'We've Branded an Unbranded Industry': FIGS Co-CEOs Trina Spear and Heather Hasson on Their Epic IPO

Sarah Favot

Favot is an award-winning journalist and adjunct instructor at USC's Annenberg School for Communication and Journalism. She previously was an investigative and data reporter at national education news site The 74 and local news site LA School Report. She's also worked at the Los Angeles Daily News. She was a Livingston Award finalist in 2011 and holds a Master's degree in journalism from Boston University and BA from the University of Windsor in Ontario, Canada.

Fashionable and comfortable medical scrub maker FIGS made history on multiple fronts when it made its Wall Street debut last month.

The Santa Monica company was likely the first led by two female CEOs and co-founders to go public; it was the first healthcare apparel company to go public, and it was the first company to make its IPO available on Robinhood.


And its performance beat expectations. Shares of FIGS jumped 36% to close at $30.02 after they priced at $22 each. They have since risen to $43.37 as of Thursday.

Co-CEOs and co-founders Trina Spear and Heather Hasson sat down with dot.LA to talk about how they went from selling their scrub sets out of their car in front of hospitals during shift changes to going public last month.

They discussed how the direct-to-consumer apparel company for health professionals surprised investors and how they wanted to make the IPO accessible to healthcare workers.

Courtesy of FIGS

Heather, you got the idea for FIGS after you had coffee with a friend who was a nurse practitioner and were horrified when you realized she was working 16-hour days wearing uncomfortable, unflattering scrubs. Scrubs seem like a big jump from the upscale handbag company you were running at the time. Why was it about that moment that made you think this could become a successful business?

Heather Hasson: Any entrepreneur doesn't think, 'Oh my God, this is gonna be a successful company,' you know. I think my lens was, what problems can I solve and how do I make this world better and how do I make this world a place where I want to live in.

Healthcare professionals are the most incredible people in the world and they don't have gear, they don't have clothing that can help them perform better. And also, direct-to-consumer, they should be able to order at 2, 3 o'clock in the morning when they need to. They need their uniform to go to work.

In the beginning, Trina and I, we were selling out of my car in front of hospitals during the shift change. At that moment, you realize people want FIGS, they want your stuff.

I really do, I wake up every single day thinking about healthcare professionals and how do we support them, how do we empower them, how do we celebrate them.

Where does the name FIGS come from?

HH: It's a very simple answer. It's my favorite fruit.

How big is your team? Why did you choose L.A. as your HQ?

Trina Spear: We have about 250 people. And why did we choose L.A.? Heather is from here, born and raised.

What was that moment like for you as the first female CEOs and first female co-founders company to go public?

TS: We really felt like the IPO, this milestone, wasn't so much about us. It was really about the community. Coming out of this pandemic and having this be almost a symbol of everything that our healthcare professionals went through. We had 12 healthcare professionals on the podium with us to ring the bell. We had 60 of our healthcare professionals at our IPO. This was a really amazing moment for this community that's been through so much and now it's kind of coming out of it and we really feel like we're the brand to support them and show up for them every single day.

You partnered with Robinhood which allowed retail investors to buy stock before the debut on the open market. Why?

TS: I think for us, back to our broader mission of supporting healthcare professionals, we really did want to give them an opportunity to invest pre-IPO and Robinhood enabled us to do that. Normally, being able to invest pre-IPO is very much a Wall Street insider-type of thing. By partnering with Robinhood, we were able to give access to FIGS stock, having equity in this company, to our most important people, the people we serve -- our healthcare professionals, so that's why we did it.

What will you be doing with their windfall? Could we expect to see them acquire other companies? Will you be growing your footprint in L.A. or elsewhere?

TS: The real investment that we're looking to make is in product. And the second area is in our community, our community is the brand, the brand is our community and so how do we continue to give to this community that's so deserving of something better. And then data and technology is a huge area for us. We have a really robust set of data and technology capability. And what that enables us to do is, at the heart of it, understand our customers better. The more data we have, the more we understand, the more we can serve and support. How do we deepen our connection with this community? Data and scalable data enables us to do that.

