Tecovas: Paul Hedrick

Summary

How I Built This with Guy Raz: Episode on Tecovas with Paul Hedrick

Introduction In this episode of How I Built This with Guy Raz, host Guy Raz delves into the entrepreneurial journey of Paul Hedrick, the founder of Tecovas—a rapidly growing brand in the western wear industry. Hedrick shares his unconventional path from consulting to launching a successful direct-to-consumer (D2C) cowboy boot brand, highlighting the challenges, innovations, and strategic decisions that fueled Tecovas' rise.

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Early Passion and Career Beginnings

Background and Education Paul Hedrick was born in Houston, Texas, and moved to Dallas at a young age, deeply ingrained in the Texan culture. He pursued higher education at Harvard, studying economics, and subsequently followed his father's footsteps into consulting at McKinsey. Seeking to further his career, Hedrick transitioned to private equity at El Catterton, focusing on consumer retail businesses.

Discovering His Passion Despite his successful trajectory in consulting and private equity, Hedrick harbored a long-standing passion for consumer goods, particularly western wear. His childhood love for cars, gadgets, and consumer products naturally steered him towards identifying gaps in the market, specifically within the cowboy boot industry.

Notable Quote:

"I subscribed to Architectural Digest and Rodent Track and Popular Science. I was always interested in consumerism and didn't know how to put it into practice."
(08:05)

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Conception of Tecovas

Identifying the Market Gap Around 2014, Hedrick observed that cowboy boots oscillated between being too expensive or too cheap, lacking a mid-tier option. This realization birthed the concept of Tecovas—a brand aimed at delivering high-quality cowboy boots at an accessible price point.

Notable Quote:

"There wasn't a brand out there that's set up for the next 10, 20 years of growth."
(17:55)

Initial Challenges and Factory Negotiations With an initial budget of $100,000, Hedrick faced significant hurdles in sourcing and manufacturing. His quest led him to Leon, Mexico—known for high-quality boot production. The process was fraught with difficulties, including high minimum order quantities (MOQ) and establishing trust with factory owners. Hedrick's perfectionism often clashed with manufacturers accustomed to standard practices, leading to strained relationships.

Notable Quote:

"I inspected every single pair. You know, personally did everyone and was rejecting a lot... It took weeks longer than expected."
(02:08)

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Launching Tecovas

Brand Naming and Identity Choosing a name was a meticulous process, culminating in "Tecovas," derived from a geological formation within Palo Duro Canyon. Initially skeptical, Hedrick grew to appreciate the name for its uniqueness and connection to Texas heritage.

Notable Quote:

"It's a rock formation within the Palo Duro Canyon, which is basically only geologists have probably ever heard of that word."
(36:35)

Go-to-Market Strategy Defying the prevalent D2C strategy of relying heavily on pre-orders, Hedrick opted for a direct launch without pre-orders to ensure a seamless customer experience. The launch on October 27, 2015, saw immediate sales, primarily driven by friends and family, generating around $20,000 on the first day.

Notable Quote:

"We launched with 5,000 emails... but I had an aversion to pre-orders because I wanted the whole experience of Tecovas to always be fast and free and amazing."
(43:38)

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Scaling and Growth

Expanding Channels Initially selling online and at local markets, Hedrick recognized the importance of physical presence. By 2018, Tecovas had achieved significant milestones, including a $10 million revenue mark and opening its first brick-and-mortar store in Austin, Texas. This move was inspired by the need for customers to experience the tactile and aesthetic qualities of cowboy boots firsthand.

Notable Quote:

"I wanted this creative outlet. I wanted... a vision of hospitality for the brand that went way further than the customer experience associates."
(58:57)

Marketing and Branding Innovations Tecovas differentiated itself through strategic digital marketing, leveraging Facebook ads early on. The brand emphasized storytelling, highlighting the craftsmanship and heritage of Leon, Mexico. This approach resonated with consumers, driving substantial sales growth and establishing Tecovas as a prominent player in the western wear market.

Notable Quote:

"We were the first brand to kind of tell the story of Mexico and Leon in particular."
(44:37)

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Navigating Challenges

COVID-19 Impact The pandemic posed unprecedented challenges, causing a 50% drop in sales within weeks. Tecovas responded with a multifaceted strategy: reducing workforce, securing emergency funding, and maintaining strong relationships with customers and partners. The brand's resilience was evident as it adapted by leveraging its Texas-based operations, where shutdowns were less severe, allowing for a quicker recovery.

Notable Quote:

"We kept making stuff. We had... an emergency round that summer... we were able to attract eyeballs, convert the eyeballs."
(63:00)

Leadership Transition In June 2022, recognizing the need for specialized leadership to sustain growth, Hedrick transitioned from CEO to Executive Chairman, bringing in David Lafitte to steer day-to-day operations. This move allowed Hedrick to focus on branding and creative directions, ensuring Tecovas continued to innovate and expand.

Notable Quote:

"I realized I didn't need to be CEO to be happy."
(72:09)

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Current Success and Future Outlook

Achievements By 2025, Tecovas boasts over $300 million in sales and operates 42 stores across 20 states. The brand's commitment to quality, customer experience, and strategic expansion has solidified its position in the western wear market.

Reflection and Gratitude Hedrick attributes Tecovas' success to relentless dedication, strategic risk-taking, and a blend of hard work and fortunate circumstances. He emphasizes the importance of adaptability and maintaining a clear brand vision amidst challenges.

Notable Quote:

"I appreciate a lot more the way the universe unfolds in mysterious ways."
(75:56)

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Key Takeaways and Insights

1. Identify and Fill Market Gaps: Recognizing and addressing underserved segments—like the mid-tier cowboy boot market—can lead to substantial opportunities.

2. Quality and Customer Experience: Prioritizing product excellence and a seamless customer journey fosters brand loyalty and differentiation.

3. Adaptability: Navigating unforeseen challenges, such as the COVID-19 pandemic, requires resilience, strategic pivots, and strong stakeholder relationships.

4. Leadership Evolution: Recognizing when to delegate and transition leadership roles is crucial for sustained growth and preventing burnout.

5. Storytelling and Branding: Effectively communicating the brand's heritage and craftsmanship enhances consumer connection and market positioning.

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Conclusion Paul Hedrick's journey with Tecovas exemplifies the blend of passion, strategic vision, and adaptability required to build a successful brand. From overcoming manufacturing challenges to navigating a global pandemic, Hedrick's story offers valuable lessons for aspiring entrepreneurs seeking to carve their niche in competitive markets.

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This summary captures the essence of Paul Hedrick's entrepreneurial journey with Tecovas as discussed in the episode of How I Built This. By highlighting pivotal moments, strategic decisions, and personal reflections, listeners gain a comprehensive understanding of what it takes to build and scale a successful brand in the western wear industry.

Transcript

[Guy Raz]

Wondery subscribers can listen to how I built this early and ad free right now. Join Wondery in the Wondery app or on Apple Podcasts. Thank you to our sponsor, Amazon Prime. You know, I've been thinking a lot about convenience lately and how one service has completely transformed the way we live our daily lives.

[Paul Hedrick]

And of course, I'm talking about Amazon Prime.

[Guy Raz]

Whenever you need something, whether it's delivered.

[Paul Hedrick]

In hours or just a couple of.

[Guy Raz]

Days, prime just makes it happen. Just the other day I realized I needed a refill on my vitamins and I found it within seconds on Amazon.

[Paul Hedrick]

I ordered it and I was back.

[Guy Raz]

To my routine the next day. It's almost like when you think of it, Amazon does the rest. But here's what's fascinating. Prime isn't just about shipping. It's about having access to an entire ecosystem of services. From award winning shows on Prime Video, to millions of songs and podcasts on Amazon Music, to exclusive deals that honestly make you wonder how they do it. Visit Amazon.comprime to get more out of whatever you're into. Thank you to our sponsor, American Express. Being a business owner means you are in control of your destiny and you get to be your own boss. With Amex Business Platinum, you can get a flexible spending limit that adapts with your business. Not all purchases will be approved. Plus you can earn 1.5 times Membership Rewards points on select business purchases. Points cap applies. That's the powerful backing of American Express. Terms apply. Learn [e-mail] AmExBusiness When I travel, I almost always stay at an Airbnb. Why? Because I can feel at home instantly wherever I am around the world. Find out how much your place is [e-mail] host.

[Unknown]

I became pretty product obsessed. So much so that actually when we launched, I actually flew to Mexico. The production run wasn't done yet. I think I flew there the first weekend of November and I stayed there until I inspected every single pair. You know, personally did everyone and was rejecting a lot and was. I mean it took weeks longer than expected. I stayed in Leon.

