Transcription
What's going on everybody and welcome back to the School of Hard Knocks podcast. I'm James, and today we have a very special guest, Paul Hedrick, who's the founder of Tecova, one of the largest online and retail boot stores in the entire world. Paul, we're very, you know, happy and thankful to be here with you today. Thanks for having us out to the office out here in Austin.
Yeah, thanks for coming to visit me. My office, I don't get too many people here. And, uh, you know, before we kind of get into asking you a bunch of questions today, if it wouldn't do me justice to introduce you, could you give us a little bit of a background and kind of how you ended up in this industry and, and became kind of a boot mogul?
H, I like that, boot mogul. Uh, yeah, so I'm born and raised in Texas, born in Houston, raised in Dallas. Uh, lived in Austin for about nine years. Moved to Austin to start working on Tecova. Uh, I worked for four years after college, uh, as first as a management consultant and then for an investment firm focused on consumer retail businesses. Says I, uh, left that job in 2014 because I wanted to start a company and I wanted to start specifically a brand. And, uh, I guess you could say the rest is history, but there's a lot of thought that went into why boots and why Tecova and how it became what it is. But, um, yeah, Tecova, uh, long story short, is, uh, the first direct-to-consumer brand in the western category. Uh, we were the first people to really sell cowboy boots in, you know, really high-end ones, directly to consumers on the internet. Uh, we started opening our own stores, uh, in 2019. Uh, we now have 30 of those. So we're still 100% direct-to-consumer, about half online, about half retail. And, uh, excited to have a lot of amazing customers.
That's amazing. Now, you, you went to school at Harvard and, and you ended up ultimately, you know, obtaining some pretty exciting, amazing jobs following Harvard. What was the turning point in your life that kind of made you go down the path of entrepreneurship and wanting to start your own business?
Yeah, it's a good question because I think a lot of people who become entrepreneurs knew they wanted to become be one when they were little. You know, they're the people who were selling lemonade stands and then figuring out how, you know, they're selling their friends clothes, you know, for then they're turning into little merchant businesses and middle school and high school. I was never doing that. I always, um, you know, my, my dad was a management consultant. I looked at what he did and thought it was pretty cool, even though I didn't understand it. Um, I wanted to be in business. I didn't know what that meant. But, so I ended up, you know, grades are really important to me. I worked really hard, you know, middle school, high school. Uh, I knew that working hard upfront would create optionality for me later. And I think I just took that mindset and just kept applying it. Um, after school, set a couple of goals for myself to get what I thought were my dream jobs. Uh, did end up getting my dream jobs, really, one after the other. Uh, and it was when I was in that second job out of college that, uh, you know, I realized, hey, I looked around, I'm pretty lucky. I'm making more money than I thought it was possible to make at 25. I'm, I've got a pretty good life. Uh, I was living in New York, which, to be honest, I didn't love living in New York at the time. I wanted to move back to Texas, but that's another story. Um, but I looked around and just felt I wasn't being personally fulfilled. And, and it took some rejection for me to, to leave me the answer. I ended up applying to business school. I applied to two schools, and usually when you get, apply to business school, you get an interview. Uh, and they interview a lot more people than they let in. And then if you get through the interview, you get in. Uh, I didn't even get an interview at either place I applied to. Granted, they were Harvard and Stanford. But, uh, that rejection was important because it made me sit back and think about, hey, I was kind of doing the easy path. Not the easy path to get into, but the easy, this should be the next step. It felt obvious to do those next things. And, and it was only then when I started thinking about, hey, what's different about me? Uh, what can I do that's maybe different from my peers? And then, you know, I had a little chip on my shoulder. I wanted to prove myself. I had just gotten rejected. I, I've actually faced a lot of rejection in my life, although I've ended up working through a lot of it. But that was another turning point for me. Was, and then it wasn't until I, uh, I was actually a member, sitting in a, in a bar with one of my co-workers and over a beer, you kind of have to be a little stupid to consider quitting a really good job and starting a business from scratch. And it took a little bit of courage and a little bit of liquid courage to start thinking about it. Uh, he and I started thinking about, hey, what, what we could start one of these brands that we're investing in. You know, we own a big water company, a big retail company, a big, a bunch of restaurants. So, our firm did. Hey, why don't I do that? Why, why don't I give it a try? So that was a, maybe the most naive thought I've ever had in my life. But I'm glad it ended up kind of pushing me down the, the rabbit hole, if you will, because it led to this.
Yeah, I wanted to say, you know, I feel like a lot of people are really, they're afraid of failure. They, they, they kind of push away from it. They, they, they just want to stay successful the whole time. And it seems that along your journey, that there were times where there are moments where you had to deal with rejection, deal with maybe the thought or fear of failure, leaving that job and going to pursue Tecova. Pretty much. Do you think that facing failure and those risk opportunities are necessary to become a successful entrepreneur? If, like, I'm a young kid, I'm like, young, early 20s, I've never really faced big failure or challenge like that. Do you think if they don't go through something like that, it would be hard for them to succeed?
Listen, it's not to say that you have to fail before you do something right. It's not like it's the second or third try for everything. Sometimes you get things right on the first try. Uh, I will say definitively that I've learned more from failure than from success. Even in the couple things we already talked about, my, you know, getting into Harvard. I was waitlisted. I, I had to work my butt off to get off the waitlist. I wrote them letters. I, I, you know, I always felt like I was having to work from behind there. My first job out of college, I was rejected from it three different times before getting. I was rejected from the summer internship, for the, for the full-time inter, and then full-time job, and then didn't get until the third try. I guess I was rejected twice. Um, and, and at Tecova, we've had, we've had failure. We've had a pretty really great run of success as well. But, you know, let's say COVID, for example, that was a disaster for us. I mean, for a lot of businesses. You know, COVID accelerated their business. And I signed 10 retail leases in February 2020. So imagine how I felt one month later, with a bunch of brick and mortar, uh, opportunities. And well, and I say that because ironically, now that's the fastest growing and most profitable part of our business. So, you know, sometimes it takes going through that to create the conviction that, that, that you need to, to keep moving forward. And actually, in that instance, I was still highly convicted of the opportunity for physically selling people things. And I knew that at some point, we were going to get out of our house and I was going to get out of my house sooner than later. And, and it ended up being the right call.
