674: From $800 to $250M Selling Women's Fashion | Demi Marchese

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1:13Today's guest, Demi Marchese, founder of 12th Tribe, the bootstrap fashion brand that scaled to$50 million a year while staying 100 % founder-owned and profitable. And in this conversation, you're going to learn how Demi made$40 ,000 in her first 30 days dressing girls for Coachella out of her car and living room. And the contrarian strategy she calls living in the group chat that lets her predict what customers want before they know themselves. And the micro-gifting playbook she used to turn free product into serious revenue at scale. This is an absolute masterclass in building a brand with soul with no money whatsoever.

1:51Hear the stories, learn the proven methods and accelerate your growth and future through entrepreneurship. Welcome to the Founder Podcast with Nathan Chan.

2:05Hey, I have a quick ask. If you're loving these episodes, leaving a quick review is honestly the best way to support us. It helps the show grow and means we can keep bringing you the founder stories and insights you tune in for. Please share it with a friend. Thank you so much. Now let's get into it. Demi, welcome to the show. You launched 12th Tribe in 2015 with just$800, no outside funding, no prior fashion background. You've grown it to almost$50 million annually, multi-eight figures,$250 million in lifetime revenue without taking a single dollar from investors. So what was the specific gap in the market that you saw back then and how did you validate it so cheaply?

2:49Well, I was 23 years old, just graduated from San Diego State. And during college, I studied abroad. I went to 11 different places and I fell in love with travel. I was like, I need other people to see the world. I just, I love travel. At the time, Instagram was not what it was. So people, especially our age, were not going outside the country. At the same time, fashion was something I was so inspired by. So when I was studying abroad, me and my journal were brainstorming ideas about how to bring inspiration of travel and fashion together. So my original mission was to create a globally inspired marketplace where I could be sourcing all of these one of a kind items from around the world and curating looks to inspire a woman to dress and feel amazing, but also want to get on a plane and go see a destination.

3:47Fast forward eight months after I had started the brand, which did start from me traveling to different places and sourcing one of a kind items. I said, I'm going to move down to Los Angeles and I'm going to dress every girl for Coachella. I had seen that the globally inspired trend, aka a bohemian trend, was something that woman my age loved. They were in the boho era. And so I moved down to Los Angeles. I told my mom, March 1st, I'm going to dress every girl for Coachella. She's like, I'm sorry, what? I've never been to Coachella, but I just think this style is going to be a big hit and I just want to dress every girl for it.

4:27So I was really inspired to style a woman from head to toe and make them just feel like feel the best version of themselves to be able to provide really a service for them to have a an outfit from head to toe that was going to take them through this very exciting weekend they had planned aka Coachella and I would dress them for Friday Saturday and Sunday it wasn't just here's the top here's the shirt it was here's the entire outfit and I'm going to dress you for every day of this festival I had no money no money like eight hundred dollars really no money and my rent was$1 ,200. So we had to get scrappy.

5:05I went to 30 sororities in a matter of 30 days. When I moved down to Los Angeles, I dressed hundreds of girls for this festival. And with a clothing rack that I had sourced from markets in Los Angeles, I, me and my girlfriend threw the clothes in the back of my car, drove up and down California, popped inside the sororities, popped up the rack and said, all right I'm gonna dress you for this outside of that I then had a pop-up in my own apartment and it got to a point where people were dming me the guy at the front of the gym was like there's a girl across the street dressing people for Coachella you got to go over there you got to go dress you got to go get an outfit from her so girls were coming into my living room my poor roommate and they're like I heard you dress girls for Coachella I'm like yeah in my head I'm thinking I've never been in my life.

5:56Let's just fake it till we make it, baby. They leave my apartment having spent$1 ,200 on a full new wardrobe for this weekend. So within 30 days, I generated$40 ,000 at addressing girls out of my car and out of my living room. I took every dollar that I made and put it right back into buying more inventory every single other day. I'd go to the vendors and go back and say, I need more bracelets. I need more necklaces. Like I took that 800, it went 1600, 2400, 30 ,000, 60 ,000. And I just kept turning that dollar. So long story short, it was a hustle mode. Wow. And when did it become 12th Tribe?

