Ep 628: How Unbound Merino Bootstrapped to Nine Figures Selling $90 T-Shirts

0:00The business economics of it is like we will pay what it costs to make it. We'll market up enough that we can run our business and be profitable enough to sustain. But we're not trying to maximize profits by cutting a corner where a customer will feel it or overcharge to the point where it's like a ludicrous margin. For what you're paying, you're getting an unbelievable value. I would rather add five bucks to the cost because we had to pay more than keep our costs the same. but like know that there's better raw wool materials that we could have bought. Don't get into the order business, get into the reorder business.

0:36I don't want to chase new customers all the time and be at the whim of an algorithm for the success of my company. We now have a reputation because we actually make something really good.

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1:27No scroll, no skip, no little square buried in a feed. Just your brand in front of someone who's paying attention on the biggest screen in their house. Sign up today at ParamountAdsManager.com. Get your brand on TV's biggest shows by tomorrow. Dan, welcome back to the D2C podcast. Huge fan of what you've been building here. We last chatted in 2023. And I think at that point, you guys were sort of approaching eight figures or maybe had just crested it. And I think from I read I read from a recent Shopify interview that you guys are approaching nine figures now in lifetime revenue and you're looking like you're going to hit high eight figures here this month.

2:07So congrats on all the success. Couldn't happen to a cooler brand. Thank you. Thanks so much. Yeah. And it's been it's been an epic. I guess that's three years, an epic three years, to say the least, with crazy highs, crazy lows, everything in between. If you had to point to one, I'm sure there's a myriad of things that could have really helped with the trajectory over the past three years. If you had to point to one thing that led to this great growth, what would you say it is? Good question. I don't know if there's particularly one thing. I think what we were doing all along is just trying little things bit by bit, falling on our face, making little mistakes.

2:46But then you find an opening and you find a way to be a little bit more efficient with your operations, to scale your marketing a little bit. And you just sort of hop onto that and exploit as much as you can. And I think in around 2023, the years before that, we were running a lot of the same creative over and over again. We had these pretty good ads that explained how our brand worked. And we didn't really diversify our creative a lot. But then I started just going on the DTC Twitter or X or whatever and seeing how some people were talking about testing tons of creative all the time. and I was just like, we don't do that.

3:29So we just started putting out volume of creative and finding winners. And when we found a winner, we would just make five new versions of it with a slightly different call to action and just got into this rhythm of just more and more and more. And when that happened, we realized we could spend more and more money on meta ads and it continues to scale and we're making money in the first purchase and let's just keep pushing. It's obvious. This is DTC 101, but it just hit us around that time. It's like, let's just add more. Add a little bit more budget. Add a little bit more budget. We're doing what you're taught to do.

4:05We just didn't figure it out for a while, and it was working. And all of a sudden, we just started scaling. And of course, there's a compounding effect because your customers love our stuff. They come back for more, so there's return customers, and they're telling their friends. And we just went nuts on that for a while. In 2023, I think it was, you told me that it was like the founder shot, the sort of wordless travel, sort of ASMR vibe brand performance ads that were driving a lot of the success. Did you continue on that train or just sort of like open up the floodgates and just try all sorts of different things?

4:39All sorts of things. It's so funny that you remember those because those ads I was so excited about and I was so happy they were working because something I've realized in DTC marketing is it tends to be this way. The ads that I love that feel soulful, that I put my heart and soul into and they stand for something, those suck. They don't work. And the ones that I hate, the cringe ones, those scale. and it's infuriating it's just kind of the reality and you try to find that balance between representing your brand in a good way but also having marketing that performs performance marketing sometimes tends to feel a little like uh lowbrow so those ads were working and we love them and that's why i was excited about them and probably talking about them but soon after sure enough they stopped working so they're a distant memory now we it was it's just again it's a pipeline, trying new things, throwing it in there.

