← Making It with Jon Davids
Making It with Jon Davids
183 - This Company Makes $200M/yr Selling Basic T-Shirts | True Classic
00:20:38
Loading summary
Transcript3 lines
- [00:00]
John Davids
This company ran Facebook ads for a T shirt, and then they made $100 million, and it barely took two years. I'm talking about True Classic, and I'm going to tell you exactly how they did it in this episode and the crazy lessons that you can learn. Welcome to the podcast. My name's John Davids, but you can call me J.D. i'm the founder of Influicity, where we help a lot of companies make a lot more money serving a lot more customers. And on this podcast, I share the stories of amazing businesses and. And how they do what they do. If you're a fan of the show, let me know by leaving a review or a comment and get my best stuff to your inbox@johndavis.com let's get to the show. You're listening to Making it with John Davids. All right, so this story starts all the way back in 2019. This guy Ryan is running a marketing agency, and he wants to try something new. He's making a lot of money for a lot of clients, and he decides that he wants to sell something for himself. He decides to sell T shirts on the Internet. Not a bad idea. After all, most of his T shirts don't really fit right. They're baggy, they're boxy. They're just not that good. So he comes up with the perfect style. A T shirt that's snug on top and breathable on the bottom. It's got that space that you can move around. Everyone looks good in this T shirt. Then he team up with his buddies Nick and Matt, and they get to work. All right, so the guys decide to start with a crew neck T shirt. Simple, classic shirt offered in six colors, all priced under 20 bucks. I think they were priced at 16 or $18. So they start running Facebook ads and Instagram ads, and they're focusing on fit, confidence, and simplicity. They really want to zoom in on a very specific kind of avatar that. That's looking for a very specific kind of shirt, and it works. In month one of advertising, the guys sell $26,000. They take all that money, they plow it back into ads, and they're tweaking everything. The pictures, the words, the hooks, the offers. They're making these ads as best as they possibly can, squeezing all the juice out of every click, and this thing is taking off. By the end of that first year, sales hit $15 million. And in year two, it's 90 million do. That's 9 0. By year three, they've smashed through to a ridiculous $150 million in revenue. So how are these guys doing it? How are they making it happen? What is the secret? Well, the truth is True Classic is a performance marketing company that happens to sell T shirts and really, really nice T shirts. I know, I actually own a lot of them. This right here, right now is a True Classic T shirt. I wear them in a lot of my podcast videos. You see, here's the thing. I don't mean it to be deme that they're a performance company that happens to sell T shirts, but it's true. These guys are just awesome at making sure they can spend a dollar to make $2 or $3 or $4, right? They've got the numbers locked down. They know how to spend money to make money. And a whole lot of it, a whole lot more money from every dollar they spend. And then there's the bundling, right? They push you to order three shirts, seven shirts or 10 shirts at a time. And this is critical because instead of losing money on that first order, they can make a profit immediately or at the very least break even on that first order. And that's so important. You know, it sounds obvious, but it's actually really hard to do. Most brands can't do it, especially when they're selling consumables and low priced goods. Plus they gamify everything. They really make sure that you're having a lot of fun while you shop, right? If you want free shipping, spend a little more money, they'll give it to you. If you want free boxers, spend a little more money. If you want a free T shirt, you know what to do. You're going to spend more money. These guys are going to make sure of it. It's all been working for them. True Classic now sells north of $200 million a year. This brand is all about rock solid execution. That's what this is all about. A simple product, it's a laser focused advertising strategy and it's a really polished user experience. And then they back it all up with social proof, right? It helps when you've got hundreds of thousands of glowing reviews, 5 star reviews, and they did it all without raising a dollar in venture capital. Right? This is really impressive. Turns out that selling T shirts on the Internet, it's a pretty good business. So let's get into it here. I put this story up on the Internet. I put it up on LinkedIn, Instagram, TikTok. Millions and millions of you saw it. And of course, Ryan Bartlett, the founder of True Classic, saw it as well. And as the founder, he's got a firsthand look. And I'm always a little bit nervous, honestly. Not because I'm afraid of what the founder of the business will think of my story, but when you live it intimately, I know this as a businessman myself, it's very hard to see on the outside what the real story is. I'm always just hopeful that I'm doing justice to the story. And I think Ryan kind of liked my version of it. So he jumped into my comments on LinkedIn and here's what he said. He said, we were bootstrapped, so we had no choice but to build a great product. Marketing actually came way later. 