Skip to Content
rothys

Running a business can be a lonely job. The long hours, the existential threats — it can feel like the weight of the entire company is on your back. That’s where the transformative power of co-founders comes in. Co-founders provide more than added manpower; they bring fresh perspectives and talents that help businesses conquer problems at speed. And the co-founder effect extends beyond the people who started the company: The lessons hold true for every team member that contributes in a foundational way. The more voices you add, the more resilience you build in yourself, and your organization.

“At the end of the day, I can’t imagine starting a company by myself. I really can’t.”

— Stephen Hawthornthwaite
About the guests:

Stephen Hawthornthwaite is co-founder, chairman, and CEO of Rothy’s. Previously, Stephen spent nearly 20 years advising on merger and acquisition transactions and evaluating investment opportunities in both investment banking and corporate development. He particularly focused on the internet, digital media, e-commerce, and consumer sectors before taking the leap into launching his own brand with Roth. He holds degrees from Duke University and the School of Law at Wake Forest University.

Roth Martin is co-founder and president of Rothy’s, overseeing business operations and creative design development. Roth studied Japanese at the University of Southern California and holds a bachelor’s degree in East Asian Studies from Boston University. His time in Japan helped shape his passion for sustainability and his penchant for clean, modern design. This inspired him to co-found Hedge Gallery, which he ran for over a decade before co-founding Rothy’s alongside Stephen. Roth is also the co-founder of FOG Art + Design Fair in San Francisco.

About the host:
reid_hoffman

Reid Hoffman is the host of Masters of Scale. A Silicon Valley entrepreneur and investor, he’s known for his spot-on insights on how to scale a startup. He’s a partner at Greylock and co-founder of LinkedIn, and co-author of the best-selling Blitzscaling and The Startup of You.

Also featured in this episode:

Pilobolus is a rebellious dance company founded in 1971. They have created and toured over 120 pieces of repertory to more than 65 countries, …

Pilobolus is a rebellious dance company founded in 1971. They have created and toured over 120 pieces of repertory to more than 65 countries, …

I believe that two co-founders are better than one, and a few voices are better than fewer voices at any stage of business.

— Reid Hoffman
Transcript of Masters of Scale: The co-founder effect

MATT KENT: On a lifted table, three feet in diameter, three dancers perform on top of this table. They’re really intimate with each other, physically intimate, being really close to each other, but they’re also telling a story. 

REID HOFFMAN: That’s Matt Kent, artistic director of the dance company Pilobolus. And the dance he’s describing, like most of the work Pilobolus is known for, features bodies assembling like Voltron into elegant, complex shapes — from a moving VW bus, to an elephant wiggling its ears in time with its swishing tail. 

These physical collaborations do more than create pretty pictures. They give the dancers leverage that almost works like a superpower.

KENT: When you are lifting someone, when you’re partnering, your center of gravity has changed, which means that you can jump a little bit further, you can lean a little bit further, you can reach out a little bit further because you’re working with another person.

HOFFMAN: Speaking of working with others, Matt doesn’t lead the company alone. He shares that job with his co-artistic director, Renée Jaworski. 

RENÉE JAWORSKI: Our physical partnering is really just the physical representation of the collaboration of the minds as well.

HOFFMAN: Pilobolus has been making work for over 50 years, performing everywhere from the Olympic games to the Academy Awards. And they’ve done it with an approach so collaborative that it actually makes some people uncomfortable.

KENT: We’ve been in situations where people have literally come behind the stage and said, “Who’s in charge?”

JAWORSKI: “Please tell me who’s in charge here?”

KENT: They don’t understand.

JAWORSKI: And it’s stressful for some people.

HOFFMAN: But for Renée and Matt, the collective input of the group is the essential ingredient that drives their company to keep inventing.

KENT: Our ability to fail together is our insurance against mediocrity. It feels like a Ouija board. You want to go this way, but sometimes you feel a little pull in a different direction. If you just were like, “Come on, we’re going this direction,” and yank it over, you’re going to lose the groupness, and that groupness is what we protect.

HOFFMAN: In business, leaders are constantly trying to channel this kind of collective spirit into a company that can innovate, move fast, and beat its competitors to scale. But it’s incredibly hard to harness a collective by yourself. 

