Opening Retail Stores vs. Going Wholesale: What the Numbers Say

Summary

Podcast Summary: Operators – "Opening Retail Stores vs. Going Wholesale: What the Numbers Say"

Air Date: July 1, 2026
Hosts: Sean Frank, Mike Beckham, Matt Bertulli, Jason Panzer
Guests: Curtis (Portland Leather Goods)

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Brief Overview

This episode of the Operators Podcast dives deep into one of the most pivotal decisions facing modern consumer brands: should you open your own retail stores (owned retail) or focus on wholesale relationships with major retailers? Through vibrant debate, personal war stories, and hard-won insights, the hosts (each a nine-figure operator) break down the pros and cons, financial realities, and strategic nuances that differentiate these two massive distribution channels.

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Main Discussion Points & Insights

1. The Great Retail Showdown: The Case Against Owned Retail

• Host (Matt) sets the tone by encouraging a direct debate between Mike (Simple Modern, wholesale-heavy) and Curtis (Portland Leather, rapidly expanding retail stores).
• Mike’s stance:
  • Opening owned retail is "insane" for most brands unless you fall into specific categories (01:13).
  • Physical retail requires new competencies: real estate, leases, understanding regional markets, loss prevention, managing dispersed inventory, running teen-dominated workforces.
  • "You're competing with Walmart and Amazon – you’re not just on their platform, you’re fighting to get people into your thing instead of theirs." (02:44)
  • "You're insane if you open physical retail. Probably it's a passion project… or something you're doing because you think it makes you look cool." (02:37)
  • Two siren songs: going international, opening stores – both are harder and riskier than they first appear (02:45).
  • Conclusion: Owned retail makes sense only if you really need to diversify channels or have a product category where it’s proven to work (e.g., jewelry).

2. Counterpoint: The Case for Owned Retail

• Curtis pushes back:
  • "Yes, you have to have competency... but retail’s been around for 60+ years and people know what the hell they’re doing." (03:54)
  • He hired retail veterans who managed over 1,200 jewelry retail locations—running stores can be a superpower if you find expertise (04:33).
  • Profits from his stores are "more than everything else we do" (05:46).
  • It's easier to hire strong retail operators than it is to hire great digital marketers, especially for DTC (05:46).
  • Owned retail works best if you have a strong product and brand – "If you have a crap brand, nothing's going to go well for you." (06:35, Mike responds).

3. Omnichannel as an M&A Requirement

• Matt notes that omnichannel (not being single channel) is often a prerequisite for major acquisition deals—brands must expand beyond DTC alone (06:50).

4. Curtis's Retail Journey: From Spite to Scale

• Why open the first store? Curtis: "I'm an egotistical bastard... I signed a lease... to prove everybody they're wrong." The first unexpected outcome: $1.2M revenue, 29% EBITDA (08:48).
• Notable Quote:
  • "All I did was take some friends golfing [to help with store buildout]." (08:55)
  • Mike jokes about the formula: “Be insane, have a vertically integrated business, plus a local AA meeting network, then you can make about the same margins.” (09:19)
• Opened a second store as an outlet – now making $3.5M/year with 28% EBITDA (10:06).
• Key lesson: In-store profitability can rival or surpass DTC if executed well (10:31).
• But: Scaling beyond three stores required hiring a seasoned retail leader—"By store five, we hired somebody... and they showed me how it's really done." (22:47)
• Buildout timelines: Once a lease is signed, a store can be built out in 2–3 weeks, stocked in 2–4 days (44:27).

5. The Hard Work & the Operator’s Mindset

• Both sides agree: shortcutting hard work is a recipe for failure:
  • "Doing the hard work is how you make the money..." (17:01, Mike)
  • "There's always money to be made by doing the hard things." (18:25, Mike)
• Operator advice: Super-high-agency needed for retail – "I will figure it out, I can fix it if it breaks, I’m willing to be misunderstood." (19:33, Mike)

6. Owned Retail vs. Wholesale: Scaling Challenges

• Retail Leases:
  • Long-term risk – 5-year leases with options, but you need to model worst-case break-even carefully (43:32).
  • Negotiation pain: "Leasing agents are just salesmen and lawyers—most incompetent people ever.” (42:12, Curtis)
• Wholesale Scaling:
  • Mike walks through Simple Modern’s origin story:
    • From $20k lifetime sales to a $9M sell-in to Sam's Club, off the back of audacity, timing—and a little bluff (27:01–33:06).
    • Notable Quote: "It’s so easy as an entrepreneur to think it’s about ‘getting to yes’—but it’s about getting the right deal. We bought back $1 million of inventory." (35:38)
    • Real risk: Selling through is much harder than selling in (35:35).
    • Buyer relationships are fragile and algorithmic—great years aren’t always rewarded indefinitely (54:59).
    • Expansion is a long game: "Decisions you make now may not be reversible until 3 years later." (40:22)

7. Speed of Feedback, Flexibility, and Risk

• Owned Retail:
  • Immediate feedback on assortment and merchandising – you can pivot rapidly (69:31).
  • Retail allows for wider assortment and more control over price, experience, and branding (57:38).
• Wholesale:
  • "You know how you're doing almost immediately—first week, you know..." (47:53, Mike)
  • But big missteps (wrong facings/SKUs) take months or years to correct (40:22).
  • Price cuts are easy, price increases nearly impossible – "Putting in price increases is like pulling teeth; putting in price decreases is smooth as butter." (53:16)
  • Channel conflict & pricing: As brands expand wholesale, Target/Walmart/Amazon will scrape their sites—price stability and channel management become complex (57:04).

8. Product-Market-Channel Fit: The Deciding Factor

• Category matters:
  • Some products (e.g., jewelry, leather bags) are well-suited to owned retail, where brand, assortment, and experience drive sales.
  • Others (e.g., drinkware) are best leveraged through wholesale due to price points, volume, and consumer shopping behavior (60:25, Mike’s “Just Milk” analogy).
  • “Being a really good operator is understanding: what are the channels where you’re likely to have success?” (74:52, Mike)
  • Brands can use owned retail for learning, then scale via wholesale for speed and network effects (69:45).

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Notable Quotes & Memorable Moments with Timestamps

• Mike Beckham:

  • "Do you have any idea the number of competencies it takes to operate physical retail? ... You're insane if you open physical retail." (01:13–02:44)
  • "Part of intelligence is knowing where your limits are." (03:54)
  • "Doing the hard work is how you make the money." (17:01)
  • "It is so easy as an entrepreneur to be like, all it is about is getting to yes. And it's like, no, not at all... We bought back $1 million worth of inventory." (35:38)
  • "Putting in price increases is like pulling teeth. Putting in price decreases is smooth as butter." (53:16)
  • "Being a really good operator is understanding what are the channels where you are likely to have success." (74:52)

• Curtis:

  • "I hired someone who’d run 1,200 jewelry stores. Their profitability is more than everything else we do." (04:33, discussing hiring expertise)
  • "I'm a DTC idiot... Everybody said, let's own retail stores. And I thought: this is a terrible idea..." (07:50)
  • "Our outlet store makes $3.5M a year... 28% EBITDA." (10:06)
  • "If people are this far into the Operators Podcast, they’re probably people who already have a company... When I start hitting the top of that, how do I go? Where do I go from here?" (67:02)
  • "I've never been able to make the mental adjustment to wholesale—once I built my first store, I could see it." (68:47)
  • [Referring to Portland market dominance] "I was out of hundreds by the time I got out of the airport. Everyone’s got a bag in Portland." (72:34)

• Matt Bertulli:

  • "Omnichannel is now a prerequisite for acquisition—single channel isn’t going to cut it." (06:50)
  • “Leases can be an asset or liability. When you do it well, they're an asset…” (23:39)
  • "You don’t need to go into stores thinking I gotta have hundreds. There's lots of ways to win." (74:52)

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Key Takeaways & Playbook for Operators

Opening Stores (Owned Retail)

• Pros:
  • Total control (pricing, assortment, experience).
  • Immediate consumer feedback.
  • Higher potential gross profit/store—if executed properly.
  • Provides strong M&A story if scaled (especially in categories like jewelry or luxury leather goods).
• Cons:
  • Complex operationally: real estate, leases, legal, HR.
  • High fixed costs, long-term risk (leases).
  • Tricky to scale rapidly beyond local region without seasoned retail leadership.