[Paul Hedrick]

And how did you keep the factory owner from just really getting pissed off at you?

[Unknown]

Well, I don't think I did. I think they did get pissed off at me.

[Paul Hedrick]

Welcome to How I Built this, a show about innovators, entrepreneurs, idealists and the stories behind the movements that built. I'm Guy Raz and on the show today, how Paul Hedrick made a sketch of a cowboy boot in Microsoft paint.

[Guy Raz]

And turned that into Tokovas.

[Paul Hedrick]

Now one of the Most popular brands of western wear in the country. Western wear is kind of having a moment. Actually, it's had a lot of moments. For decades, cowboy boots and denim have gone in and out of fashion, and it's not necessarily been driven by country singers. You've seen this stuff on actors, politicians, athletes, anyone who wants to add some swagger and maybe even an inch or two to their step. And right now, Western wear seems like it's everywhere. Again, thanks in no small part to TV shows like Yellowstone and even Beyonce. Her Cowboy Carter tour has reignited the trend. Her fans are showing up in boots and hats and fringe and rhinestones. They're creating a whole new wave of western chic that's taken over arenas and Instagram feeds. And the numbers back this up. Sales of cowboy boots jumped 20% in the first two weeks after the release of Beyonce's country themed album. Levi's. And cowboy hats had a banner year last year. And so did the brand we're talking about today. To cobas, about 10 years ago, long before cowboy boots were back in the spotlight, a guy named Paul Hedrick saw an opportunity. Paul didn't come from fashion. He wasn't a designer. He was just a guy who grew up in Texas, and he thought cowboy boots were either too expensive or too cheap.

[Guy Raz]

There wasn't much in between.

[Paul Hedrick]

So Paul decided to create that in between brand with Tacoba's. And from the very beginning, he obsessed over every detail. He sketched the designs himself. He shaped the product line. He traveled to Leon, Mexico, where the boots are still made, to personally inspect each pair. Today, beyond just cowboy boots, the company sells jeans, shirts, dresses, belts, and bags. In this year, Tacova's expects to do more than $300 million in sales. And while much of their success started online, Paul made a surprising bet on brick and mortar stores. Tacoba's now has more than 40 of these stores across the U.S. paul Hedrick was born in Houston in the late 1980s. When he was around 7, his family moved to Dallas, where his dad ran the local office for McKinsey Consulting. And perhaps unsurprisingly, Texas would become a big part of Paul's identity.

[Unknown]

There's like almost a. A responsibility that comes with being a Texan, of representing it, of being proud of it, of being friendly. It's one of the most recognizable state outlines, you know, one of the most recognizable shapes in the world. It sort of just kind of comes with the territory. You feel like you were born into something that matters a bit more. You know, it could be a negative cycle, depending on how you view Texas. But I had actually mixed feelings about that and I think a lot of people do. And I wanted to leave for at least a while. You know, I didn't even apply to any schools in Texas, for example, when kind of came time to decide about college and whatnot. And so. But yeah, I was always very proud of where I was from. I became a proud Dallasite, was a big Dallas sports fan growing up. And it was nice having a sense of place.

[Paul Hedrick]

Yeah. And I imagine you were probably a pretty good student. You went to Harvard for College, it's around 2006. You studied economics and I guess after that you kind of followed in your dad's footsteps, which is you worked as a consultant at McKinsey for a spell and then you went to go work in private equity at a place called Elkaterton. And I guess that firm at El Catterton that sort of was focused on investing in consumer retail businesses, right?

[Unknown]

Yeah. So for context, I don't know how to put this, but when I was a kid, I was, I felt like I was destined to be in consumer. I love stuff. I loved cars, I liked gadgets. I. I subscribed to Architectural Digest and Rodent Track and Popular Science. I was always interested in. I mean, listen, I think I was interested in consumerism and didn't know how to, to how to put it. And so basically I got a call, a recruiting call to work at this firm, which at the time was still. I mean, it had been around for a long time, since 1989, I believe, but only in recent years had established its reputation as really like the consumer retail firm. And I was sent to Chicago where we had just made the firm's largest investment at the time. We had merged two candy businesses and we had to do a lot of post merger work.

[Paul Hedrick]

And so you were involved in the operations side of that?

[Unknown]

Yeah, basically for about 18 out of my next 24 months, I kind of became sort of a chief of staff and I sat at a desk at a candy company.

[Paul Hedrick]

What were the businesses?

[Unknown]

They were called Farley's and Sathers and Ferrara Pan.

[Paul Hedrick]

Sure.

[Unknown]

And they were merged together to become Ferrara Candy Company.

[Paul Hedrick]

Got it. Yeah. I'm looking at them. They own. Wow. So this is a company that has like massive, well known brands. Sweet Tarts and Nerds and Gobstoppers and Lemon Heads and Jelly Bellies. I mean, so, I mean, so they've.

[Unknown]

Since grown a lot.

[Paul Hedrick]

Now they got it. Yeah.

[Unknown]

It's a big candy conglomerate.

[Paul Hedrick]

Roughly what Was the revenue of a company like that when you were. When you were doing consulting?

[Unknown]

Yeah, they were just under a billion.

[Paul Hedrick]

God, it's amazing how you just take all these brands because you think, like, when was the last time, you know, I ate a Red Hot or a Lemon Head? But then, you know, you put these brands together and you're like, there's a lot of children in the world, in the United States who eat this stuff.

[Unknown]

Man. Guy. It's a lot of sugar, and I don't really eat sugar anymore. So it's kind of funny that that's where I cut my teeth in many ways.

[Paul Hedrick]

All right, so you. You end up working for Caterton for a couple years, and I guess you start to come to the conclusion that maybe it's time to go to business school. And so you apply to top business schools. Harvard, Stanford. What did you. Did you apply to those business schools thinking like, this will be sort of a transitional period to help me think about what I want to do next? Or did you kind of have an idea in mind of what you wanted to do?

[Unknown]

Well, I wrote an essay about what I wanted to do. It must have been really bad because I didn't even get an interview for.

[Paul Hedrick]

Either of the schools.

[Unknown]

For either school.

[Paul Hedrick]

And what. What was the essay about?

[Unknown]

I actually wrote about how I wanted to start a sandwich restaurant, and I'm not sure I believed in it. I had actually thought it about getting into the franchise business, but I honestly thought at the time that writing an essay about being a franchisee to get into one of those schools was not going to be good enough to get me in.

[Paul Hedrick]

Yeah.

[Unknown]

And so I sort of changed the essay to, well, I'll start a sandwich company. And, yeah, I mean, listen, my heart was not in it.

[Paul Hedrick]

All right, so you don't get into the business schools. You don't even get in an interview with either of these schools. And that must have stung a little bit, or maybe more than a little bit.

[Unknown]

It really stung. I hadn't even thought about a backup plan. And I kind of believed I had read somewhere about burning the bridges. And I think I knew in the back of my head that I needed to burn bridges to consolidate my choices. And so I had actually given up my lease in Manhattan to a friend. And so I was kind of homeless. And that was sort of a forcing mechanism to start to think about what was next.

[Paul Hedrick]

That was the catalyst.

[Unknown]

Yeah. Basically, I went to a happy hour with one of my colleagues at Catterton, and, man, I think we just had just enough beer to start to talk about, I think we asked a pretty naive question, which is how hard could it be two to start one of these companies?

[Paul Hedrick]

To start one of the companies like that you had worked on?

[Unknown]

Yeah. Like a CPG brand.

[Paul Hedrick]

Yeah.

[Unknown]

And I was always comparing myself to my colleagues at McKinsey and Catterton. And I think the one thing I noticed at first was that they were all really type A hard workers, but a lot of them were working hard, not necessarily working smart. I also noticed I had a crazy risk tolerance compared to most of them. And then the third thing I noticed was I was creative. And almost none of my colleagues at either of those firms had really had an interest in being creative. All of them were pretty gung ho about just business. And my decision ultimately became one about, hey, if I'm starting a company, first of all, I can be creative. Basically every decision can be a creative one.

[Paul Hedrick]

So you've been brainstorming in your head, at least about, I don't know, like, what other ideas were you thinking about? Restaurants.

