This CEO’s Secrets to Scaling Your Business to 9 Figures

0:00I remember distinctly a day where I told my CMO, we will get this business to$100 million. And he was like, there's no way. He's like selling wallets on the internet. We're going to do this. And we got it done. Hey there, I'm Schweng Esther Shan and welcome to Shopify Masters, your companion for starting and building a business. So I don't have to tell you how hard it is to scale a small business. Maybe you focus on your e-commerce strategy. Maybe you expand product lines and try to sell internationally. Our guest today has done all of this and more as the CEO of Ridge. Sean Frank joined the company in 2016, and at that time, it was actually only known for one thing, metal wallets.

0:47Now Ridge is a multi-nine-figure business with sales of wallets, luggage, and men's rings. Those products might not sound related, but Sean is here today to explain how he was able to diversify and grow the company in smart ways. Sean, thank you so much for being here. Hey, I'm happy to be here. Thanks for having me. Big Shopify fan. Well, we're a big fan of you. You had an unconventional path to becoming CEO of Ridge, and it links back to the founder's desire for growth. Tell us how you ended up joining the team. Yeah, so I owned an ad agency. me and my current CMO Connor started an ad agency in 2016.

1:30And we were 22 or 23 at the time. So we did not have the clout to get a lot of big blue chip companies. A lot of ad agencies will be like, we work with Nike. We were just trying to work with anyone who had money. So we met the rich guys, father, son, best friend started the business. They got it to four or$5 million a year, just like three employees, no experience, just running Facebook ads. And they were interested in growing it, but they didn't want to manage anybody. So opportunistically, I was like, oh, great. We'll just do everything for you. We'll do your paid social. We'll do your website.

2:08We'll do your customer service. We'll do your import ops logistics. And we worked together for two or three years like that. At a certain point, it made sense to merge. I was charging them like $300 ,000 a month. And they're like, okay, well, I think it'd be cheaper just to get your full time. So we came in house in 2018 and we've been growing it ever since. It's crazy cool to hear how you got involved with Ridge. Tell us more about the state of the business and what were your goals when you actually took over the company? Yeah. So we're privately held. We've never raised any money. Six of us own it.

2:45We'll do a couple hundred million dollars this year. We'll do mid-eight figures in net income on the business. We currently have 1 % of the global wallet market. So the global wallet market is a little bit over$10 billion a year. So we're capturing our wallet business alone is over$100 million. When we got involved, I remember distinctly a day where I told my CMO, we will get this business to$100 million. And he was like, there's no way. He's like selling wallets on the internet. we're going to do this. And we got it done. We did that a couple of years ago. The current roadmap for the company is to just transition it to be a modern American accessories brand.

3:32So we currently sell a ton of wallets. There are no wallet companies, right? There's amazing accessories brands. Chanel is a great one. Mont Blanc, Coach. There's tons of great modern accessories brands. None of them primarily sell wallets. So we're pivoting the brand to just be more encompassing of the category. So we have a great rings business. We have a great travel line. We're going to get into just watches and pens and just other small leather goods. That's like the current roadmap. Yeah. It's really impressive with the small team and how much you've grown reaching that 100 million revenue mark.

4:12What are some of your principles for staying lean and being profitable? We just didn't have a choice. I mean, no one was going to give us any money, right? I think given the opportunity in 2016 or 2018 or 2020, we would have loved somebody to give us a check, an investment, but we did not have the network. We did not present well. We didn't have the big VC grand vision of dominating a market. So, you know, the father and son who started this business, Paul, the dad, was a special education teacher for 35 years. Guy was not swimming in cash. Me and Connor were 23, living together in a one-bedroom apartment and driving his like 2000 Honda Civic to go to client meetings.

4:55Like we did not have the prestige required to raise money. So we just had to be profitable every time. Like businesses shouldn't lose money. At least that was our thought process. being profitable puts growth constraints on the business. We never grew more than 100 % in a year, right? You hear these growth stories about companies going from one to 100 million in three years. You can't do that bootstrapped, right? You just have to buy inventory. You have to pay taxes. You have to slowly grow the team. So we just target 50 % growth every single year. And some years we beat it and it gives us a nice, long, even kegger to get to this point.

5:33I think when we're listening to all of the different new product categories you expanded into, the travel accessories, the luggage that makes sense with the wallet, I think what some people might have not identified was the opportunity to actually expand into men's rings. So talk to us about when you had the idea to actually go into that market. Yeah. So I'm not a product guy, right? I am just very much a financial and marketing guy. So I suggest every product to the product team, and they say no to 90 % of them. But occasionally, I just get one past the goalie. So I was like, we got to do socks.

6:14And they're like, we're never doing socks. I'm like, we have to do hats. We have to do shirts. We have to do deodorant. And then eventually, I'm like, we got to do rings. And they're like, okay, we'll do that one.

