'All my eggs in the Facebook basket': True Classic CEO Ryan Bartlett on growing a DTC brand on paid social

0:03Hello, everyone. Welcome to the Modern Retail Podcast.

0:30love here at Modern Retail, so I'd love to get into all of that. But Ryan, how are you doing? I'm good. Thanks so much for having me. Absolutely. So first, tell me a little about yourself. How did you get into the t-shirt space? Yeah. So, I mean, it's kind of a long journey, but I'll just give you the short version. I'm essentially, at my core, I'm a creative. I started in music. That was a rough road of it. So I eventually kind of gave up and tried something else. Poker kind of took over my life for a while. So I did that for a living. So essentially, you know, before starting True Classic, I was a college dropout, failed musician, failed poker player, turned entrepreneur.

1:14So eventually I ended up starting an SEO company, learned a lot about digital marketing, did that for a decade. I also learned a lot about what not to do when starting a business. through a lot of the people that I was having as clients. So they wanted to spend money on really frivolous things and we would do it and it wouldn't work, of course. So prior to starting this, I came in with a ton of experience. So it wasn't like I learned everything on the fly with True Classic. I essentially was able to start and hit the ground running right away. Also, I was able to do it with no money. So that's an important thing for people to understand.

1:51We were completely bootstrapped and it really started out of my frustration with just feeling like this market was being underserved and I would look at the landscape of people in this particular space and I was just pretty disgusted with what I was seeing in terms of pricing. Also, just I felt like people were kind of mailing it in on the quality and the fit. So essentially, I wanted to create something very narrow and a very specific skew, which was just the t-shirt. right? Just the crew neck t-shirt. I wanted to make the best possible version of that, that I possibly could. I wanted to prove it out.

2:29And once I did, we eventually started rolling out into every single category that you see on the website now, which is active wear, denim, underwear, socks, absolutely everything. But, um, we keep the same consistency as far as, you know, we don't gouge people on price. A lot of people trade down from like the Lululemons of the world to us because we're a quarter of the price, but we're the same quality, if not better in material. So also when it comes to fit, which is probably our most important thing that we're known for, everything is consistent. So whether you're buying a t-shirt, a long sleeve, a polo, a dress shirt, they all have the same fit.

3:09So, and that was very much by design because I wanted to make sure that people felt like, um, in a world where everything's mismatched and there's no really one size fits all type shirt for anybody. I wanted to make sure that we just kept things consistent and simple for men. So, um, yeah, that was really the start of it. And, you know, it just really kind of took off and word of mouth spread. Um, I wouldn't say I started with no money. We started with$3 ,000. We leveraged, uh, a good bit of that towards inventory to start out. And then, um, like I would say probably 2000 went into inventory and the other thousand we saved for paid media.

3:47So I was able to, I ran all the paid media for the first nine months of the company, basically did all the digital marketing for us. And my partner, Nick, ran the apparel side. So he was responsible for manufacturing, negotiating those deals. Since I had never done manufacturing or apparel, I had to bring in a guy that was a pro. I was not coming in here thinking I was the expert at apparel by any means. I knew that I wanted to build an amazing community. I wanted to build an amazing product. I knew how I wanted it to fit and feel, but I needed Nick to be able to really bring that to life on the, on the t-shirt side.

4:26So we also brought in Matt, who was kind of like our finance guy who understood startup life. He also understood M &A. So he's become very handy now at the level we're at because we're just constantly talking to bankers. So, yeah, it's been quite the ride. Yeah, that's a lot there. I wanted to dig into that. So let's start at the beginning because there were two sort of theses when you launched it. One was on the launch and marketing side that people were doing things wrong. They were, you know, misspending and you knew how to do the correct marketing, but also on the product side. So which would you say came first?

5:05Was it that you knew you wanted to start a business and you knew how to launch it marketing wise? Or was it that you had the idea there are, there isn't a good mid range shirt company and I want to be behind that. You know, it's crazy. I would have, if you asked me that a month ago, I would have said that it was the digital side, but my brother reminded me of a story that I told him when I was like 19, which is crazy that my mom sent me this text message exchange that they had. I actually had this idea a long time ago, decades ago, when I was in my teens. And I told my brother, because we used to go to this store in the Bahamas called Caraloja, which was, my family had a spot out there.