[Unknown]

Yeah. I went down the rabbit hole of beverage company, specifically a coffee company, was planning to start the first canned cold brew coffee beverage company, which at the time would have been fairly innovative. Yeah, I kind of put my consulting hat on and I thought about idea archetypes. You know, I kind of had a Warby Parker for X, Airbnb for X, and then a few other, you know, more esoteric ideas. And, you know, we. Airbnb for storage, for example. Actually, the one that I got very close to doing was coffins and making and selling coffins. Yeah. Basically I had realized that there was one public company that controlled the vast majority of both the production and the sale of coffins, and it was through this crazy funeral home network. Anyway, Cowboy Boots was actually the first idea I had.

[Paul Hedrick]

Right.

[Unknown]

And almost the entire process between like March and July, I was almost trying to convince myself not to do it because it was the first idea. I was like, there's no way my first idea can be the right one. You know, it's going to be perceived as a niche category. I kept thinking of reasons not to do it.

[Paul Hedrick]

Yeah, I want to go back to Cowboy Boots in a sec. But on the coffins idea, because that's actually a great idea. Right. Like, it makes me think of Warby Parker. You know, like Luxottica controlled the glasses industry that, you know, whether it was Ray Bans or whatever, they, they, they own tons of brands. And Warby Parker's premise was, well, glasses are to be so expensive, there's no reason why they're. It's just artificially inflated. I imagine it's the same with coffins. I imagine the margins on coffins are incredible because when someone dies, oftentimes there's money left. Right. And so the whole funeral industry knows that. And not to say that they're necessarily exploiting it, but oftentimes there's money to pay for the funeral and, you know, the cremation or the burial in the coffin. And, you know, it can run 20, 30, $40,000 or more, depending on how it's done. And so it would be really interesting to try and get into that business. Right. The coffin business sounds morbid, but, I mean, it is an interesting idea.

[Unknown]

You know, it's funny, you're right. It turns out at the time, the death industry was about 16 billion. I believe coffins were over a third of that.

[Paul Hedrick]

God, it's those boring things that no one thinks about.

[Unknown]

Totally.

[Paul Hedrick]

I'm looking at this now. Matthews and Batesville Casket are the two largest companies in the industry.

[Unknown]

So, yeah, Batesville was the one that I was talking about.

[Paul Hedrick]

And I'm sure they want to protect their moat. So anybody listening who starts a coffin business, don't say I gave you that idea. I don't want Batesville to come after me. They'll know where to bury me.

[Unknown]

Well, here's the thing about coffins, too. It's a secularly declining industry now that everyone's getting cremated. So it wouldn't have been necessarily a growth category.

[Paul Hedrick]

Well, maybe earns. Maybe, like, you can take on the earns business or something. You know what I mean? Like.

[Unknown]

Yeah.

[Paul Hedrick]

All right, so you. So you're kind of brainstorming and let's just get to cowboy boots for a second because, you know, there's a cliche and I. Everyone listening who's ever worked with a Texan has experiences. That guy comes into the office with his Texas cowboy boots and, you know, kind of swaggering in. Not to say I'm hostile to this. I love Texas, but we've all experienced this. People who worked with Texans, like in London or Seattle or wherever, like, that guy is coming in with his cowboys. And you were that guy at the office in Connecticut.

[Unknown]

I was, I was, But I was also, man, I was homesick. I always felt when I left Texas, I was more magnetically drawn back to it, even if almost I didn't want to be. And I just kind of viewed that as a universal signal. So, yeah, I started wearing. I was wearing boots as a kid, like any good Texan I probably had some red Justin Ropers. And then in college I started wearing them again towards the end because I really just, I was tired of trying to blend in and I wanted to kind of live more of my true identity. And so started wearing some boots then. And then and in New York. Yeah, I was wearing them.

[Paul Hedrick]

Yeah. This is 2014.

[Guy Raz]

And this is an idea that comes.

[Paul Hedrick]

To you like, oh, cowboy boots. Maybe there's something to cowboy boots. But you kept moving away from it. Cause you felt like it wasn't a big enough opportunity.

[Unknown]

I think I was just judgmental of it. Cause I knew what people would say and a lot of people would have the reaction, honestly, that you're having, which is like, it feels like a niche thing. It feels like only some people wear them.

[Paul Hedrick]

Yeah.

[Unknown]

Actually my aha moment was wait, I'm seeing what the coastal elite, if you will, think about this category.

[Paul Hedrick]

Yeah.

[Unknown]

It feels like all the people in New York and LA and SF are sort of making the decisions around what the media and what the public perception of this category is. And I feel pretty confident that we can build a big business here.

[Paul Hedrick]

But you were living in New York, so what got you to sort of say, you know what? Actually I think that consensus is wrong. I think there is an opportunity in boots.

[Unknown]

Yeah. First thing was a little bit of data that I had. I was able to pull up an old, I think private equity due diligence report on one of the retailers.

[Paul Hedrick]

A retailer that does boots.

[Unknown]

Yeah. They quoted the US boot cowboy boot industry at 3 billion or more. And I don't know what I thought it was, but that was, I don't know, at least five, if not ten times bigger than I thought it was.

[Paul Hedrick]

Yeah. Now you're getting closer to casket numbers.

[Unknown]

Yeah.

[Paul Hedrick]

But you saw that there was an opportunity there and you thought there's something to this.

[Unknown]

It was basically two major realizations. One, it's bigger than a bread box. And then two, and this was betting on my own intuition for sure. But it was, there was a brand missing. The real thing that I noticed was I don't think there's a brand out there that's set up for this next 10, 20 years of growth. The last brand that was started was started 20 plus years prior. The brand before that was probably started 20 plus years prior, if not 50. And then there's got some 100, 150 year old brands out there.

[Paul Hedrick]

Yep.

[Unknown]

And to be clear, there were a lot of other dynamics with the category that were interesting. It was super behind in marketplace development. Very Low online penetration. It was very wholesale oriented and not very attuned to the consumer. The challenge was everything in between. Sort of the sub $200 and greater than $500 sort of entry point. It just kind of felt a little dusty and it kind of felt like none of them were created for me.

[Paul Hedrick]

Yeah. The thing that is interesting is that this is a time 2014 where there's going to be an explosion of brands that, that were going for that mid range, right? The Warby Parker, like, oh, it's not going to be an LVMH pair of glasses or it's not going to be LensCrafters, but it's going to be somewhere in between. Sort of bordering affluence, but approachable and affordable away. Suitcases, very similar kind of, you know, going for that middle market. I mean, Kate Spade handbags kind of really started this in the 90s and this is a version of that. You're saying, all right, we're not going to be like an LVMH, you know, level $2,000, pair of boots or even $1,000. And we're not going to be the ones you might get at Target or WALMART that are 50 bucks. It's going to be like two, $300. That is, you know, high quality but attainable.

[Unknown]

That is where the orientation began as to what might give this brand a reason to exist, which was, can I take everything that I would ever want in the product? And I wanted the high end product to be clear. So my goal was really to have it all, was to say yes to everything and then use a business model that a lot of these other brands and other categories were using to theoretically charge a price that might be lower than the luxury price, if you will.

[Paul Hedrick]

Right.

[Unknown]

Because the luxury price also had markups built into it.

[Paul Hedrick]

Right. Design and branding that were well beyond.

[Unknown]

I think, what you needed to charge.

[Paul Hedrick]

But I'm curious because this is the summer of 2014 and you're thinking about this cowboy boot concept, right? And you're going to move to Texas. You're going to move back to Texas, not to Dallas, but to Austin. And you probably made pretty good money as a consultant for four years and probably saved quite a bit of it. So how much money did you have?

[Unknown]

Just to start out with, I had about $100,000.

[Paul Hedrick]

Right. And so with that money, what was your first move like? What did you do?

[Unknown]

I made a long checklist of all the things I kind of worked backwards from a launch date, which I ended up grossly missing by probably six Months. But anyway, sourcing was really by far the most important thing. Yeah, I eventually found out everything was made in Leon, Mexico.

[Paul Hedrick]

Yeah. How did you find that out by the way? Just by googling it?

[Unknown]

No, I cold called a bunch of custom boot makers, man. I found an article that was print only but had been archived on a Texas Monthly's website and it had the names and numbers of a lot of Texas custom boot makers. I called a lot of those numbers and the lines were not. This was probably a 20 year old, 15 year old article.

[Paul Hedrick]

They were 20. So the lines were probably no longer in business or.

[Unknown]

Yeah, well, unfortunately I think most of them had passed away. But the few that did pick up, you know, all but one of them basically told me to pound sand.

[Paul Hedrick]

And what were you asking them?

[Unknown]

I was very honest with them. I said, hey, I'm not going to compete with you. I'm a 26 year old entrepreneur. I'm starting a cowboy boot brand that's going to sort of disrupt the market. We're going to sell direct to consumer. We're going to create really high quality boots and it'll be not a custom brand at all. And do you have any advice for me?

