These Founders Started a Global Business with Just $4k

0:00Our vision is to build an international Ohana, one bag or person at a time. we had to think globally and we had to act globally. Hey everyone, welcome to Shopify Masters, your companion for starting and building a business. I'm your host, Shuang Estershan. You've heard stories that you don't need a lot of money to start a business and Aloha Collection is living proof of just that. Founders Rachel Suarez and Heather AU started the splash proof bag business with just$4 ,000. Now Aloha Collection is a thriving multi-million dollar business and allows Rachel and Heather to live their dream lifestyle, full of travel and giving back to the islands of Hawaii.

0:46Thank you so much for joining us, Rachel and Heather. Oh, thanks for having us. Thanks for having us. Well, you both have such an incredible founding story, starting Aloha with just$4 ,000. Why don't we start with you, Rachel? Talk to us about building a brand in such a scrappy way. So what's wild about Heather and I is we actually met on Craigslist. Heather was my roommate at the time when we started Aloha Collection. And at the time I'm dating a sailor and I was trying to make bags out of sales. So you'd walk in from work and look at me and say, Rachel, what are you doing? What's your profit margin?

1:24And I'm like, what do you mean? What's a profit margin? And then she would laugh and walk away. Rachel had a lot of time on her hands at that time. And I was a private mortgage banker with Wells Fargo. And I was a commission-only employee. So that meant that every single hour of every single day needed to be productive. Because if the deal didn't close, I didn't get paid. So I was really protective of my time. Yeah. So I figured Heather probably knew something about time, value, money. So I would ask her, hey, be my business partner. And she would laugh at me and walk away and go to work. So at this point, we'll fast forward.

2:03Heather moved out, moved to LA for love. I was still in Cardiff. And I think at this time, I actually ended up breaking my foot, got my heart broken, was down the dumps on my couch thinking how am I going to pay my rent when my phone rang. So at that time I was in LA working in private mortgage banking and interest rates went up overnight. In two weeks half my office was gone and I was thinking to myself oh my gosh what would I do if I had a mortgage to pay or children to support and I started thinking about all of my affluent clients that I did home loans for and they all had their own businesses.

2:44So I thought to myself, okay, I need a backup plan. I'm in a volatile real estate industry. I should start a business. I'm going to start a business. I was an international business major. I could do this. But then I thought to myself, I don't have any ideas. But then I thought, I know who has ideas. so I called Rachel she's super creative and she has a million million dollar ideas or plus um and she would pitch me one thing and I would be like oh like I don't want to deal with sizing she'd pitch me another thing and I'd be like actually like that's really heavy like shipping's gonna be really expensive she pitched me another thing and I'd be like okay this is really cool but that's a pretty saturated market like there's a lot of other companies out there that do this already.

3:32And then she showed me this little black bag. It was my wet bikini bag. I traveled around the world because I was a flight attendant. I always jumped in the ocean or in a pool or a hot tub before we get on a plane. And I didn't want to use the plastic bag that was in the hotel room. So I went around looking for a bikini bag that would fit into my suitcase. I could be gone for weeks at a time. So you don't want any extra weight in your suitcase. And when I was looking for a bikini bag, all I found was something like, like big and bulky that said bikini on it that was made out of plastic. So I came across the material and I made a little pouch.

4:11What's great about this pouch, the material is waterproof, super lightweight, and it's multifunctional. So I could put my wet bikini in there when I was traveling, but then I could also use it to put makeup in, or it could be using a bunch of different ways. I was actually going to hot yoga in LA and they had just banned plastic bags. So like back in the day, they used to have these like rolls of plastic bags in the locker rooms for you to put all your white clothes in. And so I was like, Rachel, I was like, they had already banned plastic bags in Hawaii like seven years before that. They're banning plastic bags in LA.

4:48You know, this is like an amazing product because I could use it for my hot yoga clothes. My coworkers could use it to take their kids to swim lessons. Like I was thinking about all these people that go into the office, but they go work out at 5am in the morning, or they go work out on their lunch break, or they go for a swim after work, and then they go to dinner. So I asked her to make me a bigger one. And I did. And the next thing Heather said was, you want to go into business together, how much money do you have? And at the time, I had$2 ,000. I said, great. I'll take your$2 ,000, I'll put in my$2 ,000, and we'll start a business.

5:30It's incredible that you both only put in$2 ,000, which is a similar scenario for so many of our listeners where they have to be scrappy. Can you both talk us through what you spent with that$4 ,000? What did you first invest in? Absolutely. We had our partnership agreement, our trademark, our samples. Rachel, you want to talk about our logo? Yes, I wanted to spend$1 ,000 on hiring a graphic designer to do our logo because I thought it was very important. It's the name of our brand. Heather and I got into an argument about it. She's like, you want to spend 25 % of our money on our logo. And I was like, yes, I do.