100 million in two years is only achievable with strong retention and repeat business, which comes with delivering real value to the customer. Plus, we're break even on first customer acquisition, so we rely heavily on repeat business to drive the growth of the company. Now, that last point is actually a really important one. Ryan says they're break even on first customer purchase. What that means is the very first time a customer purchases something, they don't make a profit. I assumed they did make a profit or maybe a bit of cash. But the truth is, if you can at least break even, then you've liquidated your ad costs. That's a fancy way of saying, if I spend a dollar on advertising, I'm making that dollar back. But it's not good enough to just make the dollar back. You have to actually sell something because there's a whole bunch of other costs, right? The ad cost, the $1, $2, $3 that you're paying for that. Click on meta. That's great. But then you also have the cost of your labor, your staff, your machinery, your office, your rent, your overhead, the cost of making all these T shirts. So you've got to be making a whole lot more than just a dollar on that initial purchase. All that other money goes back in to cover the overhead, and then you have a really good relationship, hopefully with the customer, such that they'll come back without you needing to spend more money. And we'll talk in a second about how you get that customer back and then you can start making a profit on those next dollars. And these guys have to be good at making a profit because they bootstrapped so much of this business. The financing strategy, I didn't get a whole lot of information on it. I'd assume that in the early days they took on debt and debt financing. You certainly need, when you're spending a lot of money on Facebook, you Don't get that money back for 30 or 60 days. So you're going to need debt to fund things. You also need debt to fund things like machinery and materials and run a business like this, a physical goods business. But I don't think they took any primary capital, or at least much of it. Primary capital meaning going to investors to put money into the business. Now they may have taken what we call secondary capital, which is, hey, let's bring on investors, let's get someone to put in $50 million. But that $50 million is gonna go into the pockets of the shareholders so the founders can take cash off the table. I wouldn't be surprised if they took secondary capital at this point. But I don't think they've taken much or any primary from what I know.
- [08:12]
Ryan Bartlett
Business owners and marketers. Honest question for you, is the money you spend on social media worth it? Can you point to sales you've made from Instagram or TikTok or LinkedIn? If the answer is no, I've got something for you. It's a playbook I wrote called how to Build a Social Media Selling Machine. It's a nine step formula designed to turn your social media into a true sales channel. One that produces revenue at scale. Get it now@johndavids.com Playbook if you're spending more than $100,000 a year on marketing, you can't afford to miss this. Grab it now at johndavids.com playbook now.
- [08:50]
John Davids
When you actually order off truclassic.com they want you to spend a certain amount of money. They want you to get to a spending threshold. And they do that in a number of ways. So number one, they bundle, right? You're not going to buy just one T shirt. You're going to buy in packages. You're going to buy a three pack, a seven pack, a 12 pack. I think I've seen 15 and 20 packs on there. And they try to get you to mix and match to get what you want. So you can buy all the black crew neck T shirts or all the white crew neck T shirts, or you can buy the assorted color crew neck T shirts or the assorted color V neck T shirts, or you can mix and match custom your crew necks and your V necks. The other nice thing about prepackaging is that they can take inventory they have on hand. So if they know that month or that quarter, they got a whole bunch of burgundy crewneck T shirts in size large, they can take all those and make those the bonuses or make those the Specials, the discounts. So they can do all sorts of things for not only bundling, but also inventory management, get you to spend more money on the things that they want you to buy. And then you have the gamification. And this is actually really interesting. I've never seen a company do it quite like True Classic, although I'm sure there are lots of examples of this out where when you spend $30, you get free shipping. Let's say, I'm not saying that's the number, but let's just say it's 30 or it's 60 or it's $100, you get free shipping. And then what they'll do is they'll say, hey, jump to the next milestone, spend another $25, and we'll give you something else free, like a free pair of socks or boxer shorts. But here's what I've noticed when I've shopped