Collars & Co founder Justin Baer on riding the Shark Tank wave

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

0:30I've heard so much about that Shark Take bump, which I'm sure Justin can talk a lot about. I want to go into that. I want to go into the growth plan. I know that Collars & Co. is opening its first store pretty soon, and I want to hear more about that. But Justin, how are you doing? Thanks for joining. Doing great. Thanks, Kel. Thanks for having me. Congrats on the podcast and not a retail. I listen and read it all the time. Oh, sweet. Thank you. I appreciate that. So first, for those who don't know you, who are you and how did you get into the shirt space? It's a funny story and it has to do with kind of side hustles in a way.

1:03So, well, one, I've always been an entrepreneur growing up as a kid, always coming up with ideas. I had an idea in college and an app business. And two years ago, I had a software business that I was running and it was during COVID. And I was kind of sitting around and I had this itch of this idea when I lived in New York where, you know, where you wear a dress shirt under a sweater. It's pretty much like the go-to look for anyone that like works in an office in New York. It's like the Midtown uniform, I say. But I hated wearing a long sleeve dress shirt under a sweater. I just found it so uncomfortable and itchy and scratchy.

1:40And even putting it on, like, you know, like the sleeves get caught on your elbow and you're like pulling it down. When all you really cared about was the collar. So, but I liked the look. And I was kind of tooling around. I'm like, you know what? I'm going to make a polo shirt. like a stretchy, soft, comfortable golf shirt, except we're going to put like a really firm collar on it, like crazy firm. So it's always going to sit up. It's not going to give you that bacon collar and under a sweater, it looks just like a dress shirt. And, uh, I made a run, I think of like 300, just white one collar style.

2:14We now have like four different collar styles. And my seven-year-old daughter's like, dad, you got to do a Tik TOK video. So I'm like, yeah, you gotta do it. So we like go in my closet. She's like holding the phone up and I'm like guys don't you wear dress shirts you know they suck they're uncomfortable you know you gotta check out one of these dress collar polos and at the time I just made a Shopify site and it was just me actually she's the one that took the pictures did like stand on a chair and take a picture of me with a white background and I mean it the you know on Shopify you turn on the notifications and it's got like a little bing like it's like a ka-ching sound when a sale comes in and we sat down we were watching Netflix that night and all of a sudden like the phone started ka-chinging and I was like oh my god like this is crazy we just sold you know somebody just bought one of these dress collar polos and that was two years ago now it's just kind of been nuts we have over 150 styles we're into outerwear pants we're getting into pants um we have four different color styles of shirts so we've got an english spread a semi-spread a button-down collar version and a cutaway that's more like a British style um when I came up with the idea everyone's like oh you gotta you know this is great for shark tank I'm like yeah I'm like that's not not not really gonna happen um or to get on and then there was like you know 11 30 at night when I was like all right I just went to like abc.com and filled out a form you know didn't write long answers because I'm like no one's picking me and um they uh they called back and you know, nine rounds of interviews later, we're, we're on Shark Tank, and we got a deal with Mark Cuban and Peter Jones, and which has been awesome.

3:58That was the founder story there. But that's how it started. That's a great, that's a great found. I mean, there are a few things that I wanted to call out one, you are one of the few brands, not few, but everyone says TikTok is a great marketing engine, but I've never heard of it as an actual sales engine. So it seems like you were able to buck that trend. You know, early on, I think, you know, to sell, you know, several dozen, couple hundred, you know, I think it's doable to sell like a million units through TikTok. It's not, you know, I don't think that's possible, but it is a great discovery channel, unlike kind of Instagram or Facebook, where it's mostly people interested in following their favorite celebrities.

4:34Let's say, you know, it's at like Tri Reyes or, you know, The Rock or something. You go on TikTok to find new things. And you're okay to watch people you've never seen before and hear what they have to say. And so it was an incredible discovery channel for Collars & Co. and kind of this dress collar polo concept to kind of test it out to see, well, do we have something here? Is this worth spending ad dollars on? So in that first year, did you have a vision, I guess is my question. Did you think this was going to become more than a side hustle? or were you like, we're going to test and learn? Are you an apparel guy or was this just one idea where you're like, maybe this will work and now you've become, you're making a quasi apparel empire?