[Paul Hedrick]

Yeah.

[Unknown]

Do you have any bone in your body that wants to help an earnest young man?

[Paul Hedrick]

And did any of them say yes?

[Unknown]

Yeah, one guy did. He wasn't a custom boot maker. He was actually an executive at one of the boot brands that was reasonably big. And I don't know, he just kind of took a. He had a soft spot and you know, he said, I'm going to do you a favor. There's really only one place to go. It's Leon, Mexico. It's where all the welted western boots are made. Really? And here's this one guy's name. He'd be my first call and if he picks up, he'd be a great guy to at least show you the ropes.

[Paul Hedrick]

Got it. Okay. So you. And how was your Spanish, by the way?

[Unknown]

Luckily I was fluent in high school and I became fluent again in the year after that.

[Paul Hedrick]

But you had good enough Spanish to kind of at least go down there. So he mentions Leon. So you decide that you're going to go down there. And what was the goal? You had some appointments lined up.

[Unknown]

Yeah. So I had only gotten one name, one email of one factory owner and he said, sure, I'll meet with you on this day if you can come down. And that was it. I created a PowerPoint deck, met with him. I don't think the deck was Opened, maybe I flipped to a page and it was kind of like, you just need to talk to me face to face. And I realized later there was no chance that he was going to work with me. I look in the factory and the brands that I really wanted to compete most directly with had banners on the wall. And by the way, now that factory is not to ruin the story, but a couple years later, he became our primary factory.

[Paul Hedrick]

Right. But you get there and you realize this is not going to. First of all, imagine that the minimum order wasn't something you could fulfill.

[Unknown]

You know, we didn't even get there with him. He basically told me, you know, I like my clients. I've got. I think he had clients that were making over a thousand boots a day contractually. And it was just, you know, it doesn't need to take any risks. He said, but I know a guy across the street, but I really wanted to work with him. In fact, I spent the rest of the fall trying to convince him to work with me until December. Man, it was hard because I kind of thought that, you know, someone will work with me. It's no big deal. And I got to the point where I was sort of desperately needing to work with someone to get something started.

[Paul Hedrick]

What's not clear to me is if you went down there, right, and if you saw that all of these other brands were already making boots down there at that point, didn't you? I mean, you must have asked yourself, well, how am I going to make my thing different? Because originally you were looking at this as like an opportunity to hit a middle market, Right. Something that was high quality, but cheaper than $1,000 or $600. But if other brands were already making their boots in these factories, surely they were already offering quality boots at a competitive price. So how are you going to differentiate your product?

[Unknown]

I mean, listen, the D2C myth is that you skip the wholesale markup and you can charge a lower price. The reality is the increase in marketing cost, the increase in gna, that you have to have to operate both as a retailer and a brand. It's a very costly game. And so I would say that was the plan, which was to basically say, we're not going to wholesale the boots. And so we've got theoretically a little bit more margin to play with. Right?

[Paul Hedrick]

Oh, a lot of these brands were wholesaling. They were selling at department. Yeah. Because that's the big business, obviously. It's like Nike. That's their business.

[Unknown]

Yeah. Mostly selling to independents and big box Western.

[Paul Hedrick]

Yeah.

[Unknown]

That the other Real thing was I really want this boot to be everyone's favorite boot, and I want this brand to be everyone's favorite brand. And so I had already started to make a long list of the things that, you know, we were going to offer the consumer. And so what ended up coming out was a couple of things. One, the product was going to be better, and there were just a few notable minor improvements we needed to make to make the product, in my opinion, significantly better than the competition. It all came down to comfort. Most of the high end brands used pretty stiff leathers and, you know, what's called the vamp and the counter, you know, basically the part that wraps your foot. And I remember asking the factory owners and the tannery owners like, hey, why? Why are people doing this? And they're like, well, in Mexico, you know, people don't like the boots to droop, and so they always make them stiff. And so we always tell people to make them stiff.

[Paul Hedrick]

Here you wanted softer leather.

[Unknown]

Yeah. And I was like, well, can we make it softer? They're like, oh, yeah, if you want, like, all right, well, let's do that. And then the second thing was most of the higher end brands that use really old school construction techniques were not comfortable underfoot. They would stick a big, basically natural, untanned leather midsole. And I said, well, why don't we just add a little bit of cushion under there as well? And so those were the two innovations that differentiated us from all the high end brands. And then the other big thing we did was, and this is where my, my sort of northeast experience with other people reacting to this industry came in handy was I kind of felt like the category needed to be demystified a little bit. A little bit, yeah. You know, the only shopping experience really available at the time for cowboy boots was not only in a physical retail store, there wasn't much online. But you're, you're walking down basically that grocery store aisle of boots that are arranged by size. And there's a hundred different kinds of boots that all look different from each other that are a hundred to a thousand dollars with almost no rhyme or reason. And it can be overwhelming. You almost feel like you need a, a Sherpa to walk you through it. And I said, why don't we simplify this for people? And I, in my research was effectively going to these stores and then asking the associate, hey, tell me your best selling high quality boot you have.

[Paul Hedrick]

Yeah.

[Unknown]

And they always pulled something off the shelf that it was so refreshing. It was always this simple brown Beautiful sort of understated details. High quality leather, no frill. You could kind of. It felt versatile. It felt like something you could wear with jeans or slacks. And like, yo, this is really the one that sells. And then I look at the shelf, I'm like, well, why? Why isn't that more obvious? And can I distill that for the consumer?

[Paul Hedrick]

Yeah. All right. I want to just stick to Leon for a moment. You end up having to work with this other factory that's across the street from the one you want to work with. I'm assuming this other factory is smaller, probably doesn't have the same capacity. When you start to talk to this factory, you're not a designer. How does it work? Do they have, like, lookbooks where you just like, pick different parts of how you want it to look and you put it together?

[Unknown]

Well, remember, I wanted to co to be my creative endeavor. And so. So, yeah, no, I designed the boots. I did draw it with my hand, but then I needed to send an email and I couldn't get a good picture of what I was drawing. And so I went into Microsoft Paint and I figured out that there was a function where you could kind of make a line and then click to the right and the line would kind of swoop and turn into a curve. And I basically used that to try to match my drawing. And so, yeah, the first boots were designed in Microsoft Paint.

[Paul Hedrick]

When we come back in just a moment, How Paul becomes the client from hell when dealing with his Mexican manufacturer, and how he chooses a name for his brand that at first, he doesn't even like. Stay with us. I'm Guy Raz, and you're listening to How I Built this.

[Guy Raz]

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[Paul Hedrick]

Hey, welcome back to How I Built this. I'm Guy Raz. So it's late 2014 and Paul is trying to place an order with a factory in Leon, Mexico to make his cowboy boots. But he only has $100,000 to work with.

[Unknown]

So we negotiated. I tried to get the minimum order quantity as low as I could.

[Paul Hedrick]

And what was their minimum? How many did you have to order?

[Unknown]

2,000 pairs.

[Paul Hedrick]

And you were going to price them at like what was your retail price going to be?

[Unknown]

195 to 235.

[Paul Hedrick]

Got it. Okay. So basically you're looking at what I mean, your price.

[Unknown]

It was about a $200,000 minimum, right?

[Paul Hedrick]

You had 100 grand. So you were going to have to get pre orders or some or get some good payment terms or raise money, but it was more than you had I mean, you were going to have to spend about 200 grand on these, but. And what was the time frame? I mean, did you again, like at that point, did you like put a deposit down and say, okay, here's the first 30 grand, let's go, let's start?

[Unknown]

Yeah. At this point, so much time. I had wasted so much time trying to get the other factory on board and we're well into the spring, My funds are dwindling. We get all the way into the summer. But it got so bad that actually I got handed off to the factory next door to the one that I had originally worked with because they were busy with their other orders. As I'm on factory number three, I basically had to start development fresh with them. And I had negotiated to spread out the minimum as much as I could. I said, how long can I spread it out? And they said four months. And I said, okay, well, in my head I'm like, well, yeah, I'm obviously going to run out of money, but if I launch the brand, I'll get revenue coming in and I don't have any other costs. So the revenue should be just enough to pay for the. Yeah, the rough math should work. I should be okay.

[Paul Hedrick]

Okay, well, we're going to get there in a sec, but you have a plan. And by the way, did you have a name yet? Was it called To Cova's already or. Not yet.

[Unknown]

I believe we picked the name in December or January. I had hired a branding agency that fall.

[Paul Hedrick]

But how much did that cost you?

