Carbon38 co-founder Katie Warner Johnson is disrupting activewear one sports bra at a time
Katie Warner Johnson, chief executive officer and co-founder of upscale activewear company Carbon38, pumped her arms into the air with Richard Simmons-esque enthusiasm. It was as if she was leading an exercise class or performing a routine from a Broadway musical, both of which are familiar for the former professional dancer and fitness instructor.
Johnson, however, was in the middle of explaining how she launched her multimillion-dollar e-commerce business in 2013.
“The first phase of this company, we were all fumbling around in the dark,” Johnson, 35, said from her office in Culver City on an early October morning. “I had to be the best saleswoman ever to our first seven employees where it was like, ‘Selling the dream! Oh my gosh, aren’t startups fun? We’re having such a good time. You guys are killing it.’ ”
Jazz hands still extended, Johnson continued the song and dance and then abruptly stopped with mock panic. “Phase 2 was, ‘Wait, this actually has legs.’ And that was the scariest transition. That’s when people are most unhappy with you, and that’s the hardest because you want everyone to like you, and suddenly you’re like, ‘They can’t. I’ve got to make decisions.’ ”
Her company is now in Phase 3, with 91 employees. After Foot Locker became a minority owner with a $15-million investment last year, Carbon38 moved from its previous 4,000-square-foot West Hollywood office to its current two-story, 21,224-square-foot Culver City headquarters, which also houses a 2,727-square-foot photo studio.
Back in 2011, Johnson was an aspiring entrepreneur. She and co-founder Caroline Gogolak (who has since left to lead retail at SoulCycle) participated in the Women 2.0 Startup Weekend in San Francisco, followed by the L.A. startup accelerator program Start Engine. They won $30,000 and used the money to further develop Carbon38, which went through various iterations before becoming the fitness-clothing platform it is today.
The company has outgrown its office space four times in six years. In the early days, Johnson worked out of her apartment. “I would walk in every day to my home, and there would be seven Ikea desks spread out across the living room and then racks of inventory in plastic bins in the dining room,” she said with a laugh. “Our conference room was essentially folding chairs pulled up to the guest-bedroom bed.” Johnson knew she was onto something when Carbon38 made $50,000 in its first month.
Last year, Scott Jameson came on board as chief operating officer to help with the company’s expansion. “His desk was literally next to the toaster,” Johnson said of the executive, who previously worked at Burberry and Ralph Lauren. “God bless him for seeing through the toaster crumbs to the potential here.”
The idea was simple. Fashion-forward activewear designed by women for women. As a former fitness instructor and personal trainer, Johnson preferred to wear fitness apparel from small, independent female-led clothing labels, and she wanted to make their products available to a mass audience. In doing so, she also hoped to disrupt the world of athletic wear, which she views as a male-dominated business that markets its products to women. “The entire activewear industry is run by men and founded by men,” Johnson said, “whether that’s Lululemon, Nike, Under Armour, Athleta, Fila, Puma, Adidas — it’s all dudes.”
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For Carbon38’s launch, Johnson scouted and signed five female-fronted brands including Lorna Jane and Michi, the latter of which her business still carries. “We raised capital around this idea of a marketplace,” Johnson said. “Individually each of us as singular activewear brands would not be able to take on a Nike or Lulu, but if we stitched together — the larger fringe group of independent vendors and brands — we’d be able to take on the big guys.” To date, 75% of the 250 brands Carbon38 carries are female founded.
The company went on to launch its own line in 2015, which now accounts for a third of its business. By 2017, Carbon38 introduced a designer collaboration series in an effort to expand its customer base and build credibility within the fashion industry. Its latest collaboration is with Australian designer Dion Lee. The 30-piece collection, which launches Wednesday, ranges from $118 to $358 and includes asymmetrical biker jackets, cashmere sweaters, corseted tank tops and track pants as well as perforated miniskirts, bodysuits, bras, leggings and mesh dresses.
