Name: Watch American Apparel’s Former CEO Speak at Fortune’s MPW Summit
Uploaded: 2016-10-18
Duration: 13 min 50 s
Description: Paula Schneider discusses her time with the embattled company

[ MUSIC ] I'm fine. How are you? It's sort of a crazy 18 months or so. I don't think you could pack more in if you tried. So for those who don't know the story of Paula, she was brought in by the CEO and founder of American Apparel. Of [ UNKNOWN ] Almost about 20 months ago, to help save this company. Well I wasn't exactly brought in, I was recommended by him to the board. He had been ousted, and then I went through a very heavy vetting process with the board, and ended up as the CEO of the company. And then, it turns out that Dove didn't really feel as positive about your hiring as he had said. Yeah, it was a bad breakup. [ LAUGH ] Tell us a little bit about your first six months and what happened at this company. Walking into this company, I did my first 13 week cash flow. I came in in June, I'm sorry, on January 5th, And it look is though we will gonna hit the rocks and by April and this was without a plan without any opportunity to make a difference and change things. I know nothing you know, walking in here and I pulled every single lever we could to save money. We're a publicly traded company. We had Millions of units of slow moving inventory. It was a company that had lost 400 plus million over the last five years. Hadn't made a profit since 2009 and was the largest apparel manufacturing company in the United States with almost 9, 000, somewhere between 9 and 10, 000 employees. So it was Very stressful to pull all of these levers and try to figure out what you're gonna do to save enough money so you can make it through until you can figure out what you're gonna do from a strategy. And that caused a lot of issues because I furloughed workers and then the Chain of events that happened after that was that the furloughed workers were very unhappy which you can understand how they would be because they felt as though I was taking money out of their pocket. But what was also happening simultaneously was that the founder of the company who had been accused of a lot of shall we say inappropriate sexual behavior Sort of led and egged on, I think it's fair to say, the workers. And there were violent things that happened, such as the worst one. You want me to tell you about the worst one? Yes, I do. [ LAUGH ] Well, there were probably two worst ones. Every day there would be a group out in front that would be handing out pamphlets that would say all of the horrible things that I was going to take it off shore. That I was going to move to El Salvador to Mexico. You name it I was moving there. I never had any intention of moving American Apparel, of keeping it anywhere but in the United States. But you know when people are fed that every day and they get scared. And there was one day that was they brought out a beautiful pinata with a life size pinata. It was about 8 feet tall. With my picture on it, my face. And it was actually probably the turning point because most of the workers, the skilled laborers that were there are women. And even though they were concerned about losing some of their hours, before i got there the year before there was $ 14 million in overtime. We simply couldn't afford that, so I cut out the overtime. But when they saw a group of rabbit employees out in the parking lot beating up my pi �� atas, extremely disturbing because it looks like you're beating a woman and I think And this is by the way to continue back to the YouTube discussion but it is available on YouTube. I, in fact watched it. And it's actually very Did you make it all the way through? Actually, I did not. No, most people cant. Yeah. So, she's the CEO of a t- shirt company, this is not, no offense to you, this is not president of the United States. We made some pants and some jackets. [ LAUGH ] Wasnt just t- shirts. [ LAUGH ] So you didnt really sign up for this. I could outfit you, in case you need a dress different from hers. [ LAUGH ] But it is made in America? But anyway, at this point though, you had death threats as well, you had security in your office, is that correct? Yes. And. And again, okay I'll go back to it's a t- shirt company and I had death threats. I mean, really? You know, I was literally trying to save 9, 000 jobs and save a company that had been troubled for years. And, you know, it did get misconstrued most of the, most of the people got it. You know and after a while they pretty much all got it. But you know, there was a picture of a corpse that looked remarkably like me that was sent. And you know it was like wow. that's like What did your daughter say about that. Nobody was very happy about that, you know. But you stuck to it, the company did go through Restructuring. Yes. And. But you intended to bring this company. Yeah, back. Yeah, you know, I did three 100 day plans in 300 days, okay? That's all we do is make 100 day plans for different audiences depending on what we had to do. And it was always the same. We needed enough money to be able to buy a product to put into our stores and to have in our wholesale because it was a blank company. Blank t- shirts. Where people printed on them, and the whole idea is that you have to have the right inventory in the stores and you have to right inventory for wholesale. It's not rocket science, it just takes cash And the first year, was literally Sophie's Choice. It was making a choice every single day between, do I do wholesale? Do I sponsor retail? Do I buy enough product for e- commerce? And the answer was, you don't have enough money to buy anything for anyone, or enough for anyone. So, The turnaround plan that I created in March of the first year that I was there is still the same turnaround. You get good product in the stores that is done right, and it will send. And the first full delivery that I was able to do is actually this fall. And it's, from what I hear, working. Starting to work. However- However- Your not going to be there- No- To see it work ->> No, no ->> because in September you resigned- I did. Why ?