Tecovas: Paul Hedrick

26:40Right. Oh, a lot of these brands were wholesaling. They were selling at department stores. Oh, every brand was wholesaling. Yeah. Because that's the big business, obviously. It's like Nike. That's their business. Yeah. Mostly selling to independents and big box Western. Yeah. But the other real thing was, I really want this boot to be everyone's favorite boot. And I want this brand to be everyone's favorite brand. And so I had already started to make a long list of the things that, you know, we were going to offer the consumer. And so what ended up coming out was a couple of things. One, the product was going to be better.

27:11And there were just a few notable minor improvements we needed to make to make the product, in my opinion, significantly better than the competition. And it all came down to comfort. Most of the high-end brands used pretty stiff leathers and what's called the vamp and the counter, basically the part that wraps your foot. And I remember asking the factory owners and the tannery owners, like, hey, why are people doing this? And they're like, well, in Mexico, people don't like the boots to droop, and so they always make them stiff. And so we always tell people to make them stiff here. You wanted softer leather.

27:46Yeah. And I was like, well, can we make it softer? They're like, oh yeah, if you want. Like, all right, well, let's do that. And then the second thing was most of the higher end brands that use really old school construction techniques were not comfortable underfoot. They would stick a big, basically natural, untanned leather midsole. And I said, well, why don't we just add a little bit of cushion under there as well? And so those are the two innovations that differentiated us from all the high end brands. And then the other big thing we did was, and this is where my sort of Northeast experience with other people reacting to this industry came in handy, was I kind of felt like the category needed to be demystified a little bit.

28:29Yeah. You know, the only shopping experience really available at the time for cowboy boots was not only in a physical retail store, there wasn't much online, but you're walking down basically that grocery store aisle of boots that are arranged by size. and there's a hundred different kinds of boots that all look different from each other that are a hundred to a thousand dollars with almost no rhyme or reason. And it can be overwhelming. You almost feel like you need a Sherpa to walk you through it. And I said, why don't we simplify this for people? And I, in my research was effectively going to these stores and then asking the associate, Hey, tell me your bestselling high quality boot you have.

29:13and they always pulled something off the shelf that it was so refreshing. It was always this simple, brown, beautiful, sort of understated details, high-quality leather, no frill. It felt versatile. It felt like something you could wear with jeans or slacks. And I'm like, yo, this is really the one that sells. And then I look at the shelf, I'm like, well, why isn't that more obvious? And can I distill that for the consumer? Yeah. All right. I want to just stick to Leon for a moment. You end up having to work with this other factory that's across the street from the one you want to work with. I'm assuming this other factory is smaller, probably doesn't have the same capacity.

29:55When you start to talk to this factory, you're not a designer. How does it work? Do they have like lookbooks where you just like pick different parts of what you, how you want it to look and you put it together? Well, remember, I wanted to go to be my creative endeavor. And so, yeah, no, I designed the boots. I did draw it with my hand, but then I needed to send an email and I couldn't get a good picture of what I was drawing. And so I went into Microsoft Paint and I figured out that there was a function where you could kind of make a line and then click to the right. And the line would kind of swoop and turn into a curve.

30:36Right. I basically used that to try to match my drawing. And so, yeah, the first boots were designed in Microsoft Paint. When we come back in just a moment, how Paul becomes the client from hell when dealing with his Mexican manufacturer. And how he chooses a name for his brand that, at first, he doesn't even like. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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34:33Hey, welcome back to How I Built This. I'm Guy Raz. So it's late 2014, and Paul is trying to place an order with a factory in Leon, Mexico, to make his cowboy boots. But he only has$100 ,000 to work with. So we negotiated. I tried to get the minimum order quantity as low as I could. And what was their minimum? How many did you have to order? 2 ,000 pairs. And you were going to price them at like, what was your retail price going to be? $195 to$235. Got it. Okay. So basically, you're looking at what? I mean, your price. It was about a$200 ,000 minimum. Right. You had$100 ,000. So you were going to have to get pre-orders or get some good payment terms or raise money.

35:20But it was more than you had. I mean, you were going to have to spend about 200 grand on these. But and what was the time frame? I mean, did you again, like at that point, did you like put a deposit down and say, OK, here's the first 30 grand. Let's go. Let's start. Yeah, at this point, so much time. I had wasted so much time trying to get the other factory on board. And we're well into the spring. You know, my funds are dwindling. We get all the way into the summer. but it got so bad that actually I got handed off to the factory next door to the one that I had originally worked with because they were busy with their other orders.

