Go Small to Grow Big: How Thuggies Uses Micro-Influencers to Spark Sales

Felix: In this episode you’ll learn from an entrepreneur that believes the key to success is to work with micro-influencers, rather than celebrity influencers. In this episode you’ll learn how to validate a product that no one has ever seen before. Why you should force customers to buy from you online, even if you meet them offline, and what are micro-influencers? How to find them, and how to work with them to help you promote your business and your product. Today I’m joined by Brad Westerop, from Thuggies.com. Thuggies sells the longest hoodie you’ll ever wear, and was started in 2009, and based out of Vancouver, Canada. Welcome Brad.

Brad: Thanks Felix.

Felix: Excited to have you on, so tell us a bit more about Thuggies and what exactly is it that you sell?

Brad: Sure. Thuggies is, like you said, the longest sweatshirt you’ll ever wear, a large fits a normal person width in a large t-shirt, but the sweatshirt goes down past your knees. It kind of originated through the hate for pants. Me and the founders just hated wearing pants, and a friend of mine had sown this thing. He’s like, “Yeah, I don’t even have to wear pants anymore.” It almost became this hoodie dress that obviously spawned into the Thuggie. Yeah, it’s got a kangaroo pocket, like a hoodie, but it’s all the way down at the bottom. We’ve got some hidden side pockets too. As we hated pants more and more, we started making adult onesies, and extra long sweatshirts for your kids too. It’s kind of hard for …

Felix: Yeah, I’m looking at the different products, it’s like it slowly evolves from just barely longer than a regular hoodie, down to like more and more comfortable, into a onesie. It’s kind of funny to see the evolution of your business.

Brad: Yeah, totally.

Felix: Yeah, so how did you come up with this idea? What was the inspiration behind it?

Brad: My friend was actually making it as a joke, every year we went up to Whistler, which is kind of the Canadian version of Vale. We were all going skiing, and we all kind of dress up every year. That year he sowed this super-long hoodie. We were all laughing about it, and he was trying to make fun of that really long skier fad, where everyone wore super-baggy clothes? We put it on and we were like, this is really comfortable. This is awesome. After that we just kind of realised, that’s where we had a business. I knew it would be comfortable, and I loved it, and I hated pants. We kind of all laughed about that, and went from there. That’s really how we kind of had the idea. It was more of a joke that turned into a reality.

Felix: Makes sense. It started off as a joke, but you realized there was value, and that you enjoyed it yourselves, because it obviously had some comfort, or some need that you were looking for. How did you validate it? How did you know that it wasn’t just you guys that wanted this stuff, and there was actually a market for the product like this?

Brad: Yeah, being such a weird product too, I’d say 50 to 60 percent of our friends thought we were crazy even trying to go further than the first three or four that we sewed ourselves. We kind of knew we had something, and we thought we could do a cult following kind of thing. We just kind of made 10 or 15 of them by hand. My business partner at the time, Brian, he sewed them at his house, and we kind of started a Facebook page, and a Twitter page, and just kind of tried to find people to talk to. We had a few people think they were really awesome, and a lot of people that thought they were really dumb. Which wasn’t really very encouraging at the start of something. We just kind of had faith in it, and we were into it for a little bit of time. We figured we didn’t really spend any time yet, and this could be a really good gift down the road for people’s Christmas, and replace those ugly pajamas that everybody gets. That was kind of our goal.

Felix: How many people were involved in this early on, from the beginning? It sounds like you and your group of friends were interested in this product, you guys were wearing it, you guys were making it for yourselves. Who was actually involved in the initial stages of starting the business?

Brad: Yeah, originally Thuggies was founded by three people, myself and two others. We all kind of focused on different parts of the business. Kim was a marketing trade person, she’s great on social media, and all that kind of PR, so we figured it was her job to get our name out there. Then Brian had all the textiles experience, he’d worked in a bunch of skateboard shops, and he had a sewing machine. I came from a real estate development background, so I had all the kind of business and feasibility aspect to the company. I was really the one driving how much money we can spend where. How many hoodies we think we could realistically sell.

Obviously though we had to estimate a conversion rate. That was the original team. The only thing we were missing was a web designer, and our second Twitter follower, Dave, ended up being a web designer. We tweeted, and I think we only had three of four Twitter followers, and tweeted, “We need a web designer, does anybody know anybody?” We didn’t have any money to pay them, so we met with Dave, and he gave us an invoice that I laughed at, and couldn’t afford. We gave him another 25 percent of the company, and then we all became the four kind of founders of Thuggies. Yeah, we all had an equal stake, which was really nice. It helped a lot through the early stages.

Felix: Yeah, you’re kind of on the other end of the spectrum of size of the founding team. A lot of listeners out there, and I think a lot of the podcasts in the past have been solo founders who maybe had another co-founder at the most. You guys pretty much started off in the beginning with four co-founders. What kind of challenges, for anyone else out there that’s thinking about starting a business with three, maybe four other people. Or maybe they already have a business, but are thinking about bringing on three or four other people, what kind of challenges do you think you have to look out for to make sure that it is going to be a successful partnership?

