John Koryl spent his first months as chief executive of the RealReal helping to clean out customers\u2019 closets. The company had recently changed its consignment policy for the luxury goods it offered, and Mr. Koryl wanted to see how people were reacting to it. So he traveled to people\u2019s homes in Orange County, Calif., Long Island and elsewhere to find out what he couldn\u2019t glean from his office.<\/p>\n
In Mr. Koryl\u2019s telling, he\u2019s the \u201cguy who folds things and packs the bags because that\u2019s about all the value \u2014 other than listening \u2014 that I add.\u201d<\/p>\n
He brings an affable, disarming quality to his work. But his job now is exceedingly crucial: He is responsible for turning around a flailing business.<\/p>\n
The RealReal is fueled by customers selling their expensive wares to the company; the company in turn authenticates the goods and puts them on its site or in one of its 25 shops and consignment stores, from Manhattan to Dallas and West Hollywood. When the item sells, the consignor receives a commission. (If the item doesn\u2019t sell within a year, it is either returned to the consignor or donated to charity.) The e-commerce reseller was founded over a decade ago, and not long afterward people began to ask lofty questions about whether this San Francisco start-up could save retail.<\/p>\n
But since going public in June 2019, its stock has declined 92 percent. As the luxury resale market continues to grow, the RealReal has struggled with inventory and other issues. The company changed policies to the disgruntlement of some customers, and it has conducted two rounds of layoffs this year.<\/p>\n
Mr. Koryl said he was focusing on better understanding the RealReal\u2019s customer \u2014 and finding even more people willing to consign their Hermes bags and 14-karat-gold diamond necklaces. He called 2023 the RealReal\u2019s \u201creset year.\u201d<\/p>\n
He sat down with The New York Times, a few days after the company reported a $41 million loss for the quarter through July, to discuss how he was trying to give the RealReal a new look, what it was like to follow in the footsteps of a chief executive who was the founder and the item he would immediately purchase if he saw it on the site.<\/p>\n
This interview was condensed and edited for clarity.<\/em><\/p>\n You are coming after a C.E.O. who was also the founder, so that\u2019s always an adjustment for any company in any industry. I think often there\u2019s that feeling of \u201chow do I make my mark because obviously the founder made theirs.\u201d So what\u2019s the biggest change that you\u2019ve made in your first six months?<\/strong><\/p>\n I think it\u2019s having a lot of respect for what has been done. I realized I walked into a room of a bunch of pioneers \u2014 and female-led pioneers at that \u2014 with a sustainability vision in mind. How often do you get that opportunity? So you have to tread very lightly. You have to have a lot of respect for what made them the company that you wanted to join.<\/p>\n When the RealReal was founded in 2011, the idea of consigning luxury goods without diluting the brand was a novel one for both shoppers and investors. The company\u2019s stock has taken a hit since its I.P.O. as investors seem to be finally wanting a return on investment and see a more firm timeline for reaching profitability.<\/strong><\/p>\n What does that mean for you? And how are you trying to position the business now that its model is no longer the new idea?<\/strong><\/p>\n I think, in many ways, the goal posts moved on the RealReal. At the I.P.O., everybody was being rewarded for endless growth. As long as the revenue was growing 30 percent or more, you were being rewarded by Wall Street. And then Covid happened. The world said, \u201cNo, no, no, we want everybody to be profitable.\u201d<\/p>\n Part of the reason I\u2019m here is to turn that story around where we can actually continue to grow double digits. Definitely not at the same 35 percent to 40 percent pace of the past, but we can grow double digits and we can grow a profitable business.<\/p>\n How will you do that?<\/strong><\/p>\n We\u2019ve gotten out of direct buy merchandise [purchasing the merchandise outright and storing it]. We\u2019ve really minimized the amount of merchandise under $100 that we have on the site. We\u2019ve really tightened our belts in terms of the cost profile. We have to address our debt overhang.<\/p>\n In November, the RealReal <\/strong>overhauled<\/strong> its consignment policies, which includes no longer accepting merchandise under $100 as the company focuses on acquiring items that provide higher margins; limiting direct buys; <\/span>and offering lower commissions for lower-priced items. What did you learn from that process?<\/strong><\/p>\n We had a little bit of a reaction when we changed our commission structure last November. People started getting their first checks in January and February, and they weren\u2019t signing with us as much. It was because the commission changes were a little too abrupt and too much at one-time. So we\u2019re doing more of the personalized approach.<\/p>\n As long as we can keep that supply growing, we can keep the double-digit growth of our traditional business and we can complement it with these other businesses, we think we will meet Wall Street\u2019s new expectation that companies like this need to be profitable.