Going Wholesale

• Pros:
  • Huge scale potential via existing retailer networks (thousands of doors).
  • Lower fixed costs, less complexity per location.
  • Fewer new competencies required (if you have supply chain/logistics dialed).
• Cons:
  • Buyers hold the power (relationships change, shelf space not guaranteed).
  • Hard to test/iterate: mistakes can take a year or more to correct.
  • Pricing/channel conflict gets complicated quickly.
  • Sell-in does not equal sell-through: big POs can be a curse if consumer pull isn’t proven.

Overarching Lessons

• Product/channel fit is #1. The market archetypes for your product often dictate best channel.
• Both paths require high-agency founders and operators willing to learn new skills, do hard work, and hire world-class subject matter experts.
• Omnichannel is necessary for both resilience and exit optionality.
• Testing into new channels (be it owned retail or wholesale) at moderate scale is lower risk than huge bets—validate before going all in.
• Don’t outsource core competency: location selection for stores, relationship management for wholesale.

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Timestamps for Major Segments

• [01:13] – Mike’s “Why not open your own stores?” rant
• [03:54] – Curtis counters with talent acquisition and store profits
• [06:50] – Omnichannel and M&A acquisition reality
• [08:48] – Curtis’s first store results (1.2M revenue, 29% EBITDA)
• [10:06] – Second store/outlet story ($3.5M/year, 28% EBITDA)
• [17:01] – “Doing the hard work is how you make the money.”
• [27:01] – Mike’s Simple Modern Walmart launch story
• [35:38] – The risk of overselling retail POs & “sell-through vs. sell-in”
• [43:32] – Lease negotiation and commitment timelines for stores
• [47:53] – Wholesale: immediate sales feedback and what to do with misses
• [53:16] – Price testing and channel conflict in wholesale
• [60:25] – Why certain categories simply don’t work as standalone stores
• [69:31] – Retail: learning from assortment, launching new lines
• [74:52] – Closing thoughts: there’s always more than one way to win

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Final Thoughts

The hosts wrap with mutual respect and a clear message: There’s no single right answer, but there is a best path for your product, category, and team. True operators understand that every channel has its traps and its upsides—the job is to learn fast, test small, and execute like a maniac where the fit is strong.

“Being a top operator isn’t about picking one channel over another—it’s about knowing which path fits your product, your talent, and your ambition.”

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[End of Summary: Operators Podcast, July 1, 2026: "Opening Retail Stores vs. Going Wholesale: What the Numbers Say"]

Transcript

[A]

Welcome back to the operators podcast, boys. Today is the great retail showdown. I have decided that I would like to see Mike and Curtis get into a bit of a pissing match. I want to hear, like, look, I want to know the pros, the cons, the good, the bad, everything about opening stores. And contrast that with Mike, you just do a ton of wholesale, right? You're in, like, every major box. It's sort of one of your competitive advantages. And I just think this is a conversation that a lot of operators want to hear. Like, my curiosity got the best of me when I was thinking about what to do today. I'm like, oh, I got to get these two guys to kind of go at it and see if. See if we can help people decide because. And I'm going to start with Mike. To me, I guess start here, Curtis, because I need to tee you up, dude. I got. I gotta, like, I gotta lay out the red carpet. Mike's gonna do that for you. So to me, owned retail is like one of the swan songs of being in consumer. It's like, oh, I want my own stores. You go to a mall, or it's like you just want your own store. So, Mike, let's start with you. Why would you not want your own stores? Give us the argument first of, like, why this is a bad idea, and then we're going to let Curtis defend it for the next hour.

[B]

I feel like this is too easy. It's like. It's like, you know, Curtis is showing up with a water gun and I've got an uzi. Like, I don't even understand what. What we're trying to do here. Like, I have on my side the behemoth megacorps, a ton of history, and I. Anyway, I. Let me. I don't know. They're so innumerable, Matt. Like, I think it's insane to operate your own locations except for in some very, very specific circumstances. How do I count the ways? Well, first is, do you have any idea the number of competencies it takes to operate physical retail? You're now getting into real estate and thinking about leases. You need to be the expert on all the markets that you're in and where the foot traffic is. You have to deal with, you know, crazy legal or lack of legal enforcement. In a lot of blue states. You're dealing with shoplifting. You're now not dealing with all of your inventory at 13 PL.

[A]

You're with dealing.

[B]

You've got inventory in a bunch of disparate locations that you have to manage. You probably have teenagers now that work for you. They're super motivated. We all know that. And I'm not even getting started. Like, I'm not even having to try. This is no notes. This is off the top of my head extemporaneously. Here's the reality. You're insane if you open physical retail. Probably it's probably a passion project. It's probably something you're doing because you think it makes you look cool.

[C]

And.

[B]

And it's insane. There are two siren songs that every consumer brand, I think, inevitably tries and it usually goes poorly. They want to go international and they want to open their own retail. And in time they realize there's reason why most people don't do this because it is really freaking hard. And I would, I think likening it to going international is probably the best way because you're just opening yourself up to a whole new set of things that you have to be competent in and. And a whole bunch of stuff that you really don't know. So that's my start. Oh, and by the way, you're doing that, you're competing with now Walmart and Amazon. It's not just like choosing whether or not to sell on their platforms. You're literally trying to compete to get people to come to your thing instead of their thing. So I think it's only appropriate that we brought a truly insane person to take the other side of this debate.

[A]

I was going to say he's calling you crazy, Curtis, but I think that's a compliment for you.

[C]

Well, it's interesting that twice he came at. If you want to go into an area, you have to have competency. And he's chosen not to go into those areas. Oh, yeah, you have.

[B]

Part of intelligence is knowing where your limits are.

[C]

Right now here's the beautiful thing. I mean, so many things jumped at me from that competency thing. I get to learn about all of those things. All those things you said are absolutely true. And yesterday we had a nine person internal meeting that basically said one year ago today we had three stores. Right now we have 16. Within five years, we plan to have 100 to 120. So. Whoa. Yes. Matt's jumping in already. Yes. Matt, you need to. Are you the ref?

[A]

Getting inventory all in the U.S. is that a U.S. rollout?

[C]

Okay, yeah. Yes, you have to have competency. Yes. You have to have locations. Yes. You have to have people. But retail is something that's been around for 60 and people know what the hell they're doing. You hire people and they're like, wow, hey, do you guys know how to do this and this and this? And I'm like, dude, I've been doing this for 30 years. The woman we hired to run our organization, when I interviewed her, I said, have you ever done something like this? She said, yes. I ran some jewelry stores. I said, oh, that's very cute. It's like somebody at an art festival. I said, so how many jewelry stores did you run? And she said, 1200. Okay, that's nice. What was the average income in each one of those stores? 11 million. She ran Signet J, Zales K, all the jewelry stores in all the malls and all. So she knows all of those things. Choosing locations, where's your traffic? What's your logistics? How do you hire people? You do all this? That area is the one I ignore the most in my entire company because they're so damn good at it. And their profitability is higher than everything else we do. Their profits is more than everything else we do.

[A]

It's an interesting counterargument, Curves, because Mike has makes a good point in that this is a very different set of competencies if you're a DTC brand, like owning stores and opening stores. But the flip side to that is it is way easier to hire people with retail experience than it is to hire growth marketers in D2C.

[C]

At the top, everybody go on his side. At the top, it's easier. At the bottom, it's still, as he said, teenagers. No, it's everybody else. 22, 28, 32 walking in. And the turnover is amazing. So you better have a company with a great culture where people want to be there, love to be there, and we lucked out. If I had a brand, I might not want to do this thing. If I had a good brand, I absolutely love this and I'm going to tell you this.

[B]

I think that's evergreen advice. If you have a crap brand, probably nothing's gonna go well for you. There you go. Operators. This is the kind of wisdom that we give away for free every week to you show up for more of our tips.

[A]

I want to pick this apart because I do think brands get to a place where, look, if you're at all at a size where you are thinking about acquisition in the future, like M and A, so you're gonna get acquired. There's a pretty common piece of, I guess, like criteria that's put out there, which is you can't be single channel. So, like, you need to be omnichannel. Right? So every brand, as they get bigger Is faced with this decision, like, do you go wholesale or do you go owned retail? And I think there is an argument to say, like, certain categories make a lot of sense in owned retail. Jewelry would be one of them. Like, we've covered this, I think, in a past episode. Like, you see a lot of jewelry brands have stores because they just make sense to have stores. Curtis, I would like to talk about why. So, number one, why did you guys decide to open one store? Let's just go there.

[B]

Why?

[A]

Why even pick that as like, hey, we should go try that?