Brad: Yeah, and I think we had a very interesting partnership through the entire part of Thuggies, and other ventures as well. I loved having partners, but there are definitely challenges. The biggest is everybody’s life cycle. I was single, I had my own apartment, I had a well-paying job, I didn’t really care if I lost $2000 starting this thing up. Whereas, other people might have a lower paying job, or a child, or something that they’re really hoping this business is going to take off, and they expect something else out of it. Or, two years down the road, they get married, and they don’t want to work on something anymore. We kind of had employment changes with people that had to put more time into their real profession. We had a couple of partnership switches through that.

I think the real challenge is making sure that you have somebody, or lots of people, that are all working on something that’s their own. I think a lot of people want to run the social media part of it, because that’s kind of the cool thing right now. You need somebody that can handle the accounting, or at least the ability to understand it. That’s kind of where I was kind of the business guy, and I had to make sure that that was being looked after while we were reaching out to PR, and while Brian was sewing, and while Dave was working on the website. We’d all meet up once or twice a week and say, “Okay, where are we all at?” We had a common goal, but yeah, finding that common goal between that many people, and having an agreement that we’re able to make sure people are happy, even when they don’t get their way. That’s the struggle for sure.

Felix: Yeah, it sounds like you guys just figured out along the way, and when there were pieces, or parts that were maybe being neglected a bit, because of these life cycles, and because of the shift in priorities for people. You and other members of the founding team just picked up that slack, and it obviously has worked out for you guys because you’ve made it through. If you were to go back and knew this was coming, could you do anything to set up the business in a way where it would respond maybe a little bit better to these changes in people’s lives? That’s going to happen for any business that you start with anybody, it’s going to happen. People are going to have different life events, having kids, getting married, having … If you have something to do on the side. Someone might lose their job, or their priorities might shift, their interests might shift. How do you set up a company or a partnership in a way that can respond well to situations like that?

Brad: I think equality was the first thing in setting up that business when we brought Dave on. Originally we were trying to low-ball him, 15 percent of the company, because everybody tells you not to give away equity. Especially when you’re starting a business, it’s keep your equity, you don’t want to lose your company. The equality really helped us because then everybody had an equal voice when there was an argument. We just agreed that if it’s two on two, we play rock, paper, scissors. If it’s three against one, then the three people that agreed are the ones that decision ends up being the right one. I’m not saying that those three people always made the right one, but at least you kind of had that kind of governance in the company. That really helped us.

Felix: Yeah, I think what you’re getting at too is that it was at least fair. Even though it might not have been the right decision, no one was necessarily bitter or resentful about it, because there was a fair way to come to an agreement. Even if it ended up not being the right agreement. I think that’s an important point. You don’t want partners that slowly build up resentment over time, because it’s going to implode at some point, and that’s obviously not good for business. Enough talking about the negatives of having partnerships. What about the upsides? Having three other partners, I can think of plenty of help that you can get now that you have all these people that invested in it as much as you did. Were there any things that maybe you didn’t foresee, beneficial that comes out of a partnership with three other co-founders?

Brad: Yeah, I think the personal networks of everybody really helped. If I were to start a business by myself I can reach out to my friends, my family, past investors, or past employers. If you times that by four, all of a sudden there’s so many more people that you could potentially be selling these things … Like I sold a bunch to my old estate company for Christmas. Or we had all these really cool networks that we didn’t think we could sell a Thuggie to, until we really started talking to them. It was a lot easier with more people. That, and just the combination of being able to split all the work. Being able to have your own talent, and you’re able to focus on that, and that’s where your career was.

Felix: Is this how you guys got started, by selling to your own network? Or how did you get the first batch of sales?

Brad: Yeah, I think the first batch of sales we just talked to people. We wore them on the subway here. We wore them at the 2010 Olympic Games, we made Canada themed ones, and we wrote Thuggies all over it. We just tried to go to as many free events as we could, and wear these things. People started to talking to us, like, “What are those?” You’re basically a walking billboard, it stands out so much that you can’t miss a guy wearing a sweatshirt dress. That’s what everybody asked. We’re like, “No, it’s a Thuggie.” Now we’ve kind of become this brand that’s been mentioned in ski magazines, to gift guides. I think that initial step was just wearing it outside, and being noticed. Then being friendly about it, and letting people try it on, and touch it, and feel it. We use really high quality cotton, so it feels really nice, versus a cheap fleece sweatshirt, or whatever.

Felix: I think when people are thinking about starting an e-commerce business they think about how can I get my sales? How can I set up a system to generate sales online? Really just focus on how to drive traffic online to a store, and get people to buy that way. You guys started offline, essentially. You were marketing this offline by going out and wearing the apparel, and talking to people about it, and getting people to talk to you about it. Did you guys ever feel, not necessarily burnt-out, but feel like it wouldn’t be scalable going this route? I think this is an important topic, because I think entrepreneurs out there do think that. They think I’m not going to set up a business that requires me to go out and sell person to person, because that might be almost counter to the reason why they started an online business in the first place. Was there an end-goal to start there, then eventually go online? What was the thought process?

Brad: Yeah, we had our website built just before the Olympics in 2010. We knew, especially with Dave’s background and being in digital design, that we had to drive people to our site to sell. Even if we had them on, even if were telling people about them, they still had to go to our site, realistically. We might be able to sell a few here and there. We had coupon codes based on the events that we were going to. We printed business cards that are super-cheap, and then we’d write Olympics 2010, so whenever we gave those out, and they were used on our website, we could see that conversion come through. We’d say okay, that one worked, or this one didn’t.