6:41Like when did it become a DTC brand that you sell like all these incredible fashion items online so I originally launched a website right after I graduated and I was doing these um this sourcing and my mom would take photos of me wearing the outfits and I'd put them on the internet and on the website and because it was one of a kind once it sold I had to go source more really quickly I carried that model through the next eight ten eight months until that demand online was just not sustainable to be launching these one-off pieces. So within a matter of a few months, I was buying bulk of single SKU products.

7:29After festival season ended, I transitioned into dressing women for traveling for summer months. And then from there, the demand just continued to pick up and I pivoted and launched collections with the seasons that came so that it went from a festival brand for the first 30 days into a lifestyle fashion brand 30 days later. Um, from there, we started to, we, we've reacted to every consumer need that our woman had, but before she knew she had it. So Coachella is a great example. Woman did not know that they wanted to wear it. They didn't know they were going to treat that like a runway until I came to their sorority and said, you probably need outfits, right?

8:18So I'm going to make three days of outfits for you. Here you go. So after that happened, what 12th Tribe really became known for was being able to meet that consumer before she knew what she needed. So then COVID came around. We launched sweatpants because she was no longer going outside and she now needed to work at home in her cute sweatpants. So we double digit comp very quickly because we reacted to sweatpants. So long story short, we were a lifestyle fashion brand right out of the gate and have just evolved ever since, launched new categories and really dressed a woman from head to toe, nine to five, five to nine.

8:59And how do you know what she needs? How do you stay on the cutting edge? I am my consumer, which helps a lot. And I live in the group chat. That's how I lead my team. I'm like, what's happening in your group chat? What's going on in the group chat? What are we talking about in the group chat, right? My entire team, most, 99 % of my team are women the age between 20 to 45. So whatever is happening in our group chat, in our DMs, in pop culture, that's where I'm really looking and I'm listening to our consumer in a way where I can see her, where I listen to what her needs are and then try to anticipate that before she knows she's going to need that so that when she starts going to a whole bunch of weddings, we've created a bachelorette collection that she's going to need because the girl getting married now needs to have her bachelorette party and she's going to have three days of a bachelorette weekend.

9:57So I live in the group chat is what I say. I'm kind of a weirdo too. Like I'll be in the nail salon. I'm just listening to girls talk. I'm like, huh, interesting. So they're doing this on the weekends now or they're talking about this or this gets them excited so I just genuinely love woman like girlhood and um womanhood and the the nature of being a girl I find it super impressive that you you're basically thrifting for for the most part in the early days and reselling vintage items and dressing girls and making like forty thousand dollars in a month like that is crazy how did you how did you transition like talk me through to the to the first collection right because thrifting is a thing like you know depop or like like that is a thing right but but to actually build the brand that you've built the size and scale that's impressive so talk me through that collection piece how did you source the product did you go to china like talk us through that because that's the part where sometimes I think it's not talked about enough.

11:11Yeah. Because I had such limited capital when I started, I had to get really creative about what I could buy to create these looks that, that I could provide for, for my girls. And so I started sourcing these vintage pieces and they're Harley Davidson t-shirts, they're, um, really cool vintage sweatshirts and they're like five dollars going into thrift shops around the country. My winning piece though and my first gem was this vintage denim short and it was called the Thrasher Shorts and it was a vintage Levi short that I had sourced and I had found a vendor pretty early into my career who was who was making these shorts.

11:58And I launched with that product and it caught wind so fast that the demand for that single pair of vintage shorts was something I could not keep up with. I was getting on the plane, going to Florida, to Arizona, anywhere I could go and find a Levi's dealer, if you will a vintage Levi short dealer um I had girls meeting me for these shorts in the Whole Foods parking lot they would dm me and be like hey I'm getting off the 405 I really need a pair of your thrasher shorts um I I heard they're the best shorts ever can I meet you um can I meet you there so anyways I would meet her with these shorts they just sold out so fast um i really had to start with vintage though there was no other way i could do it i couldn't go and buy you know 120 moq of a top and i couldn't go and um to china i didn't even know where to start that was the first point of opportunity that i saw that i could also see would give me an opportunity to invest small but create capital really fast um the margins were like 90 95 percent or three dollar shirts that we could sell for 72 dollars so it was how i made the cash to be able to buy deeper for um the bulk that i needed to buy on the single style skews and what at what revenue milestone did you start to move away from kind of like that scrappy approach and and what revenue milestone did it become unsustainable yeah it's a great question and it's one of the hardest things to scale it is so time intensive labor intensive these denim shorts were so specific to the size.