5:46We would go every year. And they were these shirts that were like really soft bamboo shirts. And it turns out bamboo is pretty expensive to make. I tried to make that the true classic shirt, but it was just way too much. Didn't work out? No. The cost was insane. So we abandoned that idea pretty early. But I remember walking into this store and they didn't have my size. And I told my brother at the time, and I have the text message as proof, that I said, someday I'm going to build a t-shirt company so that I can have the perfect shirt. And I completely forgot about this until they just reminded me.

6:17So it turns out I actually knew I was going to start this 20 years ago. Wow. And now I'm 40. So listen, I knew that I wanted to do e-com eventually. I felt like the service industry was great and I built a really nice business. But it wasn't gratifying. I felt like I wanted to create something for people, and I wanted to put a mission behind it. And I wanted to put, more importantly, a lot of intentionality behind whatever I was doing, whether it was the marketing, the customer service. I just felt like I could try harder than everyone in my space. And ultimately, I was hoping that the audience would notice.

6:52But yeah, I hope that answers your question. No, that answers my question, absolutely. So then talk to me about apparel isn't new. you know, e-comm isn't new. What worked so that you were able to grow the business from the beginning? Was it just the messaging, you know, like, and why were you able to make it such that you had the right shirt that was the right material, but at the right price? Like, talk to me about through all of that and how that worked back in the day. I mean, it was kind of a hunch, right? Like, I just knew that this, at first I was like, this is going to be a side project.

7:24We'll kind of see how this goes. I felt like I have a really good grasp on what the market wants. And the more research I did, the more it just, it really set with me that this was the right thing. So I definitely took a lot of time to think about it before I launched into shirts, because I was throwing around all sorts of ideas. I wanted to do like a matcha brand. I wanted to do like a lab diamond brand. I wanted to do like 10 different things. But I just kept coming back to this because it just felt like my frustrations have to be shared with a lot of people. So when I talked to Nick about it, you know, we worked through the design.

7:57We worked through what we wanted it to feel like, but ultimately it was a leap of faith. And if it wasn't going to work while I was out$3 ,000 and, you know, whatever amount of work I put into building the website and making it CRO friendly. So, you know, it was part of, it was just really just betting on ourselves and saying, okay, this looks like it's pretty wide open white space. And we need to just kind of jump on it and see what happens. And after the first month, we, we knew we were onto something big. I don't think we realized it was going to be this big. But, um, you know, the Tam is pretty enormous that we've realized and not just in the U S shirts.

8:34It turns out they also care how they look in shirts, more importantly, which I think most people just assumed guys didn't really care. And maybe most of them don't. I think the women in their life do care. And that's why women are a big part of our revenue because they gift this for their men and they want to upgrade the way their guy looks. So it's important. That makes sense. So how did you approach the marketing side of things? Was it all about messaging? Was it all about channels? What was it that resonated? It was a little bit of both. I would say that coming into this, I knew that I was going to put all my eggs in the Facebook basket, so to speak.

9:12So I knew because SEO was going to take forever. I'm not scaling this company to 100 million in two years on SEO. It's impossible. SEO is like a lifetime of work to like really make a dent. So I knew, listen, I was lucky enough to grow up in a time where this, this was pre iOS 14, by the way. So, you know, I was lucky enough to start this back then, which was amazing, which means I didn't have to do nearly as much work on targeting and creative because Facebook was just perfectly finding the right customer every time. So I was lucky in that regard and I also just knew how to run paid media So I was able to really just scale this thing only on facebook For the longest time I didn't spend a dollar on google or tiktok or any of those other machines For a long time.