[C]

Because I'm an ecom idiot. I'm an egotistical bastard. Okay, True freaking story. I told everybody, hey, do you want to start a shoe company or do you want to have retail stores? And I thought everyone say a shoe company. Everybody said, let's own retail stores. And I like, you guys are. I think the way that Mike Beckham does. This is a terrible idea. This is horrible. It's not going to work. What about the kids? What about the problems? And I literally. True fricking story. That night, went on to LoopNet, which is a thing. You can see retail stores. Found a Place on 23rd, which is a great street. It happened to be for rent. Got knocked out during COVID I literally signed a lease on that store to prove everybody they're wrong. I expected that store to fail. And it was cute. Oh, we do it all year long. And at the end of the year, I'm like, oh, wow. It made, you know, brought in like $1.2 million. What was the profit? 29%.

[A]

Your EBITDA on that store was 29%. Okay, so just for the people listening,

[B]

did you not have any build out, Curtis?

[C]

I'm a recovering alcoholic, Mike. And so I go to a lot of things called AA meetings. And you always have guys in those meetings that like, what do you. I run a construction company. So I called in my friends and I said, hey, guys, can you come help me for a couple weeks? We got that bill done in like two and a half weeks. All I did was take some friends golfing.

[A]

This is like a turning it. Okay, so everybody listening.

[B]

This is a super replicable formula, guys. Here's all you have to do. Number one, be insane. Number two, have a massively vertically integrated leather business. Number three, have access to your local AA meetings where people will work for a cup of coffee. If you do those things, you can make about the same margins doing owned physical retail.

[C]

He said the first store. The first store is unique because it forced me into something that I would have been uncomfortable doing otherwise. Right. I would have said, oh, well, I don't want, I did say that I don't want to do this. And you missed the point about you also have to be an alcoholic for years and then stuck to like really get in on their good side, like have a low point in your life.

[A]

Also, what I'm taking away.

[C]

Hey, we set up the second store in a building I owned. It's like right there in the middle of nowhere in Southeast Portland. And I just like, hey, where we all come in, let's just build a room around it and put an outlet store down there. And we did that. That store makes three and a half million dollars a year right now. Whoa.

[A]

Same, same. EBITDA at the store level.

[C]

Yes.

[A]

Yeah, slightly.

[C]

I have heard 28. 28.

[A]

Okay. But still, I have heard this from many people in physical retail that your profitability in store can actually be very good. Like I, it's Curtis, you're not, I

[B]

mean you don't, you're not paying cac, right? You're not, you're not paying to acquire the customers and you're not like a bunch of the kind of fees and tolls that you have to pay digitally go away. But you know, you just, there's the trade offs that come with it. I will say this, like, I'm, I'm obviously being like, somewhat jokingly just how crazy this is, but I will say that one thing that I think can work probably for a lot of brands is something very hyperlocal that you use. Especially like, I think Katie is one of these people where they, the Caden Lane offices, they have a store that's like literally connected. And the idea of like, the closer it is to you, the easier it is to manage and the easier it is to use for things other even than just selling to like get customer feedback and to, to try new ideas. So it makes a ton of sense. I think where it gets real crazy is when it's like, hey, I'm not just going to do this in a place that's local to me that I know. I'm going to go to other cities that I'm not familiar with and I'm going to be hiring people. That's when like, in terms of like the level of difficulty, you go from like a 1 to a 10, just like from doing it local to doing it some, some other place.

[C]

Well, I want to very importantly say, Matt, you hit on something really important when you said private equity. We had an offer, we unsolicited Five years ago when we were a little teeny company, we, we had a private equity come make a large offer on our company. And I said, what do you guys see us as? And they said we see you with a hundred plus stores. And at the time we had just started building the first store. And if you literally want to talk about acquisition in the future and everybody who watches this, I guarantee you you want to build a nine figure company and have somebody come and give you a quarter of a billion dollars for your company, I'm going to tell you right now that's a hint to being successful monetarily in life is have somebody come give you a load of money. And what they want is the ability to scale. And what they know is in the past they've worked with brands that started with one store and then had 10 and then went to 300. And they see that path and they say if we hire the right experienced people we can take it. So my goal is not to take it to 200. My goal is to take it to 30 or 40 and let somebody else run this train out to a thousand.

[A]

Okay, we're going to take a quick break to hear from our sponsors and when we come back, Curtis, I want to hear how you go from one store to three and then beyond. Everywhere we turn right now there is some world changing AI announcement and I think the trick for us operators is figuring out what's actually going to help our business. Is this stuff saving us money? Is it helping us grow revenue? Is it helping us grow profit? Like where's the fricking roi? Jason for hexclad, tell everybody what is actually working for you guys.

[B]

Yeah, look, I'm laser like focused on implementing AI wherever we can to just make us more efficient. Fulfill has been huge for us. Like my team is constantly using Fulfill's new CLI tool and MCP features. With Claude, they're now able to query Fulfill data. They they can vi code up dashboards. I mean we get these awesome dashboards on operations and Fulfill continues to build things that are actually useful for brands. It's hard to see what kind of AI work is valuable and what isn't. Sure, like there's so much out there, so much coming at us. But Fulfill seems to be giving us things we can really use to get more efficient.

[D]

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[B]

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[A]

All right, Curtis, so break it down for us. You opened one store out of spite. How do you go from spite to I now have two, three stores? Because everything I know about retail is going from one to multiple is hard. And then once you're at multiple it's actually a lot easier because you're starting to build muscle. So can you just take us through the initial ramp?

[C]

How do I do it? I do it poorly, right? One was great. Two was great. Three, four. I sucked up because I do what I always do. I just got cocky, right? And then everyone else starts coming in. Just like in E Comm. Everybody here who started to be successful you gets those hundred emails a day by agencies saying I can help you, I can help this, I can do this for you. The same people, but fewer out there in retail and they're like, hey, don't worry about finding the spots. Don't worry about this. We'll rent the spot, we'll hire the people, we'll run it all for you. Just sign a contract with us, we'll put you in New York and all the great places. And they want to lure me in. I did not do that. I know people who did do that, and it sucks. Nobody, nobody in the history of the world do not do that. All they want is to take the easy money, the profit, and walk out. Right? So stay away from that. How did I put up number three? Yes. You've got a question for me, Matt? I can see it in your eyes.

[A]

No, no, I don't. I actually, I love that. I think it's like you kept ownership over location selection. I think that that's great.

[B]

Well, and, and I want to. I want to just say this. People love to outsource the hard work. And doing the hard work is how you make the money. I mean, that's what the money is for. It's for being willing to do the things that are hard and other people don't want to do. Everybody wants to get paid to sit around and talk. You make money by doing things and doing things that other people cannot or will not do. And so, like, I just see this mistake all the time. Like, yeah, we're going to go to physical retail and I'm going to pay somebody to pick the location. I'm going to pay somebody to staff it. And there's. There's just no way it's going to work if you do that. I've heard some, like, horror stories of people hiring staffing firms to run the staffing at their locations because it becomes where you can't fire people in a lot of. Some of this is, like, local laws, and some of this is like the. These staffing agencies. But it's just like, you get people that are terrible employees and don't care and you can't fire them. And, like, that's a disaster. So it goes like everything else. Like, if you really are, like, insane enough to try this, you are signing up for a lot of hard work and execution. And if you go into it with that mindset, then, like, hey, maybe did

[C]

he just take my side? Did he? It is hard work.

[B]

Yes. I said if you are as insane as Curtis, if you do the hard

[C]

things, you can make a lot of money. So I think that retail's too hard. So, yeah, if you do this, it can work.

[B]

There is always money, Curtis, by being willing to do really hard things that other people don't want to do. I think the problem is people don't come in with that expectation.

[C]

It's just like, really good at this. I'm. I'm not. You are really good at this. You take all of this chitter chatter and you put it down and you throw out a maxim for all the kids to Learn what to do with their lives. I'm serious. You're really good.

[B]

The only reason I do the pods at this point is Curtis building me up. This is like counseling for me. Curtis, can you send some of this to my wife? Just send her some voice texts saying some of the. No, I'm just kidding. My wife's awesome.

[A]

But I mean, in other words, we don't compliment Mike enough.

[B]

That's why Curtis has been added to the regular rotation as my. My ego demands it. But I really do think, like, in all seriousness, like, there's always money to be made by doing the hard things. Always. And this is the great thing about entrepreneurship. And so I've obviously been, like, kind of ripping on this idea, but, like, hey, if you're the type of person, if you have the type of attitude of a real operator, and have you guys seen this high agency pyramid?

[A]

Oh, God, it's so good.

[B]

You want to do owned retail. Okay. You have to be super high agency. What are the three kind of pillars of super high agency? I will figure it out. I can fix it if it breaks. I'm willing to be misunderstood. Boom, there it is. You know what?