5:16Like how did, how did this all come to be? And was there an end vision in mind? You know, just being kind of a serial entrepreneur, I've had 50 ideas that I thought they were all pretty good. You know, most of them are all bad, you know, we're all bad, not all bad, but you know, a couple of what I felt like this idea, I didn't think it was any worse than my other ideas. I mean, I knew I had this problem, but I didn't know, you know, for sure, if other guys around, you know, the world had this kind of problem. And sure, I had grand ideas of like, God, it'd be awesome if I could launch this and, you know, one day sell, whatever, you know, 100 ,000 shirts or something.

5:55But, you know, I'm realistic early on, it was just a side hustle. I'm like, let me see what happens. You know, what's the worst I can lose here. And it just, it just worked kind of went crazy. How did you go about designing that first prototype? Did you know, like, what was the process by which you were able to actually make one that actually worked? So that was fairly difficult. It took over six months to design, develop, find a factory that would make a prototype for me. And at the time, I literally, like, took t-shirts and cut out the collars of like my regular dress shirts and kind of sew them in or put them in like a v-neck t-shirt and kind of tried to explain it to the factory how I want it to be but that the real secret sauce is like the patent pending collars like we have it's not just like a normal dresser color it's even firmer than a dresser color you can kind of see me here but it actually we run actually a piece of fabric throughout the entire collar versus just a collar stay.

6:53So yeah, that was challenging finding the right one. And it's evolved since we launched it two years ago. We've made it better. We've improved on it and made different color styles as well. Do you do your manufacturing now or are you still, how does that work now? Where is it manufactured? Well, we started, we have three factories, three different factories, kind of keeping them all honest. I think having all three and they're overseas. We make them in Pakistan, which has been great. They're a great trade partner with the US, which is really nice. And yeah, I mean, so far so good. And we've got good QA over there.

7:31We have somebody integral on our team. I'm part of our kind of core management team that is Pakistani as well, who's kind of been able to go there and visit the factories, which is really important. That's great. So talk about the first year's marketing plan, Because when you got on Shark Tank, you had a pretty good amount of sales and you were online only. How did you reach people? You said that TikTok is a good discovery engine. Instagram does something else. Did you lean on one or the other? Or what did you find that worked? And how much did you spend on paid media? I have to look back. Facebook and Instagram definitely drove the most amount of sales.

8:03We also, and we still do, terrestrial radio. So we're on with Tiki Barber, and he's one of our brand ambassadors as well. but you know our social you know the big social channels for paid ads is still what drives new customer acquisition did you find something that specifically worked or like was there you said you had uh tiki barber as a uh as a brand ambassador have did you find other brand ambassadors over time did you have an overarching strategy as the business got bigger and bigger yeah i mean we always wanted to test influencer marketing to see how that would go um i thought Tiki was a good guy for us and still is.

8:41And we also had Nick Faldo, who was really interesting. He's a Hall of Fame golfer, probably a top 10 golfer of all time. And he reached out and said, I love the shirts. I bear them all the time. Is there something we could do together? And I was like, yeah, of course. We'd love to do a photo shoot. He's like, well, I'm going to be in DC in two weeks. Can you pick me up? I literally picked him up at the airport. and we did a photo shoot when he was here doing some commentating for CBS. But as far as kind of a marketing plan, it's evolved and compounded in sophistication and price from when we just started.

9:22I mean, we had one shirt, just white English spread collar. You know, the next idea was, okay, well, let's try different colors. That was working. And we said, okay, let's try and make traditional dress shirt patterns as you kind of see what I'm wearing right now, like a blue gingham shirt. It's, it's everywhere. And we're like, well, people love that style. Let's make it into a dress collar polo and see how it goes. And that worked. And then now we're into long sleeve dress shirts. So we took basically that, that comfortable, stretchy, comfortable material, put it into a long sleeve dress shirt, you know, full buttons go all the way down and, um, but put our solid collar on it.

