Stories of modern business.

Courier Weekly Friday 11 December 2020

Courier Weekly Friday 11 December 2020

Julie Deane is founder of The Cambridge Satchel Company, the humble UK-based leather bag brand that, in the past decade, defied the odds and became a rare phenomenon. But that story has been told. This week, Julie explains what happened after the success, sharing how and why everything went wrong, and what she did to get the company back on course.

DANIEL GIACOPELLI: Hey guys, Danny here, editorial director of Courier. You’re listening to the Courier Weekly, a podcast all about working better and living smarter.

This week, I’m with Julie Deane, founder of The Cambridge Satchel Company, a humble UK-based bag brand that, in the past decade, defied the odds and became one of those rare phenomenons, an absolutely huge success story. 

I first met and interviewed Julie years ago and, in case you don’t know the story, it’s become a bit legendary. Here’s the nutshell version. Back in 2008, Julie was living in a village outside of Cambridge and was looking for a way to pay for extremely expensive private school fees for her young kids. She had saved up £600 and was basically looking for a way to turn that £600 into £24,000.

The best idea she had was to create durable, leather satchels – the old-school types, something, she's said, that Harry and Hermione would have worn at Hogwarts. Well, she and her mother launched a company around that idea from their kitchen table – and the rest was history.

Orders flooded in from around the world. It became a sensation in the fashion world – a cult favourite for editors, bloggers, models and magazines. Julie was featured in a TV advertisement for Google. She met the Queen, and was made an Officer of the Order of the British Empire. She opened her own factory and her first physical store. By 2013, yearly sales were nearing £13m and in 2014, Cambridge Satchel raised $21m from Index Ventures.

But this story has been told tons and tons of times. What hasn’t been told as much is how things then started to go bad. Soon after the investment, sales started to decline, the designs weren’t as inspired and the wrong decisions were being made at the management level.

This week, we’ll find out what went wrong and how she got back on course. First, I asked her when she started to notice the company was taking a turn for the worst.

JULIE DEANE: I think it was pretty easy to see it. I didn't need to listen to any voice of intuition because it was just the results. We were making loss after loss after loss and having been a business that was profitable every single month, to see these losses come through, that was really unnerving and something that I hadn't seen. After you have a big investment, obviously suddenly you move forward and make a lot of new hires that are quite big hires and those hires make hires. So your whole overhead base leapfrogs forward. But it's an uncomfortable feeling for somebody who'd founded something on the basis of never having any debt to see that. 

And it was a feeling also of disconnection. I've spoken to lots of people who've had investment and I think that this is actually quite a well-known phenomenon that can happen, where the founder almost sort of starts questioning – it's this imposter syndrome. Suddenly, you've got these incredible people who've worked in £100m-turnover companies and they've done all this before and they've scaled before. And they've been on this journey before. And I hadn't. Cambridge Satchel was it for me. This is the only thing that I know. Whereas now I look at it and I think this is the only thing I know, I'm not polluted by seeing different ways of doing it, more conventional ways of doing it. And that gave me an advantage and an edge. At the time, it very much felt like 'take a step back and listen to them because they know what they're doing'. 

And now I can look back and think each of those people, they were very talented, but they had come from much bigger businesses where there is a much larger support structure around. And we had got where we got by doing things very differently. And that was us. And it just didn't feel right. And I felt very disconnected. 

DANIEL: When you say 'these people', do you mean the venture capitalists you brought on, or advisors, or your own team?

JULIE: No, because Index is a great investor. But at the end of the day, it's the founder that is still taking responsibility and running the business. And you might be introduced to, ‘Oh, these are the recruiters we use and these are the hires that we suggest you make.’ You sort of follow that advice. And it was the C-suite, you know, this huge influx of people that were very experienced and then the hires that each one of them made. And for a small business, then, we had grown very organically. And when we take someone on, I'd be spending a lot of time with them. They'd get to know the tone of voice of the business and how we do things and the character. 

