How Kate Hudson turned her passion into a successful business bringing in millions

Kate Hudson speaks to CNBC about building her retail brand, Fabletics

While you may often see Golden Globe-winning actress Kate Hudson walking red carpets for movie premiers and awards, she can also be seen making moves in the world of athleisure, a popular fashion trend.

Hudson co-founded activewear brand Fabletics in 2013, and she can't believe the level of success it has garnered over the past few years, she recently told CNBC's Squawk Box at the Fast Company Innovation Festival in New York City.

"The other day, someone asked me how much revenue do you do a year and I kinda just said 'north of $250 million,'" Hudson explains, adding that she thought to herself, "Oh my god, that's insane. How did that happen so fast?"

Earlier this year, the brand's parent company, TechStyle Fashion Group, said Fabletics has a $250 million revenue run rate with sales increasing 43 percent in 2016, making it the company's fastest-growing division.

Hudson says she is surprised the company is profitable just about four years in business.

Customers can join the free Fabletics VIP Membership and for $49 a month, subscribe to receive a curated outfit — a top, sports bra and bottoms — based on an online quiz which determines their lifestyle and fashion preferences, as well as a discount on clothing on the website. Customers can return or exchange the outfit or choose to skip as many months as they would like. In addition to the e-commerce site, Fabletics has expanded its brick-and-mortar footprint this year to 22 stores.

The brand also features celebrity capsule collections with singer Demi Lovato and Olympic athlete Will Claye for FL2, the men's arm of the Fabletics service.

"When I started rapping about this idea, I got so passionate about it," Hudson told CNBC earlier this year. "There wasn't a great quality, affordable active-wear line. There were $250 yoga pants."

Similar companies were starting at the same time, such as Outdoor Voices which Tyler Haney founded out of college in 2013 and has attracted investors like Gwenyth Paltrow to raise a total of $22.5 million in funding.

But Hudson says she not only sought out to fill what she saw as a gap in the activewear world but also wanted to pursue her creative desires.

"I wanted to get into fashion, I'm a mom of two, movies take me away for much longer hours than I like as a single mama," she says. (Hudson's sons are 6 and 13.)

So she asked herself: "What can I do that can create a business for me where I can work and be creative, but be more present at home?" And "if there's something I want to be talking about that I'm really passionate about, what purpose behind it is important for me to get out there?"

That's when the idea for Fabletics came to her.

"For me, it's just healthy lifestyle and empowering women to feel good about themselves," she says.

: Founder, The Honest Company, Jessica Alba (L) and actress Kate Hudson attend the Fifth Annual Baby2Baby Gala, Presented By John Paul Mitchell Systems at 3LABS on November 12, 2016 in Culver City, California.
Stefanie Keenan | Getty Images

In addition to appearing in much of the brand's women athleisure advertising, Hudson says she is always involved in the design of the clothing because she loves that side of product development as well.

It hasn't always been a smooth road though: a 2015 BuzzFeed News investigative report on Fabletics and its parent company (then JustFab, before being renamed TechStyle Fashion Group) turned up 1,400 Better Business Bureau complaints regarding deceptive advertising and unauthorized credit card charges. Although the company's Better Business Bureau accreditation was revoked that year, it has since been reinstated, according to Fabletics' sign up form.

"You always want to sort of address everyone's issues, that being said you can't always do that and I think any business knows that, especially when you're at the scope that we're at. We're unfortunately not always going to make everyone happy," Hudson told Fox Business earlier this year.

But Hudson has support. When she needs advice, she turns to friend and fellow entrepreneur Jessica Alba, as well as her stepfather Kurt Russell, she says.

Alba co-founded the Honest Company in 2011, and it is now reportedly valued at just under $1 billion. Hudson says they have both had relatively fast success and a big learning curve with their companies.

"It's nice to be able to talk to someone who sort of understands the ins and outs of being a part of a company that has grown," Hudson says.

As for her relationship with Russell, Hudson says he has always had high expectations for her in her endeavors.

"The truth is that those expectations he had somehow drove me to be a very ambitious person and it's not necessarily about financial success, as much as it is about finishing something," Hudson said. "Until the day you die, you always want to make your parents proud no matter where they are."

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