10:01I just really built it on facebook and even now I just it's still by far our largest spend Daily, I would say it's like 70 of our daily spend still goes to facebook and instagram because it just works so well. And now we have some of the best creative to help complement that. So what have you done now post iOS 14? Because I feel like it's much more difficult. Are you still able to get even a modicum of the return you had before? Yes and no. I mean, we're doing such a better creative that yes, it definitely works pretty awesome these days because we're not just doing one type of content. Like in the beginning, I was just doing kind of like what everyone else was doing, which is like the cool guy kind of walking around type creative, which is so lame now to think about.

10:48Now we're just like trying to make people laugh, right? Like a lot of the content we put out isn't even selling at all. It's just like, let's make them laugh, make that emotional connection. And if they want to buy it, they'll buy it. I don't need to shove it down their throat and try to force them into learning about the value propositions and why we're so much better than everyone else. Cause let's be honest, everyone says nowadays, like all the marketing is always like the best fill in the blank of all time, right? Like it's all the kind of same stuff. So it's just gotten so much better. Now though, we have definitely diversified away from Facebook because we realized that if anything ever goes wrong with Facebook, we can't just tank the business.

11:26So we've been very strategic about spending more on Google, spending more on non-branded search on Amazon, spending more on podcasts and OTT. and, you know, but really testing into it. Like we really are sticklers on data and analytics and understanding attribution at the highest levels. I mean, my president, Ben, who came from Meta, is an absolute data nerd. And this guy drills into every single thing we do. And it's so important to understand attributions at the level that we do because we're spending, you know, almost$200 ,000 a day. so you can imagine you know if you're spending money like that you better be able to quantify the return so we're doing incrementality testing on absolutely everything under the sun and by the way if we can't we probably won't do it because we have to be able to prove it on some level and if we can't do incrementality testing we're heavily relying on our post-purchase survey as kind of our source of truth that's been a game changer by the way you know we didn't do that for probably two years.

12:35And then when we started looking at our spend and breaking it down by percentage and correlating that to the post-purchase survey, we were like, wow, you know, Google is not as incremental as we thought it was. Here we thought Google was a slam dunk, you know, and I come from the Google world. So I always thought it was insanely incremental to the business. Turns out once you get that post-purchase survey, it's not even like in the top five of channels where people are responding and saying they came from. So that was really eye-opening. And we learned basically that across everything, we're just living in a Facebook, Instagram world, and everything else is a very small percentage point.

13:18I mean, do you think, I'm always fascinated, and this is going really into the weeds, but post-purchase surveys are obviously important. A, do you have any tips for getting people to actually fill them out? Because I know that I have never filled one out in my life. But I also do think that I don't know if I would remember that I went to a brand because of Google, even if I did. Do you know what I mean? That's part of it. Yeah. And so I'm always interested. And I feel like that post-purchase surveys are usually for things like podcasts. And that kind of makes sense. And that's pretty much the only way beyond having a code that you would be able to have any attribution with a podcast.

13:53Is that what you're saying when you're talking about this? Or how are you thinking about it? Absolutely. Podcast is really tough, by the way. I do think it's incremental to the business, but I think it's a very flawed system because let's be honest, if you listen to a podcast, you're not buying athletic greens the first time you hear them. You're probably buying it on the 27th time, right? The problem is, is that you're actually not getting qualified on that coupon redemption because you had already bought them maybe somewhere along the line because you had heard him, but you filled out the survey saying that you heard us on Google because you typed in athletic greens in Google and then clicked on the Google search.

14:28so it's just it's a really tough way to track i would say that on podcasts we we don't take into consideration the coupon code redemption anymore because it's a small factor but you also you know if you've done this long enough you you know that these codes get scraped and they get put on the coupon sites so like is someone finding us through that or are they actually finding us so you don't know for sure so that's why again it goes back to the survey and so what we try to do is like on the podcast thing specifically, we try to like really ratchet up the spend for like a month, right? And then we try to see if there's a correlation on the post-purchase survey.

15:09Did that, you know, 2 % go to 4 % or 5 %? Did we see that increase from day to day to day? And if it goes up, then you know that you're doing something right. Now, specifically, I'm talking about podcasts. Forget everything else. So you have to kind of find a way. It's not a perfect system. But you have to kind of be able to kind of ramp up spend up and down to kind of test the effectiveness. Because when you're spending on so many things, it's really tough to figure out where ultimately the conversions are coming from. So that's kind of what we do. We try to do these isolated tests and spend up or down on everything else.