You can't do that when all of a sudden you have more people joining than there are already existing in the business. Then there was a London office and a Cambridge office, and that's really hard to manage as well. So, all of those things together were just too much to make sure that the character of the brand stayed intact and that things were done in a way that would have been in line with the way that we'd always done things. Too much change at once. 

DANIEL: So the decline in sales. I've read that in 2013 you were doing almost £13m in sales. The next year, it dropped to £10m. And in the following year it dropped to £7.5m. That was a symptom of all these underlying problems part of which were bad advice, growing pains and organisational problems?

JULIE: Well, our product wasn't good enough! You know, it really wasn't. We had always been known for our colour. We're a very bold and optimistic brand. Our colours were like the poster paint colours that you have as children. And that's a very joyful experience to go into a store that is just filled with that much colour; it's really uplifting and fun. And even if you still end up buying a black one, a chestnut one or an oxblood one, you've been surrounded by the feel of the brand. 

And one of the differences when the size of the team grew was, oh, now we're going to subscribe to these trend forecasters. And when you have a trend forecaster, then all of a sudden you're going to have colours that have been chosen by somebody else, you know, and you're also going to have the same colours as every other shop on the high street has.

DANIEL: Yeah it's like, ‘What is Topshop doing? Let's copy that.’ 

JULIE: Exactly. And I'd look at some of these trends and I'd think: my God, next year looks like it must be a really miserable year, because if these are the colours that we're all going to be wearing, this is going to be really, really miserable. We'd never done it like that. 

DANIEL: Whereas you should be leading the trends, you should be the tip of the spear creating trends, not copying others' trends. 

JULIE: Yeah, exactly. And now I've been through that and I know that, well, that might be the trend that works for lots of other brands. It doesn't work for us. We have to stay with what we look at and what just makes us feel really happy and the colours that we love, because that's what we're known for. That's what we've always been known for. 

DANIEL: What about your management during those years? Because I know that you took a bit of a step back from the day-to-day running of the company for a bit, which you've later said was probably a mistake.

JULIE: It was a mistake because it was hard to know exactly where my place was. When you're the founder and then suddenly you have somebody in who's an expert in marketing and you've got a CFO, you've got a CTO. Remember, I coded the first website and I'm also qualified as a chartered accountant – I always did the books. I had my fingers so deeply in all of these pies…

DANIEL: And you drew the logo. 

JULIE: Yes, I did the logo. I did all of this stuff. I took the photographs of the product and my mother held a white sheet behind them and we loaded them up. It was all done like that and suddenly you think: well, hang on, this is now feeling like a very grown-up place with all these experts in. What exactly is my role in this? And that was a tricky time. 

I always felt very connected to the customers, to the people that followed the brand, even if they hadn't bought yet. They were very engaged on social. And I was always chatting to them. But, again, that wasn't then my area. So I got pushed mainly into the magazine interviews and the outward-facing PR, but not in the operations and the day to day and doing customer service emails in the evening when actually I'd end up just chatting to a customer. The customers that have problems are often the ones that become your most loyal customers, because they see that it's really important to you to sort it out. 

DANIEL: So did you wake up one day in 2016 and say, ‘Right, time for a change. I'm gonna clean house.’ 

JULIE: Yeah, I just thought I can't do this any more because this brand is literally like another child to me. I brought it up from nothing. I'd loved it, taken really good care of it and did what I thought was best for it. But it wasn't. Enough's enough. So it was a bit of a swoop of the angel of death for lots of the C-suite and the house was cleaned up and the overhead was brought down. 

DANIEL: The proverbial red wedding moment… 

JULIE: It was! That's exactly what it was. There wasn't a single stone that didn't get lifted and looked under. And the more I looked, the more I just thought there were too many different types of things that were not special enough. Every bag that we had done had a story. It was a historical piece that had been brought to life and evolved slightly in bringing colours in that had never been seen before, but had stayed true to the wonderful piece that it was. Every bag had this provenance, this incredible story. And then suddenly we were coming out with bags that I wouldn't have worn, I wouldn't have bought. And so that became the rule. If I wouldn't buy it for that price and wear it, we're not having it. That's got to be the filter. 