[Unknown]

All in on branding and inclusive of basic web design? I think I paid 15 or $17,000 and that included.

[Paul Hedrick]

Oh, so that's a bargain.

[Unknown]

Yeah, I mean, I was not going to the New York agencies.

[Paul Hedrick]

No. So how did you come up with the name to Covis? Because to Covis I think it's like a geological formation or. Tell me what it is, man.

[Unknown]

Coming up with a name for any brand is so frustrating because it all starts with a lawyer, or at least it ends with a lawyer, and nothing's available. And I had a few names that I wanted to use that weren't available. The Tokova's name came from a brainstorming exercise we actually found. A friend of the agency was a graduate student at Texas, I think, majoring in linguistics, I don't even remember. And they kind of used him as a contractor every now and then for naming. And I said, I want it to be a Texas based name and I want to come from something real. And he basically came up with a list of 10. And you know, we'd been told by the lawyers to pick something relatively obscure, and we kind of picked the most obscure one, honestly. But it felt right to them, I would say. I didn't really like it at first, to be honest.

[Paul Hedrick]

You didn't like to covas?

[Unknown]

I wish I had the vision to say I did.

[Paul Hedrick]

And what is it? It is a geological site.

[Unknown]

Yeah, it's basically a rock formation within the Palo Duro Canyon, which is basically only geologists have probably ever even heard of that word.

[Paul Hedrick]

So you could get, you could use it.

[Unknown]

Yeah, it was basically obscure enough for us to own it. It felt right to me after a while. It kind of the first two letters and the last two letters were the same as Texas. It felt both masculine and feminine. It kind of felt plural and singular. It kind of sounds like a Spanish word. I think it actually derives from a native American word. And so, yeah, just a lot of signs pointed toward the name being right.

[Paul Hedrick]

All right, so you have a name, but you, you're blowing through your cash, your savings, right. You had 100 grand that you brought with you, but now you needed more money. You needed more money to pay for all this stuff, right? All these orders. So what did you do?

[Unknown]

Yeah, the well wasn't going to run dry until the fall of 15, and that was really when all the major operational costs were starting to add up. And it became pretty clear. It became blindingly obvious that I was going to run out of money. And so I really had this milestone I wanted to get to launch. I wanted to say I bootstrapped this brand to launch and then I went and raised capital for it. So I got comfortable with the idea of raising capital that year for sure. I mean, every other brand in the universe was raising seed rounds, pre seed rounds.

[Paul Hedrick]

But you knew you could get through that first year on what you had.

[Unknown]

Yeah, I got through the pre launch year and I did. I got through the pre launch year and basically September I started running. Well, here's the other thing. I cashed out my 401k. So that was not included in that original number. You take a big tax penalty on that.

[Paul Hedrick]

Yeah, but you were in your 20s. I mean, it's, you know, it's not that risky. I mean, it's not the best idea, but it's not. But you can recover from that.

[Unknown]

It's not. But man, I mean, I extended every Runway I could. Even though, like you point out, yeah, I certainly had the ability to raise capital. I don't know, I was prideful. I Didn't want to. I wanted to get to a certain point and I probably took on $30,000 of credit card debt that I don't think I even erased for three years. I mean, my credit score was in shambles until a few years ago.

[Guy Raz]

And tell me what you were doing.

[Paul Hedrick]

On a day to day basis between the time you visit Lyon and when you launch. Right. In 20. We're going to get to how you do this in 2015, but like on a day to day basis, I have to imagine you're working, both trying to work smart, but probably working very long hours. What are you doing every day?

[Unknown]

To be honest, I don't think the hours were long because there's just not a lot to do. There's no company that's operating, there's no customer service emails, there's no orders to be placed. It's a lot of hurrying up and waiting. And I think I totally underestimated the design and product development life cycle and how long that would take.

[Paul Hedrick]

Why did that take so long? Was it going back and forth with like emails or.

[Unknown]

Because I had never done it before and I was the most annoying client you could possibly have because they would.

[Paul Hedrick]

Make a prototype and you were like, no, it's not right.

[Unknown]

Yeah, basically today, the way things work is, you know, you agree to a certain number of prototype reviews, you know, usually two, maybe three. And I was a perfectionist. I mean, we probably went through 10. I remember going to them on day one and saying, I am not designing to an fob cost here, a cost here. I am designing for the end product to be perfect and then you just tell me how much it costs and I'm going to go price it, you know, the way I need to price it.

[Paul Hedrick]

In other words, they were used to doing it as cheaply as possible. Assuming that the customer was going to then sell it to a wholesale, was going to wholesale it and then the retailer would mark it up again.

[Unknown]

So yes, they were used to the, to the brand saying, it can't be more than $80 because we're going to multiply that by four and, and retail for 320. 325.

[Paul Hedrick]

And you were basically saying, look, you know, you can spend more money because I'm going to be sending, selling this direct through my website. So if I make a 30 or 40% margin on this, we're in great shape. But that meant that they could spend more money on the prototype.

[Unknown]

Yeah, the challenge was I was asking them to spend money on things they don't normally Spend money on like quality control and extra training and all this. I mean basically it was always going be to, to be a, you know, to work with, to covis as a client. I wanted to shift the paradigm with these factories. I wanted to shift away from where do we cut corners, where can we save money on, you know, some small material thing and how do we invest in the quality?

[Paul Hedrick]

Yep. Okay, so you're going back and forth and back and forth and in the meantime it's a waiting game because you want to launch this thing. And how long does it take to make a prototype? Like two weeks?

[Unknown]

Yeah, two weeks is a pretty typical cycle.

[Paul Hedrick]

Okay. You'd look at it, you fly down there and you get there and you're like, no, it's not there, not good enough yet.

[Unknown]

Yeah, that happened more times than I can count. And then it happened again because we had to switch the factories kind of last minute.

[Paul Hedrick]

How were you keeping up your spirits that this was going to work, that people would actually buy them? What gave you the confidence?

[Unknown]

It was a very humbling year, I will say. I remember my college roommates kind of asking me for updates and they're like, oh, you quit your job in private equity to start a boot store. How's it going? And yeah, I ate a lot of humble pie. And so I think by setting that baseline all the way down and knowing that no, I'm like going all the way to the bottom. I'm going to zero, I'm going to negative.

[Paul Hedrick]

You're like Drake, you start from the bottom.

[Unknown]

Yeah, maybe.

[Paul Hedrick]

Well, no, not exactly, but I hear you. Yeah, because okay, you go to this prestigious university and all your friends are in finance and, or going to business school and you're like in Austin trying to make cowboy boots.

[Unknown]

Listen, I was talking to a lot of people about going to market and getting ideas for how to launch and I ended up actually, I believe you. Have the Harry's guys been on this?

[Paul Hedrick]

Yep.

[Unknown]

Yeah, well, friends with Jeff, with Jeff Rader now I am, but didn't know him back then, but I had seen their launch playbook and they had created this, actually this open source email gathering tool that I think they had gathered like a hundred thousand emails for before they launched. And so I found the code for it and put Dacovis on it. And you know, that was just one of the many things we did. Unfortunately, unlike the 100,000 emails, I think I got 2,000, but that's not bad. You know, I think I launched with, you know, we launched with 5,000 emails. But yeah, I was basically just spending that whole six months of the last development time grasping at straws, finding every single thing I could put into the bucket of how do I make sure on day one that this thing I'm not launching to crickets?

[Paul Hedrick]

Yeah. And are you already, by the summer of 2015, letting people put in pre orders?

[Unknown]

No, I had this almost illogical aversion to pre orders because I wanted the whole experience of Tokovas to always be fast and free and amazing. And so I didn't want to subject a consumer to uncertainty, which was probably stupid for my.

[Paul Hedrick]

Yeah, I mean, that's counter. It's like a very opposite way to how most D2C companies start. They start with pre orders and there's usually this uncomfortable waiting period and then people get mad, but then it all works out. But by the way, did the website look good, by the way, or was it kind of janky?

[Unknown]

You know, Shopify was kind of getting off the ground and they had these beautiful templates and, you know, I was very thoughtful about the storytelling.

[Paul Hedrick]

What was the storytelling?

[Unknown]

Basically, I had a page about how the boots were made and told the story of Leon. We were really the first brand to kind of tell the story of Mexico and Leon in particular.

[Paul Hedrick]

Do you think a lot of brands tried to not talk about Mexico because they didn't want people to know they weren't made in the US 100%. But you flipped that script and you were like, no, actually this is really where they're made. This is a proud heritage.

