Gymboree: Joan Barnes. How Building a Beloved Brand Nearly Destroyed Its Founder | How I Built This with Guy Raz

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I go to new york to sign the deal um.

One of the investors is on the plane the lawyer, you know whatever.

They're all coming for this big celebration.

Well, I get a call that afternoon.

I'm sitting in the hotel room and she says, hello, my name is Carol Anderson.

I'm the senior vice president of something.

And I said, oh, hi, Carol.

I'll probably meet you tomorrow.

She says, actually, you won't.

The deal is off.

We're not coming.

What?

That's what I thought.

What?

Welcome to How I Built This a show about innovators entrepreneurs, idealists and the stories behind the movements they built.

I'm Guy Raz and on the show today how a casual children's playgroup grew into a national franchise, a stomping ground for kids and a lifeline for parents.

Jimboree.

Every founder eventually hears a version of the same advice.

Work harder, push further and don't give up.

That it's the combination of discipline and drive that can turn a small idea into a big one.

And don't get me wrong, this is not bad advice.

But there's also a darker side to that story, because when drive goes unchecked, it can quietly begin to erode everything around you your relationships, your health, your business and ultimately, your entire sense of self.

Today's story is about that very tension.

Now, if you're younger than say 35, it might be hard to understand just how ubiquitous Gymboree once was.

In the 1980s and 90s, Gymboree wasn't just a place you took your kids.

It was the place a brightly colored padded world of parachute games, circle songs and structured chaos.

For many parents, it was also something else a lifeline, a place to connect with other parents and find community.

Gymboree began as a simple idea get groups of kids to play and offer classes and activities that would give parents a reason to show up.

And it worked.

At its height, Gymboree operated hundreds of franchises around the world, along with more than 200 retail locations selling children's clothing.

And like so many stories on this show, it started with someone trying to solve her own problem.

Joan Barnes was a new mom living in a new city far from family and looking for connection.

She began hosting playgroups at her local Jewish community center.

The response was immediate and the demand was overwhelming.

And before long, Joan found herself running a national franchise business.

From the outside, it looked like a runaway success.

But inside, there were serious problems.

The business wasn't making enough money to pay back investors.

The pressure was relentless and the stress began to take a devastating toll on Joan's personal life and her mental health.

Eventually, she was forced to make some incredibly hard decisions about the company and about herself.

But before any of that, Joan grew up in a suburb of Chicago.

She studied dance and English in college, where she met a journalist named Bill Barnes.

They got married, and after a few years living on the East Coast, they decided to move.

I was pregnant and we didn't really plan it, but we knew we would want to have a family someday and we'd been married four years.

So we decided, okay, we'll go for it.

And I said, I'd like to just pick up and go.

The East Coast was dreary and I just couldn't get over the weather.

And so we just packed up everything and just to kind of see our America tour and went across the country and And thought well, what about here?

And what about here?

And was like, okay, well, let's try the next stop until we landed in San Francisco.

And Bill took that job.

For the San Francisco Examiner.

Right.

Exactly.

Okay.

Within, I think, about a year of moving there.

You guys left San Francisco, moved outside to a suburb in Marin County.

Correct.

And you are a young mom.

This is 1973, 74.

And from what I understand, you were kind of lonely.

You felt a little isolated at that time.

100%.

Lonely and isolated.

1973 was the lowest birth year since forever.

And the media had dubbed the families or the people who were living in that era as dinks double income, no kids.

Right.

And so having kids was against the grain.

And so I was looking for comrades.

I was looking for people who'd made the same choice.

My family was a gazillion miles away.

His family was in New York.

My family was in Chicago.

And yeah.

Lonely and isolated.

So I wanted to meet some people who had made a similar choice.

So how did you, I mean, you wanted to meet other moms and kids.

So were there play groups and things?

I'm assuming they were like play parent groups.

None of that stuff existed.

None of it existed.

And so I was in a dance company because I was still into dance.

And a woman there.

She had been offered a job at the local Jewish community center to run the children's programming.

And she was scared because she had two kids.

And I said, why don't we share it?

This was long before job shares were even There weren't job shares.

We were really kind of revolutionary.

So we did.

We shared our big $10,000 a year job and each made $5,000.

And what did that mean?

Like sing-along and, you know, coloring and arts?

After-school programs, you know, the preschool programs, the family programs.

My colleague took all the Jewish stuff and I took the secular programming.

Okay, you're running an after-school program.

And and this is basically this is what you're doing.

And I guess at one point you had just by chance you had gone to a class at a YMCA in Berkeley.

So on the other side of the bay to to see this like a gym, a gym for kids, for little kids that they were doing at the YMCA there.

Tell me, tell me, remember about that visit.

So one of the women on the board is had come into our.

At that time we were operating our offices in a trailer because we were building a real JCC.

And she came in and she said with her then two three-year-old daughter and said she was going to a program called Kinder Gym at the Berkeley YMCA.

And maybe I ought to come see it with her because it was really special.

So I said, okay.

You went to go observe this and what did you see?

So it was in a gym at the Berkeley Y and they had basically had – they were borrowing the UC gymnastics equipment.

So there was full-size trampoline.

Wow.

You know, and stuff.

And a pommel horse and all those things.

All that stuff.

Wow.

So they were sort of improvising a way that kids could kind of play on this stuff.

You know all the moms would get around the big trampoline and somebody would – you know it was just – and I just thought this is not really – kid appropriate, but it could be and I could just see all this stuff scaled down in bright colors to little kids eyes and some really wonderful upbeat music and a really lively teacher, and we would have something All right.

So you see in this concept something potentially really cool.

Now, you are directing the kids program at the JCC in Marin County.

And so tell me what you start to think.

You start to think, hey, maybe I could bring this concept and do it there.

I did.

I thought maybe we could do this at the JCC, but not this.

We could have an opportunity for moms and kids to come together.

But instead of having it be with full-sized adult gymnastic equipment, we would develop our own equipment that would be scaled down to appropriate size, with the appropriate kinds of activities to develop, because play is how kids learn.

And I knew that much.

And this would be like kid-sized or toddler-sized trampolines and toddler-sized –

Tunnels and bouncy things and climbing.

And did this stuff exist?

Like, did you buy it off the shelf?

I found somebody.

Well, first I had to convince the board to put up I think it was 5000 to buy this stuff, whatever the stuff was,

But I didn't know.

I didn't have it priced out because it wasn't like going through catalogs and saying get this.

You had to get it custom made.

Yes.

Some of it was available for special needs kids.

So some of it I could get, some bouncy logs and things like that.

And then I found somebody to make our, quote, propriety products.

And we were lucky.

I was pretty savvy because of my husband at the time.

I knew how to talk to the press.

So I went to the local paper in San Rafael, and I got a big feature story in there.

It was even before you started, you had a story about what your plan was.

Yes.

And we had pictures of the equipment.

We hadn't opened yet, but we had sort of a dry run.

Anyway, we had a big full-page feature, you know, 50 years before social media or 30.

All right.

I think you opened this up in 1976.

You opened at the JCCC.

Yeah.

And you originally you're calling it the kinder gym.

Yes.

Right.

And and how did you right away?

People people were like, this is amazing.

Like they started coming right away from that press story.

We were oversold right away.

And how much was it to cost?

It was like five bucks for an hour or something like.

Yeah.

But we would sign up for a session or, you know, for 12 weeks for 50 bucks or 60 bucks, and come once a week.

And this would be moms and their toddlers.

Sometimes dads.

Dads.

And you would lead them through a program or they would just kind of run around and jump around and do whatever.

I hired preschool teachers because I wasn't – you know, I wasn't a preschool trained – I was an entrepreneur, you know whatever.

And so –

I developed with them what they would do and how they would set up the equipment.

I was winging it, man.

I didn't know.

Because underneath all that, Guy was really the intent to connect with other moms.

And that would happen through the kids having fun and everybody talking.

And in that first year do you remember starting to develop like a program where the kids would come in and sit in a circle and then they would, or was it just free, a free for all?