35:54So I'm on factory number three. You know, I basically had to start development fresh with them. And I had negotiated to spread out the minimum as much as I could. I said, how long can I spread it out? And they said four months. And I said, okay, well, in my head, I'm like, well, yeah, I'm obviously going to run out of money. But if I launch the brand, I'll get revenue coming in and I don't have any other costs. So the revenue should be just enough to pay for the, yeah, the rough math should work. I should be okay. Okay. Well, we're going to get there in a sec, but you have a plan. And by the way, did you have a name yet?

36:32Was it called Tecovas already or not yet? I believe we picked the name in December or January. I had hired a branding agency that fall. But how much did that it cost you? All in on branding and inclusive of basic web design. I think I paid$15 ,000 or$17 ,000 and then included it. Oh, so that's a bargain. Yeah. I mean, I was not going to the New York agencies. No. So how did you come up with a name, Tecovas? Because Tecovas, I think it's like a geological formation or something. Tell me what it is. Man, coming up with a name for any brand is so frustrating because it all starts with a lawyer, or at least it ends with a lawyer, and nothing's available.

37:18And I had a few names that I wanted to use that weren't available. The Tecova's name came from a brainstorming exercise. We actually found a friend of the agency was a graduate student at Texas, I think majoring in linguistics. I don't even remember. And they kind of used him as a contractor every now and then for naming. And I said, I want it to be a Texas based name and I want it to come from something real. And he basically came up with a list of 10 and, you know, we'd been told by the lawyers to pick something relatively obscure and we kind of picked the most obscure one, honestly, but it felt right to them.

38:01I would say I didn't really like it at first, to be honest. You didn't like Ticova's? I wish I had the vision to say I did. And what is it? Is it a geological site? Yeah, it's basically a rock formation within the Palo Duro Canyon, which is basically only geologists have probably ever even heard of that word. So you could use it? Yeah, it was basically obscure enough for us to own. It felt right to me after a while. It kind of the first two letters and the last two letters were the same as Texas. It felt both masculine and feminine. It kind of felt plural and singular. It kind of sounds like a Spanish word.

38:40I think it actually derives from a Native American word. And so, yeah, just a lot of signs pointed toward the name being right. All right. So you have a name, but you're blowing through your cash, your savings, right? You had a hundred grand that you brought with you. but now you needed more money you needed more money to pay for all this stuff right all these orders so what did you do yeah the well wasn't going to run dry until the fall of 15 and that was really when all the major operational costs were starting to add up yeah and it became pretty clear that listen it became blindingly obvious that i was going to run out of money and so i really had this milestone.

39:23I wanted to get to launch. I wanted to say I bootstrapped this brand to launch and then I went, you know, and raised capital for it. So I got comfortable with the idea of raising capital that year for sure. I mean, every other brand in the universe was raising seed rounds, pre-seed rounds. But you knew you could get through that first year on what you had. Yeah, I got through the pre-launch year and I did. I got through the pre-launch year and basically September I started running. Well, here's the other thing. I cashed up my 401k. So that was not included in that original number. You take a big tax penalty on that.

39:55Yeah, but you were in your 20s. I mean, it's not that risky. I mean, it's not the best idea, but you can recover from that. It's not, but man, I mean, I extended every runway I could, even though, like you point out, yeah, I certainly had the ability to raise capital. I don't know. I was prideful. I didn't want to. I wanted to get to a certain point. I probably took on$30 ,000 of credit card debt. I don't think I even erased for three years. I mean, my credit score was in shambles until a few years ago. And tell me what you were doing on a day-to-day basis between the time you visit Lyon and when you launch, right?

40:33We're going to get to how you do this in 2015. But like on a day-to-day basis, I have to imagine you're working both trying to work smart, but probably working very long hours. What are you doing every day? To be honest, I don't think the hours were long because there's just not a lot to do. There's no company that's operating. There's no customer service emails. There's no orders to be placed. It's a lot of hurrying up and waiting. And I think I totally underestimated the design and product development lifecycle and how long that would take. Why did that take so long? Was it going back and forth with like emails or?

41:09Because I had never done it before and I was the most annoying client you could possibly have. Because they would make a prototype and you were like, no, it's not right. Yeah, basically today the way things work is you agree to a certain number of prototype reviews, usually two, maybe three. And I was a perfectionist. I mean, we probably went through 10. I remember going to them on day one and saying, I am not designing to an FOB cost here, a cost here. I am designing for the end product to be perfect. And then you just tell me how much it costs. And I'm going to go price it, you know, the way I need to price it.

