Kevin Murray & Kelli Murray Larson
Designing Success: The Intentional Growth of Rylee + Cru
Hosted by Emily Holdman, Permanent Equity
Video Transcript
Building a Brand Without Losing Your Soul: The Rylee + Cru Story
Featuring: Emily Holdman (Permanent Equity), Kevin Murray & Kelli Murray Larson (Rylee + Cru)
EMILY HOLDMAN: Good morning. I have gotten to know these two lovely individuals over the last three years, and they are just special entrepreneurs and an entrepreneurial family. We thought it would be interesting to walk through a little bit of their story, because the way I would describe it is they've managed to scale an organization without losing the soul of what it meant to be a family business. You can see that in the quality of what they produce and how they operate.
Kevin and Kelli, let's start with how did Rylee + Cru come to be?
KEVIN MURRAY: Sure, I'll start. So, father-daughter. For 35 years, I ran a graphics, apparel, design, manufacturing, sales, and distribution company. That was all while Kelli was growing up. I was blessed to have three daughters. Kelli's the middle daughter. She got all the creative genes. So I watched her creativity blossom as she grew up. She went to fashion and design school, and right out of college, she came right to work at our company.
For six plus years, I got to work side by side with Kelli to see firsthand how talented she was, how uniquely gifted she was in fashion, merchandising, color stories, but even more than that, freehand original art and illustrations. She has a very distinct personal styl,e and I got to see that firsthand. Maybe you can carry on the story from there.
KELLI MURRAY LARSON: Yeah. My passions have always been art and fashion, really. So going to school, getting that learning experience, and then working with him—we worked together for six years and realized we just made like a pretty great team. I got married, had a baby girl, and kind of entered the world of baby clothing, all the baby stuff. You don't know about that at all until you become a mother.
EMILY: And everything was pink and blue.
KELLI: Everything was. Yeah. I just couldn't find what I thought should be available to everyone to buy, which was, you know, a simpler color palette, more earthy, organic colors, and then paired with my art style. I just felt that there might be an opportunity there.
That seed was planted when I had my daughter. I was still working with him. And then I also built a decent following on social media. I started a blog where I would share my art, fashion, and all that. So I did grow kind of a customer base prior to starting the brand in the sense that I built people who were interested in what I was doing.
Really, when we decided, my dad was the first person I came to and was like, "Hey, I have this idea. Should we do this together?" And he was obviously very supportive.
KELLI: Yeah, we—
EMILY: That's not obvious. Not every family would say "together."
KELLI: To me, yeah, we've just—we do have a unique relationship. So, having had that experience for six years prior, knowing that he would be wonderful to work with.
KEVIN: The genesis of the idea was around Thanksgiving of 2013, and of course, I was all i,n and I wanted to support her in every way possible. We both together said let's do this. So it took us a year to produce our first batch of apparel that we created all based on her artwork. We produced 2,400 units in some LA factories. We launched our own Shopify store and really only marketed it to her blog following. Those 2,400 units sold out in about 2 weeks, and we thought that was pretty cool. Let's try it a second time.
KELLI: That worked.
KEVIN: So the second time we produced 3,600 units. Same idea, same concept. It was about six months to get that done. And the same thing happened. It sold out in just a few weeks. And we're like, "Holy cow, that was interesting."
But the really, the most interesting thing that happened in that six-month period of time is this was the dawn of Instagram, too. I mean, this is 2014. This is just when it all started happening. We were DM'd on Instagram by well over 200 retailers asking, "How can I work with you?" I've been going to apparel trade shows and going to Vegas for 25 years, schlepping brands and selling, and that just doesn't happen. I mean, you're out there fighting for the business, and here was an example of like, oh my gosh, 200 plus retailers are coming to us. "How do I work with you?"
So we knew we had something for sure. And that's when I started taking it really seriously. For three years, I transitioned out of my previous company and started spending all of our time on Rylee + Cru because we just saw what was happening. It was pretty amazing.
EMILY: So I think one of the things that's interesting is some of the choices you all made in how to scale the business. You put the first batches online, they immediately sell out, but you actually didn't build the business online from there. So maybe talk a little bit about that retail demand and how you thought about distribution.
KEVIN: Yeah, like I said, historically I've been in the wholesale business and apparel, so I felt like I kind of knew how to do that. We started opening up showrooms. We hired some sales reps. We started being in key markets. We started going to the appropriate trade shows. And the industry just accepted us with open arms. I mean, Kelli initiated kind of the whole gender-neutral color palette. Her art style is so light and delicate and innocent and fun and whimsical, and there was nothing like it in the marketplace.