That’s why I believe that two co-founders are better than one, and a few voices are better than fewer voices at any stage of business. 

[THEME MUSIC]

HOFFMAN: I’m Reid Hoffman, co-founder of LinkedIn, partner at Greylock, and your host. And I believe that two co-founders are better than one, and a few voices are better than fewer voices at any stage of business. 

There’s a famous song you might know that starts with this iconic line: 

SINGER: “One is the loneliest number that you’ll ever do…”

HOFFMAN: That was recorded in the year I was born, 1967, by a musician named Harry Nilsson, though you might be more familiar with the versions by Three Dog Night or Aimee Mann. It was inspired by a time Harry called an acquaintance and got a busy signal. And you can hear the echo of that “beep beep beep” in those first opening notes.  

This song has special resonance for founders and business leaders. Because running a business often feels like a lonely job. You have multiple fires burning, every day, posing existential threats to your business. You’re working 60, or 80, or 100-hour weeks just to get a foothold. Even with a terrific team, it can feel like you have the weight of the entire company on your back. 

The power of co-founders

That’s where the transformative power of co-founders comes in. Co-founders don’t exactly lessen the workload; there’s more than enough to go around. But they can distribute the work, bringing complementary perspectives and skill sets that help you conquer problems with conviction and creativity. 

I wanted to talk to Stephen Hawthornthwaite and Roth Martin about this, because as co-founders of the sustainable shoe and handbag company Rothy’s, they’ve leveraged each other’s strengths to build Rothy’s into an e-commerce Cinderella story. Celebrities from Kristen Bell to Meghan Markle have been photographed in their eco-friendly shoes, knitted with yarn made from recycled water bottles. As of 2022, the company has diverted nearly 150 million single-use plastic water bottles from landfills or the ocean. And we’ll get to how they did it in just a moment.

But first — a short disclaimer. There’s one word you’re going to be hearing a lot of in the next 30 minutes. And that word is “if.” Because the relationship between you and your co-founder — whether it’s one, or many — is personal and conditional. When I say that two co-founders are better than one, that’s only true if you work well together; if you are equally committed; and if together you build a plan to empower future employees. 

Pay attention to that word “if” in Rothy’s founding journey. Because their story is so full of uphill battles and tough breaks, it would be a minor miracle for Rothy’s to succeed at all — if it weren’t for Roth and Stephen’s incredible co-founder relationship. 

STEPHEN HAWTHORNTHWAITE: It was October of 2011, and we were at a friend’s 40th birthday party. 

HOFFMAN: That’s Stephen. 

ROTH MARTIN: We had met each other through our wives. And had been friends for about six years at the time.

HOFFMAN: That’s Roth. And they’re about to tell us about the night these friends decided to become business partners.

How Stephen Hawthornthwaite and Roth Martin met

HAWTHORNTHWAITE: We were in the back room of a restaurant in San Francisco. I think there were probably 40 or 50 people there. And Roth and I were seated together.

HOFFMAN: Professionally, they couldn’t have been more different. Stephen had spent years in investment banking, advising on mergers & acquisitions at Barclays and other firms. Roth, meanwhile, was in art and antiques, running the Hedge Gallery in San Francisco’s financial district.

But there was one thing they realized they had in common. They were both looking for a change. 

HAWTHORNTHWAITE: I was 41 at that point, Roth was 37.

MARTIN: I was sitting at the dinner complaining about what I was doing.

HAWTHORNTHWAITE: I had made the decision at that point to leave the deal business in the hopes of starting my own business.

MARTIN: I was just becoming increasingly disenchanted with what I was doing at work. 

HAWTHORNTHWAITE: We just realized that professionally, we were in the same place at the same time.

HOFFMAN: As they talked, Roth and Stephen each saw something valuable in the other. Individually, each had been feeling the need for a career shift. But together, party talk started morphing into something more serious. The two decided to go into business together. What that business would entail? That would come second. 

And here’s where we’ll want to deploy the magic word: “if.” Because this is not a template that works for everyone! Many co-founder relationships start with the product idea first: a better mousetrap, or the next killer app. Others, like Roth and Stephen, form the relationship first and then start talking product. Both are valid, but only one might be right for you. 