So I'm curious, during that time period, you just signed 10 leases and the world starting to shut down. What did that initial game plan look like to kind of adapt during that, just different environment? No one's ever been there before. And then how did that plan evolve over time?
Great question. Uh, step one of the plan was, uh, absolute panic. Uh, I, yeah, it, it was a pretty dark place, to be honest. And, and you need to get to a dark place, I think, sometimes to get real clarity on how to move forward. And, uh, I was very lucky in that at that point, we had already, uh, we had a board of directors. It was small, but I had a couple of people that, that I could call on, you know, really for the hard advice and for the, and the hard time. And I remember getting a call from one of those, uh, board members, and on the Saturday of, Saturday, March 14th, uh, so before everyone else was really freaking out. And, and it was, "Hey, Paul, we need a game plan, you know, end of this weekend. And, uh, if we don't have one, like, we might, we might fail." Like, people, I think, are going to underestimate how bad this is going to be. And he was right. And, uh, so we did come up with a game plan. One was to, it's business, you got to get your cost profile the right way. So let's get, let's get trimmed up exactly where we need to be in a, in a risky scenario. Um, we made, uh, really tough call of, uh, reducing our staff. Uh, we delayed store openings. We cut costs. We cut our advertising costs by 60%, I think, overnight. Um, and, uh, second was, you know, if we're going to get the, if we're going to get the, you take our medicine out of the way, that I wanted, I wanted bullets number two and three to be positive. So second was, keep playing offense where we can play offense. So, uh, we ended up, uh, keeping all, we didn't, we didn't try to get out of any of our retail leases. We said, we're going to open all of them. We're just going to delay them. Uh, we're going to still, uh, do all the marketing things we're going to do, we're just going to do them at a lower rate. And the third thing was, still believe in that consumer and trust that consumer. And hug the people who are already there for you. So let's try to get people to repeat as opposed to go try to find a bunch of new customers right now. And so the, the best thing for us to do at the time to get repeat business was actually to introduce new products. And that ended up being a really unusual playbook. Most of the larger brands at the time, basically cut all their orders and just tried to work through their inventory that they had, which is honestly kind of stale and it's been, it's already been sitting there. And, uh, we decided to essentially not order a lot of the same stuff that we would have ordered and let's keep all the new stuff in the pipeline and take some risk. And oh man, save the business. We actually ended up growing that year in 2020, even though, uh, we were not in the pace to grow. And we added, I think we, we literally added $10 million of profit higher in 2020 versus 2019. So, you know, you can make good out of bad if you really have a good plan.
So was that one of the things that, like, I think of, I was in your shoes, what am I going to do? And the first thing that I think of is you started off as an online retailer. And so when I think of we're going into that thing, that place of the world where the world's shutting down, I got to double down e-commerce. Is that, was that part of the playbook? Was we got to go like, even harder online and double down on online advertising?
Yes and no. I'd say yes, it was definitely the play because that was the only thing we could sell. You know, we went from, I, I don't know, maybe about a third of our business at that, 25% of our business at that point was offline, and that went to zero overnight. But online also went down. Uh, I mean, think about how many people were sitting around their apartment wearing cowboy boots. You know, people were products going out, having fun, going to dinner, going to bars, going to concerts, going to the office. You know, being outside. But not, you know, going for trail runs. You know, they're good for a lot of things, probably not great for working out. So, uh, actually, none of, we had a bunch of headwinds online as well. So yes, we needed online to survive. It was the only sales we had coming in. But we actually had to get efficient too. I couldn't, I, we couldn't afford to lose a dollar. And, and if you're trying to pummel people with advertising to buy something that they're, if they're sitting on their couch, they're just not in the mood to buy. Well, guess what? You got to get smart and know where demand is going to be and just slim down. So we ended up slimming down pretty hardcore, actually.
I, I wanted to go back to, you know, prior to going all in on Tecova and post, kind of business school, you had landed some jobs at some pretty incredible companies, and you had kind of some different roles from option training to more of like the management consulting side of things. What were some of those top skills that you were able to to obtain that led to your success in building a successful startup into Tecova? And what are those skills that you think every entrepreneur who's getting ready to start their own business in today's world absolutely needs to obtain to be successful?
Yeah, it's a good question. I, I'd say there isn't one or two or, you know, even I don't even think there's even 10 things that you can write in a list. However, I'd say for me, it was a combination of high-level and details. And, you know, you, you spend your first job or two in your career really picking up hard skills. You need some of those hard skills to get to the next thing. I'd say those are more table stakes. And a lot of people want to skip past the table stakes. And then you got people who, you know, get a job who they're supposed to know Excel, they don't know what they're doing, and then they fall behind. So, you know, hard skills are table stakes. And I was able to get those in my, in my first job. What I think I underestimated was the soft skills that were table stakes as well. And, and I think, or maybe I underappreciated them. And at my first job, which was consulting, you're forced to be in the room with people who think they know more than you do, know more than you. Um, and you are basically forced to be an expert. And that challenge socially, uh, of being able to, of being a 22-year-old, 23-year-old, having to sit in the room with people much older, much more experienced, and still deliver value and figure out how to deliver value, not through BS, not through faking it, but actually through driving value, was incredibly valuable. Taught me a lot of confidence as well. So I'd say that combination of hard skills and confidence is sort of that base layer. And then I think what really helped me entrepreneurially was being able to see the big picture. And we were able to, as a consultant, you have to look at businesses and kind of become an expert on them. You know, over a couple weeks, you're not really an expert, but you have to, you have to get good at 80/20 thinking. You have to understand, hey, how can I spend 20% of the effort to get to 80% of the answer and 80% of my understanding of this industry? And you learn to think in, you know, breaking things down, 30,000 feet, 10,000 feet, 5,000 feet, 1,000 feet. So I don't know, I still think that my, my biggest strength as an executive here at Tecova is not so much the blocking and tackling and the making daily business decisions, but it's more so having a combination of the picture of where we're going for the next five years, understanding that can be broken down into annual and quarterly increments, and that's all I really need to care about at my level, uh, at my job at this point. And then having a really good understanding of the detail, knowing that the details is what is what you as a consumer, is what every single person, the hundreds of thousands of people who consume and who interact with our brand are going to notice. They're going to think about that, that color of the box, they're going to think about where that thread is, they're going to think about what it smelled like when they walked into the store. And if you can't have both of those, then you're going to miss everything in the middle.