KELLI: And timing was on our sid,e too, at that time. I mean, it was the genesis of the baby clothing explosion in the US. I feel like it was happening a little bit in Europe and other places, but here it was just really hard to find. So timing was on our side for sure.
KEVIN: So we literally opened up about 300 accounts in the first 18 months, wholesale accounts. What was interesting at that time, to,o was when we were selling to wholesale partners, they didn't want you to have your own branded online store, but we started as a branded online store. And so we kind of had that to our advantage. When a wholesaler would say, "Hey, you're selling online," it's like, "Well, we sold online first, you know, and now we're coming to you."
So we had the luxury of building our company in parallel. Our wholesale business grew, and our e-commerce business grew because we launched wholesale so rapidly and so quickly. It was a 65-35 split wholesale to our online sales, but as the years have progressed, we're now at 50-50, which is, you know, from the economic standpoint, a very healthy place for us to be.
EMILY: Yeah, absolutely. One of the things that for Permanent Equity was really compelling about that is you think about online stores and customer acquisition costs. For a lot of your customers, they found you first in a retailer and then grew to love the brand, got to feel the quality of the fabric first, and then became a lifetime customer. For sitting in our seat, apparel can have a bad name because it feels like you're going to have to pay for every cart that comes online. What you all built were very strong industry relationships and a product that, if you see it, sells itself.
So maybe also talk about some of the decisions you made on what not to do or what not to sacrifice. You had some really interesting opportunities to scale very quickly, and some of those you said no to.
KEVIN: Yeah, we had an opportunity to go into a bunch of Target stores and have a big Target distribution. We experimented with it. We developed Q by Quincy Mae exclusively at Target. This is pre-COVID. We shipped it for two season,s and we told them from the very beginning you can only sell this online. We don't ever want to be in store. And they agreed, but then after a few seasons, it sold very well. They came to us and said, "Okay, now you need to be in a thousand stores. Now we're going to branch into bedding and accessories and do all this stuff." And we just kind of said time out.
Like that's not really our plan. That's not what we want to do. It was, you know, a multi-million dollar opportunity, but that wasn't really important to us. And that was our Quincy Mae brand. Rylee + Cru is the mothership. Rylee + Cru is where it all started. But we also have Quincy Ma,e and we also have Nora Lee. And Quincy Mae was just beginning its journey of developing its customer. Kelli and our whole team, we follow all the mommy blogs. We follow all the chat rooms and stuff, and people actually started saying, "Well, don't buy Quincy Mae. Wait until the Target Q by Quincy Mae comes out." And it's like, "Oh my gosh, that's the last thing we wanted to do." So we walked away from a Target business because we just didn't feel like it was the right thing for us.
KELLI: And I think early on, there were other opportunities with majors that we decided to decline for the reason we talked about before. We want authenticity, and the way that we grew was so organic and healthy with all of our brick and mortars and small boutiques. There are a ton of moms—mostly mothers who own all these stores—, and we just built such incredible relationships with them. That was just important to us to keep that foundation and honor them in our journey. It's been 12 years now.
KEVIN: Yeah, it's so important. I mean, we view those 600 retailers as kind of our partners, and it's the truth when we say that we're probably the most important brands they have in their store. So we're important to them, they're important to us, and like Kelli said, we just wanted to honor those relationships for sure.
EMILY: And how did you then think—if we fast forward a little bit—you made decisions that allowed for you to maintain control, but maybe affected scaling. But I think maybe talking about your growth rate would be helpful because it didn't keep you from continuing to build the business, walking away from those types of opportunities.
KEVIN: Well, being in the apparel business, it's a pre-book model. Kelli's designing—you're finished with Spring/Summer 2027 now. I mean, we're way ahead on the design cycle, and we're way ahead on the sales cycle. We go ou,t and we pre-book our collectio,ns and then go to factory orders, and then go to our shipping season. But we never replenish. We never restock. We never order more of the same thing.
So what we order is what we're able to sell for that season. The inventory is finite. It really forced us to have a very controlled growth model. For the wholesale side of the business, we've grown 15 to 20% consistently every season for almost 10 years now. And on the e-commerce side of the business, we've grown 20% consistently every season for almost the past 10 years.
And that growth has been in some ways controlled because it's based on what we pre-order. It's based on our inventory number. So our growth has been very controlled that way. And what's beautiful about it, too, is that we sell out a lot of our styles. So it's created this scarcity kind of model, too, where a lot of our wholesale increased business has been stores that were ordering $20,000 a season are now ordering $40,000 a season because they want to make sure they don't run out.