6:28the thing about the ring market is one they're metal kind of like our wallet so there's there's like natural like material overlap we can match your wallet to your ring and a lot of guys like that they're small we're really good at shipping small things right uh that's kind of like one of our core principles is the wallet is 100 bucks and can fit in your hand rings are 200 bucks and they could fit on a finger. So equally as small, equally high margin, right? The wallet business is 90 % margins. The ring business is 90 % margin. So a lot of business considerations made a lot of sense. And then I got married over the pandemic.

7:04The men's ring business used to operate as an add-on business at the jewelry store. So you would buy an engagement ring for your fiance and they would just upcharge you a men's ring. And the men's ring had the highest margin. and it's the only way those stores make money, right? The diamond business is pretty straightforward and regulated. Like outside of Tiffany's, whatever you pay is probably market rate, but the men's tungsten band business, guys would spend$900 on an$8 ring, right? And the whole justification was like, oh, it's cheaper, so they would just do it, right? Men have never researched this, but as engagement ring shopping has moved online, there isn't that upsell opportunity.

7:45So what we watched from the pandemic is that men's ring purchases just didn't go anywhere. And so we were able to capture like a very fast growing market. Let's talk about the business not growing more than 50%. Rings didn't exist in 2022 for us. And in 2023, they were an eight figure business and they're gonna grow 100 % plus this year. So there is a market demand for buying rings online and we just kind of captured that. We stumbled into it and we captured it. Yeah, I mean, it's cool to hear because this is something you discover through personal experience. And then you also had, I guess, the business logic to back it up.

8:23So if other founders are thinking about expanding into new product categories, do you have a checklist of what they should think about or where to get inspiration when they're talking about expansion? Well, the first is it's way easier to capture a small part of a big growing market, right? So if you want to launch, I don't know, like it's a horrible time to launch a fitness brand. We're post COVID. Anyone who wanted fitness stuff has purchased it, right? And like the legacy players are pretty cemented. So you want to choose a market that has natural growing demand. So whatever trend you can get early on, it's way easier.

9:08And then you should think about the actual logistics of shipping things. So during the pandemic, horrible time to get into dog beds. With the Red Sea crisis right now, horrible time to be in dog beds. Why is that? Because they're big, they're heavy, and the retail value is really low. A dog bed is$50, maybe$100. But you can only have 10 dog beds on a pallet. So the logistics cost is going to be really high. So you should think about that when you're getting into something. So capture a natural growing market. Think about how hard it is to actually get it to somebody. And if you would go deliver those all day long, right?

9:45And then you should think about just the margin profile. I think you used to be able to make D2C work with 60 % margins. Now I think you need a minimum of 80 % margins. And it's really hard to have 80 % margins on a product. So those are the three little checklists you should run through before deciding to get into a new market. Concrete, tactical. I love it. I guess my question here is, have you also seen people who might have bought a ring and then they get pulled in, they might want a wallet to match their ring or vice versa? Has the ring category actually helped other categories within the business too?

10:24Yeah. So it is really hard to sell wallets. And this is coming from somebody who sells wallets professionally, right? So a lot of people think like, oh, he's just trying to gatekeep the wallet business. No, please, if you're interested, try to sell them because it is a bad business to be in. Now, why is the wallet business bad? Can I attempt to answer that? Yeah, yeah, please. I don't buy a lot of wallets repeatedly. And especially, I imagine for Ridge, it is of a metal material that's well-built. So the repeat of purchase is hard. Yeah, nail on the head. Nobody thinks or cares about their wallet.

11:04So that's the big challenge. The average guy buys a new wallet every seven years, and then we guarantee our wallet for life. So you sell them one, it's very hard to sell a second one. And the wallet market is huge, right? I talked about the TAM being over $10 billion. It is dominated by like three luxury players. So like LVMH and Kirin, Kirin owns Gucci. LVMH sells a ton of wallets. The men's wallet business for LVMH is 4 billion plus, right? You can't really take market share away from LVMH because they're not really buying a wallet. What they're buying is the cheapest thing with a Louis Vuitton logo on it, right?

11:45So it's their entry into their brand. So the wallet market is very fragmented. It's very, very hard to scale. The difference is the ring market, people need a ring, right? Specifically the market we're going after is a$200 men's wedding band. That guy is getting married in a week or he's been married for a couple of weeks and he's like, oh, I need to buy one right now. So there's actual intent and demand where we have to spend our marketing budget this year is over$100 million. That is to convince people to think about their wallets. But our ring marketing budget, I mean, it's a fraction of our wallet budget because a lot of it is just capturing demand.