I want to go back to, kind of like what we were talking about with the e-commerce. You know, the boot industry has been around for a long time. Yeah. And so you look, I, I would love for you to get into how did you get the vision to be able to look ahead and see that, hey, if we went direct to consumer, selling boots, e-commerce wise, disrupting this industry? Where did you get the vision for that? And how did you see it in your eyes, like in the horizon, playing out and ended up end up becoming a success?
Yeah, I mean, listen, it's easier, it's easy to have hindsight vision, it's 20/20. But, um, at the time, direct-to-consumer was a buzzword. You know, there was Warby Parker had just raised their Series A when I was thinking about quitting my job. I think Casper had just launched. Um, Allbirds, I think, wasn't even really around yet. Um, a lot of these brands that have kind of become, uh, concomitant with the idea of being DTC, uh, were just getting started. And so I thought that was a, that's a business model. Um, I was wrong about that, I think, uh, maybe to be a little contrarian here. Uh, direct-to-consumer is just a channel. It's just a channel for a brand and a consumer to connect. And there are lots of ways for brands to connect with consumers. Um, and before, uh, the internet and for e-commerce, there were direct-to-consumer brands. J. Crew is a direct-to-consumer brand. The only way to buy J. Crew products is to go to a J. Crew store. L.L. Bean is a direct-to-consumer brand. They, kind of, they invented the catalog business. Catalog used to be the DTC hot take of the '70s and '80s. And so, you know, I think what took some wisdom that I maybe even didn't have at the time was to recognize that e-commerce was just another, was just another way to have a catalog, another way to have a store, uh, another way to connect with consumers more directly. So, uh, I'd say that one, uh, to actually answer your question, it was obvious that people are going to keep buying stuff on the internet. And it was still kind of crazy to think there were some categories where people were still saying, "Oh, people aren't going to buy that on the internet." It's like, okay, they're going to eventually figure out how to buy everything on the internet. Now, how much people are going to buy on the internet versus how much they're still going to buy physically, I think that varies by category. Um, you know, technology was the first thing to go from physical stores. Music was next. Uh, uh, hardware was another thing to go quick over online. Um, footwear became one of the early categories to go online because of absurd, I think it was like 4% I think of sales of cowboy boots were on the internet versus almost 20% of footwear overall. So it was very obvious that that was like an underpenetrated channel. Uh, but more than anything, it was connecting people with the brand that I was most attracted to. It was, it was recognizing that in the modern era, people are going to department stores a little less. People are relying on one place to stop and shop for everything. People wanted to have a relationship with brand. People wanted to have brands that represented their values. They wanted to to represent their style in the, in the case of footwear and apparel. So that was, I think, a, a more important trend. And the idea that you could have every single one of your sales as a one-on-one connection where, you know, who's buying, you can talk to them, you can learn from them, you can make them way happier than if your box is being shipped by someone else and then they got a question about the product, they didn't even know who to call. So, uh, was really attracted to that business model.
Now, when you started the company initially, you had done your first like $100,000 in sales before you even brought on an initial employee. So I guess I was going to ask you, like, what were those initial people that you brought on to your team? And for somebody who is creating a startup in today's world, what are those relationships that they need to develop and bring on to complement their skills?
Yeah, well, you definitely can't do it by yourself. Uh, I tried even for too long to do it by myself. And then even with a handful of people, probably tried too long to do it with too few people. Um, so what we actually did, what I actually did was, I, I hired someone, uh, who I actually really got along with, who, who I could relate to because, who I think he and I had different, had had similar backgrounds as opposed to different. I think that was good at the beginning. I think the very beginning, you want people who you have an unspoken language with. You can have what we call the no-look pass, sort of conversation with. Um, it's, it's good if you can compliment each other in some ways. But at the time, there's just a big pie and you got to split it somehow. And it's better to be aligned perfectly on how to, how to split those duties. I think at the very beginning, I'm talking, you know, five people or less. Um, and what he ended up doing was, he ended up taking all the growth, uh, and digital marketing. You know, that was something I didn't know how to do. Needed, did he? For, for what it's worth, but we, we decided we could figure it out together. And he could, uh, he could certainly just treat it like any other problem in life and in business. Um, and then I, I focused all on product and kind of, uh, the operations and, and moving and how to connect with the, our consumers more physically. And I think that was really helpful for the first growth years. And we were able to get pretty efficient on that. Really different answer later. I think the answer later, even just two years in, was thinking about what you can be replaced, what you should be replaced, what skill you're you're doing, what, what, what activity you're doing that should be replaced. And, um, actually, you know, and I've heard this before, and I, you read business books that say this, and I always roll my eyes a little bit when I hear advice like this, but it's like, hire someone who's better than you at at X, Y, and Z. And, um, your goal should be to make yourself redundant. And I always thought that was kind of dumb. I'm like, why would I make myself redundant? I'm having fun. I'm an entrepreneur. I like doing all this stuff. But it took me a while to realize that, man, life is a lot better when you do have great people around the table. You know, if you're someone who wants to do everything yourself, it's going to take you longer to get there. I think mentally, but eventually you will get there when you realize, you're good at some things, but you can't be good at everything.