No, it wasn't a free flow.

And we had – the parachute that I had seen at the Berkeley YMCA was a green.

– Oh, the big parachutes that the kids would hold in the – OK, yeah.

So that was an army-colored parachute, and I developed a multicolored parachute, which I did have made.

That was very kid-friendly.

And so every class ended with about 10 or 15 minutes of – of group time, where the kids would run underneath the parachute.

We had songs.

Some of them became propriety songs.

In the beginning, they were just songs that everybody sort of knew.

You know what I mean?

And then I was aware that parents would feel bad if their kids weren't or anti-social or didn't want to be in the group or didn't like or scared of running under the parachute.

Or shy, yeah.

All that sort of stuff.

So I wanted everybody to feel positive.

I wanted this to be a very uplifting experience.

How were you able to cultivate it?

Because I remember taking my kids to play groups and it was really fun.

And I was usually the only dad there because at the time I worked Wednesday to Sunday as an anchor of a weekend program back in the day.

And I remember the parachutes and my kids, you know, sometimes they were just shy.

They just didn't want to get in the circle.

They don't want to clap and sing and do that stuff.

How would you get parents to feel?

I always felt good.

It was always fun.

But how would you do that?

How would you cultivate that feeling?

Well, because we would have the teachers really be very upbeat and positive about whatever your kid's doing is all cool.

There's so much freer spirits than we are.

Some days we don't feel like doing something and we just do it.

Go sit in the corner and pick your nose.

That's fine.

It's fine.

And then we'd have the teachers say, hey, out there, how you doing, guy?

You know what I mean?

Just dribble running down my mouth.

That's it, you know.

Those days are so fun.

All right.

So, Joan, you're running this program at the JCC in Marin.

And it's a JCC program.

You were paid five grand a year running this program.

But it was successful enough that I guess at a certain point, maybe a year or so in, the president of JCC approached you and he had been an entrepreneur himself.

And he said, hey –

I think this could be bigger than something here.

Do you want to go into business?

And how did that work?

Did you did you start to think to yourself, hey, maybe I should turn this into a business?

Or how did you go from running a gym at the JCC to start thinking hey, there could be something bigger here.

Well before that, I opened a second one on behalf of the Jewish Community Center in a neighboring community, the one I lived in, Mill Valley, which was a lot.

So I had two of them, and they were really making money.

And they were supporting all the sort of do-good programs of other things that the center was doing.

And that's when the guy who had been running these, he was the president of the board.

He was all of 32, and I'm 26.

And I think he seems like an old man today.

He had run these Rick Barry basketball camps and he'd sold them and he was in a non-compete cause.

He was looking for something else to do.

And he came to me and said just what you said.

I think this could be commercial.

I'll put up the money.

You run them.

What do you think?

And I was completely naive.

No, this was not even – I never even thought of it as a commercial venture.

It was all him.

And just to clarify, Rick Barry was a legendary basketball player.

This guy you're talking about, his name is Max Shapiro.

He had run a chain of basketball camps with this guy, Rick Barry.

Had sold them, had made some money.

Yes.

And he was looking for something to do.

And of course, he had seen what you were doing at the JCC.

Yeah, he'd seen the success of Kinder Gym and he was like, I think we could do this commercially.

All right.

So Mac says, hey, there's something here.

Do you want to go into business together?

So what did you then do?

I mean, you have two of these centers in JCCs.

At that point, it's not your business.

So then do you say, all right, I'm going to start a business.

It's going to be called Kinder Gym or whatever.

Did that happen at that point?

Yeah.

Well, but I was afraid to leave my job, my, you know, my important $5,000 a year job.

I just so I skipped down to South of San Francisco, to the peninsula.

We call it um San Mateo to open up the first one um as a business, calling it kinder gym.

None of this trademark or any of that stuff is even.

I think about all that stuff.

And um, and so I open up at the at a temple.

Um, I convinced a temple that we could use their social hall a couple of days a week and that we could store the equipment.

You know, a little bit here, a little bit on here, that sort of thing.

So that was the model.

It wasn't like I'm going to get at least a space.

It was.

I'm going to go to a temple or synagogue or church or whatever.

Use their space and pay them rent.

And that's where I'm going to start this, open this up.

Yeah.

And I hired somebody who was similar to the teachers I'd hired up in Marin County, in the two locations.

I hired somebody with preschool background to run the program.

And they ran it a little bit of a precursor as the franchisees.

They put a phone in their home.

They run the business part of it.

And they would teach the classes.

They would pick up the calls, get them, you know.

And I was able to get a big story in the San Mateo paper, same as I had done in Marin.

And the same thing, it completely filled up.

Wow.

Okay.

So you start to see this thing as, well, there's a lot of potential here, right?

Yes.

And somewhere along the way, I bought my partner out.

I realized I'm doing all the work.

Max, he was a passive investor.

And I'm working hard.

And when the setup guy doesn't show up to put up the equipment, I'm putting the toddlers in the car and driving down to San Jose and setting up the equipment myself.

And I thought this is no way to run an airline.

So I make my, um, San Mateo partner or she was an employee at the time.

Now she's running like three of these up in Northern California, up in the Northern part of the peninsula.

And I have another person down in San Jose, who's operating another four or five of these things.

And I make them both partners in the business.

You gave them some equity.

I gave them some equity, you know, because they had an investment in this business and so they were running it.

So your investor, Max Shapiro, who had originally given you 3000, you decide.

You know he's a passive investor.

I'm doing all the work.

I want to try to buy him out.

And he agreed to let you buy him out.

I think you gave him double what he put in, like, I think $3,000.

And from what I understand, you gave him $6,000 back.

I did.

All right.

So he did pretty well.

He doubled his investment, bought out.

And-

And these places were making money, these kinder gyms?

I mean, they were little tiny businesses, but they were yeah, they were making a little bit of money.

Yeah, I was making some money.

And at what point, I mean, did you leave your job at the JCC to start focusing on this?

That's a good question.

I was trying to remember.

I think somewhere around location five or six, I thought, you know what?

This is doing well enough, and I need to focus on really making this happen.

So I left the job.

All right.

So by 1979 I read just three years in there's like nine of these locations, operating all over, from Marin County all the way to Silicon Valley.

Correct.

And you guys start bringing in significant revenue, something like over $200,000 a year in revenue.

Yeah, a little bit more than that, yeah.

And your costs were probably relatively low, because you're renting out space at churches and synagogues.

Correct.

And for them, they're happy because it's revenue they didn't even have.

Sure, and you're bringing people in.

Yeah, everybody's happy.

Yeah.

Okay.

I imagine that as people start to see how cool this is, people start to approach you to say hey, can I open one?

Can I – like talking to you about potentially franchising, which was not – again, was not part of the idea that you had right.

Nothing.

Everything just sort of showed up.

No, none of this was calculated.

It was.

You know, I'll get nine locations and then we'll start franchising and we'll be national and –.

That was not the plan.

I didn't even know what the word franchise really meant.

Right.

And I – one thing I will say is that it's best to start a business when you're young and ignorant, because I just figured I could figure it out.

I mean when I look back at all the things that I sort of figured out, amazing.

So I did and I went to the –

Federal Trade Commission.

I got the franchise papers.

I was probably the first person, not a corporation, franchising.

So I wrote up the whole thing and I got licensed to be able to franchise in California.

All right.

And so you go to the FTC office in San Francisco, I'm assuming.

Correct.

And they give you a stack of documents to fill out in order to become a franchisor.

And I'm not saying this for any other reason, except for I don't think, with all of the knowledge I've now gained over 10 years of doing the show, that I could fill out those forms.

Did you know how to fill out those forms?

I had no idea what I was doing.

I just thought, okay, I can read.

I can answer these questions.

I'll figure it out.

And I did.

Okay.

So you fill out the forms to become a franchisor, to operate a franchise business.

But I guess when they asked for the name of the business or how it would be called, you couldn't trademark Kindergym.

Well, I knew enough to know that one of the most valuable things of the franchise is the name.