Some investors have eschewed direct-to-consumer brands in recent years, I'm thinking of the mattress startup Casper's "lackluster" IPO performance. FIGS on the other hand, stock surged 36% in its debut. Why should people invest in your company?

TS: There's a big difference between us and really every other company and the big difference is that we've been able to balance both growth and sustainable profitability. If you look at even last year, we grew 140% year-over-year and $263 million in net revenue. No one thought that was possible. Every investor we met, no one thought a direct-to-consumer company that has 98% of their sales online direct-to-consumer could grow 140% to $263 million, we did $318 million in revenue in the last 12 months as of the first quarter. Nobody thought that was possible.

Why have you been able to do this?

TS: All these companies are so focused on digital marketing and they put all the money into Facebook and all the money into Google and they hope to make a return on that investment. And as they scale, their customer acquisition cost goes up.

What we've proven is that as we scale, we've been able to decrease our customer acquisition cost by 61% over the last two years because we never were reliant on Facebook and Google digital marketing. We actually built the brand the right way. The way in which a Nike or a Lululemon or Adidas built their brand, with actual people loving the product and loving the brand, not based on how I figured out the algorithm on Facebook. This is a huge, huge shift from how people thought that digitally native direct-to-consumer companies should grow. Everyone thought 'how do you crack the code on Facebook's algorithm'. No, actually you build a community around a profession, you build relationships with real people, you build a brand people love, you build a product people come back over and over and over again to buy. That's the hard way to build a company and that's what we've done.

Courtesy of FIGS

It seems like this is a really niche market, do you have any plans to appeal to a wider customer base? Expand globally and into other uniform-wearing sectors?

TS: We actually don't view it as a niche market. I think many people do because they don't understand how many healthcare professionals there are, but this is a $12 billion industry in the United States. It's $79 billion globally and healthcare jobs are the fastest growing job segment in the country. We have a 2% market share in the U.S.

We think about our company as a lifestyle brand for the healthcare professional, so it's not just a top and a pant, it's also our under scrubs, our fleeces, our vests. We're outfitting healthcare professionals to work — at work, from work, head to toe, on shift and off shift. So it's all of these other things that we're doing and creating for our healthcare community and so we feel like we have a lot of runway, even just within the category that we're in.

At some point, we do feel like the uniform industry overall is broken and if there's any company that's going to disrupt that like we disrupted this industry bringing comfort and design and technical fabrication and functionality to the uniform industry overall, it would be FIGS, but you know, that is not in the near future.

Why should a medical professional buy FIGS? The price point is higher than other more traditional scrubs. On Amazon you can find a scrub top and scrub pants for $20 each, while your scrubs start at $38 for a top and $40 for pants. For lower-wage medical professionals like nursing assistants or medical students, this price point may be out of reach. Also, some might say that since you're going to be working in them every day and all the possible stains that may get on your scrubs, it's not worth it to buy high-end scrubs.

TS: If you look at our customer base, our customers make less than the average healthcare professional; 12% of our customers are students. Two-thirds of our customers make less than $100,000 a year and one-third, make less than $50,000 a year, within that two-thirds. So as much as we are a premium product, we are only about 15%-ish higher than the average scrub set. It's really important to us to serve all healthcare professionals and so really having an affordable, accessible product is one of core tenants here at FIGS that's really, really important.

You mentioned in your prospectus that it's a highly competitive market. How do you differentiate yourselves?

TS: The way in which the industry worked, is you had all these companies that were essentially licenses of other companies that sold to the retailer, and then the retailer sold to the end customer. But 85% of healthcare professionals buy their own uniforms.

We've branded an unbranded industry. And so what these companies really struggled with is that they didn't have that direct relationship [with the consumer]. They don't even know the names of their customer. The retailer is selling to the customer. That fundamental industry was broken, that structure was broken, that needed to be fixed and so that's what we've done.

We de-commoditized the commodity products, we went direct to consumer and then we built this community around this profession.