We've tried to push the envelope on our e-commerce forecasted buys, but even in e-commerce, we sell out. And again, there's a scarcity model to that. When we do our drops, and it drops at 9:00 a.m. on a Thursday, I mean, it's a feeding frenzy online to make sure that people are getting what they want.
EMILY: It's fun. I watch it on Shopify, hour by hour.
KEVIN: That's great.
EMILY: So if we fast forward further, you guys were reliably scaling on your own, and we started talking in I think 2022 into 2023. Can you talk about why you all decided to take on a partner? I think about it as like seasons of scaling. You guys were successfully scaling on your own. What were you thinking about when you started to look at investors?
KEVIN: Yeah. So, probably five years ago, I started fielding phone calls from folks, you know, are you interested in a partner? You interested in selling? You interested in private equity? And I'm the kind of guy that's ultimately curious all the time. And so I'd always take those calls. I'd always take the time to do that. And nothing ever made sense with anybody that I talked to. And it's probably 10 or 15 people that I talked to over a couple year period.
But then I finally had a conversation with a brokerage out of Santa Monica, California. And for the first time, it kind of made sense what they were talking about. And we decided to take a chance. And some of it was—I mea,n I'm in the fourth quarter of my career. She's only at halftime, probably. So there was going to be an exit strategy there somehow, someway, with me exiting sooner. So we felt like maybe this would be an opportunity to kind of solve that problem.
And the whole journey of going out to private equity and exploring that was so fun. I loved that whole journey. A lot of people say it's really hard and it's taxing. I had the opposite experience.
If I could tell a quick story: the brokerage company that we worked with out of Santa Monica, the reason why we chose them is because they have a vast network. They had over 500 entities that they can send prospective businesses to. You know, that's VC, that's private equity, that's banks, that's institutional investors, angel investors—over 500. We broke a record with that company, where they sent our teaser out to over 500, and 114 responded that they wanted to sign the NDA. They wanted to learn more. They wanted the full deck. We created a 96-page deck—
EMILY: Long. Thorough.
KEVIN: —that explained everything about our business and where we were going. And so the broker had a lot of work to do. They had to field 114. Their job narrowed it down to the top 10. I didn't—we didn't talk to any of them. Once it got to the top 10, then we started having Zoom calls, narrowed that down to the top five, and then those five came to visit us in person.
And Emily and her team were just shining superstars above everybody else that we spoke to. It was really a no-brainer. I mean, the way that they focus on family-owned, founder businesses, just the way they approached us, their long-term—nobody was interested in a 5-year flip. It was all long-term institutional-type investing. And we would stay, obviously, in control of the company. And our partnership has just been—
KELLI: Oh, the best.
EMILY: I appreciate it.
EMILY: What are you all most excited about now that we're in this season of scaling?
KELLI: I mean, when I think about our journey and where we are now, I think what's so cool to me is just the relationships that we have and the team that we've built. I think I constantly look back and think—I mea,n we employ now 75 peop,le and it's like our family. Sometimes you spend more time with those people than you do with your family. I'm sure a lot of you guys in here can relate to that. But those relationships mean a ton, and the fact that we are able to just employ all those people and have those deep connections and relationships.
I mean, in terms of the business, there's a lot to look forward to. I feel like there's so much ahead. We opened our first brick and mortar store last year in November in Carlsbad, San Diego, and then another one in Manhattan, New York. I think we'd love to open a few more. We want to open more wholesale accounts in coastal stores because we're upping all of our swim categories. So I feel like there's a lot of exciting ways that we can grow in the next coming years. And obviously, direct-to-consumer is a huge push for us to try and get more. See what we can do there.
KEVIN: Yeah, I mean, we don't even—we don't think we've hit our ceiling. We're a $50 million company now, but we think we could double that in the next couple years. And just the level of brand awareness and the people that are contacting us, the collaborations that we have planned—we already have major collaborations planned for 2026 and 2027 with retailers and even celebrities that you guys would all recognize.
Like we've gotten to this point, and it almost surprises us all the time. I mean, every time I've done a forecast and a projection, we've shattered it. And it's like I don't even want to forecast anymore. [laughter]
EMILY: I do. I want to see that.
KELLI: She does for sure. But to look backwards and see how it was just so organic every step of the way. It wasn't us forcing it. There was no forcing in our journey, which has felt just incredibly—
KELLI: Really special.
KELLI: Yeah. And lucky, you know.
EMILY: Fantastic. Thank you both.
