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Cabi, a Brand You’ve Never Heard of, Makes $250 Million a Year

Meet the women who bring in hundreds of thousands of dollars from their living rooms.

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At a recent visit to a private home in Austin, 12 women go shopping. They sip white wine, snack on mini quiches and grapes, watch as garment after garment appears from behind a large, sheet-covered clothing rack, and listen as their personal stylist for the evening extols the yumminess of something called “dream fabric” and the versatility of a convertible trench. There are oohs. There are ahhs.

Cabi, a direct-sales women’s fashion brand specializing in workwear and weekend wear that’s celebrating its 15th year, sells items that can only be purchased in the home — and that’s sort of the point.

“I’m sure most of you can relate to going to malls or going to boutiques [where] you didn’t really get the best experience,” says Cabi stylist Monica Smith at the beginning of her home show presentation, one of over 100,000 booked annually company-wide. “And we’re here to kind of fix that tonight.”

Cabi’s villain, as the brand puts it just a few weeks later during a marketing presentation at its biannual company-wide meeting, is the traditional shopping experience. 3,500 Cabi women — the entirety of the company’s sellers, referred to in-house as “stylists” — are part of the company’s 30th “Scoop” event. The three-day conference is one part fashion show for the spring 2017 collection, one part training seminar on how best to sell and fit the line, one part branding boot camp, and one part inspiration celebration — pink balloon drop, Sofia sparkling wine can toast and all.

At the San Diego Convention Center for Cabi’s 30th “Scoop.”

“I want you to think about this for a second,” says Katie Malone, Cabi’s vice president of marketing and events, addressing the assembled crowd early on the first day. “Uber is the world’s largest personal transportation company that owns no vehicles. Airbnb is the world’s largest accommodations company that owns no real estate. Could Cabi become the world’s largest women’s fashion retailer, with personal styling services and personal relationships with their clients” — applause builds — “that owns no stores?” Huge cheers.

But really: Could it?

Trunk shows are nothing new, and the direct-sales concept comes with well-known baggage. But could Cabi’s brand promises — a different way to shop, a different way to work — bring “alternative stores” to more homes near you?

Cabi was born in 2002, the brainchild of Carol Anderson, a designer frustrated by the barriers of selling through boutiques, and Kimberly Inskeep, a corporate climber daunted by the prospect of balancing a fast-track career with becoming a wife and mother.

“I came of age in the era when women were told they could have it all, be it all, do it all, and that was my expectation,” says Inskeep, now Cabi’s president and chief culture officer. “I had a substantial career [in finance and international management] in my 20s and 30s and was traveling all over the world. And [soon] that expectation just crumbled. My husband would pick me up from the airport on Fridays and drop me off on Sundays, and I’d kiss my sweet baby girl goodbye, and it was kind of like, ‘Wow, I did not realize that everything costs something.’”

Initially called Carol Anderson by Invitation, Cabi started as a coalition of ten saleswomen, known collectively as the company’s cofounders. At this year’s Scoop, projectors hanging above the catwalk play video footage from the first-ever such meeting. In it, Inskeep and her fellow cofounders sing “Sweet Carol’s line” to the tune of “Sweet Caroline” and loiter around a pool in their best early 2000s spaghetti-strap eveningwear.

“There’s so much that has evolved,” says Syd Ryan, one of the original ten. “Our look, our feel, our branding. We have grown from being, gosh — I could tell hilarious stories about the way we did things, and bootstrapped things, and tied things together and paid for things out of our own pockets in the early days because we needed something that didn’t exist, and we look back now and laugh.”

Today Cabi is a well-oiled machine, operating all over the US — and now in the UK and Canada as well — and training stylists intensively so that every Cabi shopper receives the same streamlined experience. For 2016 alone, Cabi reported $250 million in revenue. The company’s current rookie of the season, announced on Scoop’s runway, sold over $85,000 worth of product this past fall; its top growth achiever sold over $200,000 worth.

“Stop it,” comments a stylist seated ten rows from the stage amid the applause. “That’s insane, y’all. How do you do that?”

Here’s how selling Cabi works: Stylists purchase the season’s complete line of sample items for $2,500 and use those samples to sell the catalog throughout the season. Every stylist receives the exact same sample pieces, which Ryan says ensures that each Cabi stylist is set up for the same potential success. Cabi’s executives explain that the $2,500 investment is a purposefully high barrier for entry — only women serious about a career with Cabi need apply.