In 2020, FIGS had operating income of $57.9 million after a net operating loss of $300,000 in 2019. The 2020 active customer tally was 1.3 million, up from 600,000 in 2019. What was it about 2020 that made for such growth and profitability?

TS: This was happening prior to 2020. Essentially, we were profitable as of some point in 2019. But this is a trajectory that was long before COVID. We've grown the company every year by 100% year-over-year, so in terms of that following through to the bottom line, that was the trajectory we were on. It wasn't a COVID dynamic, if you will.

What do you keep in mind when you're designing products? Is it all about fashionability?

HH: it has to be really comfortable because you're in your scrubs for 16 hours sometimes 32 hours, so that is literally the design lens -- technical comfort. And we do not do anything that's not technical and super comfortable at the same time.

They're commuting to work, so they need a fleece, even a jacket over that and when they go to work, we're the first company to make jackets for the inside. We specifically make jackets for between 62 and 65 degrees. It's about the entire layering system. It's about what the healthcare professional wears 365, on the night shift, to and from work and when they wake up in the morning. That's never really been thought about and it should be because that's what healthcare professionals need.

Correction: An earlier this version of the story incorrectly referred to customer acquisition cost as cap. It was also updated to clarify the timeline in which FIGS raised $318M in revenue.

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Meet the New SoCal Accelerator for Biotech Startups

Keerthi Vedantam

Keerthi Vedantam is a bioscience reporter at dot.LA. She cut her teeth covering everything from cloud computing to 5G in San Francisco and Seattle. Before she covered tech, Keerthi reported on tribal lands and congressional policy in Washington, D.C. Connect with her on Twitter, Clubhouse (@keerthivedantam) or Signal at 408-470-0776.

MedTech Innovator, created by Paul Grand, former CEO of a slew of biotech startups, has long been hailed as a successful accelerator that helped bring 74 medical products to market, from implants to prosthetics.

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Column: Five Reasons Why Space Matters (Hint: It's Not Tourism)

Krisztina 'Z' Holly
Krisztina "Z" Holly is a venture partner with Good Growth Capital and an advisor to leaders harnessing untapped innovation and novel business models for scale. Z is an MIT-trained engineer and serial tech entrepreneur who has been scouting, advising and investing in early-stage deep tech innovators for more than two decades.

Last night, Rocket Lab made a big comeback from its failed launch last May. The Long Beach startup's Electron rocket launched a satellite for the U.S. Space Force, bringing their total to 105.

This capped a busy month for space, with Richard Branson and Jeff Bezos making their space dreams come true in the weeks prior. But with all the attention on the billionaire's exploits, are we missing the bigger picture?

The lack of coverage for Rocket Lab's rebound is just as telling as the fanfare around Virgin Galactic and Blue Origin's flights. Space tourism is distracting us from why we should actually care about space.

The Biggest Space News of the Year

While the public has debated the merits of this month's sub-orbital joyrides, the media missed the biggest aerospace event of the year a month ago, when Hawthorne-based SpaceX launched their Transporter‐2 mission on June 30.

What was so revolutionary about last month's launch? Nothing. And that's partly the point. Launches are becoming routine thanks to reusable launch vehicles.

But the Transporter‐2 mission was significant, because the rideshare mission launched 88 different satellites for customers into orbit, enabling innovation for scores of organizations.

The launch was the first for Santa Barbara startup Umbra, which has developed technology capable of seeing at night and through dense clouds; it has since been added to a joint $950M Air Force contract. The payload also included a competing satellite from Iceye, manufactured in Irvine, and two cubesats from San Diego-based General Atomics to test optical communications between satellites and from satellites to drones.

As a preeminent hub for aerospace, Southern California stands to gain greatly as launches become more frequent and the industry re-emerges from its post-'80s slumber. But other hubs are rapidly catching up.

As a venture capitalist and advisor to space—and other—startups, I've seen the sector evolve into something barely recognizable from the time I started my career as an engineer on the Space Shuttle Main Engine decades ago. Here are five reasons we should care.