So I thought, okay, I better register a trademark or whatever it's called, this name.

Kinder Jim.

Okay.

Kinder Jim, yeah.

So I tried to do that.

I didn't have a trademark attorney.

I had nobody to make this work for me.

So I'm just me filling out the damn form for the name.

And about a year later or, you know, quite a while later, a year and a half, I get a rejection.

It's generic.

You cannot patent that.

You can't trademark the name.

Cannot trade that name.

And by that time, I had a few franchises operating.

And you had all this press attention about Kinder Gym.

All of it.

And we had about four years of operating as Kinder Gym both in the company-owned locations, and maybe we had, I don't know, four or five franchises at that time.

And I thought... can imagine what I thought.

You know, what am I going to do?

That's the end of the business.

That was sort of the first big trouble.

When we come back in just a moment.

More big trouble, a business model that just won't work and an acquisition deal that drops off a cliff.

Stay with us.

I'm Guy Raz, and you're listening to How I Built This.

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Hey, welcome back to How I Built This.

I'm Guy Raz.

So it's 1981 and as Joan's business starts to grow across the Bay Area, she discovers she can no longer use the name Kinder Jim.

So the then-husband and I, Bill Burns and I, wrote down a gazillion names and things like that.

And then he calls me from a phone booth where he's running around the Embarcadero and said Jim Burry,

And I just loved it.

I just loved the sound of it.

I got immediately what it meant.

And I thought OK, now I'm going to hire somebody to find out whether this is a good name, how we get this trademark, how we do this properly.

So I found and so therefore did all that.

All right.

So you trademark this name, this new name Gymboree, and now you're ready to start franchising the business in earnest.

And I guess you get introduced to a guy, someone named Bud Jacob, who had experience in franchising and what

He liked your idea?

Yeah, he did.

And he liked me.

And he was like a dad figure.

He was the next generation.

He was considerably older than me, 20, 25 years older.

And Bud had worked for McDonald's in Chicago.

He worked for Arby's.

And then he became a franchisee and he owned about 20 Arby's out on the West Coast.

Did you need at that point because it's 1982 and now there's a bigger vision here Did you need to raise money to do this?

Okay.

So how are you going to do that?

So Bud introduces me to the guy who eventually becomes my primary investor, Stuart Moldau.

And Stuart had had super success and he was a VC.

And I met him and I told him what I was doing.

He said, I love it.

I love you.

You go home and write a business plan.

If it makes sense, I'll put money in to expand.

Were you at this point opening your own brick-and-mortar locations, or were you still renting out churches?

Still renting church halls and community centers, yeah.

By the way, there was a model like that, which is Jazzercise.

I know Jazzercise, yes.

Yeah, still to this day, that's their model.

The instructors work out of community centers.

Okay, so you write a business plan for this investor.

I do.

I go to him with a business plan.

He says, you got it.

And he just makes me an offer.

He tells me he's going to put up $300,000 for 30% of the company.

He values the company at a million dollars, which is sort of ridiculous, I think, but whatever.

And he put up the $300,000 and said, you go for it.

So then Bud's now working for me.

We're putting up a strategy to run franchises across the country and get a foothold in the media market of New York so we weren't labeled some crazy California phenomenon.

And $300,000, 30 percent.

So the business is being valued at a million dollars, which in 1982 was a pretty – I mean, it's a pretty good valuation for what was at that point.

You had no assets.

Yeah.

We had nothing and no leases either.

I mean, it's like, I like jazzercise.

I mean any one of these churches or synagogues or whatever, could say okay, see you later, you know.

Yeah.

Okay.

So let's talk about the initial plan because, from what I understand, the model that you and Bud put together was somewhat different.

It wasn't like, hey, you want to own a Taco Bell or a McDonald's.

It was you really wanted women actually to be the franchisees.

Correct.

Particularly women maybe who were not working at the time.

Tell me a little bit about that model that you start to develop.

That was sort of, I think, one of our brilliant moments.

What we were trying to do is really replicate people like me, but a little bit younger.

Now I'm in my early 30s.

So we're looking for women in their mid to late 20s who were –

Raising a family, but also had ambition for some kind of professional focus.

And this was like the perfect business.

And so we had a unique strategy because, again, this is also pre-social media.

We knew that the local newspapers were different. the next best thing to anything.

I mean paid ads.

None of that was going to work.

Like having a press endorse you and write a big story on you.

So we just went about going to the local press in every community that we were thinking about going to and saying we're thinking about going here.

And then some story about the neighboring community with the local franchisee and blah, blah, blah.

And then people started running.

We also ran kind of an interesting strategy.

We ran editorials.

Like editorials that looked like editorials, but they were actually advertisements.

Correct.

In the Wall Street Journal so that daddy could read them on his commute to his real job that he had to do to pay for the family.

And he'd say, oh, my God, this is perfect for my wife.

And then they would fly out to California on their own nickel, maybe him too, but definitely her.

And we would sit and we would spend the whole day with them.

They would go to a center.

Then the management team and me, we'd all have lunch in my office together.

And if anyone of the management team of the company thought that this person was not a good fit for us, that was a veto.

That was very collaborative.

Yeah.

And was there a certain energy or attitude you were looking for?

Oh, yeah.

We were looking for somebody charismatic, who was bright, who understood that this was like a marriage.

The success of Gymboree was the interaction between the franchisor and the franchisee.

In addition to that, we would also discuss with them how big of a business they wanted.

Some of them would have six, seven, or eight locations.

Some would only have one or two.

And from what I understand, you really focused on the East Coast initially.

Even though you were based in California.

You really wanted to push the New York market from the beginning.

Correct.

Why was that?

Well, first of all, we built out already the Northern California market, because I was able to do that on my own even before we were growing.

But when we opened in LA, it was a different story.

And the LA franchisees were extraordinary and they knew how to get all the press and they were part in the film industry.

And so they were on all the fancy TV shows and they got all the movie stars in their classes.

And they had about eight locations.

And because of their success we were able to build out the Southern California market, because people who were in their classes would say I want to do this.

So that grew naturally.

So the East Coast was where we needed to put our energy, which is when we did the Wall Street Journal ads.

I hired a PR firm.

They helped us get some big stories.

And we're happening.

Yeah.

And, I mean, this, like, was hot.

I mean, starting in 1982, it was like you were getting all kinds of crazy attention.

We were.

Because it kind of coincided with this new trend around like Child development and better understanding of like play.

And I mean, this was becoming a thing, especially in affluent communities in the U.S.

Like, right.

I even at some point, People magazine wrote, move over romper room.

All the best babies come to boogie at Joan Barnes's Gymboree.

That was a great.

It was.

How about that?

Yeah.

We were in U.S.

World News Report and Time and Newsweek.

And I mean, it was like I just had to pinch ourselves to realize we were getting all this press.

OK.

And so and basically tell me what kind of.

You know sort of blueprint you gave to the franchisees.

Presumably you gave them like here's how you run a class for this age, like were there different classes that they would run for different ages.

And was there a script?

Exactly.

So we first of all, had a week long training program.

And all the different people on my staff trained different things.

I trained them how to find a location.

Somebody else would train about how to set up the equipment.

And we also had quality assurance people that flew out to their locations and hung out with them and made sure they were doing everything well and whether or not we could be more helpful to them.

All the marketing material, everything, that's what they bought.

Yeah.

All right, so you get you're really exploding.

I think by in 1986, I read, you had 25 employees in your corporate office.

You had about 15 million in revenue and about 400 of these franchisees, about these local play centers in in all across the US, even abroad in some countries, and I guess they were paying you like 20 or percentage of what they were bringing in.

Correct.

Well, in addition to the US franchisees, we had sold Mexico France, and we'd done those as master franchises.

So they replicated who we were, and then they would sub-franchise to things.

And all under the Gymboree brand.

And I remember seeing this movie in the theaters.

It was even mentioned in Baby Boom, the Diane Keaton film.

She mentions Gymboree in that movie.

I was at that movie and I heard them say that.