5:41And that's all, that's the game. I think honestly, we could talk the whole time about this. And it's a little bit counter of what I'm hearing in the space right now, which is this idea that with Andromeda, when you create subtle variations on winning creatives, Andromeda lumps them all as one creative. So this idea of just changing one element of creatives and just, and getting volume that way, what I'm hearing on in the marketplace is that that's not always what works is that you want to find a lot of a lot of diversity and strategy in your ad set but it sounds like you guys found success having diversity strategy but then also within iteration with within those things is that accurate well i'm referring more to like what changed from 2023 and that what was working more then and we still do it to a degree and we try to find new winners but right now we're trying to really really exploit new products and also new segments of people instead of just travelers but at the end of the day our bread and butter is we make travel products and we focus our design process around making stuff that performs for traveling and the message around packing light and traveling is always what works best for us so we're still sort of doing the iterative ad thing but yeah always just trying to find new segments new types of people you know can we be more in like the people who are just looking for premium fabrics.

7:05The minimalist, the optimizer, there's so many different segments that we're trying to target, but we have seen meta stop performing in the same way. So we're not scaling meta like we used to. Where are we in the, because I've been on the Merino tip for 10 years now or something. I just, as a fabric, I'm just kind of obsessed with it. I try to try to get of it as much of it as possible. Are you guys still riding the the fabrics trend of like people discovering, you know, discovering things like linen and merino or is that sort of becoming more saturated now? It's there's a way more product in fabric awareness now, which works for us.

7:48A lot of brands in the space have grown. But yes, still, there are still people who are discovering that merino wool is not just for your your winter wear and your outerwear, you know, knitwear, warmer layers. So we're still sort of trying to teach people for the first time that merino wool is this miracle fabric. And I still think we're scratching the surface of it. But what we focus on, I think it's because we've hit a certain level of scale. We have a little bit of awareness around our brand. Our focus is less about trying to really, really acquire new customers as much as possible, but to really, really focus on the actual product development itself.

8:31Like the amount of iterations we've made to our t-shirt over the years, like it could be in the dozens now of little things. Now, if I were to send you a t-shirt that we made three years ago and a t-shirt we made today, you might not notice a difference until I started pointing it out to you. Like, you know, see the drape here. We can do a fabric cut and weigh it. But we're really switching our obsession to focusing on just making the fabric as perfect as it can, the quality, the cuts, the fit, everything. making the world's best travel clothing as far as new products go and focusing more on retention because we feel at our scale a lot of word of mouth is becoming way way more significant to us acquiring new customers we do a fairing survey how did you first hear about us and 15 percent of people this is in the last time i checked of the last 30 days said from a friend or family it's the significant percentage of our customers that are hearing about it from other people and it sort of makes sense to me because if you're buying a t-shirt and our t-shirts are not cheap and it's a plain shirt that doesn't have a brand that's visible sometimes people have to take a little bit of time until they're ready to sort of hit that that buy now button because it's like it's like do i really want to spend this much on a t-shirt but then when they discover the product actually performs as promised they feel so good about their purchase that they kind of want to share it so i think the thing that's going to really allow us to sustain as a brand is focusing all our energy on never ever cutting corners always making it about quality and we're trying to tell that story more and yeah it's really just about newness new products always living up to that promise that we have of making the world's best travel clothing and we continue to grow it's it's really less about the acquisition strategy of scaling meta although we're still scaling, it's really more about how do we keep people coming back because our customer base is big enough.

10:27And when you get into wearing these kinds of fabrics, it does have this sort of, it compels you forward to continue to wear those kinds of products. And so that makes perfect sense when you acquire a customer. It's all about getting them to gateway into other things that you're offering. And I saw a really interesting ad the other day. It was for a higher ticket product. It was for a pair of like selvage jeans or something like that. And they were actually trying to talk about the price because you are paying two or three times as much for, for, you know, versus other staples like true classic or something like that.

10:58But the thing is you're going to wear it 10 times as much. It might cost one or two times more than a, than a standard white t-shirt, but you're going to wear it once you, once you feel it, you're going to wear it 10 to 10 or 20 times more than you would that other shirt. And I think you guys have those people that just become their uniform, right? Your, your products. Yeah. And also in, in, in the case of traveling, If you're going to go and pack into a carry-on, maybe before you would have traveled with 14, 15 t-shirts for an extended trip, and now you have three. So it's like three t-shirts are doing the job of 15.