13:54But the size was not accurate on the shorts because of the way they reconstructed them. So I'd have to have 10 girlfriends, all different sizes, trying on every single short. And it was too much. So anyways, you can't scale vintage very quickly. You can't scale vintage past probably$2 million without investing in other SKUs that you're going to have more depth in. It's very challenging to then push your business into a paid media strategy if you want to be scaling one-of-a-kind items. So I would say by the$2 million point, we shifted gears and went a bit more deep in single SKU products. And then we do curated drops around some vintage SKUs just to keep it small because it was so time intensive.

14:50Yeah. Still, though, that's pretty impressive doing one to two million dollars, just pure scrappy sourcing vintage items and then selling them in person or online. Yeah. Is that kind of one of the ways and reasons that you stayed bootstrapped? Because you and I talked about this before we hit record. you know you are intentionally bootstrapped you've grown this really successful business profitable business you know you you you've founded this business by yourself you're fully funded and you're competing in the same market as VC backed players like Fashion Nova, Lulus who've raised over a hundred million dollars of outside capital so like when it comes to I guess the numbers around margins, how do you prioritize and maintain profitability when you've got funded competitors that you're competing against?

15:48I focus a lot on the storytelling and the branding of our company. If you look at the market and you put us alongside these players that you're speaking of, we're in such a unique space from a branding and market competition point of view because we have such a personable approach that companies like Fashion Nova or Revolve don't have. We might not be as big as them quite yet, but we have the personality within the brand that consumers really, really love and it's very important to have these days, especially in 2026. Being a founder-led brand brings a different level of soul into a company and you can see that within 12th Tribe.

16:36It's a very

16:41relatable brand. We have seen very successful comps year over year at a top and bottom line, 15 % growth on the bottom line just this last year. And I'm confident that we can continue to grow bootstrapped and do it in a way that's going to create longevity within a brand. One of the things about maybe growing slower is that you're growing with a lot of intention behind it, and you're building a long term brand that could be around for 70, 80 years. So when you talked about storytelling, what advice would you give to our community when it comes to building a brand, building a great brand and keeping storytelling in mind?

17:29What are the types of things that you're doing? Can you give us examples? How do you think about how you, I guess, show up? Always start with why within your campaigns, your product launches, your go-to-market strategy. Ask yourself, why are we launching this? Why does the consumer need this? And really sit with what gap you're filling and build a story around that gap that you can speak to within your product, within your marketing, your voice, your tone, the touch points you have with your consumer. Look at the DMs that people are sending you, the group chat. Get as relatable and personable as possible because consumers want to feel like they're in your phone, that you're in their phone, that it's a friend that they're talking to, that you're reliable, that there's a person behind the screen.

18:18One thing I've always kept in mind since I've started this brand is that it's so important to bring authenticity to the surface because there's so many people behind the scenes building what these consumers are buying. And it's a beautiful thing when consumers know who is behind there. How can you feel connected with the brand? I started 12th Tribe because the beauty of a brand is being able to connect to someone or to someone in a way where they feel connected. Like they're a part of a tribe. 12th Tribe has the word tribe in it for just that reason. So as you're building a brand, look at the voice, the way that you're messaging, the little micro touch points make such a big difference when it comes to getting the connection with your audience.

19:05Yeah. And I'm also curious around socials, founder-led content. What are you doing there? And how should founders from your perspective be showing up to tell the story of your brand? Bring them along for the journey. Don't be shy. If you go back years on our 12th Tribe Instagram, you'll see me standing in the office all along the way, our 200 square foot, our 400, our 900 square foot. Treat your social community like they are your best friends, like you're bringing them along for this journey. And as a founder, it's even more exciting connecting with your audience in this way because they're your cheerleaders.

19:45When you're not having a great day where you share a milestone, the rallying behind the community is something that fires me up. And it's something that I don't, I continue to do to this day because it's so important that even as we grow, 100 million, 200 million, our audience knows that it's still us behind the scenes. We're still who we are. Nothing's really changed. And you've been along for this ride. Consumers want to feel that they're a part of the journey, right? So bring them into the mess. Bring them into the beauty. Bring them into the in-between. On my personal social, I'll talk about the highs, the lows.