Then all the products that we wore always said Thuggies.com on it. Even if people didn’t want to come up to the four people wearing these goofy sweatshirts, they could at least still go online. We had stickers all over our cars, and we drive around Vancouver, and there’s still people that take pictures of my car. You can see them looking on their phone, what’s this brand? It was a great way to get our name out, and I think that’s why Vancouver is one of our biggest markets now, is that we all live here. Yeah, it was a great way to drive people back to the site.

Whether it was scalable, probably not immensely scalable, but at least we kind of picked events that we really wanted to go to. If we were really interested in a snowboard event we would all just go to that. We’d get to hang out with our three friends and talk business, and try to sell some Thuggies. It was more of a hobby vacation, kind of thing. Getting free lift passes was something that we never got before. Being able to do that with Thuggies was awesome, so we never really thought of it as work.

Felix: Makes sense. You marketed offline to begin with, but you were able to tie it online through these coupon codes, and were able to identify which activities, which offline activities, worked the best. What did you do with this data? Have you found out that the Olympics was a very successful channel for you buys because of the jump in the coupon code usage. How did you use that to inform future decisions?

Brad: Well the Olympics one obviously is hard, we’re not going to travel around the world every two or four years.

Felix: It would be a bad idea.

Brad: It would be awesome. I think at the start we might have sold three or four units with that code, and that was probably over a month. We were still really slow, and just trying to get traffic where we could. Once we did find one that worked, we tried to find other ones. We really found … There’s a ski hill about six hours from there that, for some reason, we just kept selling Thuggies up there. We were like, maybe we should do an event up there. That one really converted, and we still do that every year. We’ve become so close with the mountain that they actually buy their own branded ones for their staff every year.

It ended up turning out to be a huge payoff, and now they even pay for our hotels when we’re up there. It’s awesome. I think it’s a matter of testing, and knowing that setting expectations for how much money or time you’re going to put into it. If you’re going to spend $500 for the booth, and then eight hours of your time, at least know that that time’s going to pay off either in awareness, or sales. Set yourself a goal, like I want a hundred emails out of this. How are you going to get that? You’re going to talk to as many people as you can. You find usually those events end up working fairly well.

Felix: Makes sense. How do you decide which of these events to have a presence at today? Like what you’re getting at is that you saw there was a lot of sales and traffic coming from a particular area, Vancouver of course, for you guys. You probably spent a lot of time marketing there because it works well. Give us an idea of how you would set this up for maybe an entrepreneur out there that’s thinking about doing more offline marketing, and being more present at events. How do you begin to identify how you should spend your time?

Brad: Mostly it’s about what either our brand feel is. If somebody comes up and says, “Hey, I want you guys to be at a yoga retreat.” We’ve actually done one, and it actually works pretty well, they’re actually really good for after yoga, because you can change in them. It’s a matter of thinking where a Thuggie would work best, where your product would work best, and knowing your market. Sometimes it works, and sometimes it doesn’t, and you’ve just got to go try one. Try to make it as cheap as you can, and make it look as cool as possible. Then from there, either say we’re not going to do this again, or try it again another time.

We had one, we had a ski festival that we went to, that we thought we were just going to do so well at. It was a whole week long, and it’s this huge thing, and it was the worst event that we could have ever done. It was expensive, and we now know not to do that again, or to do similar ones. We try to keep them really local, so we can at least talk to people, and you be can be close. We do less and less events ourselves, and now we have ambassadors that are in the Thuggies family that we will send them a bunch of stuff, and they’ll set up a booth, or they’ll set up a wake-board competition, or a water-ski competition. We end up sponsoring it with them.

Felix: I’m sure that you guys are a lot better at this now, then you were originally, identifying which events to go to. Are there any key markers, or key signs about a particular event that makes you guys go, yes, we have to be there?

Brad: Yeah, I think originally it was our hypothesis of is this market going to be good for us? Now it’s a matter of checking our sales through the back [inaudible 00:21:29], and analyzing those postal codes, and see how many people we sold, and at what time of the season have we sold our products. If we see 300 people in Utah have bought products, there’s a good chance that if we set something up there, or sponsor something, they’ll already recognize our brand. Or their friends have seen it, and we always find that that person to person, or customer to customer market has worked so well.

Felix: You guys look at the backend, and you can see that some disproportionate percentage of your sales are coming from a specific postal code, or in a specific time of year. Then maybe you’ll look to see if there’s any events going on at that time, if not, maybe set up your own. Just be there at the right time in front of the right people?

Brad: Yeah, exactly.

Felix: That’s a great way to think about it, because that’s exactly what you have to do in the online world as well. You have to be in the right place at the right time. It’s the same thing here, and now you’re just doing it in person this time. The data is going to help you inform those decisions, just like you would in the online world. Speaking of being there in person, being there to actually see your customers face to face, what are some things that you learn by talking to your customers? By seeing them offline, by seeing them in person, that you don’t think would be possible if you guys just focus online only?