15:49Because we already know Facebook's doing the best. Everything else, we just try to really dial it in as much as we can. But it's imperfect. Got it. I have another question that's really in the weeds just because it dawned on me. And I think I'm correct, but tell me if I'm not. But you said you're on OTT, right? Yeah. I think I've seen your commercials. And correct me if I'm wrong, do you guys use a QR code? Some of them we do, and some of them we don't. Do people actually... I've always wanted to ask someone, do you actually get people using your QR code on OTT? And so can you talk about just how that's worked?

16:21What the overall strategy with that? I did not click on it. I apologize, but what actually happens when I do that? So supposedly, I mean, our director of growth would be better to answer this, but I can tell you that supposedly they have a way to track. If you're watching one of our ads and you have your phone open and you scan it, there's a way for them to basically see outside of the click. There's a way for them to correlate between your phone being in the vicinity of the TV. I don't understand it, really, the technology. but supposedly that's how it works. They're able to somehow detect it.

16:57I don't know if I buy it necessarily, but, you know, it's, it's, it's OTT is weird. They, they give you these reports and you look at them and on the surface, you're just like, there's no way this ROAS is what you're reporting that it is. Like, I just know marketing well enough to know that like a seven ROAS is just, there's just no way, like, right. Like it's just, there's no way it's that high. So you take everything with a grain of salt, especially when these vendors are just feeding you kind of boilerplate reports. So I don't really buy into all of it, but I do understand the importance of brand marketing and doing things for the sake of brand.

17:34But we really try not to spend too much on brand because, you know, let's be honest, we drive so much of it through Facebook anyway, that you're still building brand. Maybe you're not doing the billboards or whatever people talk about as brand initiatives. But if we do a brand initiative, we try to make sure we can really, really measure the effectiveness. Otherwise, it's just not really worth doing. Got it. Makes sense. All right. Sorry for all those in the weed questions. No, I love those. So let's go to financing because you've expanded so much over the last couple of years. You're in new categories of apparel.

18:09I know that you're expanding internationally. You said you were bootstrapped. Have you remained bootstrapped this entire time? How have you been able to fund this because apparel is so capital intensive? Yeah, that's a great question. This is a really important one too. I feel like it gets glossed over a lot. I've learned a lot about finance. I'm really not a finance guy and my background is not that, but I have learned so much working in this business. But what I knew coming into this business was that I wasn't going to be one of those companies that over hires. I think that's been a large part of our success is even though we did, you know, 250 million over three years, we're still only 50 people.

18:47A lot of the companies I talk to that are doing over$100 million a year have like 700, 800 people working there. Their OPEX is through the roof, which means if they don't have a really good margin, there's just no way they're making money. So I'm always the guy who's kind of cheap when it comes to doing deals with vendors. Like I'm always trying to get them down to the absolute rock bottom for the sake of the company, because that technology adds up quick on the balance sheet. When you look at it as an aggregate amount, it's insane how much money we spend on technology and measuring tools and SaaS products.

19:25It's outrageous. So, you know, I've always been really bullish on keeping the company lean. And that is just super important because it also allows you to just keep reinvesting in the company. so you know basically just being able to be uh have really strong marketing and and getting a really solid ROAS on Facebook allows us to take all those extra dollars and reinvest them in the company and you know it's different now that we're as big as we are we are definitely talking to a lot of private equity companies and investors and um because what we're thinking about now is like do we roll out retail to like right now we have five retail stores so if you want to do 25 this year, which we could probably do, it would require a lot of capital.

20:12And, you know, since we are a lean company and we invest back into the company, we don't have a lot of like extra cash just like laying around to like launch 25 stores. So now the conversations are, yes, do we do a primary deal where we can take that capital and put it towards growth initiatives? Do we invest more in new product categories? You know, what do we think we want to do with that money? So we're having a lot of those conversations. But to answer your question, we are still bootstrapped. We have not taken any outside investor money. That may change in the future. Maybe even this year.