41:49In other words, they were used to doing it as cheaply as possible, assuming that the customer was going to then sell it to a wholesale, was going to wholesale it, and then the retailer would mark it up again. Yes, they were used to the brand saying, it can't be more than$80 because we're going to multiply that by four and retail it for$320,$325. And you were basically saying, look, you can spend more money because I'm going to be selling this direct through my website. So if I make a 30 % or 40 % margin on this, we're in great shape. But that meant that they could spend more money on the prototype.

42:24Yeah, the challenge was I was asking them to spend money on things they don't normally spend money on, like quality control and extra training and all this. Basically, it was always going to be to work with Tecovis as a client. I wanted to shift the paradigm with these factories. I want it to shift away from where do we cut corners, where can we save money on, you know, some small material thing, and how do we invest in the quality. Yeah. Okay, so you're going back and forth and back and forth. And in the meantime, it's a waiting game because you want to launch this thing. And how long does it take to make a prototype?

42:59Like two weeks? Yeah, two weeks is a pretty typical cycle. Okay, you look at it, you fly down there, and you get there and you're like, no, it's not there. Not good enough yet. Yeah, that happened more times than I can count. And then it happened again because we had to switch the factories kind of last minute. How were you keeping up your spirits that this was going to work, that people would actually buy them? What gave you the confidence? It was a very humbling year, I will say. I remember my college roommates kind of asking me for updates. And, you know, they're like, oh, you quit your job in private equity to start a boot store.

43:38You know, how's it going? And yeah, I ate a lot of humble pie. And so I think by setting that baseline all the way down and knowing that, no, I'm like going all the way to the bottom. I'm going to zero. I'm going to negative. You're like Drake. You start from the bottom. Yeah, maybe. Well, no, not exactly. But I hear you. Yeah, because, okay, you go to this prestigious university and all your friends are in finance and are going to business school and you're like in Austin trying to make cowboy boots. Listen, I was talking to a lot of people about going to market and getting ideas for how to launch and I ended up actually, I believe you have the Harry's guys been on this?

44:20Yep. Yeah, well, you have friends with Jeff. With Jeff Rader. Now I am, but I didn't know him back then. But I had seen their launch playbook, and they had created this, actually this open source email gathering tool that I think they had gathered like 100 ,000 emails for before they launched. And so I found the code for it and put Decovis on it. And, you know, that was just one of the many things we did. Unfortunately, unlike the 100 ,000 emails, I think I got 2 ,000. That's not bad. You know, I think I launched with, you know, we launched with 5 ,000 emails. But yeah, I was basically just spending that whole six months of the last development time grasping at straws, finding every single thing I could put into the bucket of how do I make sure on day one that this thing, I'm not launching to crickets.

45:06Yeah. And are you already by the summer of 2015 letting people put in pre-orders? No, I had this almost illogical aversion to pre-orders because I wanted the whole experience of Tecovus to always be fast and free and amazing. And so I didn't want to subject the consumer to uncertainty, which, you know, was probably stupid for me. Yeah, I mean, that's counter. It's like a very opposite way to how most D2C companies start. They start with pre-orders, and there's usually this uncomfortable waiting period, and then people get mad, but then it all works out. But by the way, did the website look good, by the way, or was it kind of janky?

45:51You know, Shopify was kind of getting off the ground, and they had these beautiful templates. And, you know, I was very thoughtful about the storytelling. What was the storytelling? Basically, I had a page about how the boots were made and told the story of Leon. We were really the first brand to kind of tell the story of Mexico and León in particular. Do you think a lot of brands tried to not talk about Mexico because they didn't want people to know they weren't made in the U.S.? A hundred percent. But you flipped that script and you were like, no, actually, this is really where they're made.

46:23This is a proud heritage. Yep. I hired a really good photographer, videographer to come with me down to Mexico to show nice lifestyle photography of the boots being made, of the artisans who are making them. I even created a bunch of shirts for them to wear, but we only had like six of them. And so we would take them off the guy who was finished with this step and put it on the guy who was finishing the next step. Oh, you had like shirts made? Like what kind of shirts? They were little green kind of Carhartt sort of work shirts. Yeah. They had a Tecovas embroidery on it. Oh, wow. You had the guys in the factory wearing.

46:58Oh, wow. That's so smart. So it looks like. Kind of faked it a little bit. You know, my brother-in-law, when he started his business, he called himself account executive. Because he was young. He was a young guy. So he was the owner. He was the only employee. But he called himself account executive on his business card. So when he'd show up, people would be like, oh, he must work for a big company. He's an account executive. By the way, I made business cards. I made very nice business cards. And I remember putting CEO on the business card. And my dad, I getting, giving one to my dad and he just laughed at me.