11:32That was the way that I was sold Merino wool before we started this brand when I first discovered it. Because I discovered that Merino wool is a performance fabric that you can pack less of when you travel by reading lots of Reddit threads. the reason we started unbound is because i felt none of the brands were doing it in with the style and the aesthetic that i wanted for my type of travel it was more for the outdoors but i was at an outdoors outfitter store and he that's exactly what he said he said i'm like i've never spent it was i think it was 90 for this t-shirt i said i've never spent 90 for a t-shirt my entire life he said yeah but when you have this one shirt it's going to perform like 10 So if you think about it that way, this is the cheapest shirt that you're going to buy.

12:15It's the best quality shirt. And it's like, it's like, it's like 10 bucks a shirt. That was the, that was the, the, that was what got me over the hump to realizing it's like you're paying for the value it gives. And I don't know if you, if you've tried that in your ads, but actually seeing someone break down the cost of something expensive by the amount more that you're going to wear it. I don't know if that, if that jives with your premium positioning, you guys are also lucky because you're targeting travelers. So inherently, these people have a bit more money. And that kind of leads me to, I just did an interview with Doan.

12:49And I don't know if you're familiar with Doan, the women's clothing brand, but every one of their blouses are like$300 or$400. And I was wondering how, because I'm seeing other news about conversion rates kind of falling across the ecosystem right now. There's sort of lack of confidence maybe in the economy. And I'm wondering how you consider your price points at this point. Like, at what point are they an impediment versus a moat? Because once you get people into your mindset, it makes perfect sense. But the average person on the outside, you know, looking at paying three times for a t-shirt, how do you think about your price point as an impediment, as a moat, or as both?

13:27The most important thing for us is making sure that we feel like it's the best it can be for the purpose in which it's supposed to serve, which is traveling. So sometimes it's costing us more. Like we could get a slightly cheaper fabric. Buying Merino wool is like buying wine. Different years have different qualities depending on the rain conditions of the farm and how the sheep were grazing. Was it grass or did they have to feed? A million factors. So there are different prices of wool and the wool price fluctuates like the stock market. But we always aim to just make it the best quality possible.

14:08And the business economics of it, it's like we will pay what it costs to make it. We'll market up enough that we can run our business and be profitable enough to sustain. But we're not trying to maximize profits by cutting a corner where the customer will feel it or overcharge to the point where it's like a ludicrous margin. we think for what you're paying you're getting an unbelievable value and i try not to think beyond that because i can see other brands where there could be way cheaper but i'm like either they're making something lesser quality and the customers are going like they're going to figure it out or they're just not making money it's not a sustainable business so it's not even like to be different it's just to be the best we could be because i think quality and if you've never ever abstained from quality there will always be people who are looking for what you're selling so we're laser focused on that yes we're profitable we make money but it's not like sometimes i see some of these businesses that make just these insane margins and i think it's really cool like that's wow you make so much money but i'm like someone could come in and do that for less and offer the same thing it's very very hard to do what we do and undercut us unless you're just legitimately not making much money because we're putting it all in to you know having a normal sustainable margin with the highest quality product with the best fabrics we can find and we will be first to charge our customer more if that's what's necessary to uphold the quality and stay in business.

15:55I would rather add five bucks to the cost because we had to pay more than keep our costs the same, but know that there's better raw wool materials that we could have bought. Were you guys jostled by tariffs? We almost went out of business. Jostle. That's a light jostling. Yeah. It was a nightmare because we're a Canadian company and 80 % of our customers are in the US. so along with the tariffs they got rid of the de minimis which is if you're unfamiliar shipping over the border under 800 to duty free so we couldn't ship it just in a day we couldn't ship over the border well we could but the customer would have to pay whatever the duty rate was in their shopping cart on shopify and i don't know if you remember how the tariff rates were in the first few weeks.

16:46It went up to 130 % or something. So if you had a$100 order with us, it was going to be$260 in your cart. So we lost all of our U.S. customers in a day. So 80 % of our sales gone in a day. And it was like, I'm like, I don't know how to get out of this one. That lasted just for a week where I thought we're toast. It wasn't even like if we're going to go out of business, it's like when are we going to go out of business? We're done. We're done. Unless we can figure something out immediately. But then he pulled back the tariffs and then had the whole Liberation Day thing. So we went on this. Do you ever watch the show 24 with the little timer?