DANIEL: So what's the real lesson here? On the one hand, there's a great lesson that you can't lose your authenticity because that's what built you and made you who you are. On the other hand, if you're growing a company to be a $100m or billion-dollar fashion brand, you're going to have to give up control and appoint deputies to do things. So how do you find that balance to make it work? 

JULIE: What I found through the cutting right back and then the growing and seeing that, as we were growing, things were going very well again, that gave me the confidence to think: yes, I am on the right track. And gradually I need to get back to having all of those people, to having that team. But it needs to be gradual. It cannot be overnight. You do learn so much more when things go wrong. And so I felt like I'd learned so many lessons. The next time we're doing a hire, I'm going to spend a lot of time with that person before they get hired so that I know they know exactly what the brand is, they're totally behind that, and you do it bit by bit. You can't – or at least we couldn't – take that massive step all at once and get completely swamped. 

And also things like Instagram. We're the Cambridge Satchel Company. Our Instagram became something that never had images of Cambridge. Our photoshoots weren't taking place in Cambridge. Everything was London-based. And we had an unreasonable number of bags against coloured doors and bags against a cappuccino and froth art or whatever it is that was a thing at that time. 

DANIEL: Overhead shots of flat whites. 

JULIE: Yeah, it doesn't make sense to me. Why would this be interesting to anybody? Because what I've really realised, my love of the brand is that the people that tend to buy bags that have a history and a story are really interesting people. They're not people who just want to go out and buy labels or collect loads of things and dispose of them. These are people that are intrigued by the story. And they buy into that. That's who we are as a brand. And nobody else is going to fully understand that. So until someone has the tone of voice, I can't hand something over to them. I'll recruit and stand by their side and then become a shadow and then sort of just check in regularly when I feel confident that they have got the exact right tone of voice. But I'm really in no rush to do that. 

DANIEL: You mentioned the word confidence a couple of times. People looking at you objectively would be like, ‘Oh, holy shit, how did this person do what she did, build this giant company, superstar inspiration and get all these awards, go around the world?’ And yet, did you lose some of your confidence when you saw declining sales year after year and say, ‘Shit, do I know what I'm doing?’ Did you feel like an imposter or something like that? 

JULIE: When I saw them going down, I felt a little bit vindicated. It was never right to do some of those bags! It was never right to do those manky, sad-looking colours. That was never right. And I knew it wasn't right. And yet I felt that I had to give people a chance to show their brilliance. But it wasn't right for the brand, so it didn't work out. 

DANIEL: So it actually gave you confidence because you realised, actually, you were right the whole time? 

JULIE: I was right! I should have listened to that voice that was saying, ‘That doesn't feel right.’ And so many times now, if you hear that voice in the early days, just after you've hired someone, and it's saying this person isn't right, you need to listen to that voice. But it's hard to listen to that voice when suddenly you've had a big investment from people who really know what they're doing. A C-suite comes in. People are recruited that have done fantastic things. And really know way more about their area then than I ever did. 

However, that voice that says, ‘That might be right for Michael Kors or somebody else’ – it's not right for Cambridge Satchel. We're a quirky brand. And that's what we had going for us. And I needed to just listen to that voice. But when you see the sales going down and you see the overheads absolutely rocketing and you see the amount of stock of inventory that ties up so much cash, we had never done that. We'd always been very demand-led. When something ran out, we'd make more of it. We were very simplistic and we needed to go back to that. And at least there was no arguing with the numbers. It was very clear that we needed to change.

DANIEL: I want to talk about China, because China has played a huge role in your brand story. You've gone to China on a trade delegation with the UK government. You sell quite a lot of bags in China. You just got some investment from a Hong Kong-based private equity firm, which I imagine has something to do with China strategy. So, why China? Do they just love the bags and you decided to double down where the demand is? 