“From a designer’s perspective, collaborations are always appealing because they’re an opportunity to learn something,” said Lee, whose ready-to-wear pieces have been worn on the red carpet by Charlize Theron, Jennifer Lawrence and Cate Blanchett.
“I’m drawn to the process of making clothes,” he said, explaining that activewear is “a very technical product” that requires special machinery that isn’t often used in his line of work. He said he was interested in collaborating with Carbon38 to explore his signature aesthetic “in fabrications and constructions that are not readily available in the fashion ready-to-wear landscape.”
Johnson was equally eager to work with Lee after being introduced to him three years ago at the members-only social club Soho House West Hollywood. “The type of person I want to partner with is on the precipice of exploding, and that is Dion,” said Johnson, who previously selected designers Jonathan Simkhai and Carly Cushnie for Carbon38’s collaboration series. “We’re about to make some big moves, and we want to be on that upswing with all the designers we partner with and help them reach new customers, serve their existing customers and vice versa.”
Lee says Johnson’s company is at the forefront of elevated athleisure attire. “Carbon38 is contributing to the greater integration of fashion and activewear as a more omni-channel marketplace,” Lee said. “Katie has a tremendous vision in terms of what she’s looking for. … I’ve always admired her, her integrity and how passionate she is about the product.”
Although activewear has become a more accepted form of fashion and self-expression in recent years, it was previously considered a completely different industry. “Two and a half years ago, there was this flip where I remember seeing Giambattista [Valli] had Nike leggings on the runway,” Johnson said. “Chanel — everyone was putting leggings with their bouclé blazers or whatever. It was like, ‘This is totally mainstream. This has replaced denim. This is the future. Why?’ ”
She attributed the change to a shift in society. “In the last 10 years since the financial crisis, there’s this new woman who’s emerged,” Johnson said. “On one side, the weight of the world is on our shoulders. We’re the ones that have to win. We have to outperform our male peers by 30% to be seen on par. We’re the ones that have to raise the next generation of leaders. We’re still the primary caretakers, and it’s up to us to link arms and fight for gender parity. … But that means there are three, four and five shifts that we have every day, and a pencil skirt, pantyhose and stack heels are not going to get us from school drop-off to board meeting to red-eye to cocktail hour to client dinner and then home to still be present for our families and our partners. But you know what could? A pair of legging.”
Johnson says athleisure is more than a trend; it’s a style staple. She’s exploring how to address customers’ sartorial needs beyond the gym. “When you put on a pair of leggings and you outperform your expectations in the gym, you truly feel like a superhero,” she said. “How do we take that and evolve that?”
Johnson is just as focused on data as she is wearability and aesthetics. After all, Carbon38 began as a website, although it has since expanded to include stores in Pacific Palisades and Bridgehampton, N.Y. “What we’re creating in an e-com environment needs to pop off the page,” she said, sharing that Carbon38 and Lee’s collaboration features navy blue and hot pink because the colors have a higher success rate online.
Johnson’s entrepreneurial journey accelerated nearly as quickly as her previous life as a performer. She trained with Miami City Ballet at age 16, but she partially tore a tendon in her foot, which led her to retire temporarily. “My body was starting to fall apart at 19, and so it was time to go to school,” said Johnson, who attended Harvard and “studied everything under the sun” including chemistry and biology, multi-vector calculus and architecture. Johnson was pre-med at one point but ultimately graduated as an art history major with a French minor.
After school, Johnson became a summer analyst at Deutsche Bank in New York, but she missed performing and soon landed a job as a dancer for the national tour of “Cats” and other musicals. Between shows, she taught fitness classes to afford Manhattan rent.