>> That's the beauty of being an adult. [ APPLAUSE ] That you have You have choices and crossroads when you come through your career, and you have to make some decisions that are worthwhile to you. And I think that the primary thing that one has is their integrity. I always said that this would be a company, while I was at the helm, that would make product in the United States. The board and ownership Had decided that they wanted to sell the company and I decided that it was time for me to leave. And today, you have announced actually that you have a new position. I do, and I can outfit you again. [ LAUGH ] And I'm hoping that most of you have some of this in your closet already. But, I am the CEO of Delta Galil which is a publicly traded company on the Israeli Stock Exchange has purchased three contemporary brands. And it's Splendid Ella Moss and Seven Jeans. So, I need your support. You got, ohs and ahs on that. [ APPLAUSE ] It's a beautiful product and I need you all to go shopping. Well, congratulations on that. Thank you. I want to get to questions. But I also, want to bring up one thing that American Apparel was kind of known for two things. One thing was the Made in America. Uh- huh. Which obviously has taken on a political context this year. And also, some of it's more provocative advertising. Mm- hm. And you change that a bit in the sense that I think the sexualization was less, but you did do a couple of really interesting things this year in the turn around. I'm thinking about make America gay again. Make America gay again, yeah. That was [ LAUGH ]. [ APPLAUSE ] That's the one gay woman in the room. I don't know, I can't see you, it's okay. No, we were all about LGBTQ rights, and equal opportunity, and women's rights, and one of the things that I did which was super fun for me, Being that I'm a Hillary fan, and I can say that out loud, because I don't have to worry about where I'm working. But I am a Hillary fan, and when there was Make America Great Again hats, I created the Make America Gay Again hats and t- shirts. In fact there was one of my best days was we have a store that in Trump Plaza in New York, and it Trump Plaza American apparel, and then I filled the windows with all of the Make America Gay Again and then we sent out- [ APPLAUSE ] And we sent out on social media to go and take a selfie of yourself and post it in front. And there were thousands of people that took selfies wearing the Make America Gay Again hat. Standing in front of the American Apparel and in front of Trump Plaza. Which you know my fabulous legal counsel was a little concerned about, but you know it was still it was great fun for me. [ laugh ] It's a great story. And you know you got to have some fun. Listen, I had a pi �� ata, at least I can have that. [ laugh ] [ LAUGH ] Who's got a quick question for Paula? No? Okay, just wait for the mic please. [ BLANK_AUDIO ] I'm JoAnna Sohovich with Chamberlain Group. I think that all of us have been in positions where we've had the best interest of our workforce in mind But the message has been misunderstood or overblown or mistranslated. What would you have done differently, in terms of transparency or communication or anything else, so that the workforce would get your intent a lot sooner through the transformation. Well, it was a labor movement that had Where they signed up for a union bud. Now, these are. They're actually all of the officers in the union. Were ex- employees. That wasn't like the needle union or a regular union. But I would have actually started communicating a little bit better and a little bit earlier to the labor force. We had 21 different languages. So when I made a communication, it was very difficult to get the information out there in all of these different languages. But I think I would have started a little bit earlier. Because, I'd never dealt with a union, or a [ UNKNOWN ] union. I had no idea what to do at that point. But, you know, looking back I think that's what I would have done. What would you say about the glass cliff theory? I hear this story and I think about this a little. I mean the notion with this is that women are often offered and take jobs that are really in some level doomed or at least much more challenging and very, very difficult to succeed in. Is that what happened to you in some extent when you took over there? Well, I had every intention of succeeding. And to some extent, with time and money, we would succeed. But life, you can't always get what you want. And I do think that this was a very challenging turnaround. It was an extremely challenging turnaround from day one. And I think specifically this board was looking for a woman who could be the antacid to the acid. But in general, I think that women check their egos at the door, try to get their job done. And you know if you're stepping into a turnaround, and a lot of times those are the jobs you get offered. As to be the CEO of turn arounds that you know you are not gonna win everyone. You are not but in general I think you still have to give it your best shot. Good for you. And any lessons that you will take to your new job? My GOD. [ LAUGH ] Assuming they don't greet you with a pinata. I've had 55 lawsuits from the founder and many of his colleagues lobbed against the company. I got sued for handing out popsicles when NLRB charges and hot days to the workers. You name it. I think I've learned so many things. I've learned about proxy battles And I do think that, and this has been the theme throughout, I've built and awesome team, an awesome team. This was a team that we had felt like we had gone through a war together. And I think it's all about the people, it's all about putting the right people in place. And It's all about empowering them to do what they do best. Those are wonderful lessons and I hope that you have a much more calm relaxing or at least normal tenure in your next experience. You know, I don't have a bodyguard here so it's already better. [ LAUGH ] [ UNKNOWN ] Knighter, thank you so much. Thank you. [ MUSIC ]

Paula Schneider discusses her time with the embattled company