One of the first decisions Roth and Stephen had to make was whether to go into software, or physical goods. Or as I often describe it, the world of bits or atoms. 

HOFFMAN: If you said, hey, there’s these two guys who are founders, one has in-depth technology M&A experience, the other one has been running an amazing gallery. What product do you think you’d create? Women’s shoes wouldn’t be top of mind.  

MARTIN: Really? Why?

HAWTHORNTHWAITE: Reid, you’d be surprised how many times we heard that.

MARTIN: We weren’t thinking about service businesses or technology businesses. We had a shared passion around creating a physical product that was innovative, right? Something that didn’t exist. Both of us were adamant about not creating a copy and paste product that you just add marketing to. And maybe it was naive, but really believed in if we built the product right it would sell itself. 

How Stephen Hawthornthwaite and Roth Martin first thought of Rothy’s

HOFFMAN: Stephen and Roth started to think about the patterns they’d been observing in their daily lives. Was there a product, not yet invented, that might actually sell itself? That’s when their attention drifted to something they both saw — their spouses.

HAWTHORNTHWAITE: If you wind the clock back and you think about 2011, women were in Lululemon tights all the time.

MARTIN: All of a sudden, every woman we knew was wearing Lululemon leggings and they had no idea what shoes to wear them with. They were wearing them with running shoes when they weren’t going running, they were wearing them with flip flops sometimes with dressy flats.

HAWTHORNTHWAITE: Both of our wives would go to SoulCycle or yoga, drop the kids off at school, maybe go to the office, out to dinner, and there just wasn’t a clear footwear compliment to that outfit.

MARTIN: There’s all these frustrations around it. It was like, “God, these kill my feet. I love these, but I don’t wanna ruin them today.” It just was like a light bulb moment.

HOFFMAN: Notice that this lightbulb moment might not have occurred to either Roth or Stephen on their own. But together, they were able to recognize a pattern. This wasn’t just something their own wives were struggling with. It was a common problem, with a large total addressable market.

This is one of the co-founder effect’s most powerful functions: making it easier to spot major trends. Each person added to the team acts as a prism to reflect back and clarify the observations of the others. 

MARTIN: I think really the white space is what kept drawing us back to this, that there was a true need for it. Witnessing our wives, and women we knew, not knowing that this product didn’t exist and how much that they really would value it. 

HOFFMAN: For Roth and Stephen, the appeal of this “white space” was electrifying: a well-designed shoe that behaved like a sneaker, and tapped into the Lululemonification of women’s wardrobes. This was a product that might “sell itself,” once it met the market. 

Now, Roth and Stephen just had to figure out how to make it. 

HAWTHORNTHWAITE: We had no idea how hard footwear is. We had a vision that if we could crack the code on creating the perfect shoe that really sits at the front of the closet, that’s equal parts style, comfort, and sustainability, that we’d have a shot at building a global brand. What we didn’t know was that, you know, it was gonna take four years to create the product.

HOFFMAN: Keep that four-year timeline in mind; that will become relevant a little later. 

It’s worth noting that Stephen and Roth were entering an industry in which they had zero experience. This isn’t a small challenge. If you’re building a software product, having a technical co-founder is almost always a stronger position than if you have to hire out all the coding. And in fact, some VCs will insist that you add a technical co-founder before they invest.

But again, let’s deploy the word “if.” The entrepreneurship journey is one of constant learning. And, presumably, something you’re doing has never been done before. Or else there’s no room for upside in your business! 

This is where newcomers can bring a unique outsider perspective that can disrupt old, calcified ways of doing things. Entering an unfamiliar sector doesn’t have to be fatal to a start-up or an established business if you and your co-founders and teammates can learn the rules quickly. 

This is how Stephen and Roth found themselves in southern China, crisscrossing the landscape to learn about their newly adopted industry: Shoe manufacturing. 

MARTIN: Driving four hours this way in a minivan and four hours that way across Guangzhou, we took this trip to China and toured footwear factories left and right. 

HOFFMAN: Stephen and Roth were in China to learn their new business. One dismal discovery? Shoemaking is wasteful. 