Brad: I think you learn a lot about your customer, and who they are a lot faster face-to-face. You’re able to talk to them, you can see them try on the product. You can see how they react, and you can see a lot of people react negatively, and you can see them react positively. You can kind of read their face, and their emotion a lot better than our Facebook ads, right? We’re always seeing a conversion rate of two or three percent, is awesome, and that’s great. We don’t know about the other 97 percent, or 99 percent, depending on the ad. You get a lot more feedback, and if you can adjust certain things. We found out at one of the events that because our hoodies are so long, you can’t really get to your pockets if you’re wearing shorts or anything. Or if you’re not wearing pants at all you don’t even have pockets.

Finally one kid came up one day, he’s like, “Why don’t you guys have hidden pockets somewhere? Why is your pocket at the bottom? I can’t get anything in there, I can’t walk in there when I have a can or Red Bull.” We’re like oh man, how have we not figured that out? We just cut a little hole in the seams, and I just did it with a pen, ripped a hole in my Thuggie, and I could get to my short pocket. I’m like, “Oh man, we should just make hidden pockets, why haven’t we done this?” You wouldn’t have gotten that feedback from a customer unless they bought online … Well they went through your ad process online, they bought it, and then took the time to email us back, instead of just returning the product. Or just not telling us about it. That was the benefit.

Felix: Yeah, that’s a good point, like you’re saying two percent of the customers obviously loved it, but then there’s just so much to learn from the other 98 percent on why they didn’t like it. You won’t ever know why when it’s just a Facebook ad, or just online only. They could just turn around and say I don’t like this, I’m going to leave and not click on this ad. You don’t have the opportunity to say, “Hey, wait a second, can I talk to you for a second to understand more?” About why they don’t like it. That’s only possible offline, because you don’t get that opportunity to ask them questions, ask them about why they don’t want to buy, or why they’re not interested in it. As easily as you would offline, versus online.

Brad: Yeah, we really learned the most was when kids wanted them for Christmas. There’s a fit 14 to 18 year old, “Mom I want to buy this for Christmas. I want this for Christmas.” They look at it like you’re never going to wear this thing. If you can show them, no after school these guys can take their clothes off, and just lie around at home, and they can hang out with their friends. If they’re changing for snowboarding they can use it without getting naked in the parking lot. The parents start realizing, “Oh, this is a really good Christmas present.” We went from that, a now we write ads based on that information, and we write online ads to parents saying your kids are going to love this for Christmas. Now we know what their pain point in not believing it originally, and that’s how we figured that out.

Felix: Yeah, let’s talk about that some more. I think this is an important gold mine for stores and entrepreneurs that they might not be using. You’re saying that people are coming up to you, and they’re telling you things that you might not be able to pick up on in the online world. Then you’re taking that information, taking what they’re saying, and using those words into your ad copy, or your design of the ads themselves. Talk to us a little bit more about this process. How do you actually go about doing this, and actually break it down for us. How do you go from hearing what people say, to actually turning that into an ad?

Brad: Sure. A perfect example is the Christmas present. We’re extremely seasonal, and these do make the best pajama replacements. We started talking to parents, and we heard that thing, I don’t want to spend $95 or $89, depending on what model you’re buying, on a sweatshirt, and a sweatshirt that’s too long. We said okay, why do you think that? We’d get this information. Once they say it’s not going to be used enough, then we go okay well we need to show a kid having a lot of fun, in a sport that they like, and we need to show the parents a picture of how that works. You need to write copy that shows them how that works.

We end up saying okay, let’s get a photo of some kids on a ski hill, or just after the ski hill. Then let’s get some pictures of some younger kids, after the playground, or after swimming, or kind of near the swimming pool, so they’ll see this is a great comfort thing for my younger daughter after swimming to stay warm. Then we can write that in copy, “Don’t let your kids get cold after swimming.” Then we target parents age group in Facebook that are married, and likely have a kid. Then if they like swimming, then there’s a good chance that a swimming ad could work with them.

That’s kind of how we did it is the step by step, what was the problem that we’re solving? If we’re going after someone like a parent, how are they going to see it? You kind of had to mix them together. Sometimes we just used pictures from our iPhone that our cousins took of their kids. Then sometimes there’s people like me, who took a picture of me and said, “After soccer throw this on, because you’re cold and wet.” That’s kind of how it worked.

Felix: Yeah, I love that, that you take the objections that you’re hearing about why people aren’t buying the products, and you handle that in the ad itself by showing them, not necessarily the opposite of it, but why maybe the objection isn’t as valid. Or maybe why it’s not as important, and why it should not prevent them from trying or buying the product. I love that. I think that obviously sounds like it works way faster in the offline world.

Again, you get these opportunities to talk to people, you get theses opportunities to understand their objections. If you can’t do it offline, I think online is just as viable of a place to find these objections, by talking to your customers, looking at reviews. Looking at what people are complaining about, looking at the reasons why they’re not buying. It’s not going to be as easy, because you won’t get this opportunity as much, but you can still find out why people are not buying online. Then using the language that they’re using, and almost flipping it on its head, and showing them why it’s not an actual reason to not buy the product.

Brad: Yeah, exactly.