47:33I'm like, why are you laughing? I am the CEO. He's like, yeah, you're also the only employee. You're the only employee. Yeah. I actually think it's better to put account executive on your business card. Anyway, now you were, you launched a website in the fall, I guess, of 2015. And you're so small that you're probably under the radar. Like none of these competitors even noticed you at this point. Yeah, I don't think any of them. Well, it was a very small universe, I will say. It's an industry where everyone kind of knows each other. I'm sure there was chatter. Here's the thing, that we were never a part of the conversations that really happened the most, which is between retailer and brand.

48:13We weren't going to the trade shows. I showed up to one of them and realized this is not our place. We're not going to be doing this kind of business for a long time. You were not going to be talking to Neiman Marcus or Bloomingdale's. You were going to focus on selling through your website. Yeah. Okay. So you launch officially in October of 2015? October 27th was the date. And you were going to go in with two styles, right? Two for men, two for women. That was it. Yeah. Two for men, two for women, two colors each. The Cartwright and the Earl, I think were the men's and they're still very popular boots that you sell, right?

48:49Yep. Still two of our four bestsellers. And then the women's were the Jamie and the Penny? Yeah, the Jamie and the Penny, both named after dogs that I, former pets. Okay, so you, and who, you know, you launched on the 27th of October, 2015. And who, like, did, was it your friends who were ordering that day? Yeah, turned it on, sent four or 5 ,000 emails out, and had$20 ,000 of sales in the first day. So about 100, you know, 80 to 100 pairs, I forget. That's pretty good. How much of that was coming from relatives? It was about half. So not relatives, but friends and family, people that I knew directly who were probably a Gmail contact.

49:36And you were paying, let's just say, roughly half of that to make them. But then you also had to pay shipping costs. And so roughly, like at that time. They were probably 40 % gross margin. That's pretty good. Yeah. I mean, it also speaks to the perception around cowboy boots, right? It's not like, I don't know, what's something that people just assume should always be cheap, like bottled water, right? A commodity. A commodity, right? But cowboy boots, I think people just go into that experience assuming this is going to be more expensive. That was by far the biggest reaction we got from people who were in the industry.

50:14And in many ways, by the way, being online only kind of worked against us because, I mean, boots are a sensory thing. The way they feel. You want to feel it. They smell. Oh my gosh. And you can see the sheen, you know, the details up front, which are hard to photograph. So I became pretty product obsessed. So much so that actually when we launched, I actually flew to Mexico. The production run wasn't done yet. I think I flew there the first weekend of November and I stayed there until I inspected every single pair. I, you know, personally did everyone and was rejecting a lot and was, I mean, it took weeks longer.

50:54than expected. I stayed in Leon. How did you keep the factory owner from just really getting pissed off at you? You'd go there, you're looking at the boots, you're like, nah, this isn't good enough. Well, I don't think I did. I think they did get pissed off at me. Yeah. They're like, you're coming down here, you're telling us what to do. You're like 26. Who do you think you are? I was a hard guy to work with for sure for a factory. you know the reason that we turned it i mean listen at the end of the day they just wanted business and i told them that we would sell 2 000 pairs they didn't really believe me but they they were just surprised that i came back for reorder and i came back for reorder three months in i said i actually i'm on track to sell all 2 000 over the four months i think ultimately no matter how much i pissed anyone off with being an annoying client to work with we ultimately won with business and doing what we said we were going to do.

51:54When we come back in just a moment, why Paul decides to take a major risk and move from just online sales to brick and mortar as well. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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54:27Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2015 and just two months after launching the brand to Cova's, Paul has done over$100 ,000 in sales and he's selling his cowboy boots in two ways. online and out of his car. I had sold my car and bought a kind of a beater, an old truck, old SUV, and I would drive that to farmer's markets. I think our second best sales day of 2015, aside from launch day, was me driving to my middle school in Dallas and selling boots from a table at the holiday market. In fact, my mom came and helped me with the booth. My parents were still living in Dallas at the time.

55:13I think we sold$4 ,000. So, you know, call it 20 pairs at that thing. And so it was just little by little. And I really believed in getting out there in front of customers. I didn't think that sitting in front of my computer and reading customer service emails, although that was helpful, was going to really drive it to the next level. I wanted live interaction. And so I told myself, and once I hired my first teammate at the end of December, I told him to assist. This is Brandon Wendell, right? Yeah, Brandon Wendell. And who was he? Like, what was his job? His title was, I think, growth lead. So we had ended up raising some angel capital.