20:47I don't know. We're talking to so many people on a daily basis. But the market is so weird, as you know. It's just no one's getting the valuations they want. Even a company like ours that looks so great on paper. the problem that we're running into is these companies don't know how to value us because there's just it's so unheard of to go to 100 million in two years that they just don't even know like what kind of multiple of revenue to put us on you know they're just like they're they're like this is the same conversation i have every day they go yeah unbelievable business this is so great but we need more time because like they just they want to keep hedging and uh yeah at the beginning of what you were talking about, you were talking about all the vendors you use, all the expenses, you keep a lean team.

21:31How do you decide what to in-house and what to spend out on? Because it seems like if you have such a lean team, that means that you're going to be using a bunch of other people to help sort of fill in those gaps. How are you making that work as you grow so quickly? It's really a function of what is best in class. Do we feel like we can do best in class creative internally? Or do we feel like we need an agency for that? If the answer is you can't do it internally, then you have to leverage an agency. So I would say that we don't make a lot of decisions like if we can save a buck here, then we'll use an agency.

22:07It's more like, you know, we need to leverage agencies to keep ourselves honest to make sure that even though our in-house team is performing amazing, we want to keep it competitive. We want to have outside agencies bringing in new ideas. and like even with media buying, for instance, we did all of it in-house for a while. And then we felt like at a certain point, there's so much money being invested, we can't possibly ask our in-house guy to be up at two in the morning checking to make sure Facebook isn't broken. So we need an agency who does have people on call and can do those kinds of checks overnight.

22:42And it just made more sense for that part of the business. But we do just about everything in-house, not to say we don't have vendors, But even we usually do both, to be honest. And we make sure that both are kind of, you know, keeping each other honest in that respect. How much of your business, you mentioned you're on Amazon. How much is on Amazon? So I would say we're doing about 50K a day on Amazon. And we're doing, you know, between five and 600 a day on the website. So, you know, it's like 10%, basically. Have you been on Amazon since the beginning? No, we just unleashed Amazon a few months ago.

23:20Really? So what made you decide to do that? Is it just because you saw search volume and that's the usual reason? Pretty much. Honestly, I was anti-Amazon. I've seen what they do to businesses. I've seen them squash businesses. I was really worried about cannibalization. So I think ultimately what it is, I'm realizing, it's just a value add for shipping for the customers. It really is not anything more than that. It's not like we're getting a lot of net new people from Amazon that were looking for that$2 shirt and they decided to buy True Classic instead. We're not getting a lot of those people.

23:56We're just getting the guys that see us on an ad and go, hey, I would buy them. Let me see if they're on Amazon first. If they are, I'll buy them. If I have to go to the website, I don't want to do it. So that's kind of what I think that revenue is. So, but what we have noticed is, which speaks to my point, is that as we scale up budgets, that we see a correlation directly tied to Amazon. So we know that it is a function of people just saying, well, I would buy this if it's on Amazon. And so they go there, and then the revenue keeps creeping up. Is it a curated selection on Amazon, or do you have everything available there?

24:28Very curated and very small because what I don't want is for just to put everything on there and then have nobody coming through the website. Because let's be honest, it's obviously much better for us to have them come to the website and buy. So I just put like our core products up there, like some of the active wear, some of the core colors and shirts that everyone loves. And then for everything else, like denim and underwear, socks, they have to go to the website. So we're careful about what we put on Amazon. done. We don't want to, like I said, cannibalize it too much. So let's talk about growth decisions.

25:02You sort of hit on this with you're thinking about taking outside investment. You've made a lot of big decisions. Given that as of this moment, you are still bootstrapped, but you've made a lot of pretty big plays. You have five stores, et cetera. How do you decide what is worthy of the expense to do? And how do you go about when you go into a new category that that's going to work out? Because it seems like it has to be a very deliberate decision, you know? Yeah. I mean, listen, the reality is, is we just don't know. We live in a world where everyone thinks they know, especially people that, you know, that I talk to on the outside, everyone thinks they know.