on True Classic. You can't just spend $25. So the next things that are available to me are like 40, 50, $60. So, yes, I need to spend at least 25, but the cheapest thing I can find is 45. And so now you've actually gotten me to spend even more money. That's what I consider gamification, because I want to spend more money. It's fun to spend more money because I get something new and I hit a milestone. So I unlock a new benefit. In this case, my free pair of boxer shorts, let's say. But they've actually forced me to spend even more money than I thought I'd have to spend, because again, I can't just spend 25, I've got to spend 45. And then they keep bringing these amounts up, up, up. You can get free shorts, you can get free socks, you can get more free T shirts. Right. I have to imagine this goes a long way towards the unit economics. Think about how bad this business would be if they were trying to sell single T shirts, or if they had to cover the cost of shipping, or if you just didn't spend. Because again, going back to Ryan's point, you have to think about this. They're break even on customer acquisition. That means just to break even, they need to sell you like a half a dozen T shirts. There's no way they could possibly do this if they were selling one T shirt at a time because that T shirt would be way too expensive or they would just be losing a whole lot of money. And there's a key lesson here that I think is applicable to so many businesses. And that is bring up the aova. The average order value is so important. If you're losing money, it might not be that you are pricing your product too cheap, although that might be it. It could be that customers are just not spending enough money on enough units. So it's not like they have to sell the most expensive T shirt. They just need to sell enough T shirts that the AOV is high enough. Right? You could do it at once, or you could do it over the course of a few purchases. A lot of the time, if you're not making enough money, that could be what it is, right? You're not spending enough money on the products. We see examples like this all over the place. Costco is a really good one, right? When you go to Costco, there's a reason. If you want to buy a bottle of vitamins or a tuna fish, they're only going to sell you like 12, 15, 20 cans of tuna. They're only going to sell you the bottle of Advil with a thousand pills in it. It's not because you went there wanting a thousand pills. It's because they know that if they only sell you 200, they can't possibly charge enough money. If you're only going to buy one bag of Doritos, they're not going to make enough money on it. So what they say is you have to buy a minimum of two bags of Doritos. McDonald's is also very famous for this. If you went into McDonald's and just bought a burger, they wouldn't make very much profit. So what do they do? They bundle. They give you burgers and fries and Coke. They make that a meal, and they make it very easy. Hey, burger, fries, Coke, the greatest line in business. Do you want fries with that? Do you want fries with that? It's absolutely genius. When you order a burger, they're always gonna say, do you want fries with that? Because they know the fries as the upsell brings up the average order value. They're not just being nice then, not just being polite, saying, hey, would you like to throw fries in? No, no, no. We want to make a profit on what we're selling you. And that's why you need to buy the fries. One more example. I remember I one time bought a phone at Best Buy and I bought this iPhone, whatever it was, the iPhone 7 or something, or 8. And I remember these guys were hammering me to buy a warranty. God, man, you got to buy a warranty, you got to buy a warranty on this phone. Why were they so insistent that I buy a warranty. I don't want an iPhone warranty. It's because they were making all their profit at Best Buy on that warranty. Cause I bet you the money that went into the iPhone that goes straight back to our buddies in Cupertino at Apple, they get that money. And our friends at Best Buy were making the money on the warranty. And this guy JD I wasn't buying a warranty and they were not happy about that. You know, the advertising for True Classic is also on point. They have these really funny ads, funny characters. If you go to YouTube, you can check them out. The right ads can really bring down your cost of customer acquisition. I mean, your CAC is so important, obviously, going back to the unit economics of it all. If you actually want to make money on this, you've got to make sure that you're acquiring customers at the right price. And a lot of the time when I talk to business owners and I look at marketing plans at Influicity and I see what brands are doing before we go in, it's not that they're missing anything in their funnel. It's not like they're missing something big, oh, you guys aren't doing this or you're not doing that. It's that the quality of the advertising they're running just isn't good enough. It's not attracting enough people. It's not stopping your thumb as you're swiping. Right. When I'm looking at the super competitive canvas that is Instagram or that is