17:30I like your older references. I like these. Yeah, we had the little 24 timer to Liberation Day and we just grinded and grinded to get set up in the U.S. and to start importing into a new warehouse in Dallas so we can ship our U.S. orders from the U.S. So now we have a Canadian warehouse and a U.S. warehouse. We got it done just in time for Liberation Day. So we got beat up in the process, but we managed to get out of that one and survived. The tariffs did take – we took a big margin hit, but still were able to claw back our margins a little bit with operation. It forced us to stop being lazy in some places of their operation.

18:17We had to work extra, extra hard to be as operationally efficient as possible because we're now in a new reality where our margins were just thinner. And I think everyone was living through that. But look, our customers kept coming back and we were able to sort of claw back a little bit of that margin. It's still harder today. We feel like we work twice as hard to do about half as much, but we're still growing. And it's pretty outstanding. Did you have to raise your prices? On most products, no. There was a couple of things where we raised the prices a little bit out of necessity, but for the most part, no.

18:55And we didn't for the first many, many months. So we probably would have raised some of those prices a little bit anyway, because the cost of Merino will have been going up so much. And that's unrelated to tariffs. Last time in our podcast, you mentioned that surprising stat that in your post-purchase survey, I don't know if you were still using FAIR back then, but you said that YouTube was number one for discovery, even though you were doing basically nothing there. I want to talk channel strategy, maybe kick us off with where YouTube sits at this point and have you put budget into it at this point?

19:27yeah so we look for creators to do we we sponsor content on youtube all the time now we're using agentio which isn't really cool what i've realized is there are some creators and it's not the biggest ones it's not the most famous it's just the right ones they just fit and i've noticed a pattern the biggest creators we have that have the as far as actual output the actually driving sales they were all customers of unbound before we reached out to them it could sort of be a little bit of a coincidence obviously they're able to speak to the brand in a very natural way because they're customers but i think it speaks to the fit like these are the type of people that would have bought a product and their their their viewers their fans are probably quite similar to them whenever there's someone who discovered unbound and then we ended up having a sort of affiliate relationship with them, those guys drive the lion's share of sales.

20:24So YouTube and meta are still neck and neck and YouTube sometimes is still number one, but it's just, just like last time, it's just a few creators that drive 90 % of the sales. I saw a video a few weeks ago, a guy, a YouTuber that I love, he's a nutrition and health and fitness guy. And he was, he mentioned Unbound in his video. I've never had a relationship or an affiliation with him. He's just like, It was one of those, here are my favorite things I bought in 2025 or whatever videos. I reached out to him immediately. I'm like, oh my God, I was so happy to hear you wear Unbound. And this just validates what I said before.

21:01He said, oh, I love it. I'm wearing it right now and blah, blah, blah. And he said, I have a newsletter. If you want, I could put a code in and maybe we can do an affiliate thing. I said, absolutely. And that was gangbusters. So it's just proof. It's just like you could spray and pray. sometimes you're getting these creators you're going to pay five thousand bucks ten thousand bucks maybe it's just a straight commission deal i find most of them don't really click but when they genuinely love it it usually tends to work so it still continues to be the same thing i don't think there's an update there the only difference is we're just investing way more trying to find more of those little winners and if anything it gives us ubiquity agentio has been really cool because we can check out and just get tons and tons of coverage from tons of different creators so we're kind of everywhere people are now like i can't turn on youtube without seeing you so nice you've described channel testing as a hallway of doors um what what other doors have you opened and have been worth keeping open well i'm going to tell you the newest and freshest one So we don't do sales or discounts typically, but we have a bunch of different styles that we only have off sizes for.

22:20It's very hard to keep on the site, so we've accumulated a lot of this overstock. And for the first time ever, we did this warehouse sale in Toronto. It started two days ago, and I've been going and checking it out. And this is the first time I've ever seen people shopping for Unbound in real life because we don't have any wholesale or retail. So I was there today and I'm just watching people try it on. And it's flying. Like we're selling. I mean, we have a lot of random little stuff there. And of course, it is discounted, but it's flying. People are shopping and a lot of them are new to Unbound.