6:13I'm so glad you talked me into it because now I understand how important it is and it was worth the investment. so after six months of research and development and getting all this stuff set up I think we had like spent all of our money on all those things four thousand dollars and I was like Heather what are we gonna do we have no money again I was still I think I was in the cast for seven months so still not working I was like don't worry Rachel we're gonna do something called a Kickstarter campaign? Launched a Kickstarter campaign and raised, I think, how much? $6 ,000? $6 ,147. I love how Heather remembers the exact number.

6:56You have to take your idea, the designs that you've created, and actually go find a manufacturer that can execute on a larger scale. What were you looking for when you were thinking about doing that first production run after the Kickstarter. So once we hit our Kickstarter campaign, we got the$5 ,000 or$6 ,147. I was so excited to go into production because I wanted to get the bags for our Kickstarter backers. At the time, my friend Jane, she had started a dress company. She's like, hey, you guys should really go to the show called Magic. Magic is a trade show in Las Vegas. But if you go to the trade show, a little tiny booth this big costs$2 ,000.

7:38So I was like, Heather, Jane told me about this place in Vegas called Magic. And we're all about magic. But it costs$2 ,000. So we don't have any money except for Kickstarter money. So we're not going to do that trade show. And then Heather said, Yes, we are. We're going to go to Vegas and we're going to gamble. Well, we're going to do the trade show and we're going to make our money back. So in order to go to the trade show, we needed samples. We didn't have any money for samples. So she wrote to our factory, Will, and was like, hey, how do we know that you can produce for us? Can you send us 200 samples?

8:17And so I'm like, oh my gosh, how is she asking him if he could produce for us? And so lo and behold, we get the 200 samples to pack in our car to go to Vegas to sell the 200 samples. That sounds incredible. It sounds like, one, you were both able to find an opportunity and take a risk. and to be able to actually advocate for yourself and get samples set up for this great investment into the trade show at Magic. So tell us what happened when you went to this trade show. Well, we packed up Heather's Prius. I think we spent$40 on gas, went out to Vegas, stayed at the Excalibur for$29 a night, put all our money on the table, the$2 ,000 table to set up our booth.

9:06Went to Home Depot, bought a palm tree or two palm trees for like$30 each, set them up, put some butcher paper down, got all of our samples, right? And then just crossed our fingers, said a prayer. I was hoping it'd work. Well, Heather, you sound like you're someone who looks at things very thoroughly and you probably have evaluated this opportunity. for magic. What made sense to you when you were evaluating this trade show that it was actually worth the investment? Well, our friend Jane had a lot of success there. And I knew that it was a place where wholesalers would go to look for emerging brands to carry in their stores.

9:52And so when we went there, we went there with that desire to meet new accounts, to talk to them about our brand, talk to them about our product, and hopefully get some orders from them. And then at the result of that trade show, did you end up getting some of those orders? Yes. We ended up getting some of our very first Hawaii accounts that are still our customers today, actually. It's so crazy. That was 10 years ago already. And we ended up getting a a Japanese distributor there. That was like our first real distribution partner for the company. It was amazing. So by the third day though, we had three different Japanese distributors wanting to distribute our product.

10:38This Japanese distributor, and he's like, yeah, I want to distribute the product. And Heather says, well, if you want to be our distributor, you need to buy 5 ,000 bags. And I sat there like thinking, like the most I had sold is 20 bags. and so I was like nervous looking at the direction and he said okay I'll take 5 ,000 bags I'm like oh my gosh I can't believe you just said that and then I was thinking in my head how are we going to produce 5 ,000 bags like we just I have no idea and then Heather said well we're a new brand so we need a 50 percent deposit and then in my head I'm like thinking did she just ask for $30 ,000 like that's the most money I'd ever seen in my life and I just sat there trying not to look right and next thing he's like okay writes us a check out for thirty thousand dollars right walks away and look at heather i'm like oh my gosh we just hit it big in vegas so starting the business with just four thousand dollars forced you to be scrappy think about profitability and cash flow why is maintaining a healthy cash flow so important for you one of the most important things when you're starting a business is cash flow.

11:50So when you're getting new customers, you should be taking deposits when you're first starting out. You should be taking deposits. You should be charging credit cards up front. You're going to pay the merchant processing fees, but something that I've learned over the last 10 years is cash is king. And we actually just went to this Ernst & Young Entrepreneur of the Year event last week. And it was like, someone said something that I was like, oh my God, that totally resonates, especially when you're like starting a business or just as an entrepreneur in general. They said, revenue is vanity, profit is sanity, and cash is king.