JULIE: So what happened was: Prince William visited China on the Festival of Creativity, and I was speaking in one of the marquees before he was due to go up. And on the way to being trotted across to this marquee, there was somebody that was with me and said, 'Well, of course, you know that Cambridge is more famous in China than London.' And I thought, 'Oh, no it's not. But, you know, nice of you to say that, but of course it isn't.' And she looked at me and she said, 'Yes, yes, because of the poem. You know, the poem.' And I looked completely blankly at her and I said, 'I have no idea what you're talking about. What poem?' And she said, 'Oh, the poem that we learn at school, Farewell to Cambridge. And I thought: get out. This is either a real gift from God or somebody is winding me up at a really bad moment to be wound up, because here I am heading to this big stage… 

DANIEL: It would be funny if she said the poem was The Beauty of Cambridge Bags…

JULIE: Exactly! So I did my scripted speech and everything. And at the end of it all, this poem thing was still so much in my mind. I thought, I need to test it out. Talk about a high-risk strategy – this is where I'm going to choose to test it out! And so at the end of it all, my hand shot in the air, and I said, 'And so, don't say farewell to Cambridge! Because Cambridge has come to China!' And there was just the most warm response. And it was a real recognition in the room. And I thought: this is fantastic. 

DANIEL: I love that. It could have gone in the complete opposite way, it could have been like The Thick of It where you said this and somebody was winding you up and just crickets... 

JULIE: It would have been! The bindweed going out of the door and then I'm dragged off the stage… And so, there is this awareness of Cambridge as a brand in China, which I was unaware of and I'm very thankful for. And we've always seen a huge number of Chinese tourists that visit the shops, particularly in London and in Cambridge. And so it was very apparent that a China strategy had to be part of the plan. The more time I spent in China, the more I realised that I just didn't know enough about the differences in the way that people buy in China. I didn't know enough about Tmall Classic versus Tmall Global and WeChat and Weibo and Baidu. There was just so much to learn and take in. 

And we did a good job of getting started. But to try and do that from a place just outside Cambridge, that was never going to be the easiest one to manage. And so when it came time to have another investor take a chance on us – I would say we were and we still are a much better investment now because of the experiences we'd gone through before. I'm really happy to say that Index are still one of our investors and they've stuck by me, even though I didn't do things brilliantly well all the time. 

But the new investor I knew had to be a strategic investor. And it made total sense to have someone who has a local knowledge. And so they're based in Hong Kong, not actually a Chinese group at all. It's a very international group. But along with that came a complete blessing in the shape of a very seasoned person, somebody who's had experience in Asia with brands from America and brands from Britain – a COO that really knew what he was doing and somebody that I could feel very happy working alongside and I could learn from and he could just let me do the things that I do best. And I've spoken to him every single day for over a year at 8.30 in the morning to discuss what's happening and what we see the vision being and who we see the investors being and then who's part of the investment. 

If I had such great fits as hires after the Index investment, we would be absolutely world dominating right now. But at least this time I know what I'm looking for. 

DANIEL: What's intrigued you most about the Chinese market? What have you learned that you were like, ‘Oh wow, if only I knew that when I started,’ or ‘This is just a completely different way of doing things than is done in the West’?

JULIE: I think it is the difference and realising that this is where I really need some expertise. To sell effectively on Tmall, you have to have a great Tmall partner. And I don't know what to look for in a great Tmall partner. And so I need someone who's done that before and who knows what the Tmall partner can do, what they can't do, and is local enough and speaks to them in their native language so that they know that they're part of the team and feel very involved and very much part of it rather than, ‘Oh, yes, we work on behalf of Cambridge Satchel, but they're so far away and they don't speak the right language and the time difference’ – everything conspires and can make that feel way too far outside of the group to be useful. 

DANIEL: Before you raised that money from that Hong Kong private equity firm, were you just yourself googling 'Tmall Global' and trying to figure it out yourself? 