Yeah, I wanted to go back. You worked at a private equity company, and I believe it was consumer retail product, like companies that you were working with. Obviously, like that's great experience to be able to come over and take to Tecova. So what were some of those things that you saw working in a private equity company, those companies that you were servicing, that you were able to take those exact things and being able to apply them to Tecova, like specifically in the retail space?
Yeah, I'd say it definitely helped being, I knew I wanted to work in retail and consumer, which is why I took that job to begin with. Actually thought I wanted to be in restaurants and didn't end up doing that. But really, there's a, there was a practical element to it. There was understanding what are the functions that you need to, to run a, a restaurant or a fashion company or, you know, an apparel or footwear retailer, CPG company. Just knowing the fundamentals of those businesses and even the nuances between them and why, how it's different to run a wholesale-oriented CPG business versus a retail-oriented, uh, apparel and accessories business. Just having that base knowledge got me all the way to first, second base, you know, compared to a lot of people who might be jumping in fresh. And then I think philosophically, it was just knowing the importance of brand. And there are some, you know, private equity means a lot of things. Private equity just means you, you've raised money privately as opposed from the public market to invest in or buy businesses and then make money by selling them, right? And so you had to create some value. You had to make the businesses more valuable. And a lot of the old-school private equity firms, the ones that were formed, formed in the '80s and '90s, you know, they did that by loading the business up with debt and then slowly paying down that debt and then selling the companies for really, for a lot of profit. But a lot of times they didn't even grow it that much. A lot of the times they were cutting costs, they can so they can pay the debt down faster. I was glad because the place that I was at, uh, the firm that I worked for was not about that model. They were more about growth and, and finding brands that were connected to people. And so I, I think just fundamentally, the, my DNA in the workplace that I was, that was sort of being rewritten live was, no, find growth, find brands that are amazing, find, and doesn't, M- almost like, doesn't matter what you pay for them. Like, like if, if they're that big, they're that great, they're going to grow. That same firm is about to IPO Birkenstock. And I mean, listen, you guys know Birkenstock now. It's crazy to think if you had asked me 10 years ago that Birkenstock would be a hot retail company now, I would have called you crazy. But they had that vision and they recognized the power of brand. And so from day one, it was all about, how do I connect the consumer to this brand in a powerful way? How do I make this brand a coveted brand? How do I make this brand so think ahead of the consumer and give them what they want before they're asking? How do we become hospitable? It was nice to be somewhere that, that recognized the value of hospitality and retail and restaurants. Um, and now it's one of our core pillars. We have, one of our internal values is what we call radical hospitality. And our goal is to extend that and everything that we do, from the, uh, how you interact with the website side to our customer experience team, to walking into the store, to even our employees. And, uh, you coming to our office, even, you should feel like you're in a radically hospitable environment. You should be, uh, welcomed and, and anticipated. And all of that was just invaluable.
I wanted to ask you because it seems like a massive component of your success was putting a lot of emphasis on building a very strong brand. But when you talk to a lot of investors and ask them what it is that they look for when they're investing in a company or a product, is that it's not necessarily the idea because ideas go to die, but rather it's the team and the people. So, you know, you have some, you know, very notable investors in your company. How were you able to sell yourself beyond just your brand and idea to these people and get them to invest into you and your company?
Well, I got a lot of "no"s, so I don't know if I did it that well. But, yeah, we've been fortunate to have some great partners in the business over the years. You know, we were growing a rapidly growing, it was a rapidly growing business that that needed, you know, that that was growing too fast for banks, really, to support, you know, our needs. Even though we were never losing money from an accounting standpoint, there's a, there's a big difference between being accounting profitable and, and cash flow profitable. And, um, you know, for us, we, we have really spent much of our first seven, eight years, uh, investing in the business. And so, yeah, we've had to get some good investors. And they're mostly angel investors. Um, a couple of venture capital firms. I'd say for me, you'd have to ask them what attracted them to, to the business. But I think it was the, uh, grasp of both the hard and the soft, sort of the right brain and the left brain, uh, that I think we had from day one, in the same sentence of talking about how important the brand was and how important the soft stuff was and being creative and, and designing things and, and really wowing the consumer. At the same time, we could answer any question about our financials like cold. You know, we, we were, we knew every single marketing metric we had and how we, we were, we were in control of every dollar we had incoming and outgoing. So I think, um, it was rare at the time, I think, to have that much focus on those two things. Usually companies are kind of focused on one or the other at the beginning, maybe to their detriment. And, uh, looking back, I do think that was maybe the primary reason.
And I just want to ask a follow-up to that because, you know, a big struggle that a lot of businesses and people have today is getting that access to capital to to fund their ideas. But you were able to raise tens of millions of dollars for your venture. So what do you think is the most efficient way to go about fundraising, you know, getting the money to to fund the ideas for people's businesses in today's world? Because you hear people, you know, advise against borrowing money, you don't want to borrow money from maybe banks or various other things. So what would you say is the most efficient way to go about funding, you know, business ideas in today's world?