55:55And one of the guys who I had reached out to about raising money was an angel investor out in DC. Brandon had been working for him. So he actually called me. And I was, I mean, he didn't know, but I was sort of desperate for help. And I had already tried to convince a family friend to join me. I tried to, I hit up the McKinsey and Bain message boards and try to convince people to join me. And, but, you know, Brandon was hungry. I told him, listen, what I don't know how to do is market. It's very clear that we're going to need to learn how to digital market and we're going to have to learn the universe of social media.

56:34How about you figure that out? So, you know, we started testing digital marketing very early. We started working with an agency on Facebook advertising probably by that January. And did that pay off, the Facebook ads? Yeah, we were, man, there was a combination of there not being any other, I think, Western boot brands advertising at the time and us having a really compelling value proposition. And candidly, man, we had product market fit and people loved the boots. And so we were able to advertise pretty early. And I mean, I think we were paying ourselves like 50 grand. So we had enough capital to test.

57:14And it turned into a game of when the dollars had to go out the door for the next order and how much we could afford on advertising that week. And what is our stock level and how much when our stock level goes down, does our return on advertising spend go down and tweaking? It became almost like a trading floor. And then I, on the other, while he was managing the spend, I was going down to Mexico every month. And I mean, I was negotiating all the way down to the timeframe. So I would say, all right, this is the date that we're going to commit to the overall quantity. And then a few weeks later, this is the date that we're going to commit to the color makeup so we can buy that leather order.

57:53Then here's the date we're going to agree on the actual size cut. And it was as late as possible so I could have as much inventory data as possible and had a constant kind of model flowing. So only because of that were we able to attract eyeballs, convert the eyeballs. We basically got$2 million in revenue out of it and broke even. I mean, 2017, you're doing$10 million in revenue and you're profitable. Yeah. When did these other bootmakers start to notice? And I imagine some of them were probably a little annoyed with your approach because you were undercutting their prices. The truth is, I don't know when because we never really heard from them.

58:34I do remember a moment. Yeah, so we did about a little under$2 million the first year,$13 million the second. And it was coming into that third full year in business, 2018, that we were clearly making a pretty big splash. And I remember sitting next to one of the other boot executives on a plane to Leon and him telling me, man, we're actually starting to feel y 'all's business. and I said, oh, well, sorry, happy to be in the industry. We're still pretty young and don't know what we're doing. And they actually said something encouraging. They said, listen, you're doing something right. People are buying it.

59:12So I don't remember exactly what he said, but it was sort of a happy hunting mindset. Paul, I mean, by the end of 2018, you do a series A round and you raise a lot of money,$30 million. So I have to imagine that by this point, you have really serious expansion plans. And it's not just going to be cowboy boots, it's going to be apparel, it's going to be, you know, accessories, leather, belts, other things, eventually cowboy hats, all these things that you would eventually do, but it was also going to be stores. And in, I think, early spring of 2019, you open your first brick and mortar store. This is, I think, still one of your flagship stores in Austin, on South Congress Street.

59:53Now you're You're going from D to C to brick and mortar. There's some crossover here. But tell me why the store, why that shift to doing brick and mortar was important. Because this was a time I think a lot of people forget where the narrative was. Brick and mortar is dead. You know, it's just a waste of money. Obviously, Warby Parker did brick and mortar away. Other brands, Allbirds. For some of these brands, it worked. For some, it didn't. But what was the thinking behind it? When the conventional wisdom was like, it's dead. No one's going to be doing brick and mortar. Yeah, so I go back to the original inspiration for a boot.

1:00:34And the cowboy boot is that it has a story. People have a story about how they bought it, how they found it, whether they got handed it down, whether they got it at the thrift store, whether their grandfather gave it to them. And I just think, I kind of thought, listen, I feel like we're almost succeeding in spite of our business model, not because of it. and I wanted this creative outlet. I had this vision of hospitality for the brand that went way further than the customer experience associates because there isn't really anything that special about really good customer service if it's still limited to phone, email, and chat.

1:01:10And then I had these theories that there was also a gap in the market. There was no premium contemporary brand in the space and now we are the premium contemporary brand. And if you go look at what premium contemporary brands do, they grow through retail. Go look at Lululemon. They're the primary example. And I kind of considered ourselves the Lululemon of Boots. You had to kind of touch it to believe it, feel it to believe it, fit it to believe it. It kind of felt like that was our equivalent. And there was no premium contemporary retail. You basically had independent specialty retailers, and then you had big box retailers.