Cabi never refers to its team members as employees. Rather, the company’s leadership takes painstaking efforts to highlight the fact that stylists are, essentially, self-employed. They are entrepreneurs who build and run their own businesses.

“Our business model is that you’re in business for yourself, but not by yourself,” says Lynne Coté, Cabi’s CEO, previously CEO at Jones Apparel Group and Tribal Sportswear. “We have a business model that requires women to perform, and by performing we’re making sure they’re recouping their investments and are able to grow their businesses over time.” The training and tools that Cabi provides to its stylists, along with the fact that Cabi owns the inventory, eliminates the standard risks of starting up a new apparel business from whole cloth. Why open a boutique when you can work Cabi on the go?

Let’s be clear: Cabi’s model relies upon multilevel marketing. As with MLMs like veteran Mary Kay and relative newcomer LulaRoe, the notion of telling your friends fuels Cabi’s profit machine. The opportunity for growth within the Cabi structure is greater when stylists share “the Cabi story” with other women eager for not just the Cabi-promised new way to shop, but that new way to work, too.

Ryan promises, however, that Cabi isn’t like the other direct-sales MLMs out there. “Network marketing, social selling, direct sales, whatever stigmas are out there, [many] use words like ‘recruit’ and ‘let’s sign them on,’ and that’s not us,” she says. “We’re looking for the right fit... A thing that we might have in common is that we sell socially, usually through a home environment. But our business plan is something that is very straightforward and very simple. And this was intentional; this was not by accident. If we can’t write this on a napkin, if we can’t be at a cocktail party or over dinner or a cup of coffee and we can’t explain how you earn money at Cabi, then we’ve done something wrong.”

Stylists can earn up to 33 percent commission on products they sell themselves, and they also benefit from two other income streams: commission off of sales from the women they bring into the company, and profit off of selling the past season’s sample line, which is valued at around $10,000 and discounted by 50 percent. Ryan says that stylists typically make $3,500 off of these end-of-season sales, which covers the $2,500 buy-in for the next season’s inventory (or reimburses the last season’s investment, depending on how you look at it), plus a $1,000 remainder that Cabi encourages women to use toward their Scoop expenses. “People say, ‘Oh, or that Prada bag I always wanted?’” jokes Ryan. “No, because we want you to start the next season in the black. And that’s what’s kind of unheard of in an entrepreneurial venture, to start quicker making a profit.”

The average annual income for a Cabi stylist is $30,000, and 70 percent of stylists work a second job in addition to Cabi, most frequently as nurses, teachers, and real estate agents. According to company reports, spring 2013’s rookie of the season was an orthopedic surgeon. Austin stylist Monica Smith, however, is one of many women in the company who works exclusively for Cabi. “I’m 100 percent my own boss lady, I like to say,” she says, explaining that she worked a part-time job alongside Cabi for two years before she built her business to the place where it could be her full-time gig. She’s been with Cabi for five years, and booked 21 shows this past season.

“We have an over 86 percent retention rate,” says CEO Coté. “That means over 86 percent of our stylists come back each season. And that is remarkable. If you look at any other direct-sales companies, any social-selling companies, or home-based companies, that number is less than 25 percent.”

The Direct Selling Association (Cabi is not a member) was not able to confirm this figure, as they don’t keep retention data for individual companies. They do report that 20.2 million people worked in direct-selling businesses in 2015, with estimated retail earnings via direct sales hitting $36.12 billion and one in six American households playing a role in the direct-sales industry. As far as Cabi is concerned, the company is projected to surpass one million visits — or individual shoppers attending home shows — in 2017.

But multilevel marketing has garnered a sullied reputation in recent years, and not without cause.

We’ve all heard horror stories about the most egregious MLMs out there (say, Herbalife), and as CNBC’s Selling the American Dream reported in 2013, some MLMs use bonuses and discounts to incentivize distributors to buy excess product, which they then must move lest that surplus inventory rot away in their garages.

Cabi does not. Similarly, the company does not employ arbitrary benchmarks that sellers must meet to move up in the ranks, nor “breakaways” that lop off groups of employees to form individual teams with different profit-making potential, nor adjustments in hierarchy based on volume sold.

