground up.

Christopher Reichert: Yeah. It's interesting, I guess I'm trying to think back to that time, so what, 15 years ago, Amazon, everyone still looks skeptically at this Amazon thing, book, whatever kind of thing. No one really took it seriously, right?

Heidi Zak: And now he owns the world.

Christopher Reichert: Is there a temptation to sell on Amazon or do you, or how does that work if you were to put your product available there?

David Spector: We don't sell any wholesale. The only company in place to buy ThirdLove is at, is our own channels. And so we get reached out to once a month by somebody at Amazon in the merchant team, letting us know how great it would be if we sold there. It's not a focus of ours today, it's unlikely it would be in the future. We operate in a category that is just different. The shopping process is different, the customer service needs are different, the packaging is different. In fact, that at just a logistical way, that our product is very sensitive, if it gets crushed in packaging, let's say it was put into a box with some CDs or something else in it, it would actually crush the cups and then it would arrive dented. It also makes it difficult to store in a warehouse. So we have very specific protocols at our two warehouses, East coast and West coast, about how the product is stored, including the temperature.

So it makes it very difficult to be in a shared facility and in a shared box and then the customer service needs and the fitting needs make it very difficult. So it's probably quite unlikely we would sell it through any other wholesale channel.

Christopher Reichert: So now it's been seven, eight years since starting, how do you keep innovating? What keeps the creativity and change going? I noticed you've gone from bras to underwear, how do you keep ahead of the competition, in terms of comfort and your peculiar edge, specific advantage?

Heidi Zak: Yeah. I mean, when we started ThirdLove, D-to-C, direct to consumer, wasn't a term that was even created yet, so we were one of the first vertically integrated online brands to start. And so obviously the landscapes changed dramatically over the past seven to eight years, where you can just do everything, you name it-

Christopher Reichert: Yeah, I think of like Warby Parker and there's many examples.

Heidi Zak: So, yeah, I think for us, it's really like, we need to be the innovators. We're the ones who said the way Victoria's Secret markets to women is completely antiquated, and actually wrong, and we're going to do it differently and then we started doing it differently and now everyone does it the way we do it. So being the company that's driving change is actually really hard, so I have a ton of respect for tech companies that manage to keep ahead of the curve, we all know, that's the hardest thing to do. So in essence, you're asking, I think the hardest question, and I wish I had all the answers of how do we stay ahead and how do we continue to stay ahead of the pack?

I mean, product development, continuing innovation in our fit finder, which is the tool that we developed that allows a woman to find her size, pushing that forward, we're launching something new later this year, new product categories and just the best possible digital experience end-to-end. And there's still so much more we can do as a company and so just always thinking about what we're doing next.

David Spector: And Christopher, I think it ultimately comes down to the customer and to summarize what Heidi said, is how do we make the customer happier and improve the customer experience to give somebody an experience that's better than what they could ever get in a retail store?

Christopher Reichert: Mm-hmm [affirmative]. Yeah and I think that's been a huge leap in terms of the idea of when I think of Warby Parker, it's like, "What, you're buying glasses without actually trying them on." And so they innovated on the whole send you four or five glasses and all that sort of thing. So I'm curious about your corporate structure, C-Corp versus B-Corp, given the underlying mission component of what you say. What was the reason for C versus B?

David Spector: At the end of the day, B-Corps are ultimately C-Corps. So in terms of structure and how they are functionally arranged, legally they operate the exact same way. Anyone that's certainly venture backed is based in Delaware. So it's functioning all the same. B-Corp it is more of a mission statement than it is a legal structure. One that we're very supportive of, but frankly, we don't feel as though ... I mean we started the company as a C-Corp, I don't think B-Corps relates to that point. We can do all of those things, which we do that is stated by B-Corp and we don't have to be a B-Corp to do that and we do all those things.

It was very important to us with our suppliers, we have suppliers all over the world, is that they treat their employees very, very well. In our factories actually, what's unique is all of them have air conditioning. It's the right thing to do for the employees working there, but they also make better products and it's all good for the fabric. So the memory foam that we develop, that we utilize in most of our bras, that actually temperature control is very, very important for that product.

Christopher Reichert: And manufacturing, right?

David Spector: Yeah, so we do things like that and we're also the largest donor of bras in the United States. So, we've given over 20 million, 30 million now, of product to women's charities, to now we're extending actually outside of the United States to places in Africa. So, we're really focused on giving back. Underwear is something that is not accessible to many people in the world, and it's a very, very important thing to have. And so we have been at the forefront of doing that.

Christopher Reichert: Yeah, you could team up with Bombas, get the socks, the underwear, the bra, get the whole package.

So you guys met at Sloan, and someone told me that the class of '07 has one of the highest graduates who marry. Did you notice Cupid in the air when you were there?