And people pay, as you know, millions of dollars to have their airline put in there.

And I started screaming, oh, my God, you know.

Because Diane Keaton is sitting there talking to a bunch of women in some Upper West Side park and they go.

You don't even know what Gymboree is.

I mean, come on.

And so this really – and you – it sounds like you were targeting – you know sort of affluent places, initially New York and Los Angeles and San Francisco, but you were also in Kansas City.

I mean, you were mainly in cities, right?

Mainly in cities, yes.

Or suburban markets.

We were all over suburban Detroit, suburban Atlanta, Florida.

Yeah.

All right.

You get to 1986.

This is now four years after you start the franchising.

You've got, you know, franchisees operating all over the place.

Got 15 million coming in in revenue, which is from the outside.

Sounds like you guys are doing great.

But on the inside you know that there's a problem, that actually what seems to be a wildly out of control success had some serious underlying structural problems.

What, what did you start to realize?

I realized that the franchise model was flawed, that no matter how many franchises we had, it wasn't about scale.

The revenues that the franchisees generated, and therefore the percent that they would give us of their revenues, was never going to be sustainable.

How?

Is that just because –

You know, a franchisee might have three or three or open three or four days a week and only bring in a certain amount.

And you could see that there was just you couldn't squeeze them for more.

I mean, we already were doing it.

So I'd seen we'd had several hundred of these things.

And you know each location would maybe pull in a good one, would maybe pull in a quarter of a million, maybe a year.

Yeah.

And we get 8% of that or whatever the percent was at the time.

It was six.

Who knows?

Because it kept growing.

And in order because of what I said earlier Guy, that the success of the growth of the business was how well we supported the franchisees.

So yeah, we could... not support them, and then we wouldn't sell anymore.

And so the cost of actually supporting them and sending out a team to be with them and run trainings for their teachers locally and all that stuff.

It was all well thought out and really beautiful, except that it cost too much money.

So essentially, the only way to even break even was to sell more franchises.

In order to sell more franchises, you had to spend money to service those franchises.

So it was like a catch-22.

Flawed.

And I realized it was flawed, but I didn't know what to do about it because I couldn't figure it out, because there was no way I could charge more or give less service.

I mean, I thought of all the possibilities.

Now my question, though, is couldn't you do things like just raise the price?

Like say to all the franchisees, okay, it's no longer $5 a class.

You've got to charge $8 a class.

Well, by that time, we spawned competitors.

And that's good news because if you don't have a real business, you won't.

Competitors validate the validity of the business.

So they charged about the same thing.

So it wasn't really sustainable for us to get to a fee where our 8 was really going to make a difference to us.

Because it would have been a race to the bottom, just undercutting.

It's amazing because on the one hand, publicly –

You're getting national media attention.

You're in Baby Boom.

You're in People Magazine.

Everyone's talking about this thing.

Every mom's going to it.

Everyone loves it.

It's so fun for the kids.

But the business is barely treading water.

Yes.

You could have said it better myself.

That must have been really, really stressful.

It was.

I mean, I'm usually pretty good at fighting it myself out of a paper bag.

But this was this was.

The only thing I could do is just be honest with the board and say the way we're doing things is never going to have a turn on investment for you guys.

We could probably move along as a nice family business.

I'd get paid.

The employees would get paid. but they would never see they'd never see a return it could and they they didn't go into this to fund a little family business i knew that of course okay so you say this to the board and what do they say they say go figure it out just no more money we're not giving you any money go figure out some some other way and you know that was like um okay i'll figure out another way So I guess you have to start thinking about, okay, maybe there's a product, maybe there's retail, maybe there's other things we could do Well, the first thing I thought about was what can we do that doesn't cost any money because they're not giving us any money.

And I'm not going to be able to go out and raise money when our board is all invested in this thing and they're not putting up any more money.

So I thought licensing.

I was sophisticated enough to know licensing.

You know, Gymboree had a really great name, as you said.

And a brand and a logo, right?

Everything.

And we had a great press and we were national.

And everybody knew it by this point.

Everybody knew it.

You would go some places.

What do you do?

I run Gymboree.

Gymboree.

I love Gymboree.

If you were a parent and didn't know what Gymboree was, you were like really out of it.

Living on Mars.

Yeah, exactly.

And so we were able to – secure some very, very prestigious licenses.

We had random house doing our books, health text, which was kind of a cool brand for clothing.

They ran.

They did a clothing line for us.

We also had connor toys.

Did some really like a big climbing gym that you'd put in your oh, that you could buy, like a bit, your own climbing, your own climbing equipment?

Oh cool, really colorful and nice looking, and it was sold in toys r us.

I mean it.

It was like wow, we really struck gold.

It appeared, And you didn't need any cash to do this because you were just licensing your name.

Exactly.

But from the consumer's perspective, it appeared that Gymboree was even bigger.

Like, wow, look what Gymboree is making.

Yeah, but probably a year later, maybe a year and a half later, we were dropped by all of them.

Because?

Because we didn't have the sales.

We weren't Snoopy.

We weren't Garfield.

We weren't Little Princess or whoever the cool product was.

We didn't have a TV show.

We didn't have nothing.

We just had this live, living, breathing program, and it wasn't big enough.

So, even though parents were clamoring to come to the classes, they weren't walking into Toys R Us and going oh, Gymboree toys.

I'm going to buy them.

Yeah.

Well, they obviously were buying some, but not enough, because these licensing companies really want you to be the next gazillion-dollar baby.

And if you're not, they drop you.

They drop you because there's always a million more TV shows that are with a new –

So we were dropped.

And so now licensing doesn't work.

The franchising, we're still operating, but we're not making any money.

We're making, we're doing fine.

We're supporting our staff, but we're never going to pay them back.

The same problem exists.

All right, so this is 1986.

You've got this major problem with the business.

But then it suddenly looks like you might get a lifeline, right?

I guess you get introduced to someone from Hasbro, which is one of the biggest toy companies in the world, right?

And what, I guess they want to make like an investment, maybe even a quarry.

What's the story?

What happened?

Yeah, so first they just thought they were going to do a corporate investment, and then they thought they would buy the company.

Do you remember how much they were offering?

I think they had an option.

Maybe it was the first they put in an investment.

And then if we hit certain benchmarks, they would buy it.

And so with that you started to get some confidence that you could at the very least pay back your investors or give them a return.

I just felt like we had been bailed out of health.

Yeah.

It's crazy.

By the way, can we just pause and say how crazy that is?

Because everyone who knew you was like, there's Joan Barnes.

She runs Gymboree.

It's the most amazing company.

And you're like freaking out.

I'm freaking out.

And I'm trying to act like I have it together.

And I don't want the franchisees to be panicking that we're going under, because this is their business too now.

You know what I mean?

And so I get this offer.

I'm so stoked.

I get the lawyer.

And they're lawyers.

They're We're going back and forth on these documents.

And I go to New York to sign the deal.

One of the investors is on the plane, the lawyer, you know, whatever.

They're all coming for this big celebration for us to be partnering slash being bought by eventually with luck.

Hasbro.

Wow.

I get a call that afternoon.

I'm sitting in the hotel room.

And she says, hello, my name is Carol Anderson.

I'm the senior vice president of something at Hasbro.

You don't know me.

And I said, oh, hi, Carol.

I'll probably meet you tomorrow.

She says, actually, you won't.

The deal is off.

We're not coming.

What?

That's what I thought.

What?

I said, I'm sorry.

I said, we have our lawyer and our other investors coming.

Everything was set.

Your lawyers are, I'm confused.

She said, well, I'm going to straighten you out.

She was really kind of not a very lovely person.

It's over.

We're not coming.

And you were like, sorry, can you give me any more information?

She was not forthcoming.

Just that's all I needed to know was that it was off.

Was there anyone else you could call?

That was it.

I said, should I call?

Whatever the marketing guy's name who I really originally connected with.

I said, would I be able to speak to... She said, nobody's going to speak to you.

I am the ombudsman telling you the news.