9:58Cause I think that's one of the big problems with kind of the performance dress shirts. It's like the collars flop down to give you the like seventies disco collar. Yeah. Yeah. They're always very short. I found it. I've never really liked them. It was funny. I was watching your, your shark tank appearance and I, you mentioned the midtown uniform, the midtown uniform. And I was like, well, it's, I feel a little bit too seen because I don't usually have nice clothes, but the one thing I do wear is a collared shirt and a sweatshirt over it or a sweater over it. And like, I always just hate how there's like, You see the pockets underneath and it never really goes very well.

10:29So even with that initial pitch, you had me with that. Can you talk about the product expansion? You mentioned a few of these new styles, these new colors. How did you go about doing the R &D with that? How did you figure out what people wanted? And how do you keep the economics to work? Because when you add more SKUs, especially in apparel, it just gets kind of crazy. So what was your thought process as you expanded that? Yeah. I mean, people love the dress color polo. That was our core hero product. But I knew to have a strong e-commerce slash retail business, it's can you get people into non-core category products?

11:08Do they believe in the brand enough to say, you know what, I'm going to try your cotton and silk tees, your more elevated tees. I'm going to try your outerwear. And then we went into sweaters pretty heavily as well. So we do merino sweaters. We do a cotton and cashmere sweater to basically give people the whole look. And so I think we just tested maybe like one sweater and to say, okay, let's see if people will go for this. And they loved it. You know, I think our price point's right. And that gave us the confidence to move into these other non-core categories, but we test them out for sure ahead of time.

11:44How many products do you have currently? 150. Oh my gosh, that's crazy. Two years to go from one to 150. How do you manage all of that? Is that just a big spreadsheet? How do you make sure they're operating correctly? That's wild. You know, I had a great guy reach out to me, and he's a data analytics guru. And he's like, I love the brand. I wear the shirts. You know, he's like, I went to Stanford Business School, and I just love digging into data analytics. Can I help you? And we just got chatting. And so he's kind of like our part-time CFO data analytics guru. So we were on top of it daily. So let's talk about, you know, the elephant or the shark in the room.

12:31And I'm sure you've done a million interviews and probably tired of it. But I, you know, you got a deal on Shark Tank. I'm always more interested just because we talk a lot about marketing is what happens after you go on the show. And so you've, you had an update recently where you said you saw huge sales, but can you just give a rundown of after, you know, if you want to talk about the experience of being on the show or the deal you got, but what happened the 24 hours after? Yeah. So the 24 hours, so one, when you're there after you, even though once you actually pitch and you finish the show, it is kind of neat.

13:02I mean, the sharks, you know, look pretty aggressive in person and it's about a show, right? It's about a show first, second, and third. And I think people need to realize that you're in there for like an hour and 15 minutes. The idea is to make good television. They don't really care too much about you or, uh, you know, your business. I mean, they do, but it's about having good ratings. Um, and I think that came off and they want you to like be fairly combative because that's makes better TV. And I think we, I think we did that. Um, yeah, it seems like you did. Um, so that was good, but after the show, everyone's pretty nice and comes up to you.

13:36And I saw Mark walk into lunch afterwards on set and, you know, he came up and gave me his email address, email me anytime. And I have emailed him and he's been insanely responsive, almost like too much. Like, oh my God, this is crazy. It's 11 o 'clock at night. I just write me like 1118. He's writing me back to like 1123. So I don't know how he manages his email. It's pretty nuts, but he's very responsive and comes up with ideas and will kind of kick things back and forth. It's actually funny. One of my first jobs was at Business Insider way back in the day. And there was always this story that if you ever emailed Mark Cuban, he would always respond to you.

14:17I think this was 10 years ago. And so maybe, I don't know if that's the truth now if you're a journalist, but he seems like one guy who's disturbingly good at email. Amazing. Amazing. He's been cool. And he wears the shirts at interviews, which has just been awesome. He's doing a GQ interview in our shirt. And he's been great. And I don't see any time in the future, like we needed something for Nordstrom. We were pitching Nordstroms and he sent this video talking to Nordstroms about how he loves a shirt and how it'd be a great, great idea for Nordstroms to pick up. So when the show aired, what was the overall impact?