Felix: Cool. Let’s talk about, I think one of the things you mentioned in the pre-interview was about one of the key ways that you guys are able to market today is through word of mouth. I think you also mentioned micro-influencers. Tell us a little bit about this, what are micro-influencers?

Brad: Yeah, I think it’s a term that’s been used around the internet. We use it a lot at Thuggies, and at BedFace. We have a bunch of people that are really into Thuggies, and they might have small followings, and that’s where I use micro-influencers. They might not have a million followers on Instagram, and 50 thousand followers on Facebook, but they were going to do so much more work, for so much less product, or payment, than you would get normally. Over the six years that we’ve been doing this, we have a bunch of micro-influencers, and they’re like ambassadors, but they’re kind of our family, I guess you could say.

We give them Thuggies and they tell their friends, and their friends tell their friends. We’ve always found because our product is so out there, and noticeable, that once one person has one, the postal codes around them, or zip codes in the US, start buying them as well. We start figuring out okay, because this person wears one here, their friend probably doesn’t live in the same postal code, but he wants one now. Then all of a sudden you see three more from there. These micro-influencers are people that now actually reach out to, that are generally fairly small, social traffic, but do take great photos, or they write a great blog. We provide them with merchandise, or a small budget for a photo shoot, and we give them all the product we want shot, and just let them do it. A lot of the time it works out really well, because they feel so much more attached to the brand.

Whereas we’ve kind of tried these 100 thousand, or 300 thousand followers on Instagram, for example, and you only get one post, and they want money. Then you never really see any benefit. I’ve never really found these big influencers really get any strong traction. Unless they’re really, really big. We’ve had a couple of big celebrities wear Thuggies, and the only one that’s actually been really good was T-Pain, and he was awesome. We’re actually working on a T-Pain Thuggie now too. Most of them we just find that if they’re not posting more than once, then you never really … It’s too easy to miss on Instagram now. I think it’s more these micro-influencers that just tell their friends, and that’s kind of where we’re at.

Felix: Yeah, I like this approach of working with micro-influencers. How do you identify micro-influencers. How do you find these people that are going to be a good fit for your brand?

Brad: I mean because everybody is on social media now, whether it’s on Reddit, or Instagram, or Snapchat, or whatever, we’re all kind of on it at work. We work in a co-working space too, so everybody is kind of on it. If people say, “Hey, I saw this picture, you should reach out to these people and check it out.” Usually we have … Thuggies is a really outdoor kind of brand, so we generally want people that are active, and that show interest or passion in what they’re doing. If you’re really into cars, and you’re always outside, we say, “Hey, take your car out for a rip, we’ll give you some Thuggies, or your dirt bike.” I think we just find them, just going through Instagram, and trying to find these lower followed accounts, and just talk to them, and say, “Hey, are you interested in this? We’d love your feedback.”

Felix: Makes sense. When you do find an influencer, a micro-influencer, and you want to work with them, how does it all get setup? What’s the conversation like? How do you set them up for success?

Brad: I generally reach out right away, either through a messenger, or if we have them, through email, and say, “Hey, I’m the CEO of Thuggies, we make this really comfortable sweatshirt. We really like your photos, I was wondering if you guys can send some photos our way. If we give you some product, and tell your friends, is this something you like?” It’s pretty similar messaging that you would want to give to somebody that had a million followers. The kind of process that ensues after that is different, where we get a lot more replies from people with smaller accounts, because they’re not used to these spammy emails from every single company that’s been told to message million person followers on Instagram.

We kind of filled in the niche, and took these smaller guys and said, “Okay, let’s do this.” They work a lot harder, and you get a lot more visuals. Honestly, someone with two followers can get just as good of a photo in a Thuggie, than somebody with a million followers that has nothing to do with how many followers they have, it’s more of the content that you’re creating. We get the pictures, we email them out to our other customers, and say this is what John from Utah was doing last weekend on his dirt bike, and he took his Thuggie, and stuff like that. That’s where it really comes into play.

Felix: I like this idea of basically curating a lifestyle around your product, because you are identifying these micro-influencers, these people that are going to be using your product, just to live their life. To do things like ride their motorbikes, or hang out at the pool, all of these examples that you gave. Then spreading that message to your existing customers. Is there a process, or some kind of schedule behind this? How do you guys manage all of this? I’m assuming you have a ton of micro-influencers, how do you make sure that you are making the most use out of the content they’re giving you, with their photos, and all that? How do you organize and manage all of that?

Brad: The first four or five years it was really hard. We kind of had a big Dropbox folder that I’d been saving every email, and everything we’ve ever gotten from these people. Now that we’re kind of a team here, and I worked for Thuggies, I quit my job probably two or three years ago, and just did full time Thuggies for a while. I was the only one working, so it was all on my head. Now that we have some social media help in-house, she’s able to kind of look through my old emails, and then I’m telling her the story. Okay, I found these people here, and this is who they are. They don’t email us anymore, they’re kind of too old, or they’re over it, and they don’t want to do it anymore. We start finding new ones.

The process is probably not as automated as it should be, and as scheduled as it should be. We do notice that the people that are really into it will email us every two or three weeks, and say, “Hey, I went water skiing here this week, here’s these new pictures.” We just say, “Thanks, here’s another Thuggie.” Try to just keep them as interested as possible. We’re working on a better way to handle more. We usually have 15 to 20 really active people at a time, and obviously that life cycle comes back when people move away, or are doing something different in their life, that they don’t follow the whole Thuggie thing as strongly as they used to. We just kind of keep evolving with the brand and the people.