The 2008 recession was a turning point for Johnson as she witnessed her peers losing their jobs. “My classes exploded,” she said. “Everyone was coming to work out, and I remember thinking, ‘This is such an interesting industry, wellness, because it’s inversely related. It sees a spike in times of economic crisis because people are looking for some sort of control and are investing in themselves.’ ”
Eight years later, Johnson herself needed to refuel; so she moved to Los Angeles. “I wanted to start over,” she said. “I knew no one out here, and I liked the idea of driving because driving turns on your right brain — your creative center. It turns you from an oral processor to a visual processor, which gets you at your most creative.” She initially thought she would attend business school, but she was rejected. “I thought, ‘I’ll start a business so I can write about it on my application essay.’ ” The rest is history, but her past isn’t too far from her present. (Rehashing her company’s origin story, Johnson also quoted, “A little brains, a little talent,” a reference to the 1955 Broadway musical “Damn Yankees.”)
With the company’s fast success, Johnson has been a quick study as she leads — and scales — her business. “I’ve had to learn choreography since, like, birth, so I’m a fast learner,” she said, sharing that her on-the-go crash course in business includes an extensive reading list. Her current favorite book is “Sapiens: A Brief History of Humankind” by Yuval Noah Harari, and she’s requiring her management team to read “The Advantage” by Patrick Lencioni, which she called “a rule book that I have found to be really helpful as someone who has never run a company before.”
Johnson has high hopes for Carbon38. Her goal is to be a multibillion-dollar business, a statement that she once found surprising. “For a time, it was like, ‘Let’s get this to $20 million and sell, and now it’s like, ‘This is a multibillion-dollar opportunity.’ ” She said Lauren Peters, Foot Locker’s executive vice president and chief financial officer, gave her permission to think bigger. “Lauren Peters sat me down and was like, ‘No, we run multiple-billion-dollar businesses. This has the makings of one of the group and beyond. So let’s scale this together.’ ”
Reached for comment, Peters said she saw great potential in Johnson’s company. “I really do think they have an opportunity to build this brand to [that] level,” said Peters, who sits on the board of Carbon38. “You can do that having it just be a U.S.-focused business, but the global appetite for this product is there.”
“I’ve seen it on the men’s side,” added Peters, who has been with Foot Locker for 22 years. “We’re an $8-billion business primarily serving a male customer, so I’ve seen what can be done for the men. I know it’s there to be done for a female customer if you can deliver what she wants. She expects fashion and performance.”
During the conversation in her office, Johnson candidly rattled off what often felt like her internal dialogue, all of which made clear she put just as much thought into small decisions (such as her office’s decor) as she did any major aspect of her business. “My whole design aesthetic is old boys’ club for women,” she said of the feminine, Japanese-inspired space, which features vertical lines with female proportions. “If you see any dude in our office sit on this couch, they look like grasshoppers,” she added with a hearty laugh. “Their knees are up around their shoulders.”
Johnson also believes in visualization and kismet. Take, for example, how she discovered her current office, which used to house Sony’s corporate headquarters. “Eight years ago, I took a meeting on the third floor with some friend of a friend — someone in the biz,” she said. At the time, she was looking for career advice on how to professionally pursue dance in Los Angeles. “Their suggestions were essentially like ‘Step Up 2’ and music videos. Enrique Iglesias was casting pole dancers. I was sitting there clutching my pearls like, ‘I am a classically trained ballet dancer. There will be no pole dancing.’ I remember thinking, ‘This is so not my town.’ ”
Flash-forward, years later, she drove by the same building, which was newly renovated and featured a gigantic pyramid. “I pulled over and was like, ‘It’s a sign. I need to be in the pyramid. I need to be at the top floor of the golden cap reaching the gods,’ ” she said, sharing that she immediately raced out of her car in search of the building’s leasing agent, who was, coincidentally, in the middle of a tour with perspective renters. “I was like, ‘This is where I’m building my empire.’ And they all laughed at me.”
Johnson knew better. She’s always looking ahead. “There’s something limitless about this town,” she said. “I think it has a lot to do with the fact that our eyes are always on the horizon. This is my land of opportunity. I thought I’d be here six months, but I will be here for the rest of my life.”