<\/p>\n Yes, there is a lot of very worthy competitors playing at similar price points, similar categories. But has anybody done it across all the brands? And with the consistency and convenience that we have? That\u2019s the moat that we have to protect, and we have to meet his or her expectations every day. That\u2019s what we\u2019re striving to do.<\/p>\n A turnaround is often needed because a company has expanded too far beyond its core customer. Is that how you see what happened with the RealReal?<\/strong><\/p>\n It\u2019s a little bit of tweaking more than pulling back. With our current capabilities and the current business model we have, we can\u2019t operate well and profitably with less than $100 merchandise. We also found categories that honestly we weren\u2019t very good at \u2014 we extended into memorabilia, we extended into art and home, <\/em>we extended into kids \u2014 and we had to pare back. Honestly, they\u2019re, for the most part, gone.<\/p>\n The reality is, we\u2019re absolutely at our best with jewelry, watches, ready-to-wear, handbags, shoes.<\/p>\n When you were talking to customers, what was the biggest frustration they had about the RealReal that surprised you?<\/strong><\/p>\n I think it\u2019s all around education of what we do and don\u2019t take. And the understanding of how we arrive at a price.<\/p>\n In the past, it would have been: \u201cYou\u2019ve lost too many goods. I\u2019ve gotten burned. What happened to this?\u201d Or: \u201cIt\u2019s taking too long for the merchandise to get onto the site.\u201d<\/p>\n A lot of those have gone away for the most part. Now, it\u2019s really, \u201cYou used to take this designer, you won\u2019t anymore. Why won\u2019t you?\u201d In a perfect world, we\u2019d say, \u201cOK, we will take everything.\u201d But there\u2019s an economic reality, right?<\/p>\n I\u2019ll give you an example. Certain brands of jeans we used to be able to sell for over $100. Now you just can\u2019t get the same return for them. So instead of upsetting you by us taking them and selling them for way less than you want, we\u2019re just telling you now we don\u2019t take them.<\/p>\n What\u2019s the plan for the RealReal to use artificial intelligence?<\/strong><\/p>\n The first was authenticating the merchandise. The second was pricing the merchandise. Where we\u2019re spending more time now is where can we, at intake, start with a picture of a good and right there we can say, \u201cHave we seen this good before?\u201d \u201cI already recognize that pattern, so now I don\u2019t have to write all the copy. I don\u2019t have to take all the measurements unless we perceive that it\u2019s been altered.\u201d<\/p>\n It still needs to go through authentication, but we can send it down a different lane where instead of each piece that we receive being a one-off, now all of a sudden we\u2019re starting to batch things together. We can do those kinds of things and reduce operational costs.<\/p>\n Dupes have become a bigger conversation in the industry this year. Before your time at the company, there was reporting about the RealReal selling inauthentic items on its platform. How you are currently guarding against that?<\/strong><\/p>\n It\u2019s basically an arms race in many ways. How do we stay ahead of the super fakes? We hire people, we invest in technology. We partner with the brands wherever we can to figure out the best way to make sure that is an authentic good and do it in a cost effective manner. It\u2019s not just visual. It\u2019s touch, it\u2019s smell, it\u2019s you name it. We have to use those tools in our toolbox to make sure we stay ahead of the super fakes.<\/p>\n You know, the sneaker industry went through big fakes and obviously there\u2019s a lot of money in handbag fakes, but people aren\u2019t faking ready-to-wear as much. So we can really concentrate on the areas where people can make the most money with inauthentic goods. So that\u2019s where we spend our time and energy staying ahead of everyone.<\/p>\n There have also been customer complaints about goods being sold on the RealReal for a price that was not agreed upon?<\/strong><\/p>\n What we need to do is make sure we put the right items on price approval. We only do that for certain classes of merchandise. And if it\u2019s your first time consigning, it\u2019s a lot. We always try and be as absolutely upfront as much as we possibly can and make it as clear as we possibly can.<\/p>\n What we need to do is make sure that we don\u2019t take that item upfront. So the best thing to do is take it into a store and have a discussion with an expert. In the absence of that, what we need to do is send that merchandise back to the consignor so that they\u2019re happy and we can sell the other goods in a win-win fashion.<\/p>\n Is there an item or a brand that if you found it on the RealReal you will purchase it no matter what?<\/strong><\/p>\n I\u2019m constantly looking at watches and shoes on our site. I\u2019m always on the lookout for Dior or Louis Vuitton sneakers. There\u2019s always that watch that you can never find and you always look for. I like the very traditional watches, but there\u2019s a Cartier Rolex out there from the \u201970s that if that ever came up on the RealReal, it\u2019s just one of those things that you\u2019re like, \u201cOoh, I might have to have that.\u201d<\/p>\n