Heidi Zak: I'm the one who told, that I at one point had counted, I think 16, 32 people married each other from our class, that I actually knew about, and there's only 360, so it's like 10% of the class married each other. And I think our year, it was only 25 or 30% women. So anyway, I've heard this about schools, undergrad and grad, that each year is different, there's a different dynamic, it's a different vibe. And yeah, our class was very close, I think, and probably pretty social, I guess, since everyone's somehow found each other, but I don't know, we've gone to a lot of Sloanie weddings, let's put it that way.

Christopher Reichert: So how did you choose Sloan when you were looking at business schools, what was the deciding factor?

Heidi Zak: So, for me, probably different than for Dave, for me, because you had mentioned I had gone to Duke, I was looking for a really different experience in terms of the type of school. And so, Duke was definitely more remote being in Durham, which I loved, but I definitely wanted something in a city. I wanted something that was a school that had a lot more diversity in its student makeup, than maybe my undergrad had, and I loved the entrepreneurship program and just the breadth of the curriculum just spoke to me. I don't know. It's one of those things that's just like dating, I think you go to the school and you visit it and you get a vibe from it and you just feel it and understand whether it feels right. So, I definitely knew when I went to visit after I had gotten in, that it was the right school and I don't know for you [David]…

David Spector: I think that the entrepreneurship focus really was a big part of it for me. I love the connection to the other side of the school, with science and math, and so I think that was very unique. It's got to be the best school in the country for entrepreneurship, I can't imagine a better one. And so that was really what, more than anything else, is what got me excited. And I knew I wanted to start companies and do something entrepreneurial and so being able to team up, and work with, and get inspiration from the folks in the other half of the school, is very unique.

Christopher Reichert: How did Sloan change you or did it enhance elements that were already there?

Heidi Zak: I think for both of us, I mean, of course there is the curriculum, like I said and it's demanding. I mean, I think the standards are high, so I was like, "Oh my God." I hadn't been in school in a while, I remember being like, "Wow, I need to buckle down and apply myself." But beyond that, I think it really is that environment of ownership by the student body. It's very interesting because when I was there, I didn't fully grasp that, but really there's the sense of you want something, build it. Is there a club that you don't see, is there a speaker that's not coming to campus, is there a partnership I want to do with a different area, like undergrads or a media lab or whatever? There are just all of these tentacles that aren't just true of business school programs.

I think it's really about creating something and that ownership that comes out loud and clear, I think the student body at Sloan is very involved across the board in many different things. And so, I think Dave founded the Sales Club at MIT and he could speak about that and it's still going strong, some of that programming is still going strong today. And certainly, like I said, I spearheaded different things, and I think building that ownership is in essence kind of like starting a company, where you have to build it and get people to participate potentially without paying them anything.

Christopher Reichert: So “we failed, myriad reasons.” Tell me about the decision-making process, just to say, "Sorry, this isn't working." Because I think that's one of the hardest things that people do is like, they start something and then you have this buy-in, personal buy-in, and maybe it's ego, maybe it's some costs, all of that element that you hang on for just a little bit longer, a little bit longer, a little bit longer. Tell us about the departure process.

David Spector: Yeah, it's a difficult one and in fact, what's more relevant, frankly, is ThirdLove, because there were some investors who were in our seed round when we struggled to get it off the ground. There was one in particular actually, that said to us, "You should probably pack it up" when things weren't going right and we were struggling to really get growth that we were looking for and that we expected of ourselves and our investors expected. This is in the early days. And so I think that there are a lot of, certainly every entrepreneurial book says, “don't listen to those people, don't listen to the naysayers, you believe in something, go for it.” And I tend to believe that that's mostly correct and in our case, I'm certainly glad we didn't listen to that investor. And that was the right call, to ignore him and just keep building because we knew we were onto something big.

And then you compare that to that earlier failure of mine, where it was clear to me and other people that it wasn't, I also had the intuition then, I knew in my heart that it wasn't the right business. And so I think that it's hard to tell that, when you're so passionate about something, it is very difficult to separate reality from your passion and you shouldn't just keep going on something and taking a third loan out on your house or getting another loan from your parents because this is going to be huge, and ...

Christopher Reichert: Any day now!

David Spector: It's going to happen! So that's the wrong advice. And I think that there are a lot of people online, entrepreneurship coaches and all this other stuff, that you see on social media and that's the wrong advice. You shouldn't do that, at some point, you do have to call it quits. And in our case, we knew this was the right idea, we had enough other people that believed in us, to keep going. And so we did not listen to that person and just kept putting our heads down and pushing through.

Christopher Reichert: Yeah. The way I think about it is that it's good to hear negative feedback occasionally because there might be some truth in there that's worth hearing. How much weight you give to it, really depends on that whole mix of other input that you're getting, whether it's positive market feedback or enthusiasm or a gut feeling. So I totally get that.

