Inside the Merch Model That Reduces Waste and Increases Sales

0:28The wait is finally over. actually have to get out of the way. Hey, everyone. Welcome to Shopify Masters, your companion for starting and building a business. I'm Shuang Esther Shan. In 2021, a landmark US Supreme Court ruling changed the game for college athletes, allowing them to profit from their name, image, and likeness for the first time. Our guest today has been at the forefront of this game-changing shift. Stephen Farragh is the CEO of Campus Inc. and the NIL Store, a platform that empowers thousands of student-athletes to build their brands and monetize their talent. The business has put more than$2 million back into the hands of athletes within three years.

1:14Stephen is here to share how he's built a sustainable and profitable business and how he cold emailed Mark Cuban to secure a funding opportunity. Welcome to the show, Stephen. Thank you so much for having me. So excited to chat because I feel like you're at the forefront of something so exciting right at the beginning. So take us back at the start of the buzzer. How did Campus Inc. start and how did you get into merchandising? Yeah, so Campus Inc. is actually an iteration of a company called Campus Sportswear that was a screen printing company. Actually started in like the late 40s on the University of Illinois.

1:56I went to the University of Illinois. I started selling apparel in college for like St. Patrick's Day events for my fraternity, actually when Shopify was brand new and started doing that, got really good at it, had a couple of designs go viral. I ended up buying the little print shop that printed for me and joining them in business the day I graduated college from the University of Illinois. And that was in 2015. And 10 years later, we're still rocking and rolling. Oh, wow. Okay. So it sounds like a side hustle maybe in university has really blossomed in so many ways. Yeah. And so I became like the t-shirt person on my campus.

2:36And so when I graduated, and this was early in online stores, you would have to put in your order at the print shop, go pick it up, collect money and sizes. And so like my first version was setting up these online stores for groups and gatherings. And then I would take these pre-orders, I'd go buy the shirts and I distribute them? Well, when I joined the business, I said, why can't I teach other college students how to do that? So our thesis as we started was we're rooted in education. We teach college students how to design and sell apparel. We've put almost a thousand students through our program over the last 10 years that have sold millions of dollars of apparel all through the Campus Inc.

3:13ecosystem. Yeah. Such a crazy cool butterfly effect you've had. And also in 2021, There's some landmark legislation that passed, which puts you in the ultimate position to be at the forefront of name, image, and likeness. Talk to us about starting the NIL store. Every week I get on calls and I teach college students how to sell and how to hustle and how to cold call and, you know, pitch and all this stuff. Well, this law changed July 2021. And I can't take credit because it was a student of ours that actually reached out to the basketball team at the University of Illinois and DM them and said, can I do your merch for you?

3:56And they responded back and said, yeah, we'd love that. And so that student sent me a screenshot and said, hey, the basketball team here wants us to do their stuff. And I didn't know anything about NIL at the time. I knew it passed. You know, we sort of played in the licensing space more in the Greek world, not in the collegiate world yet. And so we worked with the University of Illinois and we stood up this platform for the Illini basketball team. We were able to sign like 13 players on there. We made the basketball team almost$100 ,000 that they earned through their merchandise sales in the regular season.

4:30And that was kind of the pilot or the first domino that dropped. I like to say the rest is a little bit of history, but that was really the first major inflection point was, oh my gosh, we have something here. There's a brief moment in time where this ecosystem is changing. Let's take advantage of it. Well, talk to me about scaling Campus Inc. and the NIL store in the last few years, because you have to manage so many universities and athletes on the platform today. How are you able to manage and nurture those relationships? So we went from one athlete And our first athlete was Brandon Pajemski, who now plays on the Warriors.

5:11To today, we support almost 20 ,000 athletes. The hardest part about college sports in the NIL space is that they are 18 and 19-year-old individuals. This is their first time ever doing this. And a lot of them are going to transfer. They're not going to go pro. And so how do you create and incubate an ecosystem that still pays them really well, that supports them, that fosters education, branding, marketing, all that stuff, and can scale and can make sure a t-shirt gets out the door. And so to say that I did it alone would be short of a big lie because we got an investment from Mark Cuban actually pretty early on.