12:23So it's way easier to get a new ring customer into our business and then sell them a wallet, right? So we have the best selling wallet in America, most reviews, most loved product. So once they already have a ring, now we can be like, oh, hey, do you want the most popular add-on ever within our wallet? And that has been great. The ring customers have the highest LTV out of any cohort in our business. And it just makes sense because once you sell somebody a wallet, it's really hard to get them a second one. Yeah. I'm happy that you mentioned marketing because this is the perfect segue. You started as a marketing agency.

13:01The landscape changed so much. A lot of founders are having a hard time with rising costs on Meta and Google. So what are you doing now with your marketing spend? Well, a lot of it's going to Meta and Google. I mean, costs are going up. meta isn't a government force. It's not a force of nature. It is a publicly traded company and they need to show revenue growth. So they can add more users, they can add more ad space, or they can charge for that ad space. Those are the only three things that they can do, right? They already have reached everybody. I think there's more people on a meta platform than subscribe to any religion.

13:46So they've already reached as many people as they're probably going to reach. And they do have control over what's called ad load, right? So they launched Instagram Reels. Instagram Reels is a great product that's getting a lot of attention paid to it. So they can increase the ad load there. And that naturally suppresses CPMs, but CPMs will go up. They will go up for all of human history until someone disrupts meta with a new ad platform.

14:18They're still getting most of my money. The good news is they have fixed a lot of their problems from 2021. I think Meta is currently the best it's ever been. Outside of the arbitrage days of 2015, 2016, where anybody with a computer could make money back then. It's a little bit harder now that you're competing against legacy players. But Meta gets most of our money. We're also a big spender of Influencer. So if you go on YouTube, we sponsor a ton of great YouTubers. We have those longstanding partnerships. We're probably going to do more of that. We spend money on Twitter. We spend money on Snapchat, TikTok.

14:55But I mean, Meta's getting 50 % of the pie. Google's getting 25 % of the pie. Everybody else is fighting over the last 25%. And I think you mentioned the collaboration or the different influencers and reviewers you work with. I believe like Marcus Bramley is one of them, one of my favorite reviewers. So I guess like what is your tip now for seeking out those great collaborators and working together to gain some of the attention for possible customers? We really focused on YouTube because that's where I was spending time. And I think we got really lucky, right? The average mobile session on YouTube is over 45 minutes.

15:37So people are spending time with these creators. and the longer time you spend with the creator, just the more trust is built, right? Like if you're just scrolling through Instagram or going through Instagram stories, you might get one or two seconds of attention per post. But with Marquez, for example, we sponsored the Cybertruck video that, it's a 45 minute video, our ad's 20 minutes in it. And I think that I was seen by like 12 million people. 12 million people made it 20 minutes into that video, right? Those people really care what Marquez has to say. And it's just a deeper, more personal relationship with the creator.

16:13So that's why we prefer YouTube. And if your question was, how do you get started? You should just choose 10 YouTubers you personally like and try to reach out to them. Because you can go with an agency. You can go with the spray and pray model of just trying to hit up as many people as possible. But it's a personal relationship-driven business. right? Like there's not very many YouTubers, right? There's probably 2000 YouTubers that you would want to work with. Um, you know, and maybe depending on the niche, maybe it's 10 ,000. It only takes a couple of them. It only takes a couple of emails to actually get in contact with decision makers and actually start trying to build those relationships.

16:54It'll be expensive. It'll be way harder to deal with. And they really are like gambles, right? If, if a Marquez video costs six figures, I hope it's really well watched and received. So it's like, it is a gamble with those things. But the best way to start is to personally reach out. And if you're the CEO of a brand, it's like, you're definitely not above it. I mean, I emailed Marquez trying to get that deal done. So if you want to invest in YouTube as a platform, it takes man hours and it takes passion. It's not like Facebook ads, right? So I actually recommended very few brands should actually try it because they don't have like the team and infrastructure built out to do it.

17:30We have six full-time W2 employees who just do YouTuber Influencer for us inside. And we have a team of 80 people. So a big chunk of our company is dedicated to this. That's incredible to hear. Like six individuals dedicated to YouTube collaborations and videos. Wow. I think what's also interesting about this advice, especially nowadays, is I feel like everyone is rushing towards short form, rushing towards TikTok. I guess your take here is even though maybe the engagement might be high, but it doesn't translate to actual customer relationship and actual sales. Yeah. So do you use TikTok as a platform, like as a user?

18:13I do. I do. Okay. How many people do you follow? I'm just curious. See, that's a good question because you might recognize someone on your For You page, but But if you ask me exactly what their name or their username is, that's really tough. Yeah. And that is like, and not to put you on the spot, but Read from Night Media has brought that up, where if you ask a middle schooler to name 10 YouTubers, their favorite YouTubers, all of them can do it. All of them can name in detail. They can describe videos they've watched.