Felix: The content that you are getting with these photos, and you said that you email them out, I can see that there’s a lot of these lifestyle photos as well on your Instagram. Is this the best converting concept for you guys? Or is there sort of a different purpose?

Brad: I think it converts really well if we use these micro-influencers photos in certain ads if they’re working right. We generally use it as encouragement, and a sense of family in our business. We feel attached to the customer, or the influencer, and they feel that we actually value their pictures, and their lifestyle. Then they go on and tell their friends about the brand. I think it’s kind of like not a direct conversion from the photo itself, or the post on Instagram, or Facebook, or whatever. I think it’s the feeling of being together, and that feeling, like they want to help us grow. We want to help them grow, whether they’re in a sport, or if they just like camping a lot, and they just need a couple of extra sweatshirts. It’s kind of a mutually beneficial kind of relationship.

Felix: Yeah, I think that’s one of the best things when you have a lifestyle brand like this, because once you kick it off, most of your customers are going to be helping you grow this lifestyle by producing the content, producing the photos, telling their friends about it. Bringing more people into the fold. Once you’re able to kick this engine off it really accelerates at its own speed, as long as you keep on feeding it. It grows, even without your help sometimes, just because you’ve already done a lot of the groundwork by building the lifestyle, by building the image, by building the brand early on. I think you hit on something with creating this kind of engine, by working with these micro-influencers, by working with all these people that are helping you spread the product word of mouth. I actually want to talk about another business that you started since then, before we move on from Thuggies. Can you give us an idea of the growth of the business? Or how successful the business is today?

Brad: Sure, yeah. Thuggies is doing about just over half … Well we’re on track for over half a million US this year. It does sound like a very small number in the realm of things, but it’s always been this project that’s funded other projects, and before we’re so vertically integrated, we do the manufacturing, we source it ourselves. We source all the fabric ourselves. We do have fairly strong margins, and we really only pay me a small salary, and now that we have a bit of a team and a new company, we kind of split infrastructure, and we’ve created a really small conglomerate of companies. Where we use the infrastructure from both to fund it.

Felix: Awesome.

Brad: I think I answered your question.

Felix: You definitely did. Let’s talk about the new company, so that’s BedFace. BedFace.com, I can kind of see some similarities between the two businesses, but I’m assuming they are much different audiences. Certainly much different demographics. First, tell us about BedFace, what is it? What is the target market for this business?

Brad: Sure, BedFace.com, we make the best sheets on the internet. They’re bed sheets that you can mix and match 24 different colors from. You can pick and choose whatever you want. We’re launching patterns next week. It’s a fabric that we made ourselves through the learnings of Thuggies. The company was actually built through the learnings of Thuggies. One of the current partners at Thuggies and I said we want to go on and do BedFace, and we can fund BedFace by … We didn’t want to put a ton of money into bed sheets, and then have Thuggies die. We said maybe we can share resources. We actually have a team of four now, and they go back and forth, and the target market for BedFace is obviously a little older than Thuggies, but we’re still a playful brand.

I’d say generally we’re at the 26 year old to 50, 55. We’d certainly see older people buying our sheets as well. The really reason we went with bed sheets is it’s a fairly consumable good. Everybody owns them, and we saw not only the ability to sell bed sheets online, but there’s no real selection in color. We knew from Thuggies that color, when merchandised right, works really, really well. Yeah, I mean we have 20 million different combinations that you can choose from. It’s shocking. It creates a bit of an inventory nightmare, but yeah, it’s doing great, and it’s excelling through expectation.

Felix: Can you say a little more about what you mentioned about color combined with merchandising well, creates an awesome product. State a little more about that, what do you mean by that?

Brad: Sure. We learned with Thuggies that everybody loves the really bright Thuggie, but nobody will ever buy the really bright Thuggie. For every bright Thuggie we have on the site, you’d sell one bright one for every three or four black ones that you sold. If we didn’t have the bright ones on the site, no one would buy the black ones. We started playing around with the colors within a Thuggie. Instead of being all black, we’d have a black with a white pocket, then one really good splash of color. We noticed that that worked even better, because people wanted to feel different, and show off their color. The pylon orange Thuggie was really only for a really small group of people. Whereas the black Thuggie with a bit of orange on it, people kind of got close to the pylon, but it didn’t seem so out there.

That’s kind of the same thing with BedFace is you can have neon blue pillow cases, and a dark duvet cover, and it gives you that sense of individuality, and change in the bedroom. Instead of these boring navy and grey sheets all the time. That was kind of our basis. Then we see people now, same with Thuggies, is we see customers of BedFace that buy a neon yellow duvet cover, and right orange pillow cases. Then we see the other people that buy your more typical navy and grey, and dark purple, but then they add these bright pink, or white pillow cases or duvet cover. That’s really what we wanted to do is give people the ability to speak for themselves in their house.

Felix: That’s interesting that you found that when you had these essential colors of the Thuggies, it drove sales of the more muted colors. Do you still have that in the catalog today, just to continue, to help support the more muted, I guess not so loud color ways? What was the lesson that you learned, just to add these accents into not so loud color combinations.