[A]

In a nutshell.

[C]

Yeah, he just described it.

[B]

You can't get electrical permits from the city. I will figure it out. You know, like a fire hydrant busted outside of my store and it flooded. I can fix it if it breaks. You know, like, it's just, like, you just have to have these mentalities, I think, to be successful in anything, but especially if you're talking about physical retail.

[C]

There's a simple switch in the brain, Mike, that's so important for everyone to understand. Watching your own companies, all of your operators out there, or when you ask somebody about, hey, we wanted to get this done, you know, we need to get this. That their first instinct is to tell you why they didn't do it, why it's not theirs, or why they can't do it. No. And it's not that they're bad people. Their first instinct of their body, of their chemistry, of their brain basically says, let me tell you why I can't do that. Like, that is like you're just digging a hole, jumping in it, and then saying, now what the hell are we going to do with this problem? And, yes, I was going to use the stronger word there. So that is absolutely true. So I am. Yeah, move forward. We'll figure this out. We're going to learn. We're going to gain the competency. We'll have the edge on somebody else. I'M a competitive. I want to beat everybody, but I want to do it in a nice way. Matt, you were a basketball player. You love when you beat somebody and then you're the good sport, right? Hey, good. Hey, you really played well, buddy. You're really good. But then you have this on your face that I just kicked your. That's what I want to do in business, right? I want to be the good sport that kicks your.

[A]

I, I'm just not a good, I'm not a good loser. I wasn't a good loser as a kid. I've gotten better at losing.

[B]

But you've grown, Matt. I'm sure you're a good loser now.

[A]

And I've also, I just, you know, as you get older, I just think I care less about a lot of things. So, you know, no big deal.

[C]

Now, Curtis, when you go ahead, Matt, can you help me a question?

[A]

I, I, I. Because I want to contrast this with what Mike does. So Curtis, when you open the second store in an owned, it's. That's not your, these are all still in the same city, right? So you were like, I'm going to open one store. Was the third store also in Portland?

[C]

Third store was. And this is true. I'm still doing this because I'm, I'm two for two, baby. I got the hot hand. I don't need to hire anybody. I'll set up number three. So I flew with Mariana from Mexico to Houston and we went, this guy's like, I have the greatest space for you. And they drove us by Rice University, amazing new mall, brand new shake shop going up here. This is going here. And they showed me. They're like, this is the best place. It's right next to this store. Some stupid store I've never heard of, right? And I'm like, I don't know, never choose the first place that they do. And who the hell's ever heard of Viori anyhow, right? So literally I said no, Dan. I was so cautious because people warned me about retail that I went and I chose like more like a little 800 square foot kiosk esque booth in the middle of a bad mall.

[A]

Oh no.

[C]

Because you don't have to spend. You don't have to worry about the build out. They wanted a shorter term lease. It's going to work. We'll just test it out. Blah. In a city of 10 plus million, that's one of our top cities and our buyers, we can't go to the best location. I lost my edge. I screwed it Up. Now we have fought to make that one work but gosh, we missed it right there. Right? I screwed it up. By store five. We hired somebody in that came in and very nicely said, Curtis, that's so cute of you to screw things up. Why don't you stand the hell out of the way and let me work with you and choose better fricking locations, hire better people. We'll show you how the build out is. We can build out an entire store in less than two weeks, fill it up with product in three days and have it open.

[A]

I, I've, I've been in retail. I grew up in a retail family. So like locations and leases and things are just in my blood. Leases can be an asset or liability for people listening. So when you do locations and leases, well they are an asset. When you outsource it to what Mike is saying, you run the risk of them becoming a significant liability for your business. Like these are hard to get out of you sometimes. These are five and ten contracts you're signing. So like Mike is right at the beginning we're like you don't step into this stuff lightly, Mike. I want to contrast this with how you start in wholesale because again my experience with the Targets and the Walmarts and the Costcos of the world is there is a bit of a test period at the beginning. Right? So like new brand coming in. Target's going to say we want to test you in 200 stores, not 2,000. They're not going network wide. Can you give us a bit of your sort of like jump into mass retail and how that started and then ramped. Okay, but first we're going to take our last break.

[D]

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[A]

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[B]

Unbelievably, I haven't told this story on the pod and it's one of my best stories. So we started Simple Model. My still worked with my brother and it started out just selling on Amazon. Water bottles weren't even our first product. We tried a couple of other things and it went just well enough that we were like, hey, I think we're onto something. Sold our first water bottle in March of 2016 and our initial PO I think was literally 500 water bottles. So I mean as modestly as you can start a thing. And we sold. We sold the first 500 and so I bought more. You know, I bought them in colors. This time Dodge is black. I bought them in colors. So when you're approaching May of 2016 to kind of set the scene, we have done an impressive 15 to $20,000 in lifetime sales on the brand I'm not making this up. I mean, it is, it is. We've sold dozens of these and I am so just like irrational, egotistical, driven, who knows what the right word is. Uh, but I, I have this idea that what would be really good would be some licensed, like sports licensed versions of premium drinkware. And at this point, Yeti's not doing that at all. Nobody's really doing that. There's a couple of, I would say more like licensing focused companies that also do that. And, but none of it's very good. It's not very high quality, it's real expensive. And I'm like, hey, insulated drinkware is awesome and it's selling really well. I think there'd be an opportunity here. Now, I had no idea when I set out on this just how insane this idea was. If I had, I would have never started. It's the perfect encapsulation of an entrepreneurship in that if you know the odds, if you think about it, you just would never start. But I don't know any of this. I'm ignorant. And so I look into, like, how could you begin to get licensed? And it turns out that it's, it's quite a path. But like, the first thing you do is you get what's called a local license, where if you live within a certain number of miles of a university campus, you can kind of get licensed with that one university if you can convince their gatekeeper, their licensing manager to license you. So I'm like, okay, I'm going to, I'm going to try this. And before I even have this first local license, I start kind of trying to sniff around of like, how would I get in front of somebody from like Walmart, just out of curiosity. So I call a friend of mine from college who now works for the company. He's one of, he's been with us for forever. He's our chief marketing officer, Chris Hoyle. But at the time he's in cpg. He might have been with Kraft or Mondelez or some, somebody at that point. And I'm just like, how would you start? And he refers me to a broker called Harvest Group. And I started talking with them about my idea and they think it's interesting. And so they're like, hey, we'll, we'll put out some dealers, we'll see if we can get a buyer interested. In between, I find a way to convince OU to give us a local license, like one singular license for the University of Oklahoma, which is a great story in and of itself. Because like I said, we hadn't really sold anything. So it, when it's early on, it's always about like, you're like a puffer fish. You're trying to like pretend like you're way bigger than you are. And I've got to convince this other person to like let me sell it. And licensing is full. I've got so many like side parts of this. But licensing is so full of people who say they'll do something and they can't do anything. They're like, I, I don't know how to sell anything, but if I put somebody else's IP on it, I probably could sell something and they have no interest in those people. So I'm like, how do I convince this person? So I literally flip our meta budget up to like the max I can. And I turn on the Shopify notifications on my phone right before I walk into this meeting with the OU licensing director. And I walk in, my phone's going cha ching, cha ching, cha ching. And I'm letting it intentionally, you know, volumes cranked all the way up. And I let it do this for like the first two and a half min of our conversation. And then I'm like, oh, I'm so sorry. You know, those are just sales from our website, you know, notifications. Let me turn that off. And so I turn it off and I sell this OU person to license us as a local licensee. So I have one, one collegiate license and I'm sniffing around Walmart and as we're, we're sniffing around Walmart, Harvest is able to get a buyer at Sam's Club to express interest. That buyer is one of my all time favorite people, Amy LeGrone and coming to be a really good friend. And she's, I mean she's incredible. I think she's a DMM now or like, I don't know exactly. Or maybe she's a VP at Sam's Club. She was like, she won some huge award in their organization last year, so she's like on an unbelievable path. But at this point she was over sports and rec and licensing for Sam's Club and she was interested so she took a meeting. And I did not know this, but my timing was serendipitous because we're right in the period where like the Yeti Tumbler's really taking off and Sam's Clubs decided like, hey, we need to do our white label version of this. And the week before Amy got reached out to About Me, they had set their first two pack of insulated stainless steel tumblers for 20 bucks. And they were blowing through pallets of them a day. Like, just to give you an idea like that is just like an insane amount of demand and sell through. And so she's. She's just hit like a gusher of a. Of a, you know, opportunity, basically. And right then an opportunity shows up to talk to me. So I get a meeting with her. This is like June of 2016. And I go in, I've got some good looking ou drinkware. And then I have like, you know, our water bottles and stuff. And I show her everything. And I'm casting vision, which is. I mean, listen, early on, that's all you have is like the vision of what your company's gonna become, why it's gonna be great. That meeting turned into, I think, a $9 million commitment. And that was the beginning of thousands

[A]

of dollars to 9 million.