5:55And so I cold emailed Mark and he responded back to me and I said we could build this everywhere. and he decided to make an investment in us. And that's when I hired actually one of my closest friends, Adam Cook, who was teaching at Northwestern and DePaul in the sports program and knew everything about the industry. And the two of us had worked together previously. And I said, if we're going to do this, I need you to come run this thing. And so he came on. His wife was nine months pregnant, and he decided to leave his stable job at higher ed and come scale this thing. And really, we started one school at a time, one athlete at a time, designing for one player, one brick at a time.

6:40And over time, we obviously raised a little bit more money. We hired some incredible individuals, an amazing engineer in the space that could help us scale this and build a platform that could support everyone. So it definitely was a labor of love and it took a massive village to stand it up. Well, so much to unpack there, but I do want to pull on this theme of getting people on board. When it comes to getting the first university to say yes and the first few athletes, what is in your storytelling or what is in your process of building that relationship that you think allowed people to trust you with their name, image, and likeness?

7:25Yeah, well, it didn't hurt to have Mark Cuban in the room. And so we obviously had a really awesome case at the University of Illinois. And we like to say that we have three types of customers. The school is our first customer, then the athlete, and then their fans, right? And so the first thing was fostering those relationships with the school and showing them, look, here is a brief moment in time where the laws are changing, and you need to take advantage of it and not miss the boat. Because if you do, your players are going to go elsewhere. So you need to stay competitive, right? At the same time, we need to pay them really well.

8:01The licensing space that's out there was very antiquated, dated. The technology wasn't good. The websites to this day still look like they're not built on Shopify. And so we're like, we have this new, beautiful piece of technology. And I could probably count on one hand the universities that have said no to us. And most of the time it's like for political, you know, like more dramatic politic reasons. But more often than not, schools were like, come on in and do this for us. And so once we activated with the schools, the schools then help us activate with the athletes. And so doing a lot of like education and teaching to the athletes to tell them this is a platform.

8:41This is what's available. This is how it works. This is how much money you're going to make. And really, when you take that generation of creators who are obviously talented, compassionate, hardworking, resilient, and you show them these things, you let them take it to the next level. And so once we activated with the athletes, then the fans support. And so the fans are buying millions of dollars of apparel. Designs are going viral. Their vote of confidence is saying this is working. And so we could just take that and continue doing it over and over and over again. And then taking a step back, obviously Mark Cuban gets inundated with so many messages and pitches.

9:21What do you think made your message stand out? I like to say I'm tastefully and creatively persistent. Okay. I cold called in college and knocked on doors and come from a family of entrepreneurs, so I'm not afraid to shoot my shot and get shut down. And so I figured out what night the Mavericks weren't playing. I saw on Reddit his email address and I shot him an email. And the funniest part about it is it was actually the best worst cold email I sent because I forgot to ask him for anything. And he responded and said, why are you emailing me? To brag? This is just how well you're doing, by the way.

10:06Yeah. And so I'm like, cool, he answered. And I have like red receipts on my email. so I can see how many times he's opened it. And we went back and forth. We kind of talked smack because he went to IU. He was a big Hoosier fan. And then within 24 hours, he's like, okay, let's do this. And then obviously diligence started and his team kind of came in. But he does respond to emails. And to this day, sometimes our students email him and he responds. He's come on some Zoom calls to teach them. So he obviously saw something, and we appreciate everything he's done for us for sure. Yeah. For those who are new, they need to pitch a lot.

10:45They need to go out there and get people on board. What's your overarching advice to them when they do have to go through a series of rejection? I've been told yes a lot, and I believe I've gotten really, really lucky. And I'm blessed to say that I've found luck in all of these different ways. The hardest thing for individuals to do is actually to just start knocking, right? And so a lot of people want to do things. A lot of people aspire and dream, but to have the resilience to just knock and knock and knock, because every no is one step closer to a yes. And when we were raising our first investment round from institutional investors, like, yeah, you had Mark Cuban on your cap table, but we got shut down quite a bit.