David Spector:  And all these folks that say, “go with your gut, don’t listen to the crowd,” they are right in some ways, but at some point on your ... some amount of money that you put into this, there is a point where you just have to call it quits and move on the next thing, or go back to a regular job to make some money and build up some cash so you can start something again. So I think you've got to balance that, you've got to balance reality with your passion.

Christopher Reichert: So, do you have anything you'd want to do over at Sloan?

David Spector: No. I mean, certainly I speak ... I don't know if Heidi agrees me, but it was such a great experience, it was transformative for me and for her. A great outcome from it is we met each other and we have two beautiful kids and so that's a wonderful thing. But in terms of the education and the people and the experience, it was special and I have no regrets.

Christopher Reichert: What about you Heidi?

Heidi Zak: I don't really have anything to add to that.

Christopher Reichert: So, what's your definition of success, as ThirdLove goes into almost a decade now?

Heidi Zak: I think our metrics of success that changed a bit over the years, but at the end of the day, we always ask ourselves, are we making a difference in the world and are we having fun? Most of the time, it's not always fun, for sure. And so I think that's really what drives us. We're really proud at ThirdLove that we have helped change a really old school industry into something very, very different than it was five years ago. And the impact on women and young women, hopefully, will be long lasting, based on what we've developed. So that sets the core of why we started this company.

And then the second is, are we having fun and it's changed along the way. I mean, I personally really enjoy the stage we're at now, which is more of a mid-stage startup, bigger and learning how we scale and so it's been a constant evolution. And so that success is like having fun and making an impact and you're trying not to take everything so seriously as well.

David Spector: That's been a learning process though. Yeah, we can give that advice, but it's not like we just came up with that yesterday. So it's been an evolution for us, building this company, to not take everything so seriously, to have fun and to ensure that you are having an impact and working with great people.

Christopher Reichert: So, I know you guys, you're giving back to the school in various ways. One is with the [MIT] delta V accelerator program. And I guess, I would imagine you probably have some lessons you could impart to people who are earlier in their entrepreneurial endeavors?

Heidi Zak: We’ve definitely spoken to some earlier stage founders and you try to help them understand the mistakes we made and things that we wish we would have done differently, but again, everything's a moment in time, so just because it didn't work for us eight years ago, doesn't necessarily mean it won’t work today, it's the pace of change. It's certainly, there's always some core things that tend to repeat themselves in this startup journey and for those things we're happy to share.

Christopher Reichert: So, any parting advice for prospective Sloanies?

Heidi Zak: As you're thinking about business school, I think it's really about, just like you would think about when you are thinking about what company to join or what major to focus on or functional area, I think it's really about what are you trying to get out of it, not what you wrote on your application, in essence, and before, as you would tell your mom or your best friend, like, what are the three things I'm hoping to get out of school? And really just peeling that back and not doing things for other people or because somebody told you it was a great school or whatever, it's really like, does it feel right to you? Is it the right fit for you? I think that's the most important thing.

Christopher Reichert: How about you, David?

David Spector: It's really important that if you're going to spend two years of your life, which is a long time and put yourself in debt or a family member, it's important that you believe that the outcome of what you're going to get from that two years, is going to further your career and more than anything else, further your maturity.

For me, certainly it did both, maturity and my career and enabled me to see things in a much more macro sense, then I would have previously, understand the world better and get exposure to phenomenal people. That exposure to other people too is ... I think business schools get a bad rap, the parties and the traveling, all that stuff is fun and that is a part of the experience and it's great, but I think that it's through those experiences and getting exposure to those other people and their professional experiences, that enable you as an individual to grow and to further your career, that is a core part of the MBA experience and was for me.

And so if believe you're going to get that in an MBA program, if you believe you're having the right MBA program, you should do it. I don't think you should just go ... I think it's a terrible idea for people to go to an MBA program just because you want an MBA. Because frankly, as anybody will tell you and certainly a lot has been written about it, you can get a "better MBA" by just working, by having a great mentor, by taking online classes, if you want to learn about finance, for example, or accounting. Anybody can buy Harvard Business School case studies or Sloan case studies and read those and then watch a video with a class debating it.

And as a side note, there is a phenomenal ThirdLove Harvard Business School case study, which Heidi and I go back and teach every year now, which is pretty neat and I think Sloan is using it too. So you're welcome to read our case study and learn about all the mistakes that we made in the early years, but you don't need an MBA for that. So ensure that what you're going to get out of it, given the time and the money, is exactly what you expected it to be. So that's our advice.

Christopher Reichert: Yeah. And I think that authenticity, if you come to it authentically, will resonate with the admissions team at Sloan or really, any business school, they can see that this is really what matters, it's not just an addition to your resume.

So, I want to thank Heidi Zak and David Spector, 2007 MBA graduates of MIT Sloan School of Management, for joining us today to talk about ThirdLove, the journey before, during and after. So thanks very much.

Heidi Zak: We had a great time!

David Spector: Thanks Chris, it was great.

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