[B]

I. I sold a $9 million mass retail program when I had less than, certainly less than a hundred thousand dollars in lifetime sales.

[C]

And I just created the formula of what he did. Overconfidence, subtle manipulation, and really lucky timing.

[B]

Yeah, so that's. It's easy to replicate, guys. So I. So I'll finish off this story in that. So what she says to me is, she's like, I want to buy all of this stuff if you can get the licenses. And I'm like, well, surely I can get the licenses. Narrator.

[A]

He.

[B]

He was going to have a hard time getting the licenses. So there's one. The, The. The universities have these kind of central bodies that more or less handle, like the gatekeeping and the administrative of all of the. The people that sell for them. Because the universities don't really, really deal

[D]

with all that crap.

[B]

They just kind of want to cash the checks, which makes sense. And I mean, a few of them, like Ohio State, do it internally, but most of them just kind of farm this out. So anyway, I call this organization up and I'm like, hey, I'd like to get a meeting to talk about getting a national license where that includes all the schools, because I've got a. I've got a really good opportunity. And the woman I talked to, who also has become a friend, she's like, I'm just going to save you a bunch of time. There is no way that you are ever getting licensed with everybody this quickly. Like, you can just go ahead and, you know, move on to another opportunity. And I'm like, okay, I hear that, but all I want is a meeting. And she's like, okay, you know, we're happy to tell you no in person. So I set up a meeting and I, I had my buyer call the decision maker. I went in, gave one of the presentations of my life, and at the end of the meeting, the decision maker, Dave Kirkpatrick, said I we've been pitched by 15 to 20 companies about getting nationally licensed and we've told them all no, but we're going to tell you yes. And the reason we're telling you yes is that you showed up with a $9 million purchase order. And we think that you can pull this off. And that was the beginning of us selling in mass retail. Now let me tell you some more to the story because that's an amazing story and it's great. There's more.

[A]

I was going to say Sam's Club did not go well for you, did it not?

[B]

It was a disaster in some ways. Guys, do you have any idea how many tumblers and water bottles that is? I have. So we handled all the logistics on this. We. We personally. Which by the way, it's one of my all time favorite memories. Curtis, you would have loved it. It was literally, we moved 500,000 tumblers through our, our local 3PL over the course of like two weeks and handled all the logistics. And. Oh, and some of them showed up. So this is another kind of fun story. Some of the tumblers showed up and there were so many rules. Every school has its own colors and a particular licensing sticker that has to go on it. And like we had about 50 pallets show up that had been done wrong where we had to deconstruct the entire pallet, take out all the individual pieces, change a packaging component and then repackage it. Did all that, we did all the logistics, we shipped it out and we just way oversold. And this is why I always say it's. There's a big difference between selling in and selling through. And being a chief sales officer when it comes to wholesale is not about getting people to say yes. It's about selling the right deals. And that it, it is so easy when you're an entrepreneur to be like all it is about getting to yes. And it's like, no, not at all. If you get. So to finish that story where we really oversold ourself wasn't in the license stuff. We sold them a bunch of simple, modern branded stuff. And as you know, we had dozens of people that were aware of the brand at that point. And so we just saw way too much stuff for where we were as a brand at the Time we bought back, we bought back $1 million worth of inventory and that became wonderful donations to hurricane survivors in Houston. I'm sure there's some of it in the Dominican Republic, you know, like, who knows where all the, those water bottles have, have gone to the four corners of the earth. But we, we learned some really important lessons. So, like, it's not an overstatement, Amy LeGrone believing in me. That program made Simple Modern. It was the start of Simple Modern. But it also was a pretty rude introduction to wholesale in that it's not just the buyer's responsibility to buy the right amount. It's your responsibility to know what you can probably sell through. And so it probably took us two to three years before we got really serious. I guess it was probably two years before we got really serious about approaching Target. And that's its own story. And I think going into Target was the beginning of kind of the modern expansion into wholesale that Simple Modern did. And that's a whole story as well, which I'm happy to share. But so anyway, that's, that's how we got started.

[A]

It's such a good. I asked the question about how many doors do you go into at the beginning because of that? I've seen too many people. Here, here's, here's my experience. I've got some experience with retail nowhere near you, Mike, but my experience with like a modern day buyer is they have no idea how much of your stuff to buy. Like they, they don't know the demand that your brand has. You really have to be the brakes in this relationship.

[B]

Right?

[A]

Like their numbers, they look depending on

[B]

the category are so big. When you're in a, when you're in like a, a white space where they just don't have anything in the stores. I think that's an area where they're more likely to be really aggressive. So like they're like, hey, this is really hot. Uh, we're seeing a bunch of sales online. We've seen one data point from an end cap or whatever. And so we're kind of, we're buying blind. Um, I think that that's, that's where you probably have the, the most risk of them way over buying.

[A]

But in a mature category, it's probably like they've got a lot of data, right?

[B]

Yeah, it's going to be hard for, I mean it's gonna be hard for them to go really big with you right off the bat in a mature category already because they have, they have people. I mean, buyers are looking for growth just like everybody else, like we've talked about this on previous episodes, the retailers can't really build more stores. The only way they can produce growth is you get higher margins on a product or you get a product that has higher sell through. And that's kind of it. So one principle that I have learned internally is that I think this is a little bit different than digital. In digital you can kind of be as greedy for growth as you want to be. Because you know pretty quickly when you're over your skis, when you get greedy for growth in wholesale, you don't know you're over your skis until you're really in trouble is basically what I'd say. Because the decision timelines, the feedback timelines are so much longer. So like, let me give an example

[A]

we had.

[B]

Every year we have line reviews for each of our major retailers. And our line review for target for our 2024 POG reset, this would have been. We had this line review in probably May of 2024 and that they were going to use that to decide what they put on the shelf in 2025. Is this right? And so we went into the line review, we were really hot in a particular product category and they wanted to take it from four facings to like eight or something, which is like, man, that's a lot of this particular type of product. But the buyer was really excited. And so we said, okay, it's set in summer of 2025. Almost immediately, super obvious, we're way over assorted. So you don't really know until a year, you know, until the decision's been made and a year later whether or not you're over your skis and then, and then what happened is there's not a reset until 2026. But because the category wasn't doing well and we weren't performing as well as we wanted to, we didn't get to change those facings out. So we made a decision in 2024 that we won't get to undo until 2027. So just think about that. That's a three year period. So the lag, the, the level of certainty I think you have to have now this is an advantage of owned retail. Like I will, I will admit this is an advantage is that you can switch things more quickly than you can with owned retail.

[A]

Well, I, I guess like Curtis, what's the, with owned retail, what would be like getting out over your skis look like? So you, you, you said like I screwed the third store up or fourth, whatever that was.

[C]

Yeah, great. So Basically, thank you for coming back to my side, Mike, and telling me how freaking complicated and horrible wholesale can be. I appreciate that because I was almost thinking about doing it there until you were able to convince me not to. It's a lease. It's the fact that the people who want to lease you the building are. That's all they do. They're salesmen and lawyers. They're the most incompetent people in, in the history of the world. There's just a bunch of nobody's doing nothing saying, you know, we want to look at this line in the lease. And they'll negotiate a stupid line that doesn't matter for five fricking months because it's the only control they have. I want to sign the lease so I can put a store and make money. They sign a lease and say, now what do I do? I don't know. They never answer their phone. They're never around. They're just. I don't like it. I. Hey, I don't like people who built their entire career around commercial real estate, but I'm bump. I just. They have something wrong in their brain that everything is a negotiation. Everything is. And they got to get a little bit of theirs. So we do a lease. You talked about this earlier. We like to have five year leases with a guaranteed five extra years. But if the numbers are not there in four, we can walk.

[A]

It's still four years of commitment for you, no matter what is what you're saying.

[C]

So then the, the deal is to run your numbers close enough to say what, at what level could we at worst case break even? And it's pretty low. I run my own manufacturing. I control my cost of goods. People really like our product. We're not going to go absorb it into these spaces. So again, being the entrepreneur, I'm playing that very careful. I'm making sound decisions. I'm not saying that's it, let's roll out a hundred. I am. Literally every decision is me working it through, working it through.

[A]

Can you give me a sense of like, how once you've chosen a location, how long does it take you to negotiate and sign a lease? And then contrast that to how long does it go from we have a sign lease to we are open and selling product? Like, what is the average of those two things?