“Here’s what’s wrong with that for me,” says Ryan. “I wanted to attract women who really were business-minded, and whether they did this part-time or full-time, at 10 hours a week or 60 hours a week, I wanted them to be able to feel like they had control over the results of the time they put into their business.”

Still, the public perception of MLMs is clearly something from which the company wants to distance itself. So too are the less ominous-sounding but equally evocative “trunk shows” that comprise Cabi’s entire selling system.

“I never liked trunk shows,” confesses Lara Dye, the host (or “hostess,” as Cabi refers to the woman whose home functions as the alternative store of the night, and whose so-called Hostess Benefits include 50 percent off for every $250 in sales) at Smith’s Austin home show. “I always thought, this is a little cheesy. I’m much more of a boutique shopper. But [Cabi] fits a woman really well, it just does the job, and it lasts... They know a woman’s body — like, a real woman’s body.”

Cabi is proud of what sets it apart in the fashion landscape, but the company’s model presents its biggest challenge.

As marketing executive Katie Malone put it in her Scoop presentation, “We heard from you that you wanted to find a way to break through an obstacle that was perhaps influencing one’s ability or willingness to share the Cabi opportunity. The obstacle we heard... is what we refer to as the wall of judgment. It’s this idea that when describing your career choice to others they immediately jump to this conclusion of, ‘Oh, you’re like those Tupperware parties, right?’ Right?”

The women behind Cabi, past, present, and future, are storytellers first and foremost.

“Women sharing their story is how we talk about it, and what we firmly believe,” says Ryan. To wit, two primary components of each stylist’s Cabi home show presentation, and the two pillars that bookend her presentation of the Cabi line, are the relation of a quick sound bite that encapsulates Cabi’s modus operandi up front (“why Cabi?”) and the relation of the stylist’s personal Cabi story at the end (“why Cabi for me?”). “You have to earn the right,” adds Ryan. “We feel like you shouldn’t stand up at the beginning of your presentation and go, ‘Okay, so now that I’ve got you all here, and I’m holding you captive, let me tell you about Cabi, and you too can be a Cabi stylist, and get rich quick.’ It’s just nothing like that.”

Storytelling is, in a sense, how Cabi stylists break free from the stereotypes surrounding multilevel marketing and direct-sales home businesses. Developing and fostering personal relationships are integral parts of Cabi’s model, whether it’s between stylists and their hosts or stylists and their team leaders. What better way to do that, goes the Cabi philosophy, than to share your story?

“The truth is, your story is evolving, even in this moment,” writes Inskeep in “Why We Must Play ‘Know & Tell’ with Our Story,” a September 2015 post on Cabi’s blog. “Author it with intentionality. And then tell it: ‘This is who I am, this is what I’ve been through, and because of that, this is where I am going.’ Each time we share our story, it gives us the opportunity to ponder the story we are living. That takes courage.”

The genius of Cabi’s marketing strategy is that it recognizes that storytelling can feel pretty fulfilling. And in Cabi’s case, both the storyteller and the woman hearing the story tend to fall into an oft-misunderstood camp: middle-aged (and approaching middle-aged) women.

“We design to a 40-year-old,” says CEO Coté of Cabi’s target demo. “We think she’s contemporary-minded. She’s not trendy, but she wants to be on trend, she wants to feel confident in how she’s putting herself together, she cares about how she puts herself together, and she truly values the help she’s given. Like, maybe she’s not a fashionista, but she wants to look good.” Coté adds that since Cabi designs “so squarely toward the 40-year-old woman,” the line appeals to women under 40 and over 40, and the wide swath of ages that Cabi caters to could not be more evident among the stylists at Scoop. Austin stylist Monica Smith is 29 and sells to women in her demographic; her mom, Victoria Smith, has been with Cabi for 12 years and is 55. How can both women wear, and sell, the same clothes?

Cabi’s aesthetic is less about serving a particular age set and more about serving “seasons of life,” as Ryan puts it — particularly the season of life that includes motherhood. The company is careful to acknowledge that plenty of its stylists are neither married nor have children, as Inskeep points out from the main stage at Scoop. But there’s no mistaking just how much of the line is designed with moms — thirtysomething moms, working moms, busy moms — in mind.