11:29And so every morning I would send out 10 to 15 cold messages. I'd get shut down from a lot, and then I'd get a couple of answers and we'd pitch. And that's kind of the name of the game of the business that we've been in is just keep knocking. I like to tell our students and our team, and I read this a little bit ago, was there are so many doors available. You just have to keep pushing and see which ones are unlocked. And if you push on enough doors, you'll find the right ones to get you to the next level for sure. I think that's a good mentality in anything you do. And also the fact that you're sharing kind of what you learned with the students is so important.

12:05How is it that you're working with people? Maybe this is like the first job they've ever had, and you're out there motivating them to invest their time and energy into the business as well. Yeah. Well, what's really cool is I have a business partner who's twice my age. He's the one that took me into business. It was his company that was the print shop. And what we always say at Campus Inc. is we leverage generational differences, and we look at those as strengths and opportunities of voids that we might have, right? And so when you look at this next generation, if you look past the things society might peg them as, as entitled, and whatever, all that stuff, but you actually see what they're made of, and the tools they have, and how creative they are, and how talented they are, and you tap into those.

12:54I like to say Campus Inc. is like the college education of real life between the classrooms, if that makes sense. and t-shirts are fun. Who doesn't want to design and sell t-shirts, right? Like it's fun. And so, um, when you do those two things and you create a really, really amazing culture, which, um, you know, a lot of our company actually started when they were 18 and their undergrad, you know, it feels very natural. It doesn't feel forced. Um, and so, you know, I have students that work for us that are 18 athletes that work for us that are 19 and 20, um, to business partners who are in their 60s, right?

13:28And so we all come from different walks of life and are able to capitalize on our strengths. I love that a lot. And I think, yeah, bringing the differences together, you actually get a multitude of impact that you otherwise wouldn't, which I think is also unique to Campus Inc. and NIL Stores Tech is that the way that you've built out the business vertically integrated. It's actually really sustainable. It's also very cost effective. So talk to us about how you're able to manage the technology and the logistic side of things. Yeah. So we're vertically integrated in that we print the majority of our items in our facility in central Illinois.

14:10And so my passions really lied. I went to school for engineering, didn't come out and engineer, you know, printed t-shirts. But I love the automation and I'm so fascinated with the printing industry. And so the printing industry is moving to more of a print-on-demand, just-in-time manufacturing. And so I've been able to develop a lot of tooling that has given us the ability to design at scale and also manufacture and produce at scale with very little waste in real time. And so because we built that kind of on the back end, then it was really a matter of scaling the front end to be able to have 20 ,000 athletes with 10 different designs each and be able to handle their names and numbers and you name it and get those products out to the fans.

14:58It's really like this perfect kind of synergy of innovation in the printing industry, but also like innovation in a creator economy, if that makes sense. It's like a symphony of chaos because when you say 20 ,000 athletes, 10 designs, name sizing, that sounds so chaotic. Yeah. I mean, if you take all their sizes and all their designs and all the products, there's 2 million SKUs on the NIL store. Crazy. And when one athlete changes their name or number, imagine 200 of them doing it, right? And so we had to build a lot of technology just to be able to handle it. But if you can handle it for them, you can handle it for anyone.

15:40It makes everything else seem pretty easy. Wow. Which I guess also begs the question, right? With all of the athletes, with their 10 different designs, you must also have a team that's able to create designs that athletes are happy with and launching it. So how do you manage a team of talent that's able to create at that scale? Yeah, so I always say we're rooted in education. One of our artists, his name is Sean Childers, nicknamed Chili. He's actually 23 years old. And he cold emailed me when he was 20 and said, I'm doing all this stuff. When I work on Photoshop, it's like playing the piano for me.

16:27And he sent me his portfolio and I was like, come work for us. And he moved from Florida to Chicago I had to talk to his mom. And so Sean and the team have built this massive ecosystem of artists and a back end that are able to design at scale very, very, very, very quickly. And so we ingest a lot of information from the athletes. We get their pictures, their quotes, any funny tattoos they have, slogans, sayings, and we're able to then turn it into a bespoke experience. At the same time, the way we built the NIL store was a very grassroots approach. We run an Instagram, Twitter, and Facebook for every school we manage.