1. Space Improves Our Quality of Life

If you looked at your phone this morning to get the weather forecast or check the route to your first meeting, you can thank satellites for the help.

"The blue dot on your phone is possible due to billions of dollars of space infrastructure," says Van Espahbodi, managing partner and co‐founder of Starburst, a company that catalyzes connections in the aerospace industry. "Sure it results in food delivery, dating apps and so many innovations in daily life, but none of this would be possible without the boundaries of exploration into space."

A SpaceX Starlink satellite

Space isn't just delivering convenience, it's democratizing access to data and technology, too.

"There are four billion people unconnected in this world," says Akash Systems CEO and founder Felix Ejeckam, who aims to expand global access to broadband. "Unless you're still going to run expensive fiber optic cables all over the Earth, you have no choice but to drop internet beams from space."

Programs like OneWeb and SpaceX's Starlink are bringing broadband connectivity to every corner of the globe, and Akash has developed advanced materials that will help reduce the cost and increase speeds of such Internet satellites, aiming to make these services more accessible and ubiquitous.

On the flip side—those times we claim we're "off the grid" from work for a week? Those days might be numbered.

2. Space Lets Us Understand Our World and Adapt to Climate Change

With all this talk of Mars missions as our "Plan B," you might ask, "Why not invest in the planet we have?" The aerospace industry is doing that, too.

Satellites are critical for sensing our world—tracking changes in infrastructure, weather and the environment over time. Satellites can measure the height of entire oceans within an accuracy of about an inch, and NASA's first TROPICS cubesat, launched on Transporter-2, will use microwaves to predict hurricanes.

"Our space endeavors have been instrumental to understanding the extent of climate change on Earth using satellite data from NASA and NOAA," says Jessica Rousset, Deputy director of the Arizona State University Interplanetary Initiative.

Government efforts are complemented by an ever‐expanding collection of private constellations with new capabilities. With these expanding capabilities we can sense new things—and sense them more often. Inexpensive infrared and hyperspectral imaging of crops can help farmers make better decisions and make agriculture more productive and resource‐ efficient. Soon, we'll even be able to see underground, thanks to companies like Lunasonde.

Granted, the carbon emissions from rocket launches can have their own negative impact on the environment. Fortunately, some launch services—including Blue Origin—are shifting to less‐ polluting fuels like hydrogen.

3. Space Enables Things We Could Never Do Before

The unique environment of space unlocks new opportunities in science and industry that would be worthy of science fiction movies.

Companies like Varda plan to set up self‐assembling, automated factories on orbit to manufacture things. Production of semiconductors, protein crystals, polymers, new drugs or optical fibers might benefit from the zero‐gravity, near‐vacuum conditions of space.

Some have proposed setting up 24/7 solar farms in space and beaming the energy down to Earth using lasers or microwaves.

And 21st‐century prospectors have set their sights skyward, with dreams of mining asteroids for precious materials. Last year, Japan hosted the first successful asteroid sample recovery mission, landing their loot in the Australian outback.

Not everyone believes space production will be practical anytime soon, but research in space has already led to discoveries in material science, plasma physics and biology.

The publicly‐funded International Space Station has been a productive early laboratory. Now, space infrastructure developer Axiom Space is working towards a 2024 launch of their initial components for the next generation commercial space station, partially funded by a $140M NASA grant.

4. Space Has Created a Burgeoning New Industry

Space has another very practical benefit; it has created an entirely new sector of the economy. Early governmental funding and discoveries has set the stage for an entirely new ecosystem of startups, suppliers and service companies sustained by private dollars. Morgan Stanley estimates that the global space industry—$350B as of 2016—will expand to over $1 trillion by 2040.

These companies are driving innovation, fueling economic growth, and creating new jobs in an industry where the United States still maintains a manufacturing edge.

Satellites in space means the need for infrastructure, being built now. Orbit Fab, the "Gas Stations in Space" company, launched the world's first satellite fuel tanker on Transporter‐2. They are building a materials supply chain to support a space economy that CEO Daniel Faber predicts will ultimately lead to permanent jobs in orbit. (Full disclosure: I'm an investor.)