“I actually had a baby back in May,” says Smith during her home show while introducing a pair of stretch trousers, “and these are the only pants that made me feel like I got my groove back, if that tells you anything.”

Smith evokes motherhood throughout her presentation, joking that the pieces in a collection called Tea Lounge represent her entire wardrobe since she has a 7-month-old and lives in leggings.

Then there’s the Truck Jogger pant that, she says, “can go from carpool to cocktails,” and the skirt-banded M’Leggings (more leggings!) that “can go from barre to —”

“The bar!” supplies one guest.

“Barre to the bar!” agrees Smith, and everyone laughs.

These are multifunctional clothes for the multifunctional woman. See also Cabi’s Convertible Jacket:

“So I kind of tease,” starts Smith, holding the trench’s hanger up high, “that from, like, 9 to 5 you can rock the trench along, boss lady-style. And then once 5 o’clock hits, you can zip off the bottom half of your jacket —”

“What!” gasps one guest.

“Shut up!” blurts out another.

“— and it turns into this sassy little cropped bolero. And you can just, you know, let your hair down.”

Part of what seems to make Cabi an appealing brand for the busy maybe-mom, maybe-working, maybe-working-mom woman is that comfort and mileage are key. As Coté puts it, the Cabi shopper isn’t necessarily a fashionista, and couture may spook her. Cabi’s fashion is not serious fashion; it’s attainable and approachable. The models in Scoop’s runway show smile and dance while they strut, greeting one another with big, pantomimed hellos as if to say “You! Check you out!” Afterwards, the design team breaks down the line piece by piece, zeroing in on what it refers to as “fashion khakis,” “a dressed-up hoodie,” a pencil trouser that’s “the Spanx of trousers” and “the magic pant,” and a jumpsuit that “you can keep on while going to the loo,” an assessment that’s met with cheers and applause from the audience of stylists.

What makes Cabi an appealing brand to shop for makes it an appealing brand to work for. Without fail, the stylists’ “Cabi stories” speak to a desire for balance between career and family, work and home.

“I think a lot of women feel that struggle, that conflict, that pull,” Smith tells Racked. “Like, ‘Oh, do I want the career or do I want the family,’ and why can’t you have both? Cabi, I think, really mirrors and meshes both of them. We get to kind of have our cake and eat it too, because we own our calendars, we get to put first things first and be with our families, yet we get to also do our Cabi shows and get out of the house, which is so nice when you have a 7-month-old baby.”

There’s a unique dichotomy at play, something beyond simply seeking balance between two opposing forces. Throughout the dialogue surrounding Cabi’s clothes and Cabi’s stories, there’s a subversion of that antiquated “a woman’s place is in the home” bit — but, at the same time, Cabi plays into it.

“We have worked for 15 years to create a culture that gives women a sense of belonging,” says Inskeep, “and where women feel like they are being elevated, and that they are being ushered into what like I think of as a women’s rightful place: to be valued and esteemed, and cared for.”

Marketing vice president Malone takes it a step further: “Our store base is an amazing alternative store. It’s the home.”

When Inskeep takes the stage at Scoop just before the spring 2017 runway show rolls out, she commands the convention center’s great room as only practiced orators do. Her speech crafts an extended metaphor centered around musical composition, and sounds more suited for a motivational speaker or self-help guru than a clothing company executive — until it hits the crescendo, highlighting the power of the individual entrepreneur alongside the power of the collective. “You must not lose sight of the fact that although we are an orchestra together, the role you play is absolutely invaluable,” she says. “Ladies, we are no longer one of many voices, but with many, we are creating one harmonizing, resonant voice. A masterpiece.”

Is Cabi an income option for women who don’t want to choose between a lucrative career and family life? Is it an opportunity for women to create their own identities and write their own story? Or is it a direct-sales retail business that’s captured the money-making potential of the home at every level?

The crux of it comes down to confidence. And it can all be summed up by how Ryan trains her stylists in how to close out a home show: “Instead of saying ‘Oh, thank you so much for coming, I know you’re really busy and doing us a favor,’ I might say to my hostess, ‘Thank you for sharing this experience with your friends.’ It’s just a stronger, confident way of knowing that this is rocking the retail world, and we have it, and you get to be a part of it tonight.”

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