Wow.

I'm sitting all by myself.

These people are on the plane.

I'm humiliated.

I mean, I thought, okay, this is the end.

I can't imagine what we can do from here.

I mean, to me, this was the bailout.

And the board was thrilled.

They loved Hasbro.

Hasbro was a big deal in those years.

Still a pretty big deal.

Still is.

Yeah.

And so...

I left a message in the room for the woman investor who came from Montgomery Securities, who became kind of a friend.

And I said, please come to my room.

This is one of your investors who came out.

One of my investors who was coming out for the closing.

And she had been fantastic.

You know, she was with Montgomery Securities and she was a peer of my age.

And so she came to the room and I just burst out crying.

I said, I'm so embarrassed, Linda.

I don't know what to do.

You know, the lawyer...

All these hot shots are coming.

Our lawyer, you know, another investor.

And she said, we'll deal with it.

We'll figure it out.

And I don't even really remember.

I just remember.

It's a blur probably.

It's a blur.

And I remember finally flying home and going to the Gymboree office and telling everybody that this had happened.

And I said, you guys, I know there's an answer, but I don't have it.

And I'm completely spent.

I'm going to go to my little cabin in the Sierra to restore.

And I'd like it if you guys would take the weekend to get together without me, so I won't inhibit you and come up with the winning strategy.

You basically – you come back and you say to your team – Figure it out.

I'm done.

I'm done or I'm taking some time off?

No, I'm not done.

I just can't – I don't have any – I would be a drag on a creative meeting for what's next, because I was the one that had come up with the –.

All of it.

I mean, I was the one, the big leader.

And with the insult of Hasbro walking away from the deal, I just felt leveled.

I had nothing left.

I knew I would, but I needed some time to go be in nature and whatever.

I read that you guys, that Gymboree was down to $50,000 in cash.

Yeah.

I think it was even less than that.

My CFO came up to the cabin and we sat there at my little kitchen table figuring out how long we had to live.

You probably had to lay people off.

We laid people off and those of us who remained in the I called it the life raft.

We all took 50 pay cuts.

I took a 75% pay cut, and everybody hung in there.

But this was all quiet.

This was not in the papers.

It was not publicly known.

Nobody knows nothing.

The franchise, nobody knows anything except for me and my people that work for me.

The board knows, but I said, we're coming up with the final and winning solution, you guys.

I kept putting on the happy face.

I mean, it's kind of this classic dilemma.

You had an amazing brand, but you didn't really have a retail product.

We did not have a money-making business in.

You know, I always say to my franchisees the price of admission into the play yard of building a business is making money.

You can do it for a little while.

It's, you know, social venture and it's fun.

But if you can't make money, you can't stay there.

Yeah.

So when I got back from my cabin, you know, trying to figure out how long or 50 or 25 grand was going to last and who was going to get laid off and who was going to take pay cuts and all that stuff,

On my desk was a picture of a play center next to a retail store.

A photograph?

A sketch?

No, it was a sketch.

This is what they'd come up with.

Our play centers.

Instead of being in church halls, we'd rent a space.

We'd open a retail store Jimbry branded stuff.

And then in the back of the retail store would be the play program.

So we'd rent one space and then all together.

And I thought, wow.

Retail stores.

Wow, that's a big deal.

We'd have to manufacture our own clothes and sell them in our own blah, blah, blah.

I thought, okay, let's put this together.

So just to be clear, the idea was let's have retail stores.

We'll sell all of our stuff and we'll have the Gymboree Place Center inside.

Yeah, in the back.

We'd walk through the store at the back of the store.

But the store would be a new creation.

We would design and manufacture our own apparel.

And we'd also put some play equipment in.

It would pretty much be all branded.

Maybe in the beginning, we'd have to bring in some other people's toys and things like that.

But it would be a thing.

So the idea would be hey, they're coming in for the classes anyway, but let's make them walk to the gift shop first, right?

Yeah, exactly.

You walk to the gift shop, then you go to the class, and you got to walk back out the gift shop.

So the gift shop was going to be the business, right?

Yes, exactly.

But the classes are going to draw people into the stores.

Right.

And you liked this idea right away?

I did.

I thought it was, yeah.

But I realized it was going to be, we'd have to really come up with the whole plan.

We'd have to do a model of what the store looked like, some prototypes of the clothing.

You know, we'd have to do a whole thing and then sell it to the board.

But again, I'm young and dumb and, you know, just I'm Business was not dying under my watch.

That's what I can say, Guy.

It just was not going down.

Okay.

The board previously, like less than a year earlier, had said, go figure this out.

No money.

Now you're going back and say, okay, we figured something out.

I'm going to present this to you and I need money.

Is that what you did?

Yeah.

I said, I think we really have come up with a winner to take the best of our reputation, the press and all of that and come up with something that is super sustainable.

It will need an investment, and I'm going to tell you how it works.

I was all in sales mode.

We'd had a beautiful mock-up of the store, which is pretty much how it ended up looking like a gym and then some clothing.

The woman who had done our clothing, her husband was the GM of the Gap.

So he knew all these people in China that could manufacture for us.

And she did a great job designing our first line.

We couldn't design a boys and a girls because we couldn't make enough products.

So we did a unisex line.

Anyway.

So I went to the board that Phil Schlein, who had been the head of the of macy's, had just joined us venture partners, my venture capital firm, and he asked the board if he could sit in on the meeting because he was like the retail guy and he wanted to hear what, what the deal was.

And so i made the presentation.

I could tell that it was um, it was going over well, and then he asked if he could speak and he looks at the board.

He says you'd be crazy to invest in this business.

First of all, they don't know how to run the business they have.

Yeah true, They don't know the first thing about retail.

And he just gave all the reasons why they should not invest.

And, by the way, the other question he must have asked was haven't they already tried products with licensing?

That didn't work.

Why is this going to work?

I think that question came up, but that one I had an answer for.

That in our own environment, housed in our own world, that we created and also the products that we were going to create were going to be really kid-friendly.

These were three-inch cuffs and You know, unisex and unisex was kind of a thing then.

I guess the argument you could also make was our customer base is affluent.

They've got money.

They're educated.

Yep.

All of that.

Anyway, so they said, well, they would think about it and let me know.

And the next day, the lead investor called me, the guy that put in the first $300,000.

And he said, Joan, I always believed in you.

We'll give you a bridge loan.

Get over to Hong Kong, produce the line.

And when you get back, you'll find a location.

We'll open up a test store.

Wow.

I said, okay, Stu.

Just as an aside, you were based in the Bay Area.

There happens to be two massive apparel brands based in San Francisco, Gap and Levi's.

And I think at the time, Gap was starting to work on a kid's line as well.

Like, did you ever approach them or try to?

You're going to laugh.

Stuart Muldow, my lead investor, was on the board of The Gap.

He was quite close friends with Don Fisher.

And he said, Joan, I'm going to get you in a meeting with Don Fisher.

I think maybe this was before I made the presentation about the retail to them.

And he said, I'm going to get you a meeting with him.

And I think if you present it to him maybe they would take it and they would develop your whole retail thing.

So we talked retail.

So I did.

I went to Don Fisher's office amongst all the artwork that's now at MoMA and stuff like that.

And he said, it's a great idea, Joan, but you need to know we're opening Gap Kids in six months.

And I'm thinking, great.

Even if we ever get this started, we're going to go up against the most formidable retailer in the world.

This is great news.

When we come back in just a moment, the clothing line goes forward, but Joan has to step back and leave the company for good.

Stay with us.

I'm Guy Raz, and you're listening to How I Built This.

Hey, welcome back to How I Built This.

I'm Guy Raz.

So it's 1986, and just as Gymboree is about to launch its own line of kids' clothing, The Gap says it's going to do the same thing.

But despite the threat, Joan doesn't back down and she takes off to Asia to visit a clothing factory.

Yeah, me and the woman who was being my designer...

You know, we're in the back of the bus of the airplane.

You know, one of us sitting lying on the floor, the other on the two seats, you know.