Brad: Yeah, we definitely right now I think we’re at the stock level just before Christmas, we’re launching a couple of new colors in a week or so here at Thuggies as well. We are a little low on our inventory online right now, but yeah, having those basic colors with bright pops of color. A black with a red and blue cuff, does really, really well. We just started experimenting with prints with Thuggies too, and that did really well. It was just that subtle kind of pop of color, or pop of a pattern, combined with the black or grey hoodie was just awesome, it worked so well. Then we still introduced these really crazy ones. The one we’re working on with T-Pain is by far the craziest one we’ve ever made. That’s going to be that driver for sales of our other products, I think.

Felix: I think that’s so, so intriguing, and I never thought about it before. You basically have a product that might not sell as well, or maybe the T-Pain one is going to be a different story, but you have a product that might not sell as well, but it’s almost used as a marketing tool to drive people to check out the products. To maybe spread awareness about the one popular product. That when people come to the site, they discover more products that are maybe a little bit more conservative that work. That they can imagine wearing out, and no feel so self-conscious for wearing such a bright color. That’s so interesting, I never thought about it that way, but it makes a lot of sense when you talk about it.

I think there’s a lot of opportunities for other stores to try to find some kind of anchor product that might not sell as well, but might be a much bigger talking point. Or it might have more virality, or just share-ability. That itself can drive traffic to the store. Then from there, the people might buy more products that fit their tastes a little bit more. Yeah, I want to get back to BedFace, what are some things that you learned from the first business, that when you started the second business, when you started BedFace.com, you guys knew you had to apply again?

Brad: We definitely learned inventory control, that was one of our biggest issues at Thuggies from the start, once we really started selling. We would oversell products by accident, we would miscount in our inventory. Then we would sell right down the very last unit, and if that unit was dirty, or miscounted. We counted a hundred units and we sold … Or say we counted a hundred, but there was really 95, we could oversell those, and that creates a huge issue with your customer. Just in internal accounting, and inventory control. That was our huge learning there, and that’s how we got so good at it at Thuggies, and that’s how we’ve managed to handle the inventory control at BedFace.

That’s not to say there isn’t a mistake once in a while, but it definitely helps us be very efficient at getting our products out, and reordering our products, and having them ship out on time in the right size, and the right color. That was our first learning that we brought. I think other ones were to have a good team, and good partners. Just like we talked about earlier, having the right partners around, or the right people working for you, is obviously key, and that’s what everyone will tell you. I think those are probably the two biggest, inventory control and the team work, and team mates.

Felix: Makes sense. I think we all have heard about the entrepreneurs and the most common ailment of “wantrepreneur” is that they’ll start working on something, then they encounter an issue, a roadblock. Or maybe just become less interested, and then hop onto a next project. I don’t think this is the case with you guys, but I think it’s still a worthwhile question to ask, why not just double-down on just Thuggies? Rather than focus on starting another business?

Brad: That’s a really good question. I think there’s a couple of internal reasons that we wanted to do something different. Our partners are becoming busier, and busier, and wanted to do less sweat equity work for the companies. We said okay, the people that have time, we should start working on BedFace, and let’s use BedFace’s success to help bring up talent within our group to grow Thuggies to the next level as well. Generally, I would tell people not to do this, and not to kind of split your work on something that you’ve proven to be good. The way we sat down and really planned out how both companies can grow at the same time, and how we can help each other, and we can grow our team into being this flexible, kind of group, was kind of the way it worked, and the way we saw success in both companies. We share everything. Our chats are on the same window, and there’ll be two people talking to different customers at the same time, and we’ll be testing ads on Thuggies, that we then try on BedFace’s customers. Then we’ll switch it around, or we’ll try a new app in one company while the other one is testing another one. Then they both kind of grow when we find these successes.

Felix: You mentioned the experience of starting Thuggies, obviously helping you with BedFace, and of course the shared resources makes it a lot easier to get started with a new company as well. Have there been any other benefits that have come because of having two companies? Not so much a benefit, that you’re able to reap from the success of Thuggies, but just because one plus one, equals three by having two businesses. Have you encountered any of those kind of benefits?

Brad: Yeah, for sure. We pop into those almost every day here. We find our team learns a lot faster, they’re able to, when they’re not working, say they’re working on a spreadsheet for BedFace, and it’s just driving them nuts. Instead of them working slower on it, or taking a two-hour break and going for a walk, or going home early, they just switch their minds completely. They’ll go for a walk for five minutes, they’ll go grab a coffee, and they’ll come back and say okay, I’m going to work on this part of Thuggies to kind of re-jog my mind. I see that almost every day with our team, and I’m always really impressed with that. We actually end up finding that with some of the apps we use too, where both companies are so different, and so similar at the same time, that we find these glitches in apps that we’re telling our service providers. Hey, I think you need to fix this. This is why we need to fix this. You see a lot of the one plus one equals three in this business. As long as it’s well-managed, it works out pretty well.

Felix: Makes sense. Now that you have both of these companies pretty much humming along, how do you split your day? How do you manage your time between the two different businesses?