HAWTHORNTHWAITE: All the die cutting and all the offcut waste, look at leather or fabric. If you need a circle, you start with a square piece of fabric, and you die-cut out a circle.

HOFFMAN: Cutting a circle out of a square means you’re shedding all those corners and throwing them on the scrap heap. It’s simple geometry with profound consequences for the planet.

But that wasn’t the only wasteful process Roth and Stephen noticed. 

MARTIN: Behind each subsequent door was another thing that didn’t make sense. Why does it require so many materials to make a shoe? Why is the supply chain so disparate? Or when we went to look at the merchandising processes, why are lead times so long? Why make a product if you may not even sell it? To produce the materials, to commit the labor to it, to make a box for it, to put it in an ocean container and ship it across the world, to have it sit in some warehouse. And maybe in the worst case of all, it’s incinerated. 

HAWTHORNTHWAITE: That’s what ultimately led to knitting. Why can’t we just knit the circle from the beginning and only use the material we need? 

HOFFMAN: That’s right. Roth and Stephen’s answer to a more sustainable manufacturing process was to deploy the same process that makes sweaters and mittens for making shoes. 

Knitting the uppers to their shoes would make them much more sustainable in two ways. First, as Stephen just told us, it meant that they could produce just the material they needed at the moment they needed it. And second, it would allow them to make their own yarn from reclaimed ocean plastic, using computer-aided design software in a process called “additive manufacturing.” It’s sort of like 3D printing. In fact, it is “3D Knitting.”  

Note, their vision came long before they’d worked out the details. But if they could pull it off, the environmental implications would be huge.

MARTIN: Really, the innovation with what we were trying to create shoes had never been done before, which is a massive reduction in the amount of parts, materials, suppliers, all these kinds of things.

HOFFMAN: Figuring out low-waste manufacturing was one kind of disruption they wanted to take on. The other wasn’t about what to make, but where. 

Rothy’s first factory in Maine

HAWTHORNTHWAITE: Out of the gate, we wanted to do this in the U.S. We had networked through LinkedIn to a number of footwear professionals in the U.S. And we told them, you know, “We’re going to try to do this in the U.S.” And they said, “You are certifiably crazy. Like it cannot be done. The entire footwear supply chain in the U.S. went offshore in the ’80s and the ’90s. Everyone knows this has to be done in China.”

HOFFMAN: Roth and Stephen had wanted to onshore jobs to the United States. They were also skeptical that they’d be able to convince factories in China to change everything and do things their way. So they started testing and probing the problem.

This is a powerful advantage of the co-founder effect. When you conceive of a radically new approach to an old way of doing things, it could mean you’re delusional, or, it could mean you’re about to become a major disrupter. And often what separates one from the other is the ability to problem-solve and the conviction to keep going. 

It’s hard enough to tell an entire industry, “hey, you’re doing things wrong.” But it’s much harder when you’re the only one saying it. (And that’s true whether you’re founding something new, or are in an established business, trying to make a change!) Having even one other co-conspirator to poke holes in the status quo gives you the resilience and confidence to say, “This can work!” 

Stephen and Roth badly wanted manufacturing their shoes in the U.S. to work. So they scouted for anyone who might be able to help them. And as it turns out, they did have one surprising predecessor in this space. 

HAWTHORNTHWAITE: The military, they’re required to make their boots in the U.S. with U.S. materials. So, we went to military boot manufacturing complexes, one in Tennessee. We went to Puerto Rico. We thought, “If we can find the machinery, we may also find some of the materials.”

We ultimately ended up in a town called Lewiston, Maine. In 1938, they made more shoes in Lewiston, Maine than anywhere else in the world.

We decide that we need to set up a workshop or a small factory. We’re convinced that there are enough engineers and suppliers in the area, and we start to work.

MARTIN: We set up shop above a used footwear machine salesman. He was fixing up these old 1950s Goodyear welting machines, and we got a little bit of know-how from him. Everyone was trying to contribute, and say, “Well, you might try this.” All these different things. 

HAWTHORNTHWAITE: It really came down to almost reverse engineering the supply chain.

MARTIN: We ended up developing the shoe we practically make today, the flat, here in the U.S. 