Well, I think it's a different answer today. I mean, the unfortunate truth is the five to 10 years ago answer was, start your business in a lucky time. It was, start your business at a time when interest rates were low and money was flowing freely into businesses that, uh, that wanted it. And I mean, the, the, the demand, the, the flow of money, of capital, and private capital, angel capital, venture capital into businesses like ours has absolutely plummeted in the last, uh, year and a half. And I think that reality is likely here to stay for the next few years. So, to the extent that you're, you know, want to help young entrepreneurs and and business owners, you know, maybe tackle 2023 to 2025, 2026, I don't know, it's, it's going to be a different world. So unfortunately, I don't, you know, be born five years earlier. No. Uh, right now, I think what has not changed is the fundamentals. Right now, what, which may have changed, uh, is the scale that you can really achieve with those same fundamentals. So, a business that's generating $100,000 or a million dollars of profit today is going to be valued lower than it was five years ago. That's just because that's where the demand is. That's where it's, it's the way the, the, the capital markets work with, where interest rates are. And you just have to know that. Well, you have to know your market. You have to know your business well. And you, and you have to get that market feedback. And I think the only way to really learn is to get out there and try. You know, I, I, I never say, I never waited until the last minute to, to go and have a big, a big deadline to raise a bunch of money. It was, I was always talking to people, always know, I knew what all the deal flow in the market was. I knew who was making investments. I was Googling people all the time. I was trying to get connected to people. I was always, you know, in the conversation and staying in the conversation. And, uh, can do a lot for you, both in terms of people knowing you and the ease of the connection, but also you knowing the market and getting those data points. So I don't know if I have a great answer for how to fund a business today, other than you should honestly be building it to need less capital, ideally. Um, I don't know if we could have grown Tecova the way we did, uh, in today's environment versus five, six years ago. We probably would have grown slower. We probably would have been even more disciplined with capital than we already were. Uh, we were attuned to the market, but, you know, we were using outside capital to fund the business. And it would be less now. So just be smart. The fundamentals of the business don't change. A P&L doesn't change. The P&L has always been the P&L. If you ask someone who's been in business for 50 years, someone who's, you know, 70, 80 years old, I think the thing they'll tell you is, hey, we've seen a couple of these cycles. It, it all, it all repeats itself. It all comes back. The market goes down, the market goes up. It gets hard to fund, it gets easier to fund. Uh, but what never changes is is fundamentally healthy business.
One of the, uh, one of the key components of your success has been branding. And that goes deeper than just the boots, the customer experience when they walk in the store, to the website experience when they browse the website. What advice would you give to someone who's looking to build a brand that's bigger than just a product itself, but create more of like a community and a culture?
Well, first of all, I think modern consumers really want community, really want culture. They want brands to reflect their own values. Um, now, that doesn't mean a political value or a social value necessarily. It might just mean a value like, I appreciate style, I want to be bold, or I care about the environment, I want a brand that that cares about that. There's lots of ways for brands to connect with consumers. So I think first things first is knowing your consumer. And, uh, it's hard to know at the very beginning sometimes if you're creating something from scratch. Uh, I think the best thing to do is just to start with an amazing product that you yourself would use. That's certainly how I approached it. Was always product first, product first, product first. And product, I think for me, what I've learned over the years is I thought product was everything. And it is probably the most important box you have to check. If you don't have a, a product that you believe in, that, that, uh, you wouldn't put, you know, your reputation behind, then you should probably start over. But it, it, it's not everything. Exactly. It is the first box you have to check. And it's an ever-important one. And it's one that you have to be hyper-vigilant on always. But, but having a really amazing product is only going to get you so far if you don't understand who you're selling it to and why they want it and why they love it. They might like it for a different reason than you do. Uh, and you might have to iterate, you might have to expand. You know, for us, we've gone from having two men's boots and two women's boots to hundreds of of of boots and apparel and accessories as well. And the reason we were able to do those things is because we knew who we wanted to connect with as a, uh, as consumers. So I think over the time, over our time, over our lifetime, we've actually narrowed our view on, you know, what's the one thing you got to solve for, for who, who you're going to solve for? Who, like, who are you? Who is in your bullseye? And you can't have everyone in your bullseye. In fact, most brands, the bigger they get, the tighter they get their bullseye. And they know that if they nail that bullseye, there's a lot of people around it that will also buy it. You know, there's a lot of people around that that will connect for different reasons. But if you don't have a core group, whether it's, you know, 5, 10, 20% of the population that you know really well, well, that you're just resonating wholesale with, you are, uh, really understand them, then you're never going to get anywhere.
I got to pick the, uh, I got to for the YouTube audience, show the boot right here. You got to lift up the shoe real quick. He's got the same on right there. So, um, the Wyatt Jos, that was a great question. I want to touch a little bit on, you know, you said great products, they only get you so far. For people like starting from scratch, they want to be an entrepreneur, they, they, they love retail products, things like that, they might not know what product that they want to sell. So how can someone really, uh, how can someone make a great product? And would love for you to tell the story of how you came about getting the pieces together to build the Tecova boot, like the manufacturer, you know, you went down to Mexico down there, yeah?
Well, deciding to get into boots was was a journey of it in its own right, you know. And I think if I had to give advice to someone who is really passionate about consumer businesses, wants to, uh, create a product themselves, first thing I'd tell them is reconsider. It's a hard business. Everyone wants to be in consumer because everyone is a consumer and it's sexy and it's cool and everyone thinks that because you relate to a brand, "Oh, I can make that too." And, you know, I, maybe I'm being a little bit of a hypocrite, but I might, you know, at least understand what you're getting into because it is hard. It is competitive as hell. Um, you know, the, the, the margins are not amazing. You have to pay upfront to make product and before you sell it, most of the time. So it is a hard business. But if you are really committed to that hard journey, uh, which, you know, power to you, I certainly was, um, I'd start with your backyard and I'd start with what do you like? Uh, you know, that, that you, you need to be an expert on something if, if you get ready to dive in. And maybe dive in for a decade or two, because this isn't going to be a little one, two, three-year journey. This is going to be, you might, if you're successful, what are you going to be? You're going to be the leading witness to your category. You're going to be the, the person who knows it better than anyone else. And so you got to be prepared to to dive deep. So, so my first advice would be, make it fun. You know, make it something that you love already. I loved boots. Uh, I was not an enthusiast. I would say I was not a collector. I was someone who, uh, for boots, for me, culturally meant connection to my home, to Texas. And every time I left Texas, I started wearing boots more. When I went to college in Boston, I started wearing boots almost every day. My senior year, when I, uh, moved to New York, uh, I went to, I started wearing boots every single time I went out in New York City.
You must, you must have got some looks out there.
You do get some looks, but you know, as a Texan, it's, it's a good thing to get those looks sometimes for the right reasons, right? For a good pair of ostrich boots, which is what I was wearing around town.
I was like a foreigner.