Brad: Yeah, I’d probably have the hardest time management between the two than anybody else in the company, just because I’m at the top of both of them. The nice thing with Thuggies is that it’s super-seasonal. We’re trying to gain more sales, and gain more push through the outside of Christmas sales. Really Thuggies is insane at Christmas. Between November and December, November and February kind of timing, is probably 85 percent of our market. Outside of that we’re prepping for that push. While we’re doing that, we can sell bed sheets through the entire year. We know with Thuggies where, if we sell X amount of Thuggies today, in November it’s usually 10 or 15 times more. We can make estimates for BedFace and say okay, we need to set this much time aside to set that company up for the same success.

With me, I try to write lists, and I use Glip.com and write myself tasks, and set strict deadlines on when I need to get them done. I also tell everybody that works here to yell at me if I’m behind. It’s nice to have that time split, but it definitely creates challenges, and it can lead to over-focus on one, and then the other one can come down. That’s where I rely on our team to say, “Hey Brad, you need to focus more on this right now. This is more important.” It’s not to hurt the other business, but it’s a goal that we set, and we need to go to that. That’s how it’s been working so far.

Felix: Yeah, I think a lot of listeners do have businesses that obviously will have an up-take in the holidays as well, just because of the nature of retail in general. For any business out there that has a highly seasonal business, where all the sales, or over 50 percent of sales are concentrated within just one quarter. How do you spend your time the rest of the year? How do you prepare to make sure that that quarter is as successful as possible?

Brad: We test ads that we saw working through the winter, or through Christmas, and try to do variations of that. We still haven’t found huge success in Thuggies in that kind of realm. We try to build our micro-influencers bigger, we try to have a gift guide plan, and how we’re going to get to these people. We really start focusing more on getting these lifestyle shots, and kind of regrouping from the holidays usually takes us all two months to get everything back in order, and clean up the warehouse.

Felix: Like a tornado came through.

Brad: Yeah, we usually take a solid week and a half to just relax, and work half days, and say we’re through it, and let’s regroup, and get back on it, and plan. I’d say through the downtime you can still make money, and that’s where to find your next season, instead of waiting. If you are finding that you’re waiting, then at least really prep for that high season.

Felix: Makes sense. One thing you mentioned in the pre-interview was about how you have created the skill of building market-share prediction models in Excel. Can you tell us a little more about this? What are market share prediction models?

Brad: Yeah, I used to be a city planner, and we would help people, or help the city rezone, and develop new properties. After that I worked for a private company that did the same thing. We were all in retail, and I was helping build models in the Middle East, and in Canada and the US. We built these models to say if a market share is a percentage of what everybody is spending, in whatever market you’re in, how much do you think you can capture? It’s a fairly basic explanation, and in an Excel sheet you can do it really easy, you can say if you want to make a chair and sell it, you can probably Google how many chairs are sold? Or what the furniture market is in the US.

Then you can estimate what percentage you are going to capture of that. That would be say I’m a startup, I might get 0.025 of that million dollars. That’s a really basic explanation. You can build them insanely crazy over pages and pages of Excel. That’s basically how it works. It’s what percentage of a consumer spend can you get? That could be as much as, at a ski festival you can say there’s a hundred thousand people going, they’re probably spending $100 a day, and there’s probably half of that spent on food. Then half of it is spent on ski gear, and then what does that leave? There’s maybe $7 to $10 that each person there can spend. Then you can say if there’s a hundred thousand people, that’s $700 thousand worth of spending. Then what are they going to spend that on? Work it out again, and say what percentage can I get of that? That’s really how we’ve worked both our companies.

We’ve tried to figure out what people are spending. With Thuggies it was novelty goods, and bed sheets we had a lot more idea of what people are spending in the US and Canada. Then we really just estimated how much we could get. Then how would we get that is the next step. If you think you’re going to get a hundred million dollars of the market, you better have a really good idea of the next step, and the marketing. That’s where the marketing, and the business plan comes in. This is kind of like the pre-business plan. That was just something I learned at work, and took it out of real estate, and put it into any other product really.

Felix: Yeah, I think this is particularly useful for anyone that’s just looking for their first product, or first store to start, is to do this kind of market research, do this kind of analysis, to find out is it even worth it? Is it worth your time to invest in starting this business. I think what you were saying at the end too was that if you’re thinking about releasing a new product line, for an existing business, is also just as useful, because you can, again, determine if it’s a worthwhile investment in this new product line or not. Thanks so much for your time Brad, so Thuggies.com was the original store, then BedFace.com, is the second store. Anywhere else you recommend the listeners check out if they want to follow along with what you guys are up to?

Brad: Yeah, it would be great, just follow us on Instagram, and Pinterest, and Facebook. We’re @thethuggie for Thuggies, and we’re @bedfacesheets for everything else on BedFace. Yeah, get comfy this year, get bed sheets and extra large sweatshirts, we’re the best things on the market, and you don’t even have to wear pants.

Felix: Awesome, we’ll link all those places up on show notes. Thanks again so much for your time Brad.

Brad: Great, thanks Felix. Talk to you soon.

Felix: Thanks for listening to Shopify Masters, the e-commerce marketing podcast for ambitious entrepreneurs. To start your store today visit Shopify.com/Masters to claim your extended 30 day free trial.