1:01:47But you didn't have any high street, didn't have any malls. You didn't have any premium outdoor lifestyle centers. So there was this massive marketplace gap to fill as well. So, all right. So you opened this store. I've seen lots of photos of it. And it's a beautiful space. I mean, it's wood ceilings and really sort of browns. The colors in there are very, even the wood is very leathery looking. And you go in and I guess you get a drink. You get a glass of bourbon or something if you want. And they'll shine your boots. And tell me about that experience, because it seems very like there's a lot going on there.

1:02:25What did you want the store to be? I want it to be fun. We were a very we had a very fun internal culture and I wanted to translate that to to our customers. And I wanted to think about all of the things that we could say yes to. Like, could we have a bar in the store that served free drinks? Could we have boot shines? And now we do personalization in store. We started branding boots last year. And, you know, finally, I think we've been able to give the customer what they want when you invest in that. When you invest$400 in a pair of boots, you want it to fit right. So, okay, we've got boot stretchers in store.

1:03:05Oh, you want to be able to personalize it. It's a gift. Okay, we'll just say yes to you for that. You want to bring your old pair in and get it shined. Okay, we'll say yes to you for that. It's an investment. And, you know, the stores have really allowed us to kind of come full circle. on delivering that promise? So I think by the end of that year of 2019, you had opened a total of five stores. And I think, not all of them were in Texas, right? I think there was one in like - One was in Oklahoma. Five stores and you're growing like crazy. And there's, it takes us to February of 2020, you raised$27 million Series B.

1:03:44I mean, you're really humming along here. March 2020, March 13th, you open another store. And then a couple days later, the shutdowns begin all over the country. Oh, man. Yeah, that was a doozy. I think by the third week of March, your run rate drops 50%. And I mean, 50 % of a drop in sales, you have to make some serious decisions about how you're spending because so much of your business is still direct to consumer, which means you guys are spending a lot of money on ads. You had to basically stop that, which is going to have an impact on revenue because fewer people are going to see those ads leading to fewer orders.

1:04:32Yeah, it was a, obviously we had to close the six stores, one of which had just opened, which was such a surreal experience opening that weekend. You know, with everyone's can't get hand sanitizer. I think I had a box of baby wipes in my back pocket, you know, shaking a hundred hands. Yeah, I get a frantic call from an investor that Saturday or Sunday saying, we got to figure out a plan to not go out of business. And man, then things got really bad, honestly. Probably the toughest moment of my life, personally. You know, we had to act. I made a three-pronged plan that was, you know, kind of realized, hey, this is one of those moments you define your career as a CEO when a crisis like this happens.

1:05:19You know, we had to stem the bleeding. I did have to reduce the workforce. I think we had 70 employees at the time and we did a reduction in force of about 20. And then we lowered everyone's salary as well. And then I had to raise it kind of an emergency round that summer. So that was like the not fun prong. And then the other two prongs were lean in and the other two prongs were hug the customer and hug our partners and play offense. And so Hug the Customer was, let's keep launching our new product. Every other brand in the industry was cutting all innovation, cutting all new launches. But I'm just curious, as your fortunes begin to plummet, right, this is a very scary time for a lot of retailers.

1:06:06Their fortunes will turn dramatically within a few months, in some cases a few weeks. But in your case, it was different because you're selling a product that people generally wear outside, right? This is not athleisure wear or slippers. Like this is something you wear to go out and to be out and about. Like business suits, for example, just dropped, sales dropped. Formal wear, you know, or sort of going out clothes, designer stuff. When did you start to see sales pick up? Because they would pick up in 2020. It didn't pick up until the winter, really. And, you know, basically Q2 and Q3 that year were all just us emailing and keeping live the people who really liked Decovis already.

1:06:55It was just staying afloat. And by the way, the reason we picked up is that third prong was play offense and hug our partners. Our partners were our landlords and our factories. And we didn't cut any orders. We kept making stuff. We raised money to make sure we could pay for inventory. But what do you think explains it? I mean, your sales dropped 50 % in the first week of this thing. But then by the end of the year, you're$10 million more in profit than in the previous year. What explains it? I think it was us believing in the brand. I mean, we bet on the brand, to be clear. But what does that mean?

1:07:34We opened eight stores. Right. And those stores, by the way, we were in Texas. So you could be open. We reopened our store in April. You're not in California where you couldn't. Everything was shut until 2021. I think we literally were closed for three weeks. Right. You know, obviously foot traffic was plummeted. people were in masks, but people were shopping again. People were in the stores. Yeah. I think we really, let's be clear. We benefited from being a mostly Texas and Southern oriented brand. I think the brands that really got, the retail spots that really got hit were the Northeast and the West Coast.