17:10And so we have students that are running those Instagrams and that are kind of having their pulse on building these communities. And so if you were to go to one of the schools, call it like the Purdue NIL store, that Instagram is run by a student. There's an account manager and an art team assigned to it. And they are designing in real time for the athletes when there's any marketable moments. And so we're actually dropping almost 150 new designs for what is current every single week. Literally, if there's a game or something that happens, there's a shirt that comes out the next day. And I give a lot of credit to Chile and the team that's built that out.

17:51But we have an awesome, awesome, like we take a lot of pride in our art and we want to make stuff look sick. And I'm really, really proud of what they've been able to do so quickly. I also beg the question of because these are students who are running these communities for the different universities, is there also a crazy plan of succession planning where there's generations of social media managers and designers and stuff like that? How do you make that all make sense as well? Yeah, precisely. So if you foster those relationships when they're young, they will continue to propel as they get older.

18:31And so our second employee on the NIL store was Sean Allenby. And Sean came from Maryland Athletics. And he's a PR, sports, and marketing guy. And he's so good at it. And he's so good at teaching students how to do it. And so he created this sports marketing internship. And all of our students are on Slack. They get paid every single week. And he teaches them, if you want to be in the sports marketing space, this is what it's going to take to run a Twitter and a Facebook and an Instagram. And then obviously like the best students will maybe come work for us full time or they will hand the torch off to someone younger when they're a junior or a senior.

19:10And so like one of my joys is just watching that Slack channel every night and the GIFs and the memes and the TikTok and the stuff that they're making. And then they're all helping and teaching each other. And so long term, we're kind of building these snowballs and the students are helping us propel that. Yeah, because I think, you know, at the top of the interview, I already knew that this is such a complex system that you're building. But the more we talk, the more we uncover and the more chaotic it might seem a little bit, but you seem very calm. So I guess like how do you manage it yourself, right?

19:47There's so many schools, athletes, relationships, communities, social media accounts that you're building in addition to running a business, fundraising, all of that. I have a really amazing team around me. I have some of what I say is like, you know, it's not about you. It's team, team, team. And I'm not a calm person. I'm very calm right now. Maybe it's because it's the morning. But I work with a lot of intensity and I work very quickly. And I believe like speed is the way to win sometimes. But then I have amazing leaders that are poised and graceful and can kind of take over when need be. A lot of times I'll lay out the vision, maybe the case, show the idea.

20:34And we have incredible operators and people that can execute. And so like our core leadership team, they're just amazing. Some of them are my closest friends that I've worked with. And so the fact that we're so well balanced, sometimes I actually have to get out of the way and let them cook. And that's probably the biggest lesson that I've learned is to learn how to let go and let them, they're the smartest people in the room. It's just about putting all the brains together, if that makes sense. Yeah, totally. Yeah, it's so interesting to hear your perspective. I love the fact that you mentioned sometimes you do have to take a step back and let your team shine, which is also another part you enjoy where you actually learn a lot from the students that are working from you and they're able to kind of show you new things that you haven't thought about.

21:25Are there any stories from just the experience of learning from students that are working with you that have maybe changed the business? A lot of our ideas have come from and been fostered from them. I think what's really interesting is what we learn from the athletes. Yeah. And so what's really cool is we put out this platform, we give them the ability to sell t-shirts and then some of them will come with ideas to us and so um dylan riola at nebraska uh is hawaiian and so you know he wanted to make a nebraska jersey with his hawaiian flair on it and so we were able to come up with this collection with his family as a tribute and an homage to his his heritage and and his community back home but also pair it with Nebraska football.

22:15And so what that actually taught us was, hold on a second, we should really be leaning into their communities back home. And the way that iterated was, what about their hometown high school basketball jerseys? That could be interesting. And so what we've been able to do now is when we have like star athletes, Cooper Flag, Paige Beckers, we actually will try to activate obviously with their school, but we'll actually try to activate with their hometown and will go and we'll build their high school jersey because like they're hometown heroes, right? And so, you know, that's just like one example of an idea that iterated, iterated, iterated.