20:26I'll bring them into the office. I'll bring them around to the team on set. From on the brand side of it, you know, you'll probably catch me in an email saying, hey, here's my favorite things. Or we just got off the shoot and here's what I know you're going to need. so don't I think sometimes people think that the founder voice can come across like small business or to boutique and some times people want to come across a little more corporate but we're in we're in founder mode these days which I've been excited for because people used to tell me like you're a founder like just kind of be behind the scenes you know it's you should just stay behind I'm like no no no now it's founder mode is is where we're at these days it's very fun to bring your audience along.

21:12But it's something I've just loved to do since day one. And funny enough, our ad audience has resonated with me since the first day of the business and I'm the highest performing ad on all of our content. So my team's always like, Demi, I need you to go do selfies and all of these slow sellers are kind of giving them to ads. I'm like, all right, I'm doing it for the cause. Let's go. Yeah. And look, you would be the first person to say that. We are seeing a massive trend in the marketplace. And you've talked about this before, focusing on transformation over transactions early on, showing behind the scenes, radical transparency, founder-led content, founder-led ads.

21:52The first to tell me from interviews where people said the founder-led ads, just nothing beats it. So showing really, I guess, who you are, the why, why this product matters, why you created this, why this is important, why this is transformational, why you should care. I think people can feel and sense that passion very, very quickly. And in the age of AI and AI UGC and AI content, what's your take there? I'm glad that you mentioned that. I used to follow this one account that was doing amazing EGC content in the office featuring their employees, they launched an AI employee and basically brought that AI employee into their content series.

22:45And I was taken, I was a little taken back by it. I don't think I'm full, I'm not ready for EGC to turn into AI GC. That's the beauty of the connection is having that connection with the real person. So there's ways to use AI. There is. I'm not against AI. There's a ton of efficiency behind utilizing AI. It's just using it in the right ways within content. And if you want to scale content, I think there's a way that you utilize AI to scale your content, drive efficiency through your ad channels, iterations of existing content. But I'm not quite there when it comes to creating an artificial individual that is representing a brand through with voice and storytelling so you unfollowed them you lost respect i wasn't i was bummed i was honestly bummed and you know it may have just been a test from there and to see how does the how is our audience going to react but they had been doing such a good job with their the personalities in office and seeing this artificial implementation that who knows could eventually transition one of the real people out I was not really crazy about seeing happen so we'll see how it unfolds but I don't think that I don't think the internet really was ready for it either yeah okay interesting we're all testing so I give everyone you know I give everyone a little bit of grace right now.

24:20AI is so new and businesses are testing it to see how their audience is going to react. Are they, is the audience ready for it? In most cases, they're just not. Yeah. Look, I have, you know, once again, you're not the first to tell me. I've heard stories of people losing a lot of respect for brands when they're running ads and you can see that they're clearly created by AI. I always lose instant respect for brands when I can see. and this is everyone should know this when you see an m dash in the copy whether it's on the website whether it's in the ad whether it's a social media caption like it's so yeah yeah it's it's it's just so obvious like i don't know how people don't know that like that that's that's on the basic side but like yeah i always lose respect for a brand when i see that yeah you know I like when people zig I like to zag and so people have been leaning into AI a lot more right now and I'm like let's get offline and do things that have nothing to do with the internet AI or connection or digitally connected so we've been doing these tribe table series which is basically a way for our community and our network to get completely offline we've built out this beautiful dinner experience where we're not we're not posted on Instagram we're just present we're just there And I think with the analog trend is going to be very popular.

25:46People are going to be craving just to get off the Internet. You're going to start to see a rise in people just going to parks, people going to walking without their phones, probably leaving them at home. Really a big urge to just disconnect in general. Consumers are just at that at that tipping point, I would say. So we like to do a little bit of the opposite of what people are tending to do right now. All right. So something else you've talked about was offline, you said to me, not enough people know the true challenges that a founder faces. And it looks like on the outside and people just assume like that you're a millionaire, you've got all this money if you're running an eight figure brand or even a seven figure brand and a lot of people don't truly know some of the battle scars and challenges.