1:08:12Was the experience somewhat different when people were coming in and everyone was wearing a mask, like all the customer service people probably couldn't serve drinks or you weren't serving drinks or what? I think we were still serving drinks. Yeah. You know, people lowered their masks to drink the drink, just like on the airplane. But, you know, you might remember that masks became a politically charged thing. And so that became a hard thing to figure out. We always wore them, but we kind of stopped dictating that customers wear them at some point. I mean, that raises an interesting question, right?

1:08:44Because you're not Starbucks, right? And Starbucks for a long time seemed to be appealing to sort of center, left of center consumers. you know, with their public campaigns and supporting social justice and all these things. You are a Texan brand, right, appealing to not just Texans or Southerners, but people who sort of are attracted to kind of Western wear and that lifestyle. And not to stereotype, but let's just say that at least half of them are going to be slightly more conservative. Is it, I mean, you mentioned this idea of masks being kind of a political litmus test. And so I wonder if you guys kind of had a moment in the business and say, look, we have to respond to our customers.

1:09:27Like if they don't want this, if they're not going to want us to be wearing masks in stores, we shouldn't. Yeah. Listen, politics has always been an interesting question here. We have remained fiercely apolitical since day one. You know, I'd say that we're, we probably have a surprisingly even demographic spread across. I mean, it's remarkable that like Western wear, you know, which has been around since the 19th century, right? In different versions, like cowboy hats and boots and denim and that whole look, right? You know, the stitched shirts and, you know, it could have become like wearing a dirndl, like being a Bavarian in Germany, right?

1:10:10Or like in Austria, right? Like it could have been like this weird thing that you just did during Oktoberfest. But it is an enduring global phenomenon. Like you go to China today and like people are wearing Wranglers and Levi's. You go to, you know, Japan, people are in cowboy hats. I mean, there's something about Western wear, cowboy hats, cowboy boots that's just so enduring. What do you think explains that? One thing I'll say, it always has been part of the American diaspora of style. Western has, as you point out. It's had its ups and downs as well. It's been a trend that's kind of been a jagged curve up and to the right in terms of the growth of the cowboy boot industry.

1:10:53But if you drive 30 minutes outside of any city, including the Bay Area, in the country, you're probably going to see more pickup truck advertisements. the radio probably turns to country. And the point is there's a huge base that's always there and always has been there. But I also, something feels like it's turned. And when people ask me about, you know, Hey, the last few years, it feels like boots are more in trend. You know, my first response is, well, you know, it isn't really a new thing. It's always been around. Maybe your friends just started wearing them in Manhattan perhaps, but I actually am excited because I think it passed a tipping point.

1:11:35I want to sort of jump ahead a little bit because I'm curious about how you and you look back on it because we're going to talk about in a moment about leaving the leadership role. But, you know, you were a young guy when you started this 25, 26, and now you've scaled it. But what did you think about managing people and being a leader? Did you feel like you were good at it? It's really hard. I mean, some people are naturally good at it and most people have to learn it and usually they're bad at it for a while yeah i think i definitely was bad at first and i think the whole time i thought i was bad all of the hardest moments of the business come from people whether or not you may usually it was when you made the wrong hire or you had to fire someone it's the lowest lows of any day and i think i didn't realize how that i was actually doing a pretty good job most of the time and so but i beat myself up a lot.

1:12:30And that was actually one of the reasons I started looking for leverage in the business. When you say leverage, you start looking for... Yeah, I wanted an executive who can help take a bunch of the business functions off my hands. I stopped recruiting for that role during COVID until late 21 when we had sort of exploded. I mean, we'd gone from, I think we went from 80 to 140 million in revenue between 2020 and 2021. And it was so clear that the company was on a good track again post-COVID. So I was like, okay, here's the time to address my own management desires at this point. You wanted to focus on things like branding, creative experience rather than operations and employees and management and things like that?

1:13:16Yeah. I was passionate about product, about retail, and about brand. And so it was a hard decision, obviously. I mean, my identity has been tied in this business for almost a decade at that point. And over a decade now, I realized I didn't need it for my ego, though. I didn't need to be CEO to be happy. In June of 2022, you bring on David Lafitte to be the CEO at Tecovas, and you transition to become executive chairman. And at that point, you step away from the day-to-day operations. So just reflect on that for a moment. I mean, I'm sure on the one hand, it was really, it was a relief because you didn't have the same level of stress and just constant fires.