14:54And like, how did that, like, did you have a marketing blitz planned with it? How did you work all that out? And what was the effect in the end? Yeah. So we planned on doing a Shark Tank sale, a flash sale for that weekend. And we saw about 400 % increase in the number of visitors. We actually saw the same number for the update that just came out two weeks ago. Really? Yeah. And I think that was because we launched women's. We launched like a small little women's line. And I bet women are more inclined to shop and check out a new brand online. But yeah, both nights, we had about 400 % increase.

15:33And it extends through not only that weekend, but probably pushes all the way through the next week as well. Maybe not 400 % that day, you know, but it's a steady increase. I think I attached probably about 200 to 250 ,000 in revenue towards the show for that week or maybe like two weeks if I had to pinpoint like what our increase was. So quite a good bump and, you know, tons of people to the website, tons of people to kind of check out our new brand. and then we'll retarget them in ads. And it was great. Do you find, I mean, since it's a one-time blip, it's probably hard to actually crunch the numbers.

16:09But from that first appearance, do you find Shark Tank customers to be sticky or do they have a high retention rate or did your retention rate plummet after that? I'd have to ask our data guy exactly. But from what we saw originally, I think Shark Tank customer is probably not as much of a core customer as somebody that gets acquired off one of our ads. but they, they have stuck around. Um, you know, I would say, you know, some people ask, well, is it totally, is it worth it? You know, you have to give 10 % away. It was a hundred percent worth it. I would do it over again for sure. And, um, I was lucky to only have to give away 10 % you're thinking about it.

16:48Absolutely. I feel like that's a low amount for the show. So let's go into this year. I know that there, you know, you mentioned you were talking to Nordstrom. I'm pretty sure a couple of weeks ago, you announced that you're opening a store in Chicago. Is that right? Yeah, we're opening a store in about 10 days from now, 10 to 12 days, we'll see, which is just crazy. And you know, the magnificent mile just outside of Nordstrom. Nordstrom has that big main location there on the 500 block of Michigan Avenue. And we're like the first store outside the main Nordstrom's in like the mall. There's like a little mall to get there.

17:24Yeah. So what made you decide that a store was right? And also, what made you decide Chicago specifically? You know, there's still... Our customer tends to be slightly older. They're not always... You know, it's an older gentleman that's 30 to 65, 35 to 65. And not all of them are on Instagram buying clothes online. And I think there's a good swath of gentlemen out there that want to touch it, feel it, see it before they buy it and even just get introduced to the brand. We did a pop-up shop in Tyson's Galleria, which is a nice mall in the Washington DC area, Tyson's corner, Virginia, as kind of like a test just to see like, what's going to happen here?

18:09Like I had no idea. And it like crushed it. Like it was amazing. It was so fun, fun for guys to kind of walk by and talk to them about the story and put the shirt on. They're like, Hey, try this sweater on top. And it was just an awesome experience. And from that, we did see higher average order values. And we saw that those customers did have longer term, long LTVs than a traditional customer does. So somebody we can acquire in store was more valuable to us. And I always thought, look, you need to be omni-channel. Sure, we're a digitally native brand, and we rely heavily on digital marketing for advertising and acquiring new customers.

18:52But those costs are going up. They're steadily increasing. And Facebook's constantly changing. So having that store enables us to kind of be omni-channel, acquire customers on a whole another level, a whole another plane. I was reading a Wall Street Journal article that just came out that mentioned you. And you said that Facebook costs have been going up. How precipitous are you seeing your Facebook costs go up? And have you been thinking about diversifying? Obviously, you have these stores. but in other digital channels or does Facebook just still the best that works pretty much? Facebook is still the best, but we try a lot of different things.

19:26Budget's pretty large. We're trying a lot of different angles, newsletters, a lot of different online platforms that kind of pitch us. And, you know, we're YouTube and YouTube influencers kind of run the gamut. So, yeah, I think since we started, well, one, I'll tell you another cost that's gone up, the shipping costs. has doubled inbound. But I'd say Facebook costs probably up 15 to 20 % since we started. That means we've got to get better on our creative and get better on our placements, which I think we're doing. So we're still, you know, very profitable. And, you know, it's funny, I sent Mark like an end of year wrap up that I would think take you, you know, a while to read.