Yeah, that's right. Uh, yeah, we call ourselves Tex Pats, actually, all the Texans who lived in New York City. Um, but so that was really when I literally had a moment. I'm like, all right, well, let me think about products. I looked down at my feet. I was wearing my ostrich boots. In fact, they looked almost exactly like that pair right there, a little darker. They were more of a chocolate color. But, um, I was like, these are the most expensive shoes I own. These may be the most expensive article of clothing I own. And I started thinking about the experience. I'm like, oh, wait, I had to go back home to Dallas to get it. I had to go to a, a western sort of department store. Um, I'm thinking about the experience. And like, for me, it was fine. I was used to it. I knew what it was like to buy boots. But I bet if any one of my colleagues here, sitting in these cubicles next to me, went, they would be overwhelmed. They wouldn't know where to start. They don't know what the shapes are. Why are they different prices? What are these little dots on the leather? You know, why is this leather different from that one? And I realized that there wasn't an approachable way to buy boots. And so I started, you know, thinking about the different aspects of, uh, of what makes a great brand. And, and I realized it was, uh, there was a gap for high-quality, comfortable, well-made, and, uh, fairly priced boots. And so, um, that's when I started thinking about, right, where were the best boots in the world made? I was very lucky, uh, in that there was one place to go. Uh, uh, there was a city in Mexico called León, which, with my research and calling some people in the industry, I actually, I found a Texas Monthly article from 20 years ago and found a list of custom boot makers all around town. I called a lot of the numbers. Unfortunately, a lot of them weren't, uh, connected anymore. I'm afraid the, the owners may have passed away. But, um, some people picked up the phone and I was able to get, uh, some advice from people. And they basically said, making boots is really hard. But if you're going to do it, there's only one place to go. And so I flew to Mexico. I had a PowerPoint presentation with a placeholder brand name in it, not Tecova. You know, I used my consulting skills to make a PowerPoint. I got one meeting with the factory by emailing their, you know, information line. I was able only able to find one factory on the internet. And then that factory, uh, rejected me, but sent me across the street and to their, you know, cousin or something. And ended up starting out developing boots with them. Eventually, actually made our, our way back into partnering with that original factory. They're, and, you know, they, for, for what I, for what I knew at the time, they were the best one to work with. And now they actually make, uh, the plurality of our, of our boots. But, uh, yeah, I was honestly just throwing my feet and, you know, throw my feet, feet first into the pool. And, um, I did not open the PowerPoint presentation, but I used my Spanish. I had to brush up on my Spanish. I was, I was sort of broken fluency. And, and you just figured it out. And when you first
started the company. I wanted to ask what were some of those initial marketing strategies that you really implemented to really start getting that initial traction to the brand?
Well, uh, I didn't try marketing at first, to be honest. I, I had spent, so I was so enveloped in the product, um, and I knew that our product was a story to tell in itself. I knew that I had gone to the best boot makers in the world. I knew that that I had become an expert. I wanted to become an expert. I wanted, I wanted to, I wanted to attract people who knew about, uh, the qualities in the boot that we were talking about. You know, I basically, uh, we picked out all the, all the component trees that that you need to make the best boot. And my actual first reaction was, let's just put it on the internet and then people will come because we made the best stuff, right? And people are going to come to your website.
Well, obviously that didn't, uh, work. I remember launching our, uh, turning on, it was tasboots.com at the time. I didn't even have the URL for TAS. I had to buy that later. But remember, turn it on. I had MailChimp at the time and I, uh, I think I had a thousand email addresses and, uh, that I had gathered from family and friends. And then I did a little referral contest among my family and friends to add another few hundred emails. And so, you know, send an email to a thousand people or so and that was it. And it took me months for me to realize that I needed to to find, you know, to, I needed to try different advertising techniques, uh, to pay the rent.
Those first few months, we did farmers markets. I, you know, I had, I'd sold my little coupe that I was driving in New York and I, you know, bought an old SUV and, you know, I drive it. I drove it to Dallas. I drove it to my, um, uh, the the middle school that I went to that had a holiday market, uh, and I set up a table with my mom and sold 20 pairs of boots. You know, that was a $4,000 day and I paid our rent for for December. And, you know, it just got out there. And it wasn't until really kind of six months into the business, seven months into the business, that we realized, hey, if we're going to sell stuff on the internet, we have to get good at reaching people digitally. We have to advertise.
And so, uh, back then, very tactically, it was Facebook. Facebook. Instagram didn't even have advertising yet. Um, so we put a, we, we said, all right, what can we afford to spend? And we had different levels of targets for what, uh, the return would be. And, you know, just created a scenario and said, we're going to do this every week. We're going to be super disciplined about it. We're going to look at it every day. We're going to hire agencies and consultants to help us when we need to, but we're going to never outsource our learning. We are never going to outsource our knowledge of our consumer. And we're just going to keep getting better and better. And our goal was to outgrow every agency that we ever hired. Uh, and then we did end up doing that. And now we do it all in house. And that's a big part of our business. Um, for a while, it was a big percentage of our sales. And now it's, you know, 10, 12% of our sales, thankfully. So a lot more manageable.
Yeah, so, um, like you mentioned earlier, for about like a year or so, you brought in another person to be the CEO. But when you originally started, to you were the CEO. So I would first like to ask, is like, what are some of those things that people, you know, make CEO to be this, you know, top priority, this top position? And it almost might get glorified in a way as a position because you're the head of the company. It's very prestigious. But what are some of those things that people who have never stepped in that CEO role of a growing company, that they, they might not know that they should expect?