TikTok, your ad has to really stand out. True Classic has done this. A lot of brands don't. They don't put in the time and the effort into the creative to ensure that they're going to stand out in the feed such that they can pay less money. Right. Better Creative means lower cost per click, lower cost per customer acquisition. True Classic has done a fantastic job, not only on the product, but on making sure their ads stand out. Keep them fresh, keep them creative, keep, keep your customers hooked. Another big thing about True Classic is the customer service. Let me tell you guys something. I one time had to return something. It was my first or second purchase from True Classic and I wasn't crazy about the shirt that I got, so I wanted to return it. So I sent them an email, said, hey, not happy with this, I'd love to return it. And they said, don't even bother sending it back to us. No problem. We're going to refund your card right away. John, take that shirt that we sent you and, and give it to somebody in need. And I thought that was great. You saved me a whole bunch of time and energy having to put it back in the bag, go to the post office, send it back to you. Now you gotta pay for postage or I gotta pay for postage. They said forget about it, just give it to someone else. It's a feel good way to make sure that I'm getting this product over to somebody else and they don't have to worry about the costs of returning. And most importantly, you give me a great customer service experience. And I've heard lots of great customer service experiences from, from this brand. And it's no Wonder. They've got 100,000 reviews that are all five star. And even more reviews when you get into the four stars. Right. There's also the email marketing. I get emails from them all the time. E commerce brands know this. Once you spend the time and money to acquire a customer, what do you do? You gotta keep them. How do you do that? Email. Get your email funnels, working guys. I send out probably a hundred thousand emails a month on my own lists. At JohnDavids.com, i send out newsletters, I send out emails pretty much every single day. I'm sending out thousands and thousands of emails to different people on my list based on where they are in my funnel. And I can tell you I'm not running an e commerce company, I'm running an enterprise sales company. But email marketing is so, so critical if you are running E commerce, especially if you're running any business where it costs you a bunch of money to get a customer, you absolutely must maintain the relationship with that customer. And email is the number one way to do that. And you know, I want to close off on this point about the simplicity of the product. You know, by coincidence, I just had a conversation with Chris Riccobono over at Untuck It. He's the founder of Untucket, another menswear company. By coincidence, Untucket's doing amazing. I'm not sure if the episode will be out when this drops, but those guys are north of 200 million a year in revenue. And there was something about that business that really got me thinking about True Classic. And it's the innovation around something so simple. The fit of the men's shirt. In the case of True Classic, it's about that fit on the top and that breathable fit on the bottom and that perfect T shirt that people just love. And then with Untuck it, it was about making sure that the shirts are looking good when they're worn untucked. And to be honest with you, the innovation and the technology and the R and D that goes in to making sure the shirts look good untucked. Wow. It was not easy. You'll hear Chris talk about it on that episode of this podcast. But the amazing thing is that both of these brands took something so simple, the fit of a shirt, and made a small change. Put a lot of R and D to make a small change, and it goes a long way. And then they both ran ads that absolutely blew the business out of the water. And I want you to think about this for a second. Think about how many products exist today where there's an opportunity to make a simple change in the quality of that product, right? Think about regular things like soap, like plates and dishes, like pans, like cookware. There are so many things that we use every single day that people just don't love, right? They don't love the feel of it. They don't love the features of it. Maybe it's missing something. It's this unspoken thing. Hey, you know, I kind of wish it did this, but it's not big enough of a pain that I'm going to go out and buy a new product. But if you can actually find a fix, like a T shirt that looks great worn on any man, or like a T shirt, a shirt that looks great worn, untucked, or any number of things, there are big business opportunities out there today because products are cheaper to make than ever. The physical products, the things that we use every day, there is so much opportunity. So you don't need to reinvent the wheel. You don't have to focus on AI or crypto or anything crazy. You could just make a T shirt that fits really, really well. Let me know what you guys think. Leave a comment Leave a rating. Leave a review get my best stuff to your inbox@johndavids.com.