22:55I know this from like people that we drove and then people that are coming in to this warehouse sale. So seeing that and seeing the sort of buzz and seeing how many people actually showed up for that has made me really, really start to think, man, I really want to create a space where people can actually try this on in real life. And I've sort of been allergic to that and iffy about it. But today I feel quite different about it after going back to the warehouse thing today. And it was really funny because I'm in a lot of the ads. I don't know if you've seen the ads where it's me talking. so I think some of the people they they see me walking around there and they're looking at me like either who is that guy I've seen him somewhere or or maybe they know me from the ads but it's a strange feeling it makes sense with the product being you know it feels different it drapes different than than a regular t-shirt that people have experienced so anyone who's not familiar with merino being able to touch and feel and try it on I can imagine being a big big differentiator yeah I mean it's it's hard to purchase something especially if it's a premium price if you're just not quite sure you're taking a bit of a leap of faith so i've always felt that like i wish that we could have space for people to touch it and stores but it's like we're bootstrapped and it's just like feels like a big leap and a big risk but yeah i think it is the next the next iteration i say that now though i'm really excited and i do chase shiny objects i mean if you ask me in a week i might be like no i'm not doing it it's funny yeah you say i think you probably chase shiny well i guess everyone in this industry chases shiny objects we live in a in a shiny place so there's a lot of shiny things around but the way you guys have built this pretty organically seems seems pretty sound at the same time yeah it's like you know there's a lot of ddc people who are marketing geniuses and it's like i'll be honest it's like i'm not by any stretch in marketing genius i think really it we got lucky with timing we have a product that we made for ourselves i wanted this thing to exist i've said this a million times but if you ever want something to exist you feel like hmm i wish this thing was like a different it was done differently i wish this thing exists but no one's doing it it's like just do that's that's your calling go do it i love the fabric but people weren't making it the way that i wanted it to exist i wanted to have you know be something that you can dress up and dress down had the performance for the hike but you can wear it put a jacket on go to a nice restaurant it has that versatility and then i just wanted it to be really really good as good as it can be and i've said it before on this call it's like it's not much more than that it's like we we try to make a really good product we have a profitable business because the mechanics of it makes sense we don't overspend on marketing but slowly bit by bit when you acquire new customers they realize oh i actually do love this stuff and i'll come back for more so it's again i heard once don't get into the the order business get into the reorder business.

25:50I don't want to chase new customers all the time and be at the whim of an algorithm for the success of my company. We now have a reputation because we actually make something really good. And that's as simple as the business is. It's not very complicated. It's really good stuff that people love. So they come back and they buy it again. That's the business. In your Shopify interview, you stated that your orders are over 50 % from women, which I don't know if that was the case in 2023. What has been the key to unlocking the fairer sex? Most clothing shoppers are women, so it's a bigger market. And our head of products and lead designer, she's unbelievably talented.

26:36She's a woman, right? So if I was going to be the lead behind the women's line, it might not perform very well. We have a really, really seriously talented head of product and i worked with her and gave her a lot of autonomy to say okay well i can explain this brand to you all day and night of what we have been but we need to find what this is for women and there's different sensibilities there's different things that women want with clothing one thing for sure is newness you know there's a lot with men we're simple you see the shirt oh this black t-shirt it works all right i'll just buy this forever i'm good women it's different different there's different figures there's different styles things change so we've just been cranking out new products but i think there was always a dormant need for it because the men that were buying our stuff women started to become educated on the fact that marina will exist it so we i mean the writing was on the wall we'd get emails all the time we get comments all the time when's the women's line coming out when's the women's line coming out there was this like latent demand that just existed and then i guess it's all you know there's also a higher degree of word of mouth with women they share more about what they love and what they bought more than men men don't care on that it's a generalization but we don't as much like if i bought a pair of pants i like i'm not telling all my friends but women love to sort of share So it was so natural, but it grew so fast.