12:27So if there's like, you know, that's just another piece of advice I think is really important to these people starting out or anyone starting a business just to remember how important your cash position is. We didn't know what line sheets were. We didn't know what like terms were. We didn't know what this stuff was. So it was just, I think it was just being very aware of, you know, okay, we have these wholesale accounts, you know, let's set up a payment authorization so that they pay us before we ship the orders. I think that just came natural. Like it was like instinctual almost. No one told us to do that.

13:06Whether it's gut or whether it's things that you were doing to be cautious and protective of your brand. Those were very, very important steps that you've taken. So now that you have the deposit, you're able to go and meet your manufacturer. What happened next? Nobody had really started a fashion brand with Tyvek and printing on coated Tyvek. And a couple of times we had meltdowns. I mean, one time we got our bags and the print just started wiping off of the bag. Like it took a while to figure out how to actually keep the print on PU coated Tyvek. It took us a really long time to make that happen.

13:50And somehow we made it through. Another time we ordered our Coco Palm print and it was supposed to be this beautiful blue. And when it showed up, it was neon blue. And I had to break down. She literally was like, we're done. We're done. We spent all our money on production and the bags came out wrong. And I said, I looked at the bags and I was like, no. I said, we're going to call it shave ice blue and it's going to sell. And that's what we did. And shave ice blue was a hit. Oh my goodness. Okay. That's genius. Also, I feel like whenever things go wrong in production, you also have to advocate for yourself, go back and communicate with the production partner.

14:37What are some advice there when the conversation might be a little bit hard, maybe a little tense, but you kind of have to do it? Yeah, you absolutely have to do it. You have to advocate for yourself. And if you're with a partner that you wanna be with long-term, they're gonna have integrity and they're gonna wanna make it work with you. So for example, one time we had a shipment and like the zippers were wrong. Like the zippers didn't zip. They didn't zip. You can't, how are we going to sell pouches and zippers that don't zip? So we went back to our manufacturer and we're like, Hey, you know, we did a quality control check.

15:15We checked all the bags. These are how many bags were defective. You know, we need a credit and a replacement or something. Um, and they did, they worked with us and they credited us or replaced, um, whatever was effective. So I would say your partners are going to want to work with you because they're going to want to grow with you. I think what I love about our conversation is seeing the two of you interact and it sounds like you also know how to be really like open and transparent and supportive of each other especially when you mentioned the discussions or perhaps arguments that the two of you have had throughout the decade and more, what were some key things that you kept in mind when you're developing this friendship into a professional one?

16:04I would say number one thing, communication. And everybody says, oh, communication is key. Communication is so important. But we had to take it like a level deeper. So we were fortunate enough to have a friend that's an executive coach. And one thing that we learned from her is that there's a lot of different communication languages. So, Rachel and I, even though we both speak English, we speak different communication languages. I'm extremely direct. What I say is what I mean. I'm not trying to get someone to figure something out about what I'm saying. Rachel, you want to talk about your communication style?

16:46I'm the exact opposite. Someone could be speaking to me, but I'm actually reading their emotions and looking between the words to see what they're actually feeling. So I feel more than what I hear. So somebody could say something, but I won't take it as direct. I'll look behind them, reading the words and where it's coming from. So when Heather would speak to me, I would look at her because I couldn't read her. I'm like, what do you mean by that? And she's like, I'm telling you exactly what I mean. But then for me, when I speak, I speak in such a way that it's not direct and it's more feelings and like questions because I'm theorizing all the time and I'm brainstorming constantly.

17:27And that's just how my brain works. And so Heather would look at me and be like, what do you mean? What are you trying to say? I would be like, stop asking me questions. Just get to the point. I just need you to just get to the point. Yeah. So important. Like any relationship, you need to be communicative. And I love how much Aloha has expanded. And now the business have also expanded where you have your own retail stores. So talk to us about that growth. So it was 2020 or 2021. And the pandemic was really obviously a big thing for us and a lot of other businesses. one of the things that we realized was at the end of 2020, 80%, I think it might have been 82 % of our revenue was e-com.

18:15And if there's something that Rachel and I have always believed in, it's like, okay, we never want to have all of our eggs in one basket. So even though that was like, we were so grateful to be coming out of that year successful. And with the growth that we saw, it was still a little bit alarming to be like, oh my gosh, but hold on a second. Our dream had always been to be like 50-50. So like 50 % e-com, 50 % everything else. And so when we really started to look at the economic environment and thought about, okay, at the time we didn't know what was going to happen with wholesale. Some of our accounts were going to survive and other ones, unfortunately, didn't make it.