HOFFMAN: This development process itself was a feat of engineering and co-founding. Because some of your most important co-founders aren’t limited to the people you form the company with. It could be the machine repairer downstairs from you. Or the early employee who invents a great cultural practice. Or, the supplier who fixes a supply chain challenge. 

In the case of Rothy’s, that supply chain piece was one of the most critical puzzles to solve. Earlier, we talked about the additive manufacturing process that enabled Rothy’s to knit the uppers of their shoes with yarn made of recycled plastic, such as the kind you get from single-use water bottles. 

Spinning empty bottles into yarn like an eco-friendly Rumplestiltskin wasn’t a broadly available process at the time. So they had to create their own.

MARTIN: Our yarn, we had developed with a U.S. supplier to transform single-use plastic water bottles into a yarn. We had developed the machinery and the computer programs to knit our parts and assemble those shoes in the U.S.

HOFFMAN: Creating their own process for sourcing materials was a major triumph. Maybe they could revitalize an American industry singlehandedly.

But then one year of research and development turned into two. And two turned into three. 

MARTIN: This just ended up to be a very lengthy development process.

HAWTHORNTHWAITE: People really were looking at us and like, “Okay, guys, you’ve been working on this for three years. We have yet to see a shoe. What is taking so long? We think it’s a great idea, but somebody’s going to come out with something else.”

HOFFMAN: As often happens in the world of atoms, developing the prototype was one hurdle. Getting to mass production was a taller one. 

MARTIN: After considerable time and a lot of challenges with getting the product consistent, really we’re at a dead end and looked at each other one day, and I said to Stephen, I said, “Look, I think I better go to China.” And so, I left Stephen in Maine, and I flew with our yarn, and the machinery and the computer programs to knit our parts.

I took all that in a Pelican storm case and flew over to a sweater factory in Fujian, China.

HOFFMAN: One benefit of co-founders is the ability to actually be in two places at once. But which place would hold the future of their company remained to be seen. 

[AD BREAK]

HOFFMAN: We’re back with Stephen Hawthornthwaite and Roth Martin of Rothy’s. If you’re enjoying this episode, share it with your co-founders by clicking the “Share” button in your podcast app. And to hear our complete conversation with Roth and Stephen, become a Masters of Scale Member at Mastersofscale.com/membership. There, you’ll find stories we didn’t have time to cover in this episode — like Roth’s early adventures in biotech, and the time Stephen spent learning how to make men’s suits. And, you’ll hear how Rothy’s took their e-commerce business “IRL” at the Farmers Market in San Francisco’s Ferry Building. You won’t want to miss it.  

Why Rothy’s closed their Maine factory

When we left off, Roth and Stephen had just made a dramatic decision in the life of Rothy’s. For over three years, they had worked to develop a washable, versatile women’s flat, knitted from plastic water bottles and made in America. They had ticked the first two boxes on that list. But the third had proven an unvanquished foe. After all that time, they still didn’t have a product release date, or a timetable for when that date might be. 

HAWTHORNTHWAITE: We were able to make, you know, 30 or 40 pairs of shoes that were okay. But, they were not beautiful. And the writing was on the wall.

HOFFMAN: So they had sent Roth to China to see if a factory there might be more viable. 

And it bears saying: this moment of reckoning can be a bitter one. You’ve been hammering away at executing on something that’s critical to the mission. But the obstacles and market realities have been hammering back. And at some point, it begins to dawn on you that the obstacles might win. And you start to wonder if it happened because you and your colleagues had the same blindspots. 

Sometimes we refer to this as groupthink, which we are generally told to avoid. But allow me to offer a slight reinterpretation of that word, which I shared recently with my producers.

HOFFMAN: Blind spots are just the flip side of strengths and weaknesses. We go, “Well, our blind spot is a predisposition to speed, and sometimes we don’t realize that sometimes it needs to be done long. Yup.” Right? So it’s just a question of shaping the right ones, where these are our collective hypotheses, our collective theory of the world. 

And what you’re really saying groupthink is the ones that are bad that might kill you that you’re not seeing because of your point of view. And that means you have to be able to ask each other learnings. Like, “Oh, I talked to this really smart person, maybe we should take this seriously. I see this happening with our competitor. I see this happening in the market. Maybe we should reevaluate this.” We have a group learning that us learning and being right is more important than our collective theory of the case.