[Unknown]

Yep. I hired a really good photographer, videographer to come with me down to Mexico to show nice lifestyle photography of the boots being made of the artisans who are making them. I even created a bunch of shirts for them to wear, but we only had like six of them. And so we would take them off the guy who was finished with this step and put it on the guy who was finishing the next step.

[Paul Hedrick]

Oh, you had like shirts made. Like what kind of shirts?

[Unknown]

They were little green kind of Carhartt sort of work shirts. Yeah, they had a to Cova's embroidery on.

[Paul Hedrick]

Oh, wow. You had the guys in the factory wearing. Oh, wow, that's so smart. So it looks like kind of faked it a little bit, you know. Reminds my brother in law, when he started his business, he called himself account executive. So we're. Because he was young, he was a young guy. So he was the owner, he's the only employee, but he called himself account executive on his business card. So when he'd show up, people will be like, oh, you must work for a big company. He's an account executive, by the way.

[Unknown]

I made business cards. I made very nice business cards. And I remember putting CEO on the business card. And my dad, I getting giving one to my dad, and he just laughed at me. I'm like, why are you laughing? I am the CEO. He's like, yeah, you're also the only employee.

[Paul Hedrick]

And you're the only employee. Yeah. I actually think it's better to put account executive on your business card if you're the solo fan. Anyway, now, you were. You launched a website in the fall, I guess, of 2015, and you're so small that you're probably under the radar. Like, none of these competitors even noticed you at this point.

[Unknown]

Yeah, I don't think any of them. Well, it was a very small universe, I will say. It's an industry where everyone kind of knows each other. I'm sure there was chatter. Here's the thing that we were never a part of the conversations that really happened the most, which is between retailer and brand. We weren't going to the trade shows. I showed up to one of them and realized, this is not our place. We're not going to be doing this kind of business for a long time.

[Paul Hedrick]

You were not going to be talking to Neiman Marcus or Bloomingdale's. You were going to focus on selling through your website.

[Unknown]

Yeah.

[Paul Hedrick]

Okay, so you launch officially in October of 2015.

[Unknown]

October 27th was the date.

[Paul Hedrick]

And you were gonna go in with two styles, Right? Two for men, two for women. That was it.

[Unknown]

Yeah. Two for men, two for women, two colors each.

[Paul Hedrick]

The Cartwright and the Earl, I think were the men's. And they're still very popular boots that you sell, right?

[Unknown]

Yep. Still two of our, you know, four bestsellers.

[Paul Hedrick]

And then the women's were the Jamie and the Penny.

[Unknown]

Yeah, the Jamie and the Penny. Both named after dogs that I. Former pets.

[Paul Hedrick]

Okay, and who you launched on 27th October, 2015, and who was it your friends who were ordering that day?

[Unknown]

Yeah. Turned it on, sent four or five thousand emails out and had $20,000 of sales on the first day. So about 180 to 100 pairs. I forget.

[Paul Hedrick]

Chris. Pretty good. How much of that was coming from relatives?

[Unknown]

It was about half. So not relatives, but friends and family, people that I knew directly who were probably a Gmail contact.

[Paul Hedrick]

And you were paying, let's just say, roughly half of that to make them, but then you also had to pay shipping costs. And so roughly, like, at that time.

[Unknown]

They were probably 40% gross margin.

[Paul Hedrick]

It's pretty good.

[Unknown]

Yeah.

[Paul Hedrick]

I mean, it also speaks to the perception around cowboy boots. Right. It's not like, I don't know, what's something that people just assume should always be cheap, like bottled water. Right?

[Unknown]

Yeah. Commodity.

[Paul Hedrick]

A commodity. Right. But cowboy boots, I think people just go into that experience assuming this is going to be more expensive.

[Unknown]

That was by far the biggest reaction we got from people who were in the industry. And in many ways, by the way, being online only kind of worked against us because, I mean, boots are a sensory thing. The way they feel it, they smell. Oh, my gosh, you can see the sheen. You know, the details up front. It's. Which are hard to photograph. So I was. I became pretty product obsessed. So much so that actually when we launched, I actually flew to Mexico. The production run wasn't done yet. I think I flew there the first weekend of November and I stayed there until I inspected every single pair. I, you know, personally did everyone and was rejecting a lot and was. I mean, it took weeks longer than expected. I was, I stayed in. I stayed in Laon.

[Paul Hedrick]

And how did you keep the factory owner from just really getting pissed off at you? Like, you'd go there, you were looking at the boots, you're like, nah, this isn't good enough.

[Unknown]

Well, I don't think I did. I think they did get pissed off at me.

[Paul Hedrick]

Yeah. They were like, you're coming down here.

[Guy Raz]

You'Re telling us what to do.

[Paul Hedrick]

You're like 26. Who do you think you are?

[Unknown]

I was a hard guy to work with for sure. For a factory, you know, the reason that we turned it. I mean, listen, at the end of the day, they just wanted business. And I told them that we would sell 2,000 pairs. They didn't really believe me, but they, they were just surprised that I came back for reorder. And I came back for a reorder three months in. I said, I actually, I'm on track to sell all 2,000 over the four months. I think ultimately, no matter how much I pissed anyone off with being an annoying client to work with, we ultimately won with business and doing what we said we were going to do.

[Paul Hedrick]

Why don't we come back in just a moment? Why Paul decides to take a major risk and move from just online sales to brick and mortar as well. Stay with us. I'm Guy Raz and you're listening to how I built this.

[Guy Raz]

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[Paul Hedrick]

Hey, welcome back to How I Built this. I'm Guy raz. So it's 2015 and just two months after launching the brand Kovas, Paul has done over $100,000 in sales and he's selling his cowboy boots in two ways. Online and out of his car.

[Unknown]

I had sold my car and bought a kind of a beater, an old truck, old suv and I would drive that to farmers markets. I think our second best sales day of 2015, aside from launch day, was me driving to my middle school in Dallas and selling boots from a table at the holiday market. In fact, my mom came and helped me with the booth. My parents were still living in Dallas at the time I think we sold $4,000, so call it 20 pairs at that thing. And so it was just little by little. And I really believed in getting out there in front of customers. I didn't think that sitting in front of my computer and reading customer service emails, although that was helpful, was going to really drive it to the next level. I wanted live interaction. And so I told myself, and once I hired my first teammate at the end of December, I told him too.

[Paul Hedrick]

I said, this is Brandon Windle, right?

[Unknown]

Yeah, Brandon Windle.

[Paul Hedrick]

And who was he? What was his job?

[Unknown]

His title was, I think, growth lead. So we had ended up raising some angel capital. And one of the guys who I had reached out to about raising money was an angel investor out in D.C. brandon had been working for him. So he actually called me and I was, I mean, he didn't know, but I was sort of desperate for help and I had already tried to convince a, a family friend to join me. I hit up the McKinsey and Bain message boards and tried to convince people to join me, but Brandon was hungry. I told him, listen, what I don't know how to do is market. It's very clear that we're going to need to learn how to digital market and we're going to have to learn the universe of social media. How about you figure that out? So, yeah, we started testing digital marketing very early. We started working with an agency on Facebook advertising probably by that January.

[Paul Hedrick]

And did that pay off the Facebook ads?

[Unknown]

Yeah, we were. Man, there was a combination of there not being any other, I think, western boot brands advertising at the time and us having a really compelling value proposition. And candidly, man, we had product market fit and people loved the boots. And so we were able to advertise pretty early. And I mean, think we were paying ourselves like 50 grand. So we had enough capital to test and it turned into a game of when the dollars had to go out the door for the next order and how much we could afford on advertising that week and what is our stock level and how much, when our stock level goes down, does our return on advertising spend go down? And tweaking it, it became almost like a trading floor. And then I, on the other, while he was managing the spend, I was going down to Mexico every month. And I mean, I was negotiating all the way down to the time frame. So I would say, all right, this is the date that we're, they're going to commit to the overall quantity. And then a few weeks later, this is the date that we're going to Commit to the color makeup so we can buy that leather order. Then here's the date we're going to agree on the actual size cut. And it was as, you know, as late as possible. So I could have as much inventory data as possible and had a constant kind of model flowing. So only because of that were we able to attract eyeballs, convert the eyeballs. We basically got 2 million revenue out of it and broke even.

[Paul Hedrick]

I mean, 2017, you're doing $10 million in revenue and you're profitable. When did these other boot makers start to notice and. And I imagine some of them were probably a little annoyed with your approach because you were undercutting their prices.