18:56We thought to ourselves, I was, okay, like what else can we be doing? And at the time, I think, Rach, you can talk about this too, like everyone being locked down for so long, we felt like we were craving for those in-person experiences and we thought that our customers might also be craving those. So again, we took a risk. We said, okay, let's try opening a brick and mortar store where we can bring our brand experience and the product experience in person. On top of that, you know, we were looking at different ways to do new customer acquisition with all the iOS updates and everything. So we decided, I think it was like beginning of 2021, we signed our first two leases for the Waikiki store and the Encinitas store.

19:47And we opened Waikiki, I think it was August 2021. Yeah, and Heather, you're talking about how it's harder to target customers online through digital marketing. So we started thinking outside the box, like how can we do something in person? And we decided to open a retail location to also like introduce people to our brand and to get new customers and acquire customers that way. Heather and I talked to her about how we would like to have the experience. And the experience would be just like how Heather and I, when we were roommates, when we were roommates, anybody was welcome into our home. So we wanted our stores to feel like that welcoming, as if you're walking into someone's home where there's, you know, pictures on the wall or just mementos from the different places that we've traveled.

20:38And our team brought it all to life. It makes me cry when I walk into our stores. They did such a great job. Yeah. Well, I want to pull on that thread about travel as well, because it's amazing to think about you built a multi-million dollar business, omni-channel brand. That's already incredible. But the other side is you also maintain a lifestyle that you want where there is travel threaded throughout your life. So how do you actually accomplish great success in your business, but you also maintain a lifestyle that makes you happy as well? So I think it starts from when you first laid down the foundation of the company.

21:20When I pitched those ideas to Heather, we were in my living room. Heather had just moved out. And when we talked about going into business together, I was like, hey, Heather, I want to keep my flight attendant lifestyle. I still want to travel. And she said, well, I want to travel too. And then another big thing is I became a flight attendant, so I wouldn't have to go into an office. And she's like, we don't have to go into the office. And this was before the pandemic. So the way we set up our business was, I think, completely different than other companies out there because we had always, like, offered remote before remote was a thing.

21:58Another thing, too, was we wanted to make sure that we gave back. And that's, like, part of our foundation, our roots. we're two native Hawaiian women I grew up in Hawaii Rachel's family is there we decided that we were going to get back to Hawaii and we were going to focus on that because that was something that was meaningful to us and you know there's a million people that visit Hawaii like we want it to stay the way that it is as special as it is for generations to come so we agreed that was who we were going to get back to that was where we were going to put our focus and our funds for our business and for our brand.

22:35So we give 5 % of profits annually to Hawaii conservation organizations. And what got us through the pandemic was when everything was closing down and we thought we might have to close down, we just looked back to our pillars and we're like, well, a huge part of it is giving back. So right now, what can we do? Let's give back. Travel is our inspiration. The beach is our home. Travel has always been our inspiration. So, you know, from like going somewhere and doing a photo shoot or going shopping and looking at different colors and prints and textiles and products. Like that's one of that's Rachel's like special sauce coming back and like designing a collection that we were inspired by.

23:18So between that and then we both really wanted a global lifestyle brand. So if we're going to be a global lifestyle brand and our vision is to build an international Ohana one bag or person at a time, we had to think globally and we had to act globally. I think our biggest value though is to share Aloha. So when we talk about it, we both wanted to build a global brand. It's also sharing Aloha with everybody that we come in contact with. Well, why don't we dig into that a little bit deeper? What does sharing Aloha mean to the both of you and how do you achieve that? It's showing up somewhere with curiosity, like, and being humble.

24:04And when we show up on a photo shoot, I want to make sure that we understand the culture that we, that we hire local models and local talent to help us and to actually like learn about the place that we're shooting or we're inspired by. And like just showing up with an open heart. Yeah. I think that a big part of our success has been authenticity. Um, and so, uh, people can feel that, um, you know, and I, and I think when we talk about sharing aloha, it's not, it's not a tangible thing. It's a feeling. It's a feeling that you share like, um, this energy force with everyone that you come across.

24:46We say you can sit at our table. We're not the cool kids, we're like, yeah, come sit with us. Awesome. Well, I love that so much and very excited to see how the both of you grow and how much the community evolves as well. Thank you both for being here. Oh, thank you. Thanks for having us. That's Rachel Suarez and Heather IU, founders of Aloha Collection. Shopify Masters is produced by Megan Coyle and Gogo Zoger. Our engineers are Miku Betlam and Matt Shorts. Our managing producer is Benjamin Golib and I'm your host, Shuang Esther Shan. We've got brand new episodes every Tuesday and Thursday. Thank you so much for tuning in.

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