Q&A with Rana Argenio, Founder and CEO of 10 Grove

Rana Argenio is the Founder and CEO of 10 Grove, a direct-to-consumer luxury linens company. She worked at Goldman Sachs from 2010 to 2013 in the firm's Finance Division in London and New York.

You’ve been testing the quality of textiles since you were a baby wrapped in your parents’ luxury linens. What is the importance of selling something you are deeply passionate about?
Rana: In launching 10 Grove last year, I set out to build a long-term, sustainable business. For me, this meant providing a quality product that people love and communicating openly and honestly about everything we’re doing. I don’t think either is possible without an underlying passion for the product; you spend so much time with product–sourcing, testing, iterating, marketing–that you genuinely have to love it. Furthermore, entrepreneurship is a hard and non-linear journey; although I’m only a year in, launching my own business is the hardest thing I’ve ever done. It’s a rollercoaster – there are ups, downs, and very few periods of pure coasting. This is especially true early on when you’re bootstrapping, and you don’t have a dedicated team overlooking every aspect of the business. Most things come down to you, so it’s stressful and when failures inevitably happen, they feel personal. However, it’s a passion for and belief in the product that help you get through those moments.

Although your family has always been in the textile industry in both the United States and Iran, you weren’t always sure that you wanted to follow in their footsteps. What changed your mind?
Rana: It’s true, I never thought I’d join the industry, and frankly, neither did my parents. When I graduated from Wharton undergrad in 2010, I joined Goldman’s office in New York where I spent two years, followed by a year in the London office. While I really enjoyed my time at the firm, learning about the financing of large, traditional consumer retail businesses, I left in 2013, with the desire to work on something more tangible.

Growing up in a family business, I saw how hard my parents worked, but I also saw how they were directly rewarded by that work. It made me want to start something of my own, where I’d have creative liberty to craft products and the ability to directly impact people’s daily lives. I don’t mean this in the “I’m saving the world sense,” but rather in the most authentic and simple meaning of the word impact. Whether it’s understanding what motivates the artisans who craft our products in Texas or the needs of our consumers across the US, the ecosystem of giving and receiving feedback on every decision I make is unparalleled.

Furthermore, I’ve been able to directly impact the lives of our local Texas artisans, who truly are like family. Many of them have been working with my family since I was a child, so I know them personally. As a business and as a family, we’ve really thought about how we can positively influence their lives. We don’t believe in a minimum wage, but rather a livable wage. Most of our artisans are mothers, so we’ve structured our factory hours from 7:30am-3:30pm, which allows them to be with their children outside of school hours. We offer paid vacation, interest free loans, access to health/dental insurance and retirement benefits, all of which is unheard of in a manufacturing environment. This is a tangible impact I get to be proud of every single day.

Your products go direct-to-consumer via the internet. Why did you choose an online marketplace over retail stores?
Rana: Following my time at Goldman Sachs, I joined my family’s business, which is a wholesaler and fully bespoke manufacturer of luxury textiles that business partners with over 500 retailers, interior designers, department stores and hospitality clientele across North America. It was the best training I could have received for crafting luxury textiles.

I spent four years educating myself on every aspect of the industry–from spinning the yarns, to weaving the fabrics, to designing collections, to the manufacturing of luxury home textiles, to navigating the traditional wholesale channel. This provided me with the needed foundation to build a truly product-first company.

However, through this experience, I also learned about the inefficiencies associated with the traditional wholesale-retail model. The supply chain is laden with intermediaries and third-party mark-ups that add unnecessary costs, which are ultimately passed onto the consumer. This means the consumer ends up paying more money for a lesser product.

I wanted to deliver a better product in a better way, so consumers could actually receive what they paid for. By creating a vertically integrated supply chain, whereby we produce all the product in-house at our Texas factory and sell it on our own website, we’re able to control every step of the process. This allows us to (i) eliminate the 6x mark-up that gets applied through the traditional retail channel and (ii) maintain a direct line of communication with our consumer, so we can produce exactly what he/she needs, instead of relying on information from third-party retailers.