HOFFMAN: Roth may have been the first to see that their factory in Maine wasn’t going to get them to scale. But the learning was a collective one with both of the co-founders. So instead of doubling-down on an old mistake, they moved forward, a decision that had its own challenges.

MARTIN: I flew over to a sweater factory in Fujian, China and set up with them.

HAWTHORNTHWAITE: Keep in mind that Roth does not speak Mandarin, and he’s using WeChat to communicate.

MARTIN: China all of a sudden was like, “Oh my god, I can access materials in a nanosecond. I can access the know-how, the engineering, all these things.”

HOFFMAN: Through grit, determination — and WeChat — Roth worked with fabricators in that sweater factory to see how quickly they could produce a Rothy’s shoe.

MARTIN: We had no formal agreement, nothing. I gave them our programs. We started to work immediately and made progress. 

Called Stephen about a week later I think, and was like, “You know what, this is just never going to happen in the U.S.”

HOFFMAN: When you’re wrong, and realize you’ve been wrong, the right partner gives you double the resilience to keep going. And, double the manpower to put things back on track.

As Roth scaled operations in China, it fell to Stephen to shutter the factory in Maine.

HAWTHORNTHWAITE: So after I shut down the factory, I’m in the background working in the U.S. trying to set up an e-commerce business, setting up Shopify, doing a photoshoot. And so, it was really going in parallel. 

HOFFMAN: As both co-founders followed these parallel tracks, one fact was becoming clear. Their U.S. factory may have failed, but the product they’d innovated at that factory really held up. The additive 3D knitting process using reclaimed plastic yarn went shockingly fast in the hands of Chinese manufacturers. Every day, production was gaining speed. 

However: there was one thing they’d had at their U.S. factory that was proving harder to replicate in China, using contractors. And that was team cohesion.

MARTIN: So, along the journey had OEMs defraud us —

COMPUTER VOICE: OEM: Original equipment manufacturer.

MARTIN: Had workers treated incredibly poorly where they weren’t paid, had machinery stolen. And so, navigating that really started to create the desire to build our own factory and to do things in a way that would ideally influence the state of manufacturing in China. 

HOFFMAN: These painful experiences working with a piecemeal workforce taught Roth and Stephen a critical lesson. The wrong partners are as detrimental to your growth as the right partners are additive. 

Building their own wholly owned factory in China wasn’t feasible yet. But little by little, they did their best to build a team they could rely on. 

How Rothy’s launched into the shoe industry

HAWTHORNTHWAITE: I would say by October or November, the shoes were far enough along that we confirmed a final order. I think Roth and I bought 8,000 pairs of shoes. 

Our website was ready. We combined our Rolodexes, which was for me, bankers, attorneys, friends from schools. Roth had gallerists and artists. Maybe we had 5,000 names.

HOFFMAN: Stephen mentions this in passing, but their ability to combine two vastly different sets of contacts is no small thing. It’s one reason that diversity of experience is a great thing for co-founders to have. Because when you combine networks, it’s more than additive — it’s a force multiplier.

Nearly five years after the fateful birthday party that brought Stephen and Roth together, they got their 5,000-name mailing list all ready and launched their first campaign.

HAWTHORNTHWAITE: It was a very quiet launch. We didn’t make a lot of noise. We just hit send on a few emails. 

HOFFMAN: The launch may have started quietly, but it soon took on a distinctive sound.

MARTIN: We were on Shopify, right? Shopify has this amazing sound, but it’s a cha-ching, right? And this thing is just cha-ching-ing, cha-ching-ing, cha-ching-ing. “Holy shit, is it ever gonna stop?” You look in, and you start to look at the orders, you’re like, “I know that person. God, they’re just being nice. And I know that person, they’re being nice.” Then, you know, a couple of days later, it was like, “I don’t know this person. I don’t know this person. “Oh my God, I think they might like this, right?”

HAWTHORNTHWAITE: The analogy I use sometimes, we decided we were going to bake a cake. We had no idea what a cake was. We didn’t have a recipe. We spent four years figuring out what that recipe was. No one really tried the cake. And then we put it up for sale, and people said it was the best cake they’ve ever had.