And we go and then they say they can't make that few quantity because of what we need for one store.

So I called Stuart and I said, Stuart, they won't make this few of quantity.

The factory needs a bigger order.

Yeah.

And he said, I double it.

You'll open two stores.

So I did.

I doubled the order.

I come home.

I get rolling.

I look around.

I find a location in San Jose and one in San Mateo.

Are these in shopping malls or are these in Macy's?

Shopping malls.

Yeah.

Top level malls between the Nordstrom's and the Macy's.

And these are what, 10 year leases that you had to sign or three year leases or what?

10 year leases.

And they were at that time with only a thousand square feet.

They were small stores.

And, um, we were ready to roll.

And the holiday season of 86 going into 87, all this had happened within a few months.

Wow.

Okay.

So you get the clothes being made.

You get the leases in shopping malls, which is a little scary because a 10-year lease man you are locked in.

And the shopping malls, of course, this is the 80s.

I mean, today, shopping malls are in crisis, but this is like boom times.

This was the top of the line.

And also the fact that everybody's tried to get in and we don't have any history of any retail stores.

How did you get in?

I got in telling them that we have, you know, 10 franchise locations in the area.

These people know the brand.

I implored them with all the statistics that I was aware of and that those people you know and they're going to bring other business to the mall.

They come anyway to walk their kid, you know, just something to do.

They'll come to the classes, they'll come to the store and then they'll spend money at the rest of the places.

They'll go to lunch, And they bought it.

And it turned out to be true.

Okay.

And tell me about the openings of these places.

They were on fire.

People were lined up.

We did the highest dollars per square foot in both malls of any other store during that holiday season.

What were people buying?

Clothing?

They were buying clothing.

Yeah.

And actually, I'm looking at my wall here.

I'm looking at a picture of the first store, because we were voted the best new design ever in 1986 or 1987, as well as doing the greatest dollars per square foot.

It's incredible.

It must have been such a validation for you.

It was such a validation.

And we did it all on our own.

I didn't have to go to the board and I hired all the people.

All of our staff went down and merchandised the stores.

We opened up the boxes all damn night.

And we greeted the customers the next day and it was just a blowout.

And you must have been on cloud nine.

I was so ecstatic.

And then Of course, the board, just like all businesses, they saw it as a winner.

And now that we were to go out and raise money.

So within the next year, we raised $6 million.

People were coming to you to give you cash.

Yeah.

And because Stuart knew all these people.

So he went to Harvard Endowment, Chemical Bank of New York, and they all came in.

Wow.

And so now you're on fire.

You've got something really hot.

You've got a hot brand, but you're also making money.

We're making money.

We're doing well.

And I also realize that I'm in over my head.

And I'm assuming the board is like, expand, expand, expand.

Let's go.

Let's put down a business plan.

I want 50 stores by year three or something.

And now they're telling me I'm aware that I have what I call my origin team, the people who have been with me from the beginning, which we wore every hat.

Okay, put your marketing hat.

Okay, put your this hat on because that's what you do when you're building.

You well know you're building something.

And now –

We needed the specialists.

We needed someone who did this, someone who did that.

And so my main investor said, Joan, and I knew too, it's time to let go of those people.

Start hiring people.

Start letting go of firing the people, the journalists that have been with you forever, took the pay cuts, did everything.

And I thought, I can't do this.

They wanted you to professionalize basically, quote unquote.

Yeah, they wanted me to run a real business.

And I thought, you know what?

I should go too.

Not only should the origin team be cut, I should be cut because I don't know what I'm doing either.

We need somebody that really knows how to – who's done this before.

It's one thing.

I'm a visionary.

I could conceive what the store would look like.

I can get it operating.

But I'm not going to be the right person to replicate this in.

You know up to hundreds of these things.

I'm just not.

Okay, this is 1988.

And again, from the outside, you are just one of the most successful female founders in America.

You've got this incredible brand.

It's expanding like crazy.

All this money is coming in.

The board wants 100 stores in the future.

And you yourself are like crumbling inside, like you are actually physically unhealthy.

Yeah.

And also you've talked about this and written about it.

You had an eating disorder that was serious.

I did.

And I managed it by building a gym in the Gymboree headquarters and making everybody come at lunchtime to a aerobics class so I could settle myself down.

It was just not a good time for me.

Everything looked great on the outside and on the inside.

I felt like I couldn't do this anymore.

And you were exercising like hours a day just to cope with the stress.

I was an exercise addict.

Uh-huh.

Yeah.

Were you talking to anybody about this or were you keeping this all in?

At that point, I think I was still keeping it in.

I was just embarrassed and I knew that I had all these franchisees that depending on me and I wanted to keep it together for them.

And I said to the board, or said to my main investor I am going to let these people go, as we both know they need to.

Do you think maybe it's that you want to replace me too?

Because I'd be down for that.

I said, Oh, the press loves you.

Everybody thinks you can you're going to run it all the way.

And I'm thinking, OK, I'll do my best.

Meantime, Joan, you were working like crazy, right?

And you also had a family.

I think you had two kids, right?

I had two kids.

And your husband was busy.

Tell me about your relationships at home with your husband and with your family.

Well, I had hired au pairs from the time my kids were little, because I was working so much and you know I would come home late and I'd be like well, what's for dinner?

You know what I mean?

I just, you know.

And so I was, you know, basically hired someone to kind of raise my kids.

Except for on the weekends and the vacations I was there.

And my husband was, you know, he was now, you know, He was a big-time editor?

He was a big-time editor but he morphed from that to running campaigns, running Bill Bradley's campaign and Jerry Brown's campaign.

Oh, presidential campaigns.

Yeah, or Mayor O'Reilly, like Bradley in L.A.

He morphed into another business where he parlayed all his know-how into that.

So neither one of us were manning the store.

He was more involved than I was.

And you had two kids.

And we had two kids.

And we were both very much committed to our professional lives.

And you know we were drifting apart because you know I didn't have the energy to hear him about his day-to-day shit.

And he didn't have the interest of mine.

And, you know, so I don't just I could tell that this wasn't going well.

You around this time were hospitalized.

You had a panic attack.

I can understand.

I mean, it's so crazy because on the one hand, the business is really succeeding.

You're under a lot of pressure from your board to fire people, to run new people and also to double down on how much you're working.

Your marriage is crumbling and you are feeling overwhelmed.

Yeah.

And so one of my employees, who became a friend, took me to the hospital and they said yeah, you're having a panic attack.

You know, gave me whatever they give you for that stuff.

And it just wouldn't go away.

Then I decided to talk to somebody.

Then I hired a therapist and I told them about my eating disorder.

And they said, oh, we'll solve it here in the thing.

And, you know, it's not solvable that way when it's as extreme as what I was doing.

You know, I was, you know.

I was a bulimic and I was an exercise addict, and it was just not – and I was just – I was not in a good place.

Let's just put it that way.

And I decided I was going to go to a treatment center.

You were going to need to step away from obviously from the business.

Yeah.

So I told the investor that I was going away for 30 days and would he cover me?

I had hired –

I think by that time they'd already kicked me upstairs.

I was chairman of the board.

So you weren't operationally – I was already hired somebody who was operational.

But from the press's point of view, I'm chairman of the board.

You know what I mean?

Sure.

And I went away and they told me at the treatment center that I would never recover if I went home after 30 days and I needed to go to a long term.

Where was this treatment center?

Georgia.

I was up in the Blue Hills of Georgia.

It was one of the one and only eating disorder 30-day programs.

There was millions of alcoholic programs, but this was for eating disorders.

So you basically go – it's kind of a place where you go and you live on this campus and they have – structured program for you.

Yes, but really 30 days is not going to be enough.

Not enough, they said.

You're going to need to go to long term because it's not like you plug the jug like an alcoholic.

You have to create a whole new relationship with food because you need to eat.

You just need to do it in a different way.

But what?

The thing that i really learned about it was that you cover because you're with like-minded people, and that it's not the therapist thing, it's your other quote colleagues that are also suffering from eating disorder are going to bust you.