Could you discuss your supply chain and how you source your fabrics?
Rana: At 10 Grove, we have developed a business model that allows us to deliver more tangible value of product to the consumer for every dollar they spend. Our goal is to deliver the highest quality product (equivalent to those offered by legacy luxury brands, such as Frette, Pratesi, Sferra and Matouk) at the most honest and transparent price, by cutting out every possible intermediary.

Our product cost is simply the sum of the raw materials (fabrics, threads, packaging) and the labor to manufacture, as we source directly from the fabric mills and manufacture on-demand, in-house, so there are no intermediaries adding to our cost basis and therefore no unnecessary markups to the consumer.

To summarize, our supply chain is as follows:

(i) Fabric is developed with our partner mill in Italy, which manufactures for the legacy luxury brands (Frette, Pratesi, Sferra and Matouk). We work together to determine the cotton used, the way the yarn is spun, the weaving process for the fabrics and the dying/finishing process implemented. Like us, they are a family owned and operated business with generations of experience.

(ii) Then, the fabric is shipped to our factory in Texas, where our warehousing, production and distribution takes place.

(iii) Our inventory manufacturing process takes place on a just-in-time basis, so most of our inventory is kept as raw materials. We keep a base level of each SKU (SKU is short for stock keeping unit and is used by retailers to identify and track its inventory, or stock), so we’re able to ship out same day, and as a unit is ordered, we put another unit into production. This allows us to produce exactly what our consumer is demanding.

a. We are not making assumptions based on historically grounded forecasts.

b. We have a higher level of quality control on every unit produced, as we personally oversee production of every single unit.

c. We have more flexibility on product designs and shorter lead times on new product introductions. By making each piece ourselves, we can include luxury design details that have previously only been available at a high price point. And by having manufacturing done in-house, locally, we can consistently iterate and ideate on our product designs, without needing to plan for an oversees flight.

How do you set yourself apart from other direct-to-consumer linen brands?
Rana: Unlike other direct-to-consumer linen that originate from the typical story of “I went looking for bedding, but I could not find it at a reasonable price,” 10 Grove’s origin is the exact opposite. My family has been in the textile industry for five generations, and within luxury bedding specifically for over 30 years, so linens are far from new to me; in fact, I enjoyed the finest that the industry had to offer, and I started 10 Grove because I believe more people deserved access to true luxury quality linens at an accessible and honest price.

Prior to launch, I spent a lot of time looking at the existing direct-to-consumer brands that had launched years before. Unfortunately, when it comes to these businesses, the term direct-to-consumer is massively diluted, if not entirely misused. These brands use stylish advertising and catchy marketing gimmicks to seduce consumers into buying mediocre products, which are equivalent to those that have always been offered by existing mass-market retailers. They use the same low-market quality, third party middlemen and high cost-markups; they have just wrapped the products in shiny new branding.

When you look at the supply chain of these businesses, you quickly see they are quite indirect, as nothing is done in house. They rely on a network of third parties and intermediaries for every step of the process: sourcing the fabric, manufacturing the product, packaging the product, and shipping the product to the customer. This means that the product makes it through the entire supply chain without the brand itself ever touching the physical product.

In contrast, 10 Grove takes care of every step of the process in house, from warehousing, to production to fulfillment. While we’ve launched with products that target a similar price point to many of these brands, we spend much more on the product itself, rather than inefficiencies in supply chain. This allows us to bring the same quality, craftsmanship and styles, currently only accessible at specialty linen stores and the likes of Neiman Marcus, Bergdorf Goodman and Bloomingdale’s at a premium price ($1,200 for a sheet set), directly to the consumer, at the most reasonable price ($200 for the same sheet set).

You stress the importance of the consumer being able to touch and feel the fabrics. How do you provide this as part of the user experience since your products are sold exclusively online?
Rana: Your bedding is the single thing you touch most in your lifetime–night after night, year after year. Yet, unlike your clothing, shoes or underwear, you’re not changing your linens every day, and still the majority of consumers don’t know the brand of their bedding, much less the quality of the sheets that they wrap themselves in every night.