HOFFMAN: This instant kind of product-market fit is not the norm. Rather, it’s a combination of luck, timing, and design. The integrity Roth and Stephen both brought to building their product was reflected in their responses from customers. 

Which is not to say that the existential fires stopped burning the day they launched.

HAWTHORNTHWAITE: We sold a couple hundred thousand dollars worth of product, and we thought, “Wow, it’s been almost five years. Now, we’re going to go on vacation,” and we woke up on December 25th to an inbox that was just overflowing with emails about, “Hey, this is a great product. I want to exchange. How do I do that? I got a gift card. How do I use it?” And, I think that’s when we quickly realized this is real. There’s no holiday vacation.

HOFFMAN: For nearly five years, Roth and Stephen had been operating (more or less) on their own clock, dictated only by their resources and personal capital. That’s actually rare. More often, new business ventures find themselves racing multiple competitors to scale. As much as Stephen and Roth had been frustrated by the lack of imagination in footwear, it was this very lack that gave them time to innovate and build their product. 

But the launch drastically accelerated their timeframe. If Rothy’s couldn’t deliver an ecommerce experience as beautiful as their shoes, their customers would evaporate or drift to a competitor, who by now would be on their trail. 

They had to move fast. So once again, the co-founders divided & conquered. 

MARTIN: Stephen went about fixing a lot of our e-commerce problems and —

HAWTHORNTHWAITE: And answering thousands of emails one by one.

MARTIN: He did, he was the sole customer service representative. And I went back to China.

HOFFMAN: Notice how Roth and Stephen each claimed their own area of expertise — even if it didn’t start out as something they were expert in. Nothing about Stephen’s previous experience said he would be a fit to handle thousands of customer service emails. And as we’ve discussed, Roth’s experience with the manufacturers in China was learned entirely on the fly. 

Each co-founder had to trust that the other would learn to master their new skillset. That trust is what growing teams learn to rely on. 

MARTIN: I think that’s one of the dynamics. You’re always trying not to let each other down. And I think that pushes you to actually, ideally, outperform.

HOFFMAN: As Stephen dug into every customer question, Roth worked to fulfill the dream of opening Rothy’s own vertically integrated factory. 

MARTIN: “Factory” is rich. It was a tiny office with two knitting machines, and I started to hire a few good people, and a few good people led to a few more good people, and that’s how it started.

HOFFMAN: “A few good people leading to a few more good people” sounds like a simple formula. But in fact, this is the way teambuilding works. The co-founder effect provides a model all teams can use as they scale, where each new member has room to add their voice to the mix. And if everyone’s playing well together, more voices are better than fewer.

Why Rothy’s owns their own supply chain

MARTIN: January 1st, 2017, we cut over to our own factory, and we were nine people making shoes. And we like to say, if you were a dog on the street that knew how to make shoes, we would’ve hired you.

HOFFMAN: Our fact-checker asked us to mention that dogs lack the opposable thumbs and fine motor skills for machine work. But you get his point. Opening their own factory let Rothy’s close a loop that had been stubbornly open for five years.

MARTIN: There are very, very few footwear manufacturers that own their own supply chain or that are vertically integrated, and we think it’s the future. It is what has allowed us to innovate.

The designers at Rothy’s get to put their hands on the products as they’re on the manufacturing lines and optimize for like, “Oh God, that extra step there, I didn’t realize the unintended consequences of me designing something a certain way results in a whole lot of extra work for someone else.” And so, that connectivity to the design process and the ability to put that back into iterating your designs and making them better is one of the true benefits of being vertically integrated.

HOFFMAN: Remember, co-founders are more than just the person you started the company with; that goes for anyone creating and owning the processes that become more integral to the business. Consider it another kind of “additive manufacturing,” where instead of adding plastic yarn in geometric shapes, you’re adding people and their ideas.

As Rothy’s scaled, their manufacturing got more and more reliable. And their airtight product-market fit has led them to steady growth ever since. 

HAWTHORNTHWAITE: Rothy’s is the beneficiary of a lot of repeat business. Our customers, once they try the product, they love it, they want to come back and buy again. We have customers that own seven pairs, 20 pairs, 40 pairs.