"Fuel is now available for purchase and delivery in space," says Faber, "And we don't have to keep throwing away perfectly good satellites when they run out of fuel."

In the past NASA has justified their funding by pointing at thousands of technologies spun out of the space program—memory foam, cochlear implants, freeze dried food, CMOS image sensors and powdered lubricants — to name a few.

"But today, it's almost like the reverse is happening," says Jonathan Fentzke, the newest managing director of the Techstars Space accelerator. Space is driving demand for technology. "Unique challenges on orbit, like petabytes of image data streamed daily or the lack of heat dissipation in a vacuum, means the industry is always looking for new technologies and suppliers to solve their challenges." The June 30 launch of three SAR satellites alone will add 30-40 terabytes of data per day to the cloud.

Which is why his 2021 cohort includes startups like Pixspan, an image compression company with roots in Hollywood, and Thermexit, whose carbon nanomaterials were originally designed for supercomputers. These companies are finding a new thirst for their technologies thanks to the space industry.

5. Space Inspires Discovery

And finally, space still holds a special place by being the final frontier. While there aren't many places left on Earth that haven't appeared in a selfie, endless discoveries await us beyond our atmosphere.

The James Webb Space Telescope

Southern California has a long history of space adventures, including Chuck Yeager's historic sound barrier-busting flight in 1947. From NASA-JPL's Curiosity and Perseverance rovers to SpaceX's dreams of colonizing Mars, we continue to be the epicenter of big-idea space exploration

And our discoveries aren't just for adventure, either. By exploring beyond our planet, we can prepare for interplanetary human settlement, learn about the origins of life or better understand the beginning of the universe.

In El Segundo, Northrop Grumman is assembling the much awaited James Webb Space Telescope, soon headed a million miles away to "L2," a cold, stable perch past the moon. From there it will peer deep into space, providing views of faraway exoplanets and glimpses of light from 13.6 billion years ago, when the earliest stars and galaxies were just forming in the universe.

Our Future in Space is Inevitable

Things have changed for the better in aerospace over the last decade.

Back when I was a young engineer working at Rocketdyne, my work was funded by NASA. I remember how we depended on the largess of government dollars and lived by the whims of public sentiment. Risk and new ideas weren't readily accepted, and failure wasn't an option.

Today, aerospace is more iterative, entrepreneurial, and largely driven by commercial interests. "There's so much money and interest out there, and there is more of a culture of innovation," says Carrie Hernandez, formerly of SpaceX and now CEO and Co‐Founder of Rebel Space Technologies in Long Beach.

And private space investments have never been higher. "In 2021, private capital will invest more money in the space industry than NASA will spend on everything," NASA-JPL physicist and local angel investor Shanti Rao quipped recently on Twitter.

And with a few exceptions, we're exploring at relatively bargain‐basement prices. Reusable rockets, space servicing, robotics and other technologies make space more affordable than ever.

"In the 60s, we went at great expense—often around 4% of GDP. But today, we're doing twenty times more at one‐tenth the price," says a colleague who asked to remain anonymous because he doesn't have permission to speak on behalf of his government employer. "And this time we're not just stopping by to say hello, we're setting up a permanent base."

Private industry is taking the lead, but Southern California needs to keep its eye on the ball. These days space companies can be almost anywhere, and Colorado, Texas and Northern California have become major hubs of space innovation, too.

NASA's Apollo and Space Shuttle programs were as much a PR effort as they were science expeditions. And those educational efforts have paid dividends by inspiring more public funding for research and development and a whole generation of kids to pursue science and math.

Will Blue Origin and Virgin Galactic succeed at filling this inspirational role? I hope so. But it's time for us to celebrate and support all the entrepreneurs exploring the boundaries of space.

Because it turns out, you don't need to be a billionaire to pursue your space dreams. And with or without public support, the space industry is now inevitable.

https://www.linkedin.com/in/krisztinaholly/
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