Christine M. Day found a “wellness” connection between her current position as the chief executive officer of healthy fast-food start-up Luvo and her investment in early stage medical apparel firm Figs.
“This one matched up with me perfectly while I was doing research at Luvo. Hypertension, heart disease and diabetes are where 72 percent of our health-care dollars go,” she said, adding that adult onset diabetes used to start at age 50 and now about 9 to 13 percent of the population begins showing signs between ages 12 and 15.
She sees both the food and medical industries as growth sectors, noting that the projection for job growth for health-care workers is 33 percent over the next decade. Medical apparel is a $50 billion global industry, with the U.S. accounting for $10 billion of that total.
“What I look for right now, the number-one criteria, is a large addressable market. Two, can they [put together] a solid business model? If they can’t do that, they shouldn’t be taking investor money. Three, can it connect directly with consumers? One of the challenges at Luvo is the grocery business is not the best place to disrupt the consumer, so we’re working on a direct to consumer model. At Figs, the company started as a direct-to-consumer business,” Day said.
The executive said she was “thrilled” to see the deal between Amazon and Whole Foods, noting that the combination of Wholes Foods’ high cost structure and Amazon’s low-cost delivery structure will disrupt the grocery industry for consumers in a “positive way.”
As for Figs, Day relied on her experience as the former ceo of Lululemon Athletica when evaluating the investment potential of the medical scrubs firm. “Apparel can be a high-margin business when done right. Fabrication is key. Figs has a strong business model that’s disruptive because they went to the consumer online instead of relying on the traditional wholesale model working with hospitals. They’ve also brought in tech fabrics that stretch and prevent the spread of bacteria, and the styles look good,” she said.
Day noted that when she was at the yoga apparel firm, consumers bought Lululemon’s pants and tops for hospital gear to meet the medical facility’s uniform criteria, as well as the consumer’s preference for comfort. And she noted that Figs is consistent about sizing, so “once consumers know the size or fit, they can order again even if the detailing on the product changes because they know it will fit them. That’s a winning strategy because it reduces returns.”
Day also saw the possibility of the product line extending beyond hospital workers. “I can see workers at Starbucks and coffee shops wearing the scrubs. And absolutely there is the possibility of extension outside of hospitals, whether at nursing homes or other medical facilities such as dentists’ offices and vets. The addressable market is quite large, especially once you include the food service sector,” she said. Prior to joining Lululemon, Day spent 20 years at Starbucks, and headed up its Asia-Pacific division.
Day said she chose to be a strategic adviser to the company instead of joining its board, noting that her operational expertise is a better fit for an advisory position.
Figs was cofounded by Heather Hasson and Trina Spear in 2013. About 95 percent of the firm’s total revenues are from online sales. The company so far has raised $10 million in funding. In addition to Day, other investors include serial entrepreneur and film producer Thomas Tull; film producer and New York Giants chairman Steve Tisch; venture capitalist John Fisher of Draper Fisher Jurvetson; Hard Rock Café cofounder Peter Morton; private equity firm Irving Place Capital’s comanaging partner John Howard, and actor Will Smith.