[C]

There isn't one. But let's say the space is open, right? Let's say it's an empty space, which is different than we got to wait to kick this person out who, you know, there's all of those folks and everything. They will go through that back and back and forth on the. And push that for two to four months, which literally drive. And they'll say, we want the deal. It's empty. We want it today. And then they'll just delay. Every time they ask a question to a lawyer, it goes to our lawyer, it goes back, it goes forever. So we tell people we have a date, we want to be open. That's it. So that helps out in that. Now, once we get the space, our team, depending when we want to do, can now go in and set that up and about two to three weeks tops, and two to four days, have the product in merchandise set up. Technology.

[A]

Staffing does take some time, though, like, to hire people and get them trained.

[C]

And that's going on the same time, right? The same time your store build is going on. It's going on about that now. We're getting so fast on build. We have a new one in Sevierville. It's an outlet, and if you've never heard of Sevierville, I had never heard of it, but it's huge. It's across from Dolly World. It's one of the top 10 outlet malls in the United States. And we got an amazing space. Our team built it so fast, we didn't have all the people hired. Like, we. They're getting faster and faster at what they're doing. So that's all getting simple. But it's a longer play compared to E. Comm. Right? It's a longer play, but you get feedback right away. Now with us, we luck out. We get so many people in our openings and our grand openings that we make so much money, we pay back half of the build in the first couple weeks, right? Because we get lines of people who are excited that we're there. So we're paying back that stuff right there in the first month.

[A]

Curtis, do you. Do you ever have a store that opens that does not come out of the gate hitting the numbers that you need? Like, when you open a store, how often are you saying, like, okay, now we have work to do. Like, it's not performing we want it to. Or when you open a store, they all kind of always hit, like, your

[C]

floor the first day. Of course, whenever opening, our people are there. Three, the one I chose in Houston, not great.

[A]

That. That did not do well.

[C]

Others. And they were mostly seasonal. They were mostly seasonal. Like, it's a. You know, there's different types. You can be in the middle of a mall, you can be in a lifestyle center. You can be street, like, you know, a cool street. If you're on a cool street in Chicago, it doesn't matter how great it is on your opening day, but no one's walking around that neighborhood in the middle of a snowstorm. So we just run seasonal numbers on that, figuring out that starting right now through September, and it's already surging up because people are walking the streets shopping when it's 10 below.

[A]

Okay. And then, Mike, when you're. Whether it's opening a new sort of wholesale channel, like a new Target, a new Walmart, or it's like, maybe you're just doing line, like a new line, right? So like new facings or a new product that's going in.

[C]

How.

[A]

How quickly do you have a sense for. For how that product or that channel is performing, right? Like the sell in being. Let's put that aside. But like actual turns and actual, like sell through. What does that look like in those first days, first weeks?

[B]

So, interestingly, the answer is immediate.

[A]

Like literally the first 24 hours or.

[B]

Yeah, it, it's interesting because I mean, think about it just from like a statistics perspective. If you set something in target and it's in, let's say you have five SKUs and 500 doors every day, you have 2,500 data points of how things are going. And so you get to statistically significant samples, like, really quick, like in a week, you're just like, yeah, we, we kind of know what it is. So like, there's, there's two different ways you can expand. You can expand by going to additional kind of retailers. And the, the challenge there is always like, every retailer is a little bit different. The price points people are expecting to pay, who you're kind of on the shelf against, and so whether or not. And their own internal expectations. So I think that what you have to do is kind of test your way into which retailers work for you. I think one of my pieces of advice here is that as long as you're not trying to go really, really big, I would be more liberal in testing here. Just like you test a lot of creative, I think it makes sense to test a lot of different retail channels and kind of see like, hey, where is our product resonating? Also, who do we like working with? Because you learn that as you work with different retailers, they're all different. The kind of their attitudes, the types of buyers, the margin requirements, whatever. So that's one way that you can diversify as different retailers, and then the other way you can diversify is by Being in different parts of a store with the same retailer. So perfect example this recently with us, we sell in the kitchen area with drinkware. That's our kind of home base. They also sell drinkware in sporting goods, but typically you sell in one or the other like a Wallace sells in sporting goods. Stanley sells in kitchen with us. But all of the back to school stuff is owned by sporting goods. So we are doing a kids backpack program with sporting goods this year. Even though we sell in kitchen with drinkware and then the kind of baby, more infant kind of think it's 0 to 2 age. Buyer approached us and said, hey, we think you'd be a really good fit here. We came up with some stuff for them and they said it and within like three days it was like, we are going to just crush these forecasts. Like we're pride, we're probably tripling up on their forecast. So like it was a good example where the buyer was like, we think you do well here. We didn't really have a frame of context of like how well would we do in that particular section. We knew what we'd do in kitchen. But it turns out that you know, people shopping in the baby section, like it's a different buyer and the way that you might resonate against a different set of competitors, you just never know. And so like we were all way off. We way underestimated how successful we could be in that, in that part of the store. And that's been one of a really bright spot for us this year in wholesale.

[A]

So can you give me the reverse then if it does not go well, so you get feedback right away then. And like this is the whole agency thing. What do you do? So like Target saying the sell through is not where we needed to be. You can see it the first week, the first two.

[B]

Now what I think that the tendency for people is to be like, well, let's give it some time. You know, customers don't know what's there. This and that. I have never seen that to really be the case. I'm not saying it can't, just saying I haven't personally seen that to be the case. We have done a lot of testing around, we've worked with House, we've done testing around how does digital spending impact physical purchasing? And it does. There's like, there's some real spillover, but I don't think it's like going to change your life unless you're spending a bunch top of funnel with digital spending. Um, and there's some brands that do but unless you're like planning on really scaling in a short period of time top of funnel spend digitally, I don't think you can expect the numbers that you see to change. And this is where it's usually like hey, we need to think about changing price. And it's, it's really promotion is the lever that you have to pull. We're going to be on discount more. Maybe we just need to cut a price altogether. So you'll see this all the time where people will go out with an end cap or they'll go in line and they'll immediate almost immediately they'll, they'll flip on price. Usually don't notice it as a cus a consumer unless you really pay attention to a category. But the next time you're in retail like look for places where all of one brand stuff has you know, new low price tags or whatever. Like that's usually like they came in and they just found like hey, this price point's not getting the velocity we need. And we've been I think for sure, like we, we had a situation where with the tariffs last year, it happened at the worst possible time where we were setting all of our stuff for the year and we had to make a decision about pricing and we just did not know what the government was going to do. And so we ended up taking up our prices and within a month it was super obvious that it had really been bad for our sales. And so then we, we, you know, putting in prices, price increases and putting in price decreases. I guess the way I would say is this putting in price increases is like pulling teeth. Putting in price decreases is smooth as butter. Like the retailers.

[A]

No one's gonna argue with that.

[B]

Yeah, the retailers are gonna be more than happy to sell your stuff for cheaper. They're gonna be very hesitant and resistant to you taking up prices unless you say, hey, I'm gonna give you better margin or you know there's some real, or you're just selling so much that they, they're like you kind of have more of the leverage and, and the negotiating kind of process. So anyway, like I, I would say you know, really quickly and if you're not hitting the sell through targets you need to, then you need to start thinking about price almost immediately. And sometimes it's like, it's not uniform so like you'll set you know, whatever six SKUs on the shelf and two of them look real good. Two of them are kind of okay and two of them really suck. And so it's like oh, okay. Well, we're getting an idea of the type of thing that the customer is responding to here and we want to lean into that more. Um, so anyway, like at this point we probably have, you know, I don't even know. I mean, definitely over 10,000 doors that we're in and we probably have a hundred SKUs that we sell into wholesale. And so there's a lot of learning. You never get it all the way right, but hopefully over time you learn more about like, what tends to resonate, what's good, that kind of stuff.

[A]

Would it be safe to say then if you're a new, let's say like if you're a brand and you're expanding into wholesale, this goes back to the like walk before you run thing. Because is it fair to say that if you enter a target, not to say it's just target, but if you enter a target, sell through is not what you want it to be in your new. That's not a good signal for that buyer.

[B]

Right?

[A]

Whereas if you're more mature, you're simple, modern, you've got a long standing relationship, they know you largely perform, you can manage around that.