Listen, the CEO is a, you know, a fun job to say you have. I loved being CEO. I was CEO for seven years, um, like you said. Yeah, I, the board and I decided to hire a CEO a year ago, um, so I could focus on my role as founder, as the largest shareholder, as our sort of creative vision, um, leader, uh, among other things. And the reason I hired a CEO, maybe is a good picture or an answer to your question, which was at some point, you know, the company does need something that's that's a formula. It's a very hard formula to get, but it is a formula. You need a strategy. You need to be aligned on that strategy. That strategy is a combination of a vision and a mission you have for the company. That's then laid down on a, you know, one to five-year plan, depending on how far into the future you can really envision your business. Um, you need a process to execute that strategy. Uh, for us, that there's a, you know, something we call the concept of consumer process, which is, you know, everything from a twinkle in your eye to something being delivered in a box. And and seasons and and buying products and planning and selling and moving through stores. And, you know, really, it's the, it's the process of running a retail and consumer business. And they need a great team, uh, to run that process. And that's it, really. That is a three-part thing that you need. And a CEO needs to recognize that playbook, um, know it cold and deliver on it. And the CEO has to be a lot of other things. I'd say for an earlier stage business, the CEO has to be, you know, a fundraiser and a cultural creator and a and a cheerleader as much as those. But if you don't have that element, that playbook, then you won't succeed. And I think it took me a while to realize that it actually was that simple. I had sort of thought that it was this subjective, complex, ethereal thing. You know, I have to be running the business because I had to be making every decision and and hiring every person on the executive team. And I need to be in every meeting and this meeting and this meeting and this meeting. And and I realized that you're never going to scale if you can't get other people to to work for you and to add leverage for you. You're never going to scale if you're not going to get better people, like we talked about before, to work for you, uh, in certain areas. And the only way to do that, uh, was to have a vision that had a big vision for the company so that you can keep growing. And by growing more, you can pay people more and you can get greater and greater people in. You can get more people in, um, more consumers in your tent, um, but really, it was just that process. And as soon as we real, as soon as we started working on that, it just clicked for me. And it was, uh, I realized I could have applied that five years prior. Not that I should have. I I shouldn't have been CEO five years prior, but I would have been a much better CEO, I think, if I were operating every year with a three-year plan that I'd broken down to a one-year plan and a quarterly plan. And I knew exactly what the process was for my team to feel good. And I, I knew exactly what where the talent that you need to invest in. So that's the playbook. That's the CEO playbook. Easier said than done, uh, but I think that applies to a five-person company just as much as it applies to a 500-person company.
Oh, now how many states are you guys in right now?
Oh, that's a good question. I think we're in 20 or so.
So you guys are in, you know, 20 plus states? Yeah, retail stores?
Well, we sell, uh, boots in all the states on the internet.
You, you brought up, you know, you have to grow. And you hear in business today, if you're not growing, you're dying. Um, you know, for people, they have a good idea, they start a business, but they really struggle to to scale and grow. What's your advice to people when it comes to scaling a business? What are those big things that you implemented that enabled you to go from one to 20 states and having your retail stores and selling, you know, all over the country?
It goes back to what, uh, we just talked about. It goes back to the strategy, to the process, and the team. And, and it, it's embedded in the strategy. So strategy has a few components to it. It has, uh, your brand, your brand strategy, your consumer strategy, your product strategy, uh, has a lot of other things as as your supply chain strategy, whatever. But it, but it starts with that. It starts with understanding who your consumer is and knowing that you have the product to serve them. Because you can grow, you can grow your number of consumers that you have in your business. You can grow the number of products that you offer those consumers. And you can grow the number of marketplace channels, sales channels, you can reach those consumers. Those are your three levers. And I, if I were a any smaller company, I would think about each of those three levers. And, you know, they multiply against each other. Obviously, there's overlap. It's the hardest part about running a consumer products business, honestly, is is having a mutually exclusive and collectively exhaustive view of your business, MECE, as they say, um, because all that stuff overlaps. And you can, there's only so many matrices you can create to really understand that and put it in Excel, for example. But at the very beginning, you should be able to break apart, hey, how many customers do we have? Do we want new customers? Do we, do we want repeat customers? Do we understand the P&L dynamics of those two things? Do we understand how much we're paying for those things? Okay, if we have a simple understanding of that, let's move on to the next question. Products. Do we have one product? Can we offer two products? Um, can we offer products that get that people buy more frequently? That that is easier for them to buy as a first, uh, purchase, a second purchase? So many ways to innovate just with products. That's probably my favorite area to innovate. You can get, you can get breadth, you can get depth, lots of ways to think about. And then marketplace for us is just, that's what, that's what in in the retail business, you call that that third, uh, pillar of strategy. Uh, but marketplace means retail, wholesale, online. It's basically any place that that people are transacting for your product. And do you have a good understanding of your white space there? Do you have a, are you doing too much? Do you need to simplify and focus more on one channel? Uh, for us, you know, we're a $200 million business that, uh, still only has two channels. That's pretty unusual. Most people at this stage would have added a wholesale channel or a third-party, uh, online channel. For us, we're still first-party online and first-party retail. Uh, we don't do any international. International is another, uh, growth lever that's part of the marketplace. So always go back to 80/20 principle. Understanding, can you break your, if you can't break your business down into a simple one-sentence answer for someone, if you can't break down your growth strategy, your sales strategy into a simple answer, you're probably missing something in your business. You might need to go back to square one.
Yeah, I think, you know, to get yourself to where you are today, you probably have had to have some mentors along the way that you can tap into and learn from. Uh, what has been the best piece of advice that a mentor has given you, and who is that person?