22:51A lot of times the schools will come to us with ideas. And so there's an athlete at Purdue, kind of looks like Buddy the Elf. And so they wanted to do this entire campaign on him as Buddy the Elf on a shirt. And they created this video. And at the end of it, they put a QR code on the Jumbotron where you could buy his Buddy the Elf Purdue-themed shirt. And it's Caleb First. And that leaned into this holiday theme. We've had athletes come to us and say, I want to raise money for a charity. Or I have a sister with special needs, and I want to raise money for her foundation, and I want to collab there.

23:30So many of these ideas, we just kind of listen and we ingest them. And a lot of times we'll say like, let's try it. Let's see what happens. Love it so much. And to that point, right, even unlocking a new door with going back to their hometowns and their high school teams, what a cool opportunity. And I think on the inverse of that, right, a lot of athletes, they might not go pro and they might actually use this experience with NIL to kind of kickstart something entrepreneurial. Yeah. Talk to us about how, you know, this might be a way for them to think about life beyond sports as well. Yeah. So I always like to put myself in the shoes of an athlete.

24:13I was not a college athlete. You know, my sports career ended my senior year of high school when I realized I wasn't cut out for college sports. But a college athlete is at the top tier of their hometown school. They're the most talented, hardworking, resilient. They've earned this right to go and play at this next level stage. To go play D1 sports is so hard to do. They come on campus. They're inundated with all these things. They might have the news in their face. They're also 18 years old. And then they're also told, hey, by the way, you can make money now. You can brand. You can market. You can activate.

24:48You can work. You can real life experience to play around, mess up, figure out how to start making money, figure out where their passions lie outside of sports. Because when the ball stops bouncing, you got to figure something else out. And so a lot of them are learning to work with contracts, and they're learning to negotiate deals, and they're learning to work with companies, and they're learning how to market. And like, that's the real collegiate experience, if you think about it. And so I I believe NIL, obviously it's awesome that they're finally making money, but it's really the bespoke experience that an athlete gets in their undergrad to propel their future the day they leave their campus.

25:34I also want to circle back a little bit of life before your cold email to Mark Cuban because you were bootstrapping this business for a long time. And then you also had to switch gears to know what to do with the investment. So what would you say to founders who are in that bootstrapping period? And how do they mentally adjust when they do get funding? So, you know, I went to a very, very competitive school where all of my peers and friends went to go consult, work for Big Four, work for Big Tech, right? Like Illinois is a breeding ground for innovation. And so I was always a little jealous of it.

26:13And what my friends had always said is, you know, you keep building this and eventually if this is big enough, we'll come work for you. Right? And so I was always just like the t-shirt guy. But at the same time, I stayed really, really well connected with some professors that I had at the university and would always talk about fundraising. What does that mean for the business? What are my growth strategies? How does that work? And I would get lunch with them and I would go to their talks and seminars. And one thing that we realized was the Greek business was probably not venture backable. It could grow to$20,$30 million.

26:47but it's not like this 10x thing. And so I even had made a pitch deck for it to raise money on Greek but never really did it. And when NIL hit, I felt like I had enough experience observing that I could finally participate. And so that's the thing. The tools that we used to build the NIL store were just a derivative and an iteration of something that we built for another purpose. And so to the founders that are thinking like, what's next? It's keep taking what you've built and iterating on it because you might crack something that is just unknown to you, right? The tools that we built during COVID to help people fundraise are some of those tools that we use for the athletes to make money.

27:35And I wouldn't have known that, right, during COVID when we're just trying to sell shirts and ship them out. But when that inflection point happens, chase it, right? Right. Because then, you know, you might miss out on that opportunity. And as an entrepreneur, you don't want you don't want to have any regrets. Right. Now that you are on the other side of the inflection point where you do have Mark Cuban on board, you're now going through the process of pitching VCs. How are you thinking about fundraising differently today? Yeah, so going through an investment round, we've raised successfully twice from institutional investors, names like Light Bank and Jason Rabin from Centric Brands and Scrum Ventures, which is in the sports space.