[B]

I think this is like the NFL. You know, they, they joke that the NFL stands for not for long. You know, that you're, you know, basically you're, you're just wearing somebody else's, you know, number at all given point, a future person's number all the time. Like this is the way it is. Like you are on the shelf when you're able to drive performance that year. One of the things that the wholesale partners will do, and I think it makes sense for them to do this, is that they just switch up the buyers every couple of years. They don't want the buyers to become too fond of certain brands. And this will happen all the time. Like a brand will really help a buyer, you know, double their performance or maybe not that much, but increase their performance a bunch and really improve their career trajectory prospects and then they'll kind of plateau or decline. And if the buyer feels some kind of sense of loyalty to them, that's not in the best interest of the, the retailer. So they will, they'll flip these buyers out. And you know, we've had quite a few buyers at this point and they have ranged from being wildly, you know, favorable fans of the brand to people who are like, why are you on my shelf? Why do I need you? And that's their kind of opening line. And so you just kind of have to reprove yourself constantly. And the way that I tell it to my team is you just have to be undeniable. You just have to have your numbers be undeniable. That no sane rational actor would do anything other than keep you on the shelf or expand you based on your numbers. And if our numbers aren't that good, then like you're putting yourself at the whim of a buyer and you don't want to be there. I think also like there's a really big question about how agentic does buying become in the future? And my guess is more so like that it's more algorithmic, it's more AI driven. Walmart's already implemented a system where they're doing more, some of their negotiations with an AI agent. You're not negotiating with your buyer, you're actually talking with an AI agent. So that's, that's probably what's coming, is that you know, you are your numbers, you are your performance and you're going to, you know, you serve at their pleasure.

[A]

Let's drill into that a little bit. So one of the challenges with wholesale for DTC brands is just, is actually price stability and channel conflict, right? Like D2C, you, when you're single channel D2C, you got a lot of leeway. You can do whatever the hell you want with offers and pricing and all that crap. When you start to go into targets and Walmart, it's like they are actually quite algorithmic. They, they crawl your site, they crawl every brand site, so does Amazon, there's like a whole price matching issue. Curtis, when you're owned retail, you don't have this problem like you can, you own your own stores, you own your own D2C, you can play with all this stuff.

[C]

I'm assuming you learn so much, you learn so much about people. My personality is exactly who the hell you think I am. When you meet me in person, you're like, oh, that son of a bitch is exactly who I thought he was. Right? That's me. And I like to be in control. And the fact that I go into a room and say, hey guys, like here's what I need you to do, like, please put me in your story. I know that's not what Mike does, right? I can control, I can control my D2C, I can control my retail, I can choose what I'm going to do. I pick my spot, I pick my price, I pick my product, I manufacture that. And for good or bad, that's the limitations and the strengths that I have. And I work around that, right? Because what I think some of My strengths are. Might be big weaknesses. Like we build this thing in our mind. We were talking about Mike's strength over here and his great product at Simple Modern. Okay. I last week heard an amazing story that Mike. I want to know if you know this story, because it is fact. It is a PE firm, private equity firm, who owned a little drinkware company, right? And it was secondary because they delivered other ceramic drinkware to a very large chain of coffee shops that everybody knows. And this one sat around for years and years, and no one did anything with it. And they only made their drinkware in Hammer Metal Green. Right? That's it. It was a famous thermos for 50 years, but they only made it in Hammer green. And every quarter, they'd say, maybe we should try some colors. And the people said, no way. Management's like, no way. People only want this in the ugliest green that's ever been created in the history of the world. They literally had to get rid of the entire management of that particular company. They got rid of them, put a new management in just so they could put in color. They took the color, they sent it to a bunch of Mormon women influencers. It took off, and they went from the tens of millions to the over of a billion. And all they did was add color because they thought that their strength was that Hammer Green. Right? That's. That's who we are. Who I am is a control freak. You know, I'm very fun, but I. I really want to control this stuff. So. Can not what Mike says he's brilliant at this. Everything he said makes total sense, from testing to this to the strategy. I. Maybe I don't have the confidence yet to go into wholesale. People are talking about it, but I

[A]

just haven't done it well, I guess. Okay, like, let's flip that around then. Mike, why don't you guys do stores? Like, I think I know we've talked about this privately. I don't know how much we've talked about this publicly on the pod. Like, Simple Modern has got quite an assortment of product at this point.

[B]

So let's talk about this. I think that one of the things that I try and emphasize on the pod, and I'm gonna do it again here, is that different products are better suited for different channels. Right? If I told you guys, I mean, you know me, I'm predetermined. I'm pretty smart guy. I'm doing a milk startup. I'm going to do owned retail, and I'm just gonna sell milk. It's gonna Be great. Milk. That's it though. Just Milk. That's the name of the, that's the name of my store. Just Milk. And it's gonna be owned retail. How do you guys think it'll go? Do you guys wanna invest? It's like, no, that's insane. Like, if you wanna sell milk, you need to sell it to like grocery stores, right? Because it's just like, that's the best format for that. Or if I'm like, I'm gonna do a new D2C business, Just Milk, I'm gonna ship milk to you. It's like, nope, that's a bad idea. You know, like 99 of milk is sold through like whatever, like the Walmarts and the Targets and the, the grocery stores. And they put it in the back of their store because they know that that's the one item that people always get from them. The same exact thing is true in all of consumer. Whatever product you have. There is a channel that is the ideal channel for you. And there are some that it's like, yeah, owned retail is the best channel. There are many that D2C is the best channel. Like one example of this that we talked about with Sean last week. They've had a lot of success with rings and they're having a lot of success with not bracelets, but necklaces, chains. And that would not work in wholesale. Like Target will not buy that stuff from you. That is not going to happen. They're not going to do those price points. They're not going to, you know, they're going to do that in house. They're going to take that margin. There's, there's no way that you could do that wholesale. And I think it would be really, I mean, it'd be really difficult to do a non diamond based, just rings and chains jewelry store like as a owned retail. But D2C, it can really work. And it can really work in his context. And, and so for, for my product category and my positioning in that product category, we don't sell coolers and we try and sell, you know, water bottles and tumblers and stuff that are, I don't know, call it 20 to $35. There's not enough AOV to be a D2C centric brand. It just, it just can't really work. And there's not enough volume plus AOV to support owned retail. It just won't. I mean, it's funny because I'm being really critical of it. We thought about doing one in okc, not just for the business Reasons, but also because like a kind of a, you know, like this is where we were founded, really high following here and we just couldn't make the numbers pencil. It's like the things you had to believe about the world in terms of the number of people coming in and the, and the purchase rates and stuff. For this thing to make sense with a decent sized build out, we're just like, it just was not going to happen. And the reason I share all that is like, I think that you have to be realistic about what's possible with your brand. Yeti sells drinkware, but they sell it at a 40 to $50 price point and they sell it with 200 to $400 coolers. And so D2C can work great and they do a great job at it. But for us, for like when you're doing our particular strategy wholesale, just our particular product wholesale just has to be a huge part of it. And the. Interestingly though, like one exception for us is there's one part in the year where we can really do DTC well, and that's during back to school because people buy many things and they bundle it together and we have Ohio AOV and we have embroidery and stuff like that. That makes D2C the ideal channel. So my whole point and this whole diatribe is just, it's great to listen to a bunch of people, but it's, it's really important to understand what are the characteristics of the market you're in and the product you sell. And that's going to map naturally to certain channels and that you're going to have to really contort to make it work in other channels. Let's talk about Curtis's product for a second. He sells leather purses by and large. I mean, you sell a bunch of leather stuff, but leather purses are a big part of your sales, right, Curtis? It's very easy to map that to several other people that have made owned retail work. Like, I mean, Coach would be a really obvious example where like there are other archetypes in the market of making owned, you know, owned retail work when you're selling that kind of product. And so I'm not surprised that Curtis is able to make it work. The market kind of tells us that you should be able to make that work if you do it at a high level of excellence anyway. But do you guys, are you guys aware of anybody that does drinkware as a standalone? I mean even Yeti think has like.

[A]

Yeti has stores, but not many.

[B]

They have a few stores, but not Many. I think it's more of a branding play. And again, they're also selling two to $400 coolers as well. And so anyway, all that to say, like, I also. We didn't really talk about this here, but a lot of times you'll hear people say, well, it's a branding play. And just for my taste, that's a little bit too loosey goosey. I think that. Yeah, yeah. So, like, yeti's done it and I, you know, it's like, it's a. There's no counterfactual. Has that helped their brand? Has it been positive roi? Nobody knows. Yeah, exactly. Who knows? And for me, it's just too loosey goosey to be like, yeah, we're gonna spend millions of dollars at something that I really have no idea how it would impact the brand. And I think the actual, like, economics of it are really challenging.