28:11And it still remains about 50-50 to this day. When I last saw you, we were at the Ecom North event last summer. And you did a talk there about what it's like kind of building a business with your closest friends, which I think is one of the coolest things about kind of what you've built here with Unbound. The question I want to ask is, what's a hard conversation that you don't avoid anymore? Have you gone through that at all? where when you're working with friends, there are certain things that you're loathe to talk about to bring up because they're uncomfortable? And have you gotten over that?

28:42Are you guys just fully transparent with each other? We try to be. And we say that we really value that. It's actually, we have our core values for the company. One of them is to be honest and direct. And that's very easy for best friends. In fact, employees of ours, when they're in meetings with us, they think it's crazy how we talk to each other because it's just like childhood best buds. It's like we roast each other in business meetings. So it's a weird environment. But yeah, I think there's a high level of trust and we really enjoy working with each other. But it is important to slow down and check in every now and then because things change.

29:23Like, for example, one of my business partners, he's had kids for a while. But the other one is just starting to have kids for the first time now. And I don't have kids. and the demands and pressure on him are changing and he's more tired and i've noticed we're bumping heads about more things and i'm trying to get to the bottom of it and there's been unpleasantries but at the end of the day it's very clear that we understand how lucky we are that we get to go to work with our best friends so when things get tense and they and if i'm being perfectly candid right now they're more tense than they've been there's a vested interest as people who have really had life together to be like hey like let's like sit down and figure out what do we really want like are we still aligned with where we're taking this do we still want to do this for another 10 years another 20 where are we at and in the frustration i had a moment with one of my partners where i said you know if the business ever got in the way of the friendship If we ever had resentment towards each other because of anything business related, I will regret every bit of this.

30:34Because this has been awesome. It's been an amazing ride. But it pales in comparison to the fact that we've upheld such an amazing, strong relationship. And I'll stop at nothing to make sure that that's the thing that we end on. Whether we sell this thing or we continue for another many decades, I care far more about this than I care about the business. And we had this moment there where it was just like, yeah, that is the thing that matters. And, you know, I think it's very important to communicate what you expect of each other and your duty as friends and partners in business and in life is to to do that hard work to to to let that other person know that you're going to bet for that for them, for yourself, for the business.

31:25and you're leaving it all on the table. And, you know, what I've realized is no one ever would be able to push me as hard as my best friends and to make me get better. So it's like, it's truly the greatest gift. I think the coolest thing in my working life is that I get to do this and it's a privilege. It's a real privilege. From the most human aspect of your business to my obligatory section on AI. And there's two sides to AI. Obviously, there's how you're using it in your business. At D2C now, we have a robot media buyer named Gary who does all of our user acquisition now, checking every 15 minutes.

32:04And he's performing better than the lead gen agency we were working with, which is interesting. I just came from the Triple Whale show where everyone was talking about Moby 2 and how True Classic is now spending 100 % of their meta spend through agentic media buyers, which I thought was quite interesting. I'm like, we're living in the singularity now. And then there's discovery as well, which shoppers using these things. So maybe on the first side on how are you guys really embracing AI technologies in how you work? And on both sides, I guess. Yeah, the thing that's been most interesting for me, and sometimes I feel I get lost in these little AI things where I think it's going to be the game changer.

32:46And then I'm spinning my wheels a little bit. And I'm like, I could just do this the old fashioned way. Sometimes that's better, but there's one thing that just blows my mind every single day with AI is the way it can analyze data and triangulate information from one part of your tech stack to the other. We have everything connected to our own custom AI. So obviously our Shopify and Google Analytics, our ERP software, even our Asana, our Slack, our Google Drive, it has everything. And then it has strategic planning documents of what our goals are and our targets and our week-by-week dashboard of how we're doing.

33:33And it can read it all, and it can triangulate information in a way that just would take any human, let's say, days to give me this one little story. Why is it that this thing is getting returned now more than before? And it goes and looks at our POs, sees who ordered, did it change who we ordered it from? It looks at our Slack. It sees conversations that are relevant that we've had. It's, you know, obviously privacy of our own employees is factored in. So I can't look at other people's Slack messages. But, you know, we'll say, hey, remember that time? It says, well, I've seen that you were talking with Hala about this and you said such and such.