[Unknown]

The truth is, I don't know when because we never really heard from them. I do remember a moment. Yeah, so we did about a little under 2 million the first year, 13 the second. And it was coming into that third full year in business, 2018, that we were clearly making a pretty big splash. And I remember sitting next to one of the other boot executives on a plane to Leon and him telling me, man, we're actually starting to feel yalls business. And I said, oh, well, sorry. Happy to be in the industry. We're still pretty young and don't know what we're doing. And they actually said something encouraging. They said, listen, you're doing something right. People are buying it. So I don't remember exactly what he said, but it was sort of a happy hunting mindset, Paul.

[Paul Hedrick]

I mean, by the end of 2018, you do a series a round and you raise a lot of money, $30 million. So I have to imagine by this point, you have really serious expansion plans. And it's not just going to be cowboy boots. It's going to be apparel. It's going to be, you know, accessories, leather belts, other things, eventually cowboy hats, all these things that you would eventually do. But it was also going to be stores. And in, I think, early spring of 2019, you open your first brick and mortar store. This is, I think, still one of your flagship stores in Austin on South Congress Street. Now you're going from D2C to brick and mortar. There's some crossover here. But tell me why the store, why that shift to doing brick and mortar was important? Because this was a time I think a lot of people forget where the narrative was brick and mortar's dead. You know, it's just a waste of money. Obviously, Warby Parker did brick and mortar away other brands allbirds. For some of these brands it worked, for some it didn't. But what Was the thinking behind it, when the sort of the conventional wisdom was like, it's dead. No one's going to be doing brick and mortar.

[Unknown]

Yeah. So, I mean, I go back to, like, the original inspiration for a boot. And it was the. And the cowboy boot is the. It has a story. People have a story about how they bought it, how they found it, whether they got handed down, whether they got it at the thrift store or their grandfather gave it to them. And I just think. I kind of thought, listen, this. I feel like we're almost succeeding in spite of our business model, not because of it. And I wanted this creative outlet. I wanted. I had this vision of hospitality for the brand that went way further than the customer experience associates. Because there isn't really anything that special about really good customer service if it's still limited to phone, email, and chat. And then I had these theories that there was also a gap in the market. There was no premium contemporary brand in the space. And now we are the premium contemporary brand. And if you go look at what premium contemporary brands do, they grow through retail. Go look at Lululemon. They're the primary example. And I kind of considered ourselves the Lululemon of boots. You had to kind of touch it to believe it, feel it, to believe it, fit it, to believe it. It kind of felt like that was our equivalent. And there was no premium contemporary retail. You basically had independent specialty retailers, and then you had big box retailers, but you didn't have any high street, you didn't have any mall, you didn't have any premium outdoor lifestyle centers. So there was this massive marketplace gap to fill as well.

[Paul Hedrick]

So. All right, so you open this store. I've seen lots of photos of it, and it's a beautiful space. I mean, sort of wood. Wood ceilings and really sort of browns. The colors in there very even. The wood is very leathery looking. And you go in and I guess you get a drink. You get a glass of bourbon or something if you want, and they'll shine your boots. And tell me about that experience because it seems very like there's a lot going on there. What did you want the store to be?

[Unknown]

I want it to be fun. We were a very. We had a very fun internal culture. And I wanted to translate that to. To our customers. And I wanted to think about all of the things that you could say yes to. Like, could we have a bar in the store that served free drinks? Could we, you know, have boot shines? And now we do personalization in store. We started branding boots last Year. And, you know, finally, I think we've been able to give the customer what they want. When you invest in that, well, you invest $400 in a pair of boots. You want it to fit right? So, okay, we've got bootstratchers in store. Oh, you want to be able to personalize. It's a gift. Okay, we'll be able. We'll just say yes to you for that. You want to bring your old pair in and get it shine. Okay, we'll say yes to you for that. It's an investment. And, you know, the stores have really allowed us to kind of come full circle on delivering that promise.

[Paul Hedrick]

So I think by the end of that year of 2019, you had opened a total of five stores. And I think not all of them were in Texas. Right. I think there was one in like.

[Unknown]

One was in Oklahoma.

[Paul Hedrick]

Five stores. And you're growing like crazy. And there's, you know, it takes us to February of 2020. You raised $27 million, Series B. I mean, you're really humming along here. March 2020, March 13, you open another store and then a couple days later, the shutdowns begin all over the country.

[Unknown]

Oh, man. Yeah, that was a doozy.

[Paul Hedrick]

I think by the third week of March, your run rate drops 50%.

[Unknown]

Yeah.

[Paul Hedrick]

And I mean 50% of a drop in sales. You have to make some serious decisions about how you're spending because so much of your business is still direct to consumer, which means you guys are spending a lot of money on ads. You had to basically stop that, which is going to have an impact on revenue because fewer people are going to see those ads leading to fewer orders.

[Unknown]

Yeah, obviously we had to close the six stores, one of which had just opened, which was such a surreal experience, opening that weekend, you know, with everyone's can't get hand sanitizer. I think I had a box of baby wipes in my back pocket shaking a hundred hands. Yeah. But I get a frantic call from an investor that Saturday or Sunday saying we gotta figure out a plan to not go out of business. And man, then things got really bad. Honestly, probably the toughest moment of my life, personally. You know, we had to act. I made a three pronged plan that was, you know, kind of realized, hey, this is one of those moments you define your career as a CEO, when a crisis like this happens, you know, we had to stem the bleeding. I did have to reduce the workforce. I think we had 70 employees at the time. And we did a reduction in force of about 20. And then we lowered everyone's salary as well. And then I had to raise kind of an emergency round that summer. So that was like the not fun prong. And then the other two prongs were lean in and the other two prongs were hug the customer and hug our partners and play offense. And so hug the customer was let's keep launching our new product. Every other brand in the industry was cutting all innovation, cutting all new launches.

[Paul Hedrick]

But I'm just curious as you are, your fortunes begin to plummet. Right. This is a very scary time for a lot of retailers. Their fortunes would turn dramatically within a few months, in some cases a few weeks. But in your case it was different because you're selling a product that people generally wear outside. Right. This is not athleisure wear or slippers. Like this is something you wear to go out and to be out and about. Like business suits, for example, just dropped. Sales dropped. Formal wear, you know, or sort of going out clothes, designer stuff. When did you start to see sales pick up? Because they would pick up in 2020.

[Unknown]

It didn't pick up until the winter really. And you know, basically Q2 and Q3 that year were all just us emailing and keeping live the people who really liked to covis already. It was just staying afloat. And by the way, that the reason we it picked up is that third prong was play offense and hug our partners. Our partners were our landlords and our factories. And we didn't cut any orders. You know, we kept making stuff. We had, you know, we raised money to make sure we could pay for inventory.

[Paul Hedrick]

But what do you think explains it? I mean, Your sales dropped 50% in the first week of this thing. But then by the end of the year, you're 10 million more in profit than in the previous year. What explains it?

[Unknown]

I think it was us believing in the brand. I mean, we bet on the brand to be clear.

[Guy Raz]

But what does that mean?

[Unknown]

We opened eight stores. And those stores, by the way, we.

[Paul Hedrick]

Were in Texas so you could be open.

[Unknown]

We reopened our store in April.

[Paul Hedrick]

You're not in California, where you couldn't. Everything was shut until 2021.

[Unknown]

I think we literally were closed for three weeks.

[Paul Hedrick]

Right.

[Unknown]

You know, obviously foot traffic was plummeted, people wearing masks, but people were shopping again.

[Paul Hedrick]

People were in the stores.

[Unknown]

Yeah, I think we really, let's be clear, we benefited from being a mostly Texas and southern oriented brand. I think the brands that really got hit, the retail spots that really got hit were the Northeast and the. And the west Coast.

[Paul Hedrick]

Was the experience somewhat different when people were coming in and everyone was wearing a mask, like all the customer service people probably couldn't serve drinks or you weren't serving drinks or what?

[Unknown]

I think we were still serving drinks. Yeah. You know, people lowered their masks to drink the drink, just like on the airplane and. But, you know, you might remember that was a. Masks became a politically charged thing. And so that became a hard thing to figure out. We always wore them, but we kind of stopped dictating that customers wear them at some point.

[Paul Hedrick]

I mean, that raises an interesting question, right, because you're not Starbucks. Right. And Starbucks for a long time seemed to be appealing to sort of center, left of center consumers with their public campaigns and supporting social justice and all these things. You are a Texan brand, right. Appealing to not just Texans or Southerners, but. But people who sort of are attracted to kind of Western wear and that lifestyle. And not to stereotype, but let's just say that at least half of them are going to be slightly more conservative. I mean, you mentioned this idea of masks being kind of a political litmus test. And so I wonder if you guys kind of had a moment in the business and say, look, we have to respond to our customers, like, if they don't want this, if they're not going to want us to be wearing masks in stores, we shouldn't.