JULIE: As part of that trade delegation, it was when the UK signed the MOU with Alibaba. And so I'd met Jack Ma then... 

DANIEL: Ah that's right, I read about that! You were doing Tai Chi with Jack Ma or something…

JULIE: Yeah! And then he invited me back to speak at a conference that he held for women entrepreneurs in China. And so through all of that, yes, I got to meet people who are incredibly helpful and incredibly knowledgeable. But I most of all got to see how different it was and how much I really didn't know. And so, to do that properly, the Hong Kong base and the expertise that we've got in that local market are absolutely key. I just can't do that. 

DANIEL: Yeah, I forgot you met Jack Ma. I guess that gives you a little bit of a leg up! Just call Jack and ask him. I'm just joking. 

Ok, so how has Covid affected Cambridge Satchel, because you have physical stores – stores are obviously now open and closed and open and closed. And you have a brand that skews towards the luxury end of things, but are people buying luxury items? How's the past year been? 

JULIE: It's been a memorable year! Our investment closed in December of 2019. And then we made a hire for head of e-commerce, head of digital, who joined us in February about a month before everybody went to remote working. So that was very, very difficult for her because there wasn't much of a run-up to learn and meet the team and really get embedded in. We had a plan to have a new website launch in the summertime, and we opened an Oxford store in February, which closed in March. 

And so trying to deal with all of those things – in an ideal world the virus would have given us another year before hitting and we'd have had our fantastic new website up and running and then we could have benefited from this sudden rush to shopping online! But we didn't have that benefit. But what we did have was a pared-down structure already that meant that we could react to things very, very quickly. And so we had gone through that painful exercise of looking at every area and thinking, what is the excess here? We cut it out. 

And so we were in a good shape in that kind of position at least. And we had also really addressed the problem of: what is the product that we want to go forward with? And we weren't sitting on £3m of stock. So that was great, because if we'd had that much cash tied up in a warehouse somewhere and no shops to sell it through and wholesale accounts dropping off left, right and centre, then that would have been problematic. But we didn't. We were very much in a lean space, thank goodness. 

DANIEL: I like that British understatement, 'problematic'. What does ‘problematic’ mean? Would that have been game over?

JULIE: No, because we don't do game over. That's somewhere that we're not going to go near. We're sidestepping the game over. But what we could do is just stop and think that this is a time when it would be very easy to make knee-jerk reactions. We absolutely are not doing that. We're going to think about how it is that we want to emerge from this. What do we want to look like when we come out? And so we actually put back the website development and we spent the summer speaking to Mary Portas and her agency in London being grilled about who we are as a brand, going back to basics – what is the spirit of the brand. Because otherwise, what could have easily happened is we could have got a new web developer and said to them, ‘Here's all our existing copy, here's our existing stock and here are all our existing photographs.’ And then been surprised when the new website looked like the old website. That's something that can happen. 

And so by taking that space and just thinking: this is the time when people are going to give you permission to make change because everybody has to make change. So if you're going to accelerate the change to really stop and think, who do you want to be coming out of this – we want to be the Cambridge Satchel Company of the first three years of Cambridge Satchel. Who was that? 

We'd gotten to this point where, before Christmas, we'd probably tell people that if they haven't ordered in November, we can't promise it to them for Christmas. Whereas in the first few years, I would say to people, 'Look, I've got the bags here. If you want to drive to my house and buy it, you can come on Christmas Eve and you can have it. But otherwise, we're going to have to work out how we're going to get it to you, even if that means me driving and meeting you halfway.' Because that's kind of the spirit of the brand. 

DANIEL: So it's about how do you keep that spirit alive? 

JULIE: Exactly. And that's that's what we've been working on. And I think that's the most important thing.

DANIEL: And that’s it for this week. Thanks to Julie Deane from the Cambridge Satchel Company for this week’s show. As ever, get in touch with any thoughts or feedback, I’m at [email protected]. The Courier Weekly is back again next Friday – we’ll see you then.