You know, and eventually when I did get home, I went to that therapist.

I said if you ever have anybody like me in your office again, get them to treatment, because that's where it happens.

John, did you feel like – so I mean, on the one hand, you're this role model and you're strong and you've run this business and all these things.

On the other hand, you're doing something very vulnerable, right?

And people had to know about it because they need to know where's Joan going.

I told Stuart I was going, then I called him.

He's your lead investor.

Stuart, my investor.

And I called him because I thought my marriage wasn't going to make it either.

And I told him that I wanted him if he would, because it wasn't public company or anything at that point.

I wanted him to buy some of my stock or all of it, because I wanted to have some financial security, because I didn't think my marriage would make it.

And he said, Joan, this is your business.

You made this all happen.

I don't want you to ever think I took advantage of you and you were vulnerable.

You go away.

I will definitely buy you some of it or all of it, whatever you want.

But I want you to really think about this.

Hmm.

He was such a great guy.

And I said, okay, I will.

He paid me the whole time I was gone.

I got my salary.

And I called him halfway through that time.

And I said, Stuart, I need to sell.

He said, how much do you want?

How much would you be willing to sell?

I said, Stuart, I'm like any other entrepreneur.

I want a million dollars.

And he said, okay, well, there is no public market for it.

I'm going to leave you with 30% and I'll take 70%.

So you get a million dollars for 70 and you keep 30, but you're really focused on your recovery at this point.

And you would stay there for almost a year, 10 months, I read.

Yeah.

And I guess after you left that rehab facility, you didn't come back to California right away.

You actually spent quite a bit of time on the East Coast.

Yeah.

And then eventually you move back in 1993.

But by then you've been away for quite some time, like almost three years, right?

Yeah, about three years.

And you move back and you, I guess, and now your daughters are, they're grown up.

I mean, I think they're close to my age.

So they're in college.

And you would come back to try and and you say this, you've written about this to kind of repair your relationship with them.

There were some challenges.

Yeah.

Well, I mean, I left them when they were, one was a freshman in college and one was in high school.

And I left and I never came back.

I mean, they thought I was gone for 30 days and I was gone for almost three years.

I mean, I came back periodically, but I wasn't living with them.

You know fortunately, their peer groups and their friends were much more important to them at that time than their mother.

But I definitely needed to do some repair work.

And we did.

Did that take some time?

Yeah.

So you come back to California in 1993.

And that year, Gymboree announces it's going to go public.

Were you even involved?

Like were you did they?

Did they communicate with you?

Did you have any connection with them?

And you came back?

I'd gone to a restaurant in Los Gatos where I went to move.

This is like around, again, in the Bay Area, yeah?

Yeah, the Bay Area.

This is in the South Bay.

And I go to this restaurant and I heard a bunch of you know sort of entrepreneurial types, young sort of wannabe Silicon Valley go-getters talking.

And I heard them say, you know, a consumer company went public yesterday for quite a valuation.

It's Gymboree.

And I overhear this and I thought, Jimboree went public?

And I'm sort of half-assed interested, really interested, and I go up to where they're, you know, and I see a bunch of New York Times sitting on a little bench next to where you cash out.

And I took a paper and I opened it up and, sure enough, in the financial section I see one of those tombstone ads that Gymboree was going public.

Wait, how were you not informed of this?

I mean as a shareholder – Nobody told me.

But as a shareholder, I think they have to find out if you're going to sell your shares before they're going to go public.

Like I don't understand how you were not made aware of that.

I was not.

Maybe I had signed something originally.

I don't even remember that when I sold my shares to the investor, maybe I signed something that if there was ever an event that I would agree to.

You know, I was sort of still out of it whenever that was happening.

So I did not know.

I looked it up.

Their IPO price was $20 at the end of the day.

I think it closed like $38 a share.

It went up 58% on the first day of trading.

And so you had 30% of your shares remained.

So you probably still had some considerable number of shares.

I had some money.

Yeah.

I mean, it was nothing like what I would have had.

And I didn't even care.

So when you found out about this, did you want to liquidate your shares right away?

Well, no, I did not.

I was so focused, Guy, on maintaining my recovery.

That was the most important thing to me was that I could do that.

But the company, I kept my stock because it was like, this was my baby.

I can't sell this stuff.

And the company went split a number of times.

So it was kind of smart that I kept on to it.

It was not smart knowingly, but it turned out well for me.

Right.

Okay.

So the company IPOs and that's really I mean, you'd already kind of been out of it, but that's really kind of your end with Gymboree.

Meantime, you are now back and you are divorced.

Right.

Got divorced that same year, big year.

The company went public.

I got divorced.

And you are fully recovered?

Recovered.

Although some of us like to think that they're always doing push-ups in the background, so you need to be vigilant.

But I was really committed and I've been in full abstinence for 35 years, so I feel like it's behind me now.

And fitness was always part of your life anyway.

Yeah.

You were a big fitness person and still are.

I guess you were never really into yoga.

But this is when you start to get exposed to yoga in the mid-'90s.

That friend of mine that I had that was in the dance company.

With that we shared the job at the Jewish Community Center.

We stayed friends this whole time.

And she called me.

She said, come to a yoga class with me.

And I said, I'm not a yogi.

I'm a mountain biker.

I'm a this, I'm a that.

You know, that seems silly, but okay.

Friendship trumps.

I'll go.

And my first class, I fell in love.

I just it just something cracked in me.

I was able to access my emotions.

It was just the way those poses were put together.

I just loved it.

And I became a yogi right from the get go.

And then people came up to me and said, oh, you're the Jim Marie lady.

We should you should open up a chain of yoga studios.

Of course, they would say that because you already did.

You already proved what you could do.

I've already done this, right?

And I said, you know, I don't think I can do this again.

I just kind of – and they said, well, how about just a Bay Area chain?

Who were these people saying this to you?

These were students in the class that I had known and people – fellow students with me or people I'd known from the community and stuff like that.

And I thought –

You know what?

I guess I'm going to, you know, I just I softened to the idea because I'm an entrepreneur.

I love the idea of growing.

I love service businesses.

I love, you know, a business where you go in one way and an hour later you come out another way.

And I thought, OK, we'll do this.

So you basically decide that your next act was going to be yoga studios.

It's amazing because it's basically Gymboree for grownups, right?

Exactly that.

That's what I would say to myself.

I'd say, here you go.

Because I start businesses for the phase of life I'm in and I still want to do like a senior living center because that's the phase of life I'm headed towards.

But I'm not fully there yet.

I don't want to go live in one of those places.

But if I do, I want to start it.

And this was going to be a chain of yoga studios only in the San Francisco Bay Area.

That was the idea.

That's what I thought.

I can't do this nationally.

I can't do a big rollout again.

But maybe I could do a little Bay Area chain.

And so where did you open the first location?

I opened the one in Mill Valley where I lived.

And I thought, gee, I want to be just like a little franchisee.

I just want to have a little location, go home, have this thing, you know, blah, blah, blah.

And then I opened one in another area of Marin County, Larkspur.

And then I opened one in the city.

And then I realized the same stuff is coming up for me again.

Like what?

I'm feeling completely obsessed with this business.

I can't think about anything else.

I don't want to see my kids.

I don't want to talk to people.

I just want to make this business work.

I don't have that ubiquitous thing called balance.

I don't know how to do that.

I just don't.

And I didn't want to have another breakdown.

I just so.

I said I'm going to sell the business which I did to Yoga Works, which was a national chain.

They had at the time when they bought me, they had about 25 locations.

They were in L.A., but they buy other studios like me and change the branding.

So now it went from the name I called it to Yoga Works.

Your business was called the Yoga Studio, right?

Yes.

And you had how many locations did you have?

I had three locations, but they were really significant because they weren't like these old school places that were up upstairs with purple walls.

They were in real malls, and we had like three studios, and we had a retail thing.

They were significant businesses.

Was it breaking even?

It was not.

Yeah, it's a tough business.