26:43So as an example, during a peak season, a warehouse partner mishandled inventory, left thousands of orders in limbo. That kind of crisis could just destroy a brand's reputation pretty quickly. This happened to you. What were the immediate hour-by-hour steps that you took to communicate with customers and solve that, but then talk us through some other challenges that have been just, it has to happen to get to where you've got to. Well, when it comes to a warehouse mishap, staying dialed across all of our 360 marketing channels is just extremely important. So it's being integrated directly into the customer service Slack channels, into the e-com Slack channels, into the social channels, and all of us being really hands-on and intentional with what type of messaging that we're putting through, really hour by hour measuring the, you know, impact of number of concerns that are coming through, cancellations or, you know, severity of different situations.

27:48But having had created a, practically having created a plan so that if something does go south, we can offer them X dollars towards their next purchase or a gift with purchase. Just always trying to find a way to meet our customer in the middle so that if they are frustrated, we can make them feel a little bit better. But being founder-led and being the face of a brand as well comes a little bit harder also. You know, you get personal DMs, personal LinkedIn messages from customers, personal emails. And I'm a very intentional leader. And I think what I've learned is that because I'm so intentional, I carry things very heavy on my shoulders and take responsibility in areas of the business if things don't go the way that they should.

28:45So I've learned how to manage that motion on my end. But I care so much. I care about our consumer. I care about our employees. So I'm always jumping in and making sure that my team knows I'm available. And I'm here to help them figure it out. And if anything goes south, they can come to me and we can talk it out. But when it comes to outside of a warehouse, Well, actually, I went to the warehouse during that time. I personally showed up and was like, we need more hands on deck. Let's go. My mom flew down. We're like, let's just get you need you need people on board. We're going to get the troops.

29:25This is 12th tribe. We're a tribe. So we're coming. We do what we need to do for our customers. You talked about like, you know, people don't really truly know the highs are high and the lows are low. Like, like talk us through that. You said not enough founders talk about this. What I've learned is what comes what goes up comes down what goes down comes back up. That's just the nature of entrepreneurship before I used to take the lows much more hard than I do now. But that's the nature of this journey. you know you celebrate you may have a record sales day and then and then you're also dealing with an insane employee issue so you're promoting this like big drop and all these great things happening but then on the other side you might be dealing with a whole bunch of turbulence that not the rest of the world is seeing as a founder and a ceo your hands are across all of the business all departments.

30:23And as much as you want to say that everything is always just easy peasy, the reality of running a business is just not. You can ask in any business business owner there. No one's going to say that it's glitz and glam. Right. So, you know, I, I tend to be really hard on myself and I think it comes across to other people that I'm really, really strong. And I am. And I am. But I'm not always strong. And I have hard times. And I have to really work on And sometimes getting out of my own way, because I am so hard on myself, I'm a big critic. Being an intentional leader, you hold a lot of on your shoulders.

31:19You know, being a solo entrepreneur, I don't have any partners. So I don't have a partner to carry half the weight. I was in my 20s when I started this brand, and it grew into millions of dollars and eight figures before the time I was 30 years old. um you don't get taken very seriously when you're five foot two and you're 24 years old trying to move 60 ,000 units into a warehouse with your mom next to you um I've been really I've been talked down to I've been underestimated I've been told I shouldn't do one thing or the next, but we're 10 years into this business and I figured it out through every single challenge that's come our way.

32:08I've gone through COVID. I've gone through the riots that have happened, the presidential elections, the economy, now AI. I think aliens just got announced. Way more, oh, driver, like we've had some wild times, but, you know, through this journey, I've been wildly underestimated and not taken seriously in many ways. And it was really challenging in the beginning when I would be having, I had business relationships with, with individuals that were 40 years older than me, who didn't take me seriously. And it was really hard to get my points across. You know, I've had a lot of support along the ways, but there's been those challenges.

32:52And a lot of people have doubted me. I don't have a CEO background. I'm a founder turned CEO. I learned everything on the fly. So I've been told before, you shouldn't be a CEO. You shouldn't be leading a company. And I had imposter syndrome for a while, but after you've gotten through so many challenges within a business and you've turned it around and you've grown it successfully and you've got a bottom line that you're proud of, you finally start to say like, no, I deserve this title now. And I might not lead in ways that people may want me to and I'm always growing as a leader but I've been able to do it and it's taken me a long time to be able to accept that about myself because many people didn't believe that in me so those are some of the behind the scenes um I would say yeah some of the behind the scenes that people don't really see they they show me I you know I think Instagram just tells its own story and a fashion can look very beautiful.