18:51Just comes down to watch time, right? Like you could really love a TikTok. you could watch a minute of it. Hopefully that person shows up again on your For You page, right? My wife's a TikToker, so she's a content creator for a living. Outside of her, I cannot name any other TikTok stars. So it is really hard to build affinity on that platform. And you're right. There's a ton of watch time there, but the watch time is just so split amongst so many different videos where I would much rather get someone who is spending 30 minutes with one creator and really building that relationship and valuing what they have to say versus just, you know, popping it out of my feed.

19:33It's very ephemerate, the whole TikTok in short form video experience.

19:42Very fascinating to hear your thoughts behind all of the successful growth strategies for Ridge. Very quickly, I wanted to take a moment to thank our listeners. If you're new here, subscribe to the show wherever you get your podcasts, and we'll bring you new interviews every week with business owners and experts. And we'd really appreciate it if you shared the episode with a friend.

20:10So a big part of Scaling Ridge is entering retail stores. How long were you a direct-to-consumer brand before opening that channel? You know, we always had a couple stores. Whenever you start advertising online, you'll get small wholesalers reaching out. So single doors, double doors, something like that. We call those like specialty shops or regional shops. So we were doing those day one. But really the big push into retail came in 2019 when we landed Nordstrom's, right? So Nordstrom's ended up doing a test of 30 doors right around Father's Day 2019. It went really well. So they put us in all 100 doors.

20:53So we explained it across the whole global Nordstrom's footprint, which included Canada at the time. Then the pandemic hit and wholesale got really crazy for a little bit. The stores were shut down, so they weren't placing orders. And then around June or July of 2020, they're like, okay, we're open. specifically outdoor and exploded. So that's when we landed Shields as a big customer. We ended up going in a buckle and a bunch of the other ones. So it just builds legitimacy for the brand, right? A lot of us are digital first. We built a career on the internet. The internet has gone through different phases.

21:32And with the rise of scams and from China knockoff products like Timu, it just really helps to have really a stamp of approval. being like, yep, we're real. You can go to the Best Buy in your town and you could purchase us. So it's still a small part of our overall business. I would say last year was the first major year of wholesale for us. And I think 2024 is a year where it doubles and then I think it'll double again. It is very fast growing. And I think the future is being omnichannel and being as many places as possible. When I listen to your description, I think about my dad. He's pretty tech savvy, but he's probably still going to drive out to Best Buy to actually pick it up.

22:14There's something about that retail channel that does give you legitimacy for some customers. So I totally get that. And I think a lot of people might not realize is that retail is a hard relationship to manage. You're number one for wallets at Nordstrom, which means you have great displays and there's that like inter relationship where you like work together. What's your tips for maintaining and growing those retail relationships so you can actually thrive in their stores? Yeah. Well, what I'll say is do not rush into a retail relationship. It is one of the few things you do that can kill your brand.

22:58Okay. And why can it kill your brand? because one, you're probably not set up to do wholesale correctly. Just the average brand isn't, right? Wholesale thinks about things in 12 to 24 month cycles and they're gonna wanna know what you're making in 12 months. And you have to bring at least renders of that to the meeting because you have stuff right now, they're not buying for right now. There's certain windows where their checkbooks open, right? And you have to get on their buying cycle. So the reason why it takes a long time to get into retail is even if they love you, you have to align with their buying cycle and their shelf space.

23:35They have to manage physical stores, right? Where they have warehouses, they have distribution centers, and you probably aren't set up to ship to a distribution center correctly. So there's all of this just like procedure tied to it. And there's timelines and calendars. And as an outsider, I didn't know anything about it. It's the reason why we didn't do wholesale correctly for a long time. Because I'm like, we have stuff. Why don't they just buy this stuff? And it's like someone had to explain to me how long it takes for them to actually get into these purchase cycles. So you probably aren't prepared.

24:05You should just do a lot of research to figure out how you can get prepared to go into wholesale. And then the reason it can kill your business is they're going to want a lot of stuff right now and they're not going to want to pay you for 90 days or 120 days. And those cash flow cycles could really end up killing your business, right? And it is the ultimate goal for beverage companies or snack companies or CBG companies to get into those big wholesalers. But do it on your terms. And when you're ready, don't just rush in and don't just see money and just be like, I'm going to go get that opportunity.

24:39I've seen a lot of great brands go bankrupt because they pursued too big of wholesale relationships for the size that they were in right now. One other way you're thinking about expansion and it's a big goal for Ridge this year is expanding internationally. Talk to us about your current footprint and what you're trying to do for this year. Yeah. So we have Ridge.com. It's our main US website, ridgewallet.ca. So we have a separate Shopify instance in all of these core markets with localized inventory. So we're a little long in the teeth when it came to setting up our international markets. We were doing this pre-Shopify markets.