It was another Gymboree franchise business.

The service business, even though the classes are packed and everybody thinks it's super successful.

It's just not.

That's the thing.

It's like restaurants.

You go to a restaurant that might be packed, but the margins are thin.

And you go to a yoga studio and it might be packed, but it's just, the capacity is limited, you can only fit a certain number of people in and they're really hard businesses unless it's a super efficient model really hard businesses to make profitable.

Right.

And here I had been selling my teachers all these years and we're partners.

So I would give them 50% of the revenue.

That was never going to fly.

And the truth is I was not going to be able to make it work because, unless I changed the way they got paid, which was too scary for me, I wasn't going to do it.

So I sold it to Yoga Works.

Yeah.

And Yoga Works eventually would go on.

During COVID it went under.

During COVID, yeah.

Yeah.

And so this really begins the next chapter in your life to start focusing on.

You know just different things.

I mean, tell me a little.

I mean, here you are.

It's 2008 time period.

You're in your 50s, right?

At this point.

Early 50s.

Yep.

And I mean, were you done with entrepreneurial ventures?

What did you think you wanted to do at that point?

Well, Gymboree now had a new chapter.

And first of all, YogaWorks, I consulted to them for about a year and a half after they bought me.

And then I decided that, while I had lost my privilege to be an entrepreneur, it didn't mean that I didn't love the whole idea of other women building their businesses.

So I became a mentor slash consultant or whatever to other women who were running their businesses.

And then I went on the speaking tour.

I became a keynote speaker and was flown all over the place to speak to women's conferences.

But you didn't like that.

Well, I liked the fact that I would tell my story pretty unvarnished, as I'm telling you about the whole eating disorder thing.

And women would come up to me afterwards and say I've never told anybody, but I have an eating disorder too.

It feels so good to know that there's someone like you, who I looked up to and thought I wanted to live your life.

And I always say, well, wait till you hear the story before you want to be me.

You know what I mean?

Yeah.

And so that felt good.

But it was lonely.

It was even more lonely to fly across the country and then lead a workshop and then fly home.

I just – I didn't love it.

Meantime, the Gymboree world – I mean it went public.

It was public in the 90s.

And by 2010, it was acquired by Bain.

Yeah, for $1.8 billion.

$1.8 billion.

Which is incredible.

I mean, the shareholders, I'm sure, did very well out of that.

And you're certainly you were nervous about paying your investors back.

But of course, they did very well.

Yeah.

Many millionaires, many multimillionaires.

But this really begins or maybe was in the midst of a decline, a significant decline for Gymboree.

I mean, that was sort of its high – probably its high watermark in terms of its value, because then eventually, I think Bain then buys it for 18 billion and then sells it six years later for 127 million.

And then recently the brand name was bought for $75 million.

Clearly people still see value in it because someone paid 75 million for it a couple of years ago, just for the name.

Exactly.

And there's still – I have friends that live in Oakland and there's still a franchise on Oakland on Lakeshore Drive and kind of the kind of hot area over there.

I mean, they're still around.

Joan, you are in your 70s.

Yep, late 70s.

And you're very – people can't see you, but you're very vibrant and clearly very fit.

Tell me a little bit about your sort of regimen.

How do you – what do you do?

I pretty much go to yoga every day or maybe four times a week now.

And I hike every day.

And –

Well, it's not like I haven't had my fair share of things.

I'm a cancer survivor.

I mean, I've had my stuff too, but I just can't.

When did that happen?

I got my first cancer, my first and only cancer, actually, six years ago.

I'm six years in remission.

So I'm 72.

Wow.

I had major ovarian cancer, and it comes on very quickly.

I figured it out quickly, and they put me into surgery, and it was heavy duty for a lot of years.

Wow.

Yeah.

But I think I'm a little bit naive guy, to be honest with you.

I just never occurred to me that I would really die from this thing.

So I just kept keeping on.

And then I knew that because the oncologist kept telling me you know, there's going to be life before cancer and there'll be life after.

And what did that mean for you?

Well, I thought she meant, like, don't expect to come back to your old self.

You know what I mean?

And I was like, okay, well, I'll deal with that when I deal with that.

But I pretty much have.

I mean, you know, I'm older, so I've got regular aging issues, but I'm pretty much myself.

I wonder when you think about...

You know, starting at the Jewish community centers just with you know part-time job and then turning it into a really big cultural thing, right?

It was People Magazine.

Baby Boom, it was centers all over the country eventually bought for 18 billion from Bain.

When I put it in those terms, do you reflect on it and think, that's a lot to be proud of?

Yeah, I'm proud of it.

I mean, it's not my defining, actually, my recovery from cancer.

I'm more proud of that and how I came through that.

I hear you.

Yeah.

I mean, I guess you know I ask this question to everybody because of the show and you know it's more of a chance to kind of reflect.

But do you think that your success came from all the work you put in the grind or do you think some of it had to do with luck and just the timing of all this?

The both and.

Yeah.

Absolutely the both and.

I think you have to definitely be on the right street corner at the right time when the bus comes by and know which one to get on.

And there were many of those moments.

But I also think that if I had given up where many people would have...

Probably I would have too if I was a little smarter at different periods of time.

Just walked away like, oh, god, the franchisee doesn't work.

Oh, god, the licensing has crumbled.

Oh, god, Hasbro has killed us.

You know what I mean?

Just a million exits should have happened.

But I was – as I mentioned earlier, I refused to let the damn business die.

I'd let my marriage go.

I'd let my kids falter.

I mean, I, and I still don't know 25 years of therapy later.

I still do not know why I put that kind of effort into it.

It wasn't like I had a lot of money into it at $6,000, you know?

I mean, that was the total sum of my investment in this thing.

I mean I, it's part of me and I love building that business until it was just over my head.

But I really love the camaraderie of the team and the women I built it with.

And um, I feel like what a privilege it was to be able to dream up something and have the right people at the right time and get the right investors to be able to make this a reality.

That's Joan Barnes, founder of Gymboree.

By the way, even though Gymboree is nowhere nearly as big as it once was, it's still doing pretty well overseas, especially in China, where there are hundreds of play centers.

As for the clothing line, the retail stores closed down in 2019, but the brand still exists.

It's owned by a company called The Children's Place, which recently reopened its first Gymboree brick and mortar store at a mall in New Jersey.

Hey, thanks so much for listening to the show this week.

Please make sure to click the follow button on your podcast app so you never miss a new episode of the show.

And as always, it's totally free.

And if you're interested in insights, ideas and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at Guy Raz dot com or on Substack.

This episode was produced by Chris Messini with music composed by Ramteen Arablui.

It was edited by Neva Grant with research by Rommel Wood.

Our audio engineers are Patrick Murray and Jimmy Keeley.

Our production staff also includes Alex Chung, Casey Herman, JC Howard, Sam Paulson, Catherine Seifer, Carrie Thompson, John Isabella and Elaine Coates.

I'm Guy Raz, and you've been listening to How I Built This.

[The Rise, Crisis, and Resilience of Gymboree: A Founder's Journey]-[Gymboree: Joan Barnes. How Building a Beloved Brand Nearly Destroyed Its Founder]

📋 Summary

The Rise, Crisis, and Resilience of Gymboree: A Founder's Journey

The Accidental Beginning: From Loneliness to a Movement

Scaling the Unscalable: The Franchise Model

The Dark Side of Drive

Pivot and Departure

Reflection and Legacy

🎯Key Sentences

📝Key Phrases

📖 Transcript

[The Rise, Crisis, and Resilience of Gymboree: A Founder's Journey]-[Gymboree: Joan Barnes. How Building a Beloved Brand Nearly Destroyed Its Founder]

📋 Summary

The Rise, Crisis, and Resilience of Gymboree: A Founder's Journey

The Accidental Beginning: From Loneliness to a Movement

Scaling the Unscalable: The Franchise Model

The Dark Side of Drive

Pivot and Departure

Reflection and Legacy

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🎯Key Sentences

📝Key Phrases

📖 Transcript

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