HOFFMAN: 40 pairs?

HAWTHORNTHWAITE: I mean, we have customers who send us pictures of their closets that they have had custom-built to accommodate their Rothy’s collection. And for some people, it’s also a considered purchase, and they might own one pair.

HOFFMAN: Roth and Stephen take these messages from customers seriously. Because in a way, your customers have a co-founding role as well. They can be your ambassadors, your quality control, and your source for new ideas.

HAWTHORNTHWAITE: I was really struck by the power of the consumer. And when you have a product or a service that really resonates with the customer, their desire to tell their friends. It’s hard to create. But if you tap into that lightning in a bottle, how powerful it can be. 

HOFFMAN: In recent years, because of feedback from customers, Rothy’s has been able to launch new product lines like handbags, wallets, and men’s shoes. 

And because of the customer love they’ve received over their commitment to sustainability, they can keep driving in that direction. In fact, they have very specific plans to make their company even more sustainable, which is one of the goals that Roth and Stephen bonded over when they first started.

MARTIN: Rothy’s is incredibly proud to have pledged to be fully circular by next year. We’ve run a pretty tremendous recycling program this year, using a lot of emerging technologies in that space, such as chemical recycling. 

On the sustainability front, there’s so much happening on the fiber side. The shapes that you’re able to impart onto those fibers, how they’re spun. It’s a space where there’s a lot of innovation happening, and all that goes back into creating you know, Geez, those “Aha” moments in the factory where we’re like, “Why are you doing it that way? We could actually engineer this better.”

I think it’s akin to cooking. You buy all these ingredients, and you figure out how to put it together. 

HOFFMAN: Roth’s reference to cooking makes perfect sense, and it leads us to the unspoken question beneath the subject of co-founding, and adding more voices as you scale. Everyone is familiar with the saying, “Too many cooks in the kitchen.” How do you ensure that you have the right number of cooks for your business? 

It comes back to our magic word: if. If your cooks aren’t well-coordinated, or if they’re confused on who’s making the final call, then even two cooks is too many! And you have to fix your processes before adding more.

But if your chefs do play well together, trust each other, and value each other’s expertise, then your number of co-founders and refounders can and should increase with time. 

We took this question of cooks to Renée Jaworski and Matt Kent, the artistic directors of Pilobolus from earlier in the show.  

KENT: I would say it is a real thing to have too many cooks in the kitchen, but it changes by the moment.

JAWORSKI: I think it’s all about the casting, in my opinion.

KENT: Yeah, right. The hangout. It’s all about the hang.

JAWORSKI: It’s all about the hangout. So yes, you can have 25 people, 25 cooks in the room, and if they’re all talkers or they’re all trying to take the spotlight, then that’s too many cooks. But if you’ve got half listeners, half talkers, if you find this happy medium where you’re not all vying for the spotlight at the same time, you find a flow. I think it depends on who’s in the room.

HOFFMAN: Exactly.

HAWTHORNTHWAITE: As I reflect on it, I think the starting point is trust. 

MARTIN: I think if someone asks you to be a co-founder, you should just say yes to the first person who asks you. No. No, it’s such a hard thing to get right. Being able to pass the baton back and forth is immensely powerful, and I think helpful. And God, doing it by yourself, as if it’s not hard enough.

HOFFMAN: Finding your perfect co-founder is rare, but your co-founder — and your next team members — can come from anywhere — if you share values, trust each other, and bring equal commitment to the mission. Accomplish that, and the co-founder effect is that 1+1 is significantly greater than 2.

HAWTHORNTHWAITE: At the end of the day, I can’t imagine starting a company by myself. I really can’t.

HOFFMAN: I’m Reid Hoffman. Thanks for listening.

Masters of Scale’s mission is to democratize entrepreneurship. Launched in 2017 as a weekly podcast featuring Reid Hoffman, we’re now two weekly podcasts — Masters of Scale with Reid Hoffman, and Masters of Scale: Rapid Response, hosted by Bob Safian — as well as an award-winning daily learning app, a best-selling book, virtual and live events, and more, serving a global community of founders, funders, and leaders looking to innovate at scale.
Sign up for our weekly newsletter