[Unknown]

Yeah, listen, politics has always been an interesting question here. We have remained fiercely apolitical, neutral.

[Paul Hedrick]

Right.

[Unknown]

Since day one. You know, I'd say that we probably have a surprisingly even demographic spread across.

[Paul Hedrick]

I mean, it is remarkable that like Western wear, you know, which has been around since the 19th century, right. In different versions, like cowboy hats and boots and denim and that whole look, right. You know, the stitched shirts and, you know, it could have become like wearing a dirndl, like being a Bavarian in Germany, right. Or like in Austria. Right. Like he could have been like this weird thing that you just did during Oktoberfest. But it is a. An enduring global phenomenon. Like, you go to China today and like people are wearing Wranglers and Levi's. You go to, you know, Japan, people wearing cowboy hats. I mean, there's something about Western wear, cowboy hats, cowboy boots, that's just so enduring. What do you think explains that one thing?

[Unknown]

I'll say it is always has been part of the American diaspora of style. Western has, as you point out, it's had its ups and downs as well. It's been a trend that goes. It's kind of been a jagged curve up and to the right in terms of the growth of the cowboy boot industry. But if you drive 30 minutes outside of any city, including the bay area, in the country, you're probably going to see more pickup truck advertisements. The radio probably turns to country. And the point is, there's a huge base that's always there and always has been there. But I also, something feels like it's turned. And when people ask me about, you know, hey, the last few years, it feels like boots are more in trend, you know, my first response is, well, you know, it isn't really a new thing. It's always been around. Maybe your friends just started wearing them in Manhattan, perhaps. But I actually am excited because I think it passed a tipping point.

[Paul Hedrick]

I want to sort of jump ahead a little bit because I'm curious about how you and you look back on it, because we're going to talk about in a moment about leaving the leadership role. But, you know, you were a young guy when you started this. 25, 26, and now you've scaled it. But what did you think about managing people and being a leader? Did you feel like you were good at it? It's really hard. I mean, some people are naturally good at it and most people have to learn it and usually they're bad at it for a while.

[Unknown]

Yeah, I think I definitely was bad at first, and I think the whole time I thought I was bad. All of the hardest moments of the business come from people, whether or not you make. Usually it was when you made the wrong hire or you had to fire someone. It's the lowest lows of any day. And I think I didn't realize how. That I was actually doing a pretty good job most of the time. But I beat myself up a lot. And that was actually one of the reasons I started looking for leverage in the business.

[Paul Hedrick]

When you say leverage, you start looking.

[Unknown]

For, hey, I wanted an executive who can help take a bunch of the business functions off my hands. I stopped recruiting for that role during COVID until late 21 when we had sort of exploded. I mean, we'd gone from. I think we did went from 80 to 140 million in revenue between 2020 and 2021. And it was so clear that the company was on a good track again post Covid. So I was like, okay, here's the time to like, address my own. My own management desires.

[Paul Hedrick]

At this point, you wanted to focus on things like branding, creative rather than operations and employees and management and things like that.

[Unknown]

Yeah, I was passionate about product, about retail and about brand. And so it was a hard decision, obviously. I mean, my identity has been tied in this business for almost a decade at that point. And over a decade now, I realized I didn't need it for my ego though. I didn't, I didn't need to be CEO to be happy.

[Paul Hedrick]

In June of 2022, you bring on David Lafitte to be the CEO at Tocova's and you transition to become executive chairman and at that point you step away from the day to day operations. So just reflect on that for a moment. I mean, I'm sure on the one hand it was a relief because you didn't have the same level of stress and just constant fires. But on the other hand, you didn't have the same level of stress and constant fires, which is also extremely, you know, it's stimulating and all of a sudden like not as many phone calls, not as many emails, like you're not needed it in the same way. How did you personally cope with that change?

[Unknown]

Well, it's been an evolution and you're right, a lot goes out the door. It's been a sort of an extreme exercise and self awareness, awareness. And there are days when I realize my ego hasn't been filled up and I haven't done the things that I used to do that give me creative fulfillment. And those days are hard. And what I would say is it's not for everyone. To be clear, some people should run their businesses forever. Some people need to be told to get out of the way. Some people need to be told to go away. But one blind spot that I think I've noticed in myself when I reflect is that. But it's taken me about three years, I think, to realize that my style that I had was actually really good for the first, you know, seven or eight years and maybe would have been a little bit challenging in these next five years. And I've been a lot more reflective and grateful I think recently, but it took me a while to get there.

[Paul Hedrick]

Paul, you. And I say this to you speaking as an older guy to a younger guy here, because I'm about 15 years old. Older than you. What, you're 36? Almost 37, I think, right?

[Unknown]

Yeah. By the time this airs, I'll be, I turn 37 next week.

[Paul Hedrick]

Okay, so. But I'm, I'm 50, so a little older than you. And you are still a young guy. You've made some money because you started this brand and it's successful and you'll probably make more once it, you know, if it ever goes public or it's bought out by somebody else. I'm sorry, it's a heavy question, but how do you say, see, sort of, let's just say the next 10 years of your life unfolding.

[Unknown]

You know, it's funny, I've literally spent. This has been my main focus of the last few weeks and months really has been asking myself these questions. Not to dodge it, but I would say that the question I get the most is what's next? What's next? Yeah, I, I let it pressure me into thinking about a lot of ideas. I thought about starting another company and I realized that wasn't the right answer right now. And that there's two things that are true. One's kind of logical and one's a little illogical or faith based. The logical thing is Jacovis is still growing, Tokova still has a job to do and I still have a really important job to do as its founder and as its chairman. But then the other man, the other answer to your question is I have no idea. And I am just getting comfortable with the idea that I don't know and that's okay. And I think think I've never not known. I've never not had the next step. And I've my whole life I had the school, the next school, the job, the job, the thing, the thing, the thing, the next year, the next budget. And I don't have that now. And I think that's okay. And I'm putting a little trust in the universe. Honestly, it's a little woo woo, woo, but I'm putting a little trust in the universe that whatever it is I'm doing right is going to guide me to those next things.

[Paul Hedrick]

Paul, when you think about the journey you took and launching this in 2015, starting in 2014, but launching 2015 and then now this business is going to do what in sales this year?

[Unknown]

Yeah, we'll definitely exceed 300 million in net sales this year.

[Paul Hedrick]

I mean it's amazing. And you've got how many stores?

[Unknown]

We have 42 stores in 20 states.

[Paul Hedrick]

So when you think about that, you know a category that you weren't initially super confident about and where it is now and you know what you've been able to do, how much of where you are now do you attribute to the work that you put in the grind and how much do you think had to do with just luck that people, it just appealed to people. This brand, this name, this kind of the zeitgeist around Western Wear Guy.

[Unknown]

As I told you when we first met, I'd been listening to your show for a decade or so.

[Paul Hedrick]

So you've answered this question in the mirror, with a phone, with a brush.

[Unknown]

You know, I haven't, but I did. I could tell you what I would have said five years ago. Yeah, I used to not like this question. Honestly, I used to be like, you know what? It's not luck. It's all, there's no luck. It's all life is what you make it. But man, I do have such a greater appreciation now that I've reflected on it, on the circumstances that had to unfold for me to be where I was, for me to be born where I was, for me to have had a crisis that I could not have possibly been thankful for that turned me into the CEO I wanted to be. That got so many moments that I don't think ever would have happened that I had no control over, and that certainly had nothing to do with my skill or will. So I think I appreciate a lot more the way the universe unfolds in mysterious ways. Whatever you want to call that.

[Paul Hedrick]

That's Paul Hedrick, founder of Tacobas. By the way, if anyone ever doubted that westernware is having a moment, look no further than Tacoba's newest flagship store, set to open in the fall of 2025 right in the heart of SoHo in New York City. Paul, who came up with the idea for Tocova's when he was still living in New York more than a decade ago, calls it his full circle moment. Hey, thanks so much for listening to the show this week. Please make sure to click the Follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas and lessons from some of the world's greatest entrepreneurs, please sign up for my [e-mail] or on substack. This episode was produced by Alex Chung with with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Iman Maani. Our engineers were Patrick Murray and Robert Rodriguez. Our production staff also includes Chris Masini, J.C. howard, Casey Herman, Sam Paulson, Kerry Thompson, Catherine Cipher, John Isabella, and Elaine Coates. I'm Guy Raz and you've been listening to How I Built this.

[Guy Raz]

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