1:14:06But on the other hand, you didn't have the same level of stress and constant fires, which is also extremely, you know, it's stimulating. And all of a sudden, like, not as many phone calls, not as many emails, like you're not needed it in the same way. How did you personally cope with that change? Well, it's been an evolution. And you're right, a lot goes out the door. It's been a sort of an extreme exercise in self-awareness. And there are days when I realize my ego hasn't been filled up and I haven't done the things that I used to do that give me creative fulfillment. And those days are hard.

1:14:44and what I would say is it's not for everyone. To be clear, some people should run their businesses forever. Some people need to be told to get out of the way. Some people need to be told to go away. But one blind spot that I think I've noticed in myself when I reflect is that it's taken me about three years, I think, to realize that my style that I had was actually really good for the first, you know, seven or eight years and maybe would have been a little bit challenging in these next five years. And I've been a lot more reflective and grateful, I think, recently. But it took me a while to get there.

1:15:21Paul, you, and I say this to you, speaking as an older guy to a younger guy here, because I'm about 15 years older than you. You're 36, almost 37, I think, right? Yeah, by the time this airs, I'll be, I turn 37 next week. Okay, so I'm 50, so a little older than you. And you are still a young guy. you've made some money because you started this brand and it's successful and you'll probably make more once it you know if it ever goes public or it's bought out by somebody else um i'm sorry it's a heavy question but how do you see sort of let's just say the next 10 years of your life unfolding you know it's funny i've literally spent this has been my main focus of the last few weeks and months really has been asking myself these questions not to dodge it but I would say that the question I get the most is, what's next?

1:16:10What's next? I let it pressure me into thinking about a lot of ideas. I thought about starting another company. And I realized that wasn't the right answer right now and that there's two things that are true. One's kind of logical and one's a little illogical or faith-based. The logical thing is Tecovis is still growing. Tecovis still has a job to do and I still have a really important job to do as its founder and as its chairman. But then the other man, the other answer to your question is I have no idea and I'm just getting comfortable with the idea that I don't know. And that's okay. And I think I've never not known.

1:16:47I've never not had the next step. And I've, my whole life, I had the school, the next school, the job, the job, the thing, the thing, the thing, the next year, the next budget. And I don't have that now. And I think that's okay. And I'm putting a little trust in the universe, honestly. It's a little woo, woo woo, but I'm putting a little trust in the universe that whatever it is I'm doing right is going to guide me to those next things. Paul, when you think about the journey you took, right? And like launching this in 2015, starting in 2014, but launching 2015, and then now this business is going to do like, what?

1:17:24In sales this year. Yeah, we'll definitely exceed 300 million in net sales this year. I mean, it's amazing. And you've got how many stores? We have 42 stores in 20 states. So when you think about that, you know, a category that you weren't initially super confident about and where it is now and, you know, what you've been able to do. How much of where you are now do you attribute to the work that you put in, the grind? And how much do you think had to do with just luck that people – it just appealed to people? This brand, this name, this kind of zeitgeist around Western wear. Guy, as I told you when we first met, I'd been listening to your show for a decade or so.

1:18:09So you've answered this question in the mirror with a phone, with a brush? You know, I haven't. But I did – I could tell you what I would have said five years ago. Yeah, I used to not like this question. Honestly, I used to be you know what? It's not luck. It's all there's no luck. It's all you life is what you make it. But man, I do have such a greater appreciation now that I've reflected on it on the circumstances that had to unfold for me to be where I was for me to be born where I was for me to have had a crisis that I could not have possibly been thankful for that turned me into the world.

1:18:47to the CEO I wanted to be that got so many moments that I don't think ever would have happened that I had no control over and had certainly nothing to do with my skill or will. So I think I appreciate a lot more the way the universe unfolds in mysterious ways. Whatever you want to call that. That's Paul Hedrick, founder of Tacobus. By the way, if anyone ever doubted that Westernware is having a moment, look no further than TECOVA's newest flagship store set to open in the fall of 2025, right in the heart of Soho in New York City. Paul, who came up with the idea for TECOVA's when he was still living in New York more than a decade ago, calls it his full circle moment.

1:19:36Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at gyros.com or on Substack. This episode was produced by Alex Chung with music composed by Ramtin Arablui. It was edited by Neva Grant with research help from Iman Ma 'ani. Our engineers were Patrick Murray and Robert Rodriguez. Our production staff also includes Chris Messini, JC Howard, Casey Herman, Sam Paulson, Carrie Thompson, Catherine Seifer, John Isabella, and Elaine Coates.

1:20:16I'm Guy Raz, and you've been listening to How I Built This.

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