[C]

Launching the difference. Mike is in Austin. You're totally right, like, with that YETI star. There's one in Austin. I've heard probably a dozen people say, hey, we're gonna go to the Yeti store. No one says, I want to go buy something from yeti. They're gonna go see it.

[B]

It's almost like a tourist attraction, which is cool. That's why we thought about okc. We thought maybe, but, you know, Yeti, listen, yeti's a much bigger brand than we are. And I think that what could make sense, and they have a. They have a lot of much bigger products than we do. And so, like, I just think what made sense for them, we looked at it and we ultimately decided that it didn't quite make sense for us. Sometimes when you own a brand, like, you can do things that aren't purely economic. You can just do them because you're like, this makes this look cool and it's a flex, and, like, that's fine. But if we're talking about, like, actually growing your business, my guess is that, you know, for most people, owned, retail would be much more of a distraction. Moth on Curtis. You had to learn a ton to make this work. Right.

[C]

You know, the. The key thing is, if people are this far into this operator's podcast, they're probably people who already have a company, right? And they say, hey, I want to take it 7, 8, 9, 10 figures. And they probably have already chosen their channel, right? So what we started talking about for me was, hey, I'm a D2C company, right? I'm going to do 200 million in D2C. What's the other channel that I go to next, do I go to wholesale? Do I go international? Do I go to retail? By sheer luck, I went into retail and we found out that it was there. And for a lot of plays that we're working, it works for us. Like, I have outlet stores around the country, so I have a manufacturing that can make things specifically for those outlet stores. I can buy slightly different leather, make different things, and fill those outlet stores up. So we all look around at our product. Mike is exactly right. But he said, hey, if I'm going to start a store, do I start here? Almost everybody here who's watching their operators, they have a store, it might be doing 100 bucks, it might be doing 100 million, but they're saying, hey, here's one avenue. I want to be more successful. And when I start hitting the top of that, how do I go? Where do I go from here? And that's what we did. We chose retail. And I'm going to be completely honest with everybody. I admitted this for the first time last week. Why did we really not go wholesale? Because I made the first leather bag in my garage and my mind is so linked to God. That was bag, right? I didn't even know how to sew. And I sew this thing and I'm like, here you go. And I took it to an art festival and somebody bought it, and I'm like, you poor son of a bitch. Thank you for buying this from me.

[B]

Right.

[C]

And I've never been able to make the mental adjustment to saying, now that is sitting in a store and somebody walks by, how would it be displayed? How would they do it? How would they view returns? We're our own limiting factor. Once I built my first store, I could see it in a store. I probably. Once we do our first wholesale, then I'll be calling up Mike every night crying, saying, help me out with. I don't know what I'm doing.

[A]

Yeah, I think Curtis. The other thing too is owned stores, you can have a really wide assortment of products. And wholesale, you. You can't. Right. Like, you're very limited by how much space they give you. And most. Most large retailers are going to give you, like a very small amount of space at the beginning. And then if you're lucky and good and they grow it over time.

[C]

We have a higher end signature line coming out in November where the bags are much more expensive, and we just take a small part of the store and turn it into that. Right. Like we just. Okay. Yeah.

[A]

You have so much flexibility over merchandising and I think that's an argument in favor of owned stores.

[B]

Um, it's actually an interesting idea of doing a hyper, local, you know, one physical retail of some type. Whether that's a pop up or you know, a booth somewhere, your own, your own store, learning from it and then using that to go to the mass retailers. Because like, I think if we're talking about using owned retail to learn, I think that's really different. Curtis said it earlier, like, the thing PE loves is like, hey, you've got 50 stores, we can take it to 300. Well, you know, Target has 2,000 doors. Walmart has 4, 500 doors. And the ability to go from 0 to 6,500 doors by going into those two places is like, you know, it's un, you know, untouchable basically. So I think when it comes to scaling quickly and scaling with the least amount of investment and complexity, those will always be undefeated. But you really do have to learn in order to do that effectively. And so I could, I, I could see a model where you use both.

[A]

There's, there's a great. So Katie's a good example of this. I think she said this before on the pod. Maybe not. She owns a retail store that is actually not branded. Caden Lane. So it is a, it's a, a multi brand retail store that she has had 20 years, right, called, I think it's called nursery something. And that store carries lots of brands in her space. And she looks at that, she's like, and I've talked to her about this, she's like, she learned so much about all of the categories because she has this store. It is like her, it's her school for what's happening in all things baby and family and newborn, all that stuff, right? So like, I think, Mike, that's a really good use case. I think the other one, the other one that I do see work very well is when you are the kind of brand that can own a geography, right? So like there are retailers, especially in the states, less so up here in Canada. But in the states where like you do have brands that are like, they just own Texas or Florida or like they're just a local darling. And then that's a justification to say like, okay, stores owning your own stores might make sense. Like Yeti only has 20 stores, guys their size. So like that's very much a brand play. Like they've, I know they've got one in Scottsdale because my parents.

[C]

So Matt. But I, I have this thing where I give out $100. When I see somebody in the airport or walking around with my bag.

[B]

And I.

[C]

And the first time I ever did it, this woman, I was like, I usually was going to have a card I had made, and I forgot it at home. I'm in the Dallas airport. I went up, and this woman was, like, freaking out on the phone. I'm like, should I do it? Walked up, I tapped her on the shoulder. I said, hey, love your bag. Keep supporting important leather goods. I gave her a hundred bucks. And she looked at me like I was the crazy man, right?

[D]

Like.

[C]

And I'm like, I'm never doing again. Never doing it. I got home two days later on LinkedIn, the woman wrote to me, and she said, the reason I was freaked out is I had lost my wallet. I had no money. I was stuck. I was hungry. Stuck in an airport, and a guy walks up and gives me $100. She's like, thank you. And I'm like, okay, I'm gonna do this. So when I go to the US Or I'm traveling, I have, like, about a thousand dollars of hundreds. There's a point to this. I went to Portland a couple weeks ago. I got off the goddamn plane. I was out of hundreds by the time I got out of the airport. Because everybody's got a bag in Portland. Is Portland leather goods, right? I stayed in a hotel downtown. I walk out the door and I'm like, oh, my gosh. Like, I'm glad it's a weekend because I cannot get that much money out of the bank. I'm going to stop doing this stuff. So you can own an area to. Covis owns Texas in Boots. Just, hey, let's put up one in. Are they in New York?

[B]

No.

[C]

Are they here? No. They have 30 in Texas. Absolutely.

[A]

Yeah. And just for everybody listening, Curtis, I think this gets done on an even more like, on a smaller scale, right? So, like, our friend Tony owns a brand called Vessi. They sell shoes. They sell waterproof running shoes. So, like, that was their big innovation. Well, they own the. Out of Vancouver and Seattle, like, and. And that, like, that little corridor of the Pacific Northwest where, like, it's super rainy. Their household penetration there is freaking nuts. So where do they open stores? Vancouver. So I think you can do this at all levels. There's lots of examples of this for people listening. You don't just need to look to the Yetis. To Covis is a good one. This happens everywhere, guys. I just want people to know it's an option when it comes to stores. Like, you don't need to go into stores thinking, I gotta go national. I gotta have hundreds of them. Like, I know a guy that owns a jewelry brand. He has 61 stores. I talked to him two weeks ago, and the first thing he said to me, he's like, I should probably have as half as many, right? So, like, it goes the other way around. So I. I just think there's lots of ways to win when it comes to owned retail. And on the other side, Mike, I think there's lots of ways to win when it comes to wholesale. Like, you don't need to play the game. You do either. You don't need to be Target, Walmart. Like, it's so category dependent. Dependent. There's lots of doors.

[B]

There's many types of products. You wouldn't want to go into Walmart or Target. Again, my big thing is, like, this is a very specific thing for what you sell. And that being a really good operator is understanding, like, what are the channels where you're likely to have success?

[C]

Every time we talk about this, we talk. We talk about wholesale. There are three names that come up. Target, Walmart, Costco. And I'm like, I sat next to Matt in. In Bozeman, out to dinner, and it was like, costco, Costco, Costco, Target, Walmart. Right? So when you own a leather bag brand, you're like, yeah, no one's telling the stories I want to hear. And one of the things we do on the operators podcast is we're hoping that through all the craziness and. And the back on the fourth and us telling this, that one or two of these things hit you and says, oh, that's the same dilemma I'm in right now. And it subtly helps them make a decision for action to change what the hell they're doing.

[A]

A hundred percent, man. All right, boys, I like this. I think we can wrap here. This was a good conversation. Owned, retail, wholesale. I hope you learned something. If you're listening and you're still here, thank you for tuning in. I think that's the podcast.

[C]

I always learn something with you guys. Bye.