Oh, man. Uh, I, you know, I get this question a lot and I can never think of a great answer to it. I'd say that the advice that I've gotten has been contemporaneous, has been, um, has been applicable to the moment. Has been, there's been moments in time, uh, that have been really pivotal for my business. You know, one of our board members, his name is Brian Spaly. He's the founder of Bonobos and Trunk Club, um, now venture capitalist, um, angel investor. He and I were, he and I were the only people on the board, um, for a little bit. And so he was around for these pivotal moments. You know, and he, I remember when he and I, uh, had a very breakthrough conversation about retail. And I said, I think I want to open retail stores. And, um, he said, that's the kind of gutsy thing I know that we could do well. Um, let's, let me think, let me help you break it down. And at the time, uh, you know, we wanted to get aggressive. How do you balance being aggressive by being with being conservative? How do you test and learn? And how do you answer the question of test and learn? And and for me, I was really convicted that it was going to work. So we ended up, you know, sometimes you just need someone like that to get on the whiteboard with you and say, all right, let's map out three scenarios. If the first store does X, we'll do this next. If the first store does Y, we'll do this next. And having a partner by your side who, you know, whether they're your age, 20 years older, experienced, you know, it doesn't really matter, but just having that problem-solving partner was huge for me. Uh, later, I'd say Elliot Hill, who I think has been interviewed by y'all separately, um, great guy, you know, worked his way all the way all the way up to running, uh, running Nike, uh, consumer business as their president. And, um, obviously impressive. But he was the guy who really, uh, gave me the advice that I just, uh, spewed out on strategy. And, you know, it took, uh, it took someone who'd seen, you know, a 30, 40, 50 billion to, uh, to recognize that that same stuff applies to a $30 million company, to a $200 million company, to a $3 million company, to a $50,000 company. And, um, it was seeing that wisdom, I think, that that led me to, uh, make a lot of really good decisions the last couple years. So, uh, I'd say surround yourself with mentors. But, you know, you also have to have the confidence to, uh, to know that you should be, shouldn't, you know, there's, there's a lot of noise out there. You got to be able to distill the signal from the noise.
One of the things that you did during the 2020 years was launch new products. And you said that was one of the pivotal things that helped you stay alive during that time. That's right. You started out with boots, but now you sell a variety of things like belts, apparel, and just other things like that. What would advice would you give to someone who's thinking about adding on additional products to their existing business? And is there a right time to do that?
Yeah, I think it really depends on the business. And I hate to say it depends, but it does. Uh, for us, uh, it was natural to have extensions of the brand, uh, in people's lives that they already were going to be looking for. And that has been proven by other brands to be expansion, uh, opportunities, uh, that we would call adjacent. And as far as the right time to do those, well, to go back to that, I think whether or not you should do that depends on the strength of your brand. If you're hearing from consumers, we love your value prop so much, we love love how you approach this product so much, we would love for you to to, we'd like to see this in other things we want. And I, I think most brands who have succeeded in product expansion tend to have been led by their consumers. They weren't just sitting in the room, you know, mind melding and then, you know, picking a category at random, certainly, or deciding, uh, having over, you know, high level of confidence that they can do something that they're not, that no one's asking for. So listen to people are asking for. If no one's asking for it, maybe you should reconsider. But as far as timing, um, man, it's hard. Uh, I'm not sure that we were ready for some of the categories that we launched, for example. We're very glad that we've had spent the years investing in them now because it takes a long time to get good at some of these things. Apparel and footwear, for example, if you run a little a footwear brand and you're thinking about getting into apparel, I would say the supply chain is completely different. The team you need is completely different. The process is completely different. The consumer needs and how how you, what being good at making that product means for the consumer is completely different. So it's a, not a journey or a decision I would take lightly, I'd say that much. So I'd say most, I'd say it's probably better, you know, all things held equal, to get really good and get at at selling one thing or a couple things and having a simpler business and going deep as opposed to, you know, going for depth versus breadth. But, you know, if you play the really long game and you think this brand's going to be around in 20, 30, 40 years and you know, hey, at some point we're going to have this, we're going to have apparel, we're going to have coats, you know, we might have home, you know, blankets and stuff at some point, at some point we're going to do that. There's going to have to be a first day for that at some point. So, you know, the earlier you can make it without fumbling, you know, the more you're going to learn over over a longer period of time. So advice can go both ways. That's why it depends.
So, you know, 90% of startups and businesses, they fail within about five years. But you were able to successfully, you were able to, um, you were able to successfully create a nine-figure business. But if you were to go back into 2015 and have a conversation with Paul when he was first starting Tacovus, what is the number one thing that you would tell yourself? In other words, what is the blueprint that it really takes to create a, what is the blueprint that it really takes to create a successful startup in today's world?
Yeah, I mean, some of it's going to be a little repetitive. But I think, well, I'd say there's, I'd maybe answer two. If I had to say say one thing, I would say it's going to take way longer than you think, buddy. Strap in. And I know we've, you know, we're still a relatively young business. We're turning eight years old next month. But, uh, I was pretty naive and that I thought I thought overnight success was something that you manifested if you were good at your job and you made great stuff and you had a good, um, head on your shoulders and you brought a couple good people in. And and that just obviously wasn't the case. And if anything, we've been an example of a relatively overnight success compared to other companies. It may have taken longer to get to where they are. Um, but man, it takes a while. And building a brand that lasts, by definition, it's going to last. You're going to be a part of it for a long time. And so I think I would, the first thing I would say is, strap in, think long term. And, uh, yes, you know, make, make product great today. Make tomorrow's next decision today. Live in real time and know your numbers cold. But also be able to step outside the box. And I think what I just didn't do enough of in my first year, my first two years, was envision that success. Set a real a goal for myself that was more than a one-year goal or a two-year goal. And then really work backwards on what you need to do to set those strategy pieces in place, knowing that even if I had set a goal for myself five years from now that was $10 million in sales or $20 million in sales, working backwards from that and knowing that, hey, I'm going to need this function set up by year two, or this function set up by year three. And it takes this much longer to, it takes this long to recruit someone really good. It takes this long to train someone. I'm also going to miss on, you know, I'm not going to bat a thousand on hires. And all these little risk elements in the business, you know, if you want to save yourself five or 10 years of running around, pulling out your hair, just think ahead. Know that you have to have a strategy, a process, and a team to do it well. And make sure you've planned enough time in your day and your and your life to do each of those things well.
Amazing. Well, Paul, thank you so much for joining us today on the podcast, on the School of Hard Knocks podcast. Had a blast getting to really know your story and and ask you some questions on how you were really able to build such a successful company. Of course, where can everybody find you at?
Well, you can find us at tacovas.com or any of our 30 or so retail stores.
Amazing. Be sure to leave a like and subscribe to the School of Hard Knocks. We've got some amazing content coming soon. Paul, once again, thank you so much for joining us today and see you guys on the next one.
Appreciate it. Thank you so much.
Cool.