In fact, prior to launch, we surveyed hundreds of consumers to determine how they went about purchasing their bedding online; we learned that their decision making process was first driven by color, then style, followed by price, with feel or quality rarely entering the equation until the product had arrived at their home. However, in the world of luxury Italian linens, the decision-making process starts with feel, as you’re making a $1,200+ investment, so it has to feel amazing. That’s the approach we wanted to bring to the 10 Grove consumer: you’re making an investment in your sleep and health, so let’s start with what really matters.

In order to achieve this, we developed The Blind Feel Test to help guide consumers to the fabric that best suits their sleep preference. The Blind Feel Test starts with a series of questions that are meant to get an idea of how a consumer sleeps and his/her tactile preference; based on his / her answers, we provide our recommendation for which fabric is right for his/her needs.

For those who are still unsure, we offer the opportunity to order our Blind Feel Test pillowcase set, which consists of one Percale and one Sateen pillowcase, labeled purely with a Moon and a Star, so that the consumer can feel and experience the fabrics in real life, without any preconceived notions. We want them to feel, wash and sleep on the pillowcases from the comfort of their own home. This goes above and beyond the traditional retail experience by providing the opportunity to genuinely “try before you buy.”

The Blind Feel Test not only allows us to offer a personalized retail experience in purely digital environment, but also helps us empower and educate the consumer in his/her shopping experience. All the products on our website are offered in both fabrics, so consumers can really personalize their bedding exactly for their needs by not only shopping by style and color, but also by feel.

How many product offerings and patterns do you have today? How has that evolved over time?
Rana: In launching 10 Grove, we wanted to build a collection of timeless styles in a classic color palette, which consumers could return to time and time again. Our goal is to deliver luxury quality pieces that would serve as the foundation for their home, which will never go out of style. This allows the consumer to buy pieces over time, without the fear that we will discontinue their color or style.

Furthermore, our business model has allowed us to offer luxury design details that have historically only been offered by the legacy luxury brands at a high price point. Currently, we offer over 370 SKUs, giving consumers the flexibility to choose style, color, fabric and size, as well as shop for products via our pre-curated sets and separates.

The Madison: designed with a timeless, hand-guided hemstitch

The Irving: designed with an embroidered satin stitch and hand-applied piping

The Mercer: designed with a hand-cut appliqué inset

The Hudson: designed with a hand-cut appliqué inset + border

The Crosby: a lightweight quilted coverlet, made from the same material as our sheeting

As we look to grow our offering beyond the bedroom, we plan to continue by introducing luxury pieces, which transcend trends.

How has your business changed over the course of the pandemic?
Rana: As people spend more time at home, they have realized the importance of investing in their most personal spaces to make them comfortable. This has directly translated to 300% year-over-year growth for our business, compared to last year. Not only have prior consumers returned to make additional purchases for their home, but we’ve seen strong growth with new consumers looking to upgrade their bedrooms.

Generally, we see most of our consumers start out by purchasing a set of sheets, and they either return to buy additional sets or they layer on Duvet Covers, Shams and Coverlets. The feedback we’ve seen from our consumers has been incredible. Most of them have purchased from other direct-to-consumer bedding brands in the past, but they truly experience the difference in quality we offer. Since our launch, we’ve seen an average reorder rate of 25%, which is extremely high in the home category.

Can you share one thing you learned as an analyst that helps you lead 10 Grove today?
Rana: So much of what I learned during my three years at Goldman has shaped how I approach my business every day: strategically, financially, and culturally. Balancing business performance, without losing sight of how to make a longer-term impact. Investing in people at every touch point possible. Never forgetting the financial viability of a decision. Preparing to be unprepared. And building a network that can support you at every stage. I am so grateful for my time at Goldman Sachs and how it armed me with the skills I needed to pursue my own venture.