20:14He writes back right away, are we casual positive? and you know i was like yes we're cash for positive every month well that's that's great to hear that's rate rare for a dtc brand to say that so yeah that's so yeah we're growing but we weren't growing we want to do it profitably yeah you mentioned the shipping costs what like what are you seeing in terms of the rising shipping costs because especially you you began in 2021 which was when not when things started to alleviate but when like 2020 was the real year where everything went to hell what what have your costs been that you're dealing with and have Have you found any ways to alleviate them now that you've become a much more scaled company?

20:48The costs have definitely doubled bringing inbound from overseas. If you remember, like container costs were outrageous. We still do bring in a lot of stuff by air. Really? Yeah, we're selling. If we run out of something, we just need it right away. Or if we see like a trend of a certain style, we want to kind of make it right away and have it. So there'll be some cost savings for us when we kind of move completely into C. But with our volume going up, we're getting better rates. So that's been our way to alleviate it. If we do it with scale, we do it with volume, the shipping companies are willing to say, okay, I'm going to drop your cost.

21:25So that's kind of in play to help us flip-flop the cost increase. I want to go back to the store. Do you have a business model in mind for how the store will ideally run? I talk with different brands about different ideas. it sounds like you have a high LTV with your in-store customers, at least with the pop-up. Does your store need to be profitable or are you okay if it's a little bit of a loss leader, but you know that there is a sales lift in the Chicago region for e-com or something like that? How are you thinking about it? Sure. We definitely want the store to be profitable. It doesn't have to be that profitable because it's not the main driver.

22:01And it's going to be a fraction of the revenue that we're doing D2C online. But we want to acquire customers profitably. And if we can acquire customers and keep the stores a little bit profitable, we're going to scale them. Now, one of the questions you asked was, why did we pick Chicago and how do we manage the store ops and things? We're using a company called Leap Retail, if you've heard of them before. So what they do is they have brands like ours go into retail because we don't have the infrastructure or bandwidth or personnel to even make this happen. And so they've been awesome. the reason why we are in chicago one we did a study and found that chicago is one of our main markets but then leap said hey we finally have this store opening up we've got this great location just outside of nordstrom's you know it's not a long-term lease do you want to check it out and i was like you know let's jump on it this is our chance to kind of try and test out retail and so they are kind of managing the whole store ops for us wow that's very nice how does the that entire system work?

23:02Like, do you pay, do they get a part of revenue or like, what is the entire model with that? So you do pay the fixed costs and the variable costs of the store, but they also get a piece of the revenue. So they get a rev share, they get upside, but they just make it, you know, much easier. We just couldn't do it. We could not do it without leave. You know, we, we, one, number one, we couldn't, you know, we'd have to sign five or 10 years, which we don't want to do. They have the store designers, which we don't have. So So we were able to kind of get up and running in three months where it would take, if we wanted to do it ourselves, maybe nine months or a year.

23:37You mentioned wholesale a little bit before. What is, like, A, do you have any wholesale updates going on in the future? How are you approaching it? And do you think that that is going to be a major channel down the line? Or are you still focused predominantly on e-com? We're still focused on e-com. But just like before, we want to be omnichannel. and you're hearing this a lot, I think with the rising advertising costs. So wholesale is a channel for us to get our brand name out there. We think wholesale is a good way to introduce the brand to a lot of people. And then I do it myself. It's like I buy something at a store and then I go online.

24:13I'm like, I think I want to get on their email list and check out what they have and then buy direct. So I think it's going to be a really nice channel for us. When do you think you'll have, are you in any stores yet? Or when do you hope to make an announcement out of store? We are in kind of select boutiques and small retailers. Also some country club pro shops starting to pick up as well. Nordstrom's, we'd probably be on nordstrom.com soon. Hopefully in store, maybe this year that would be nice. But yeah, no like major retail announcements we can make yet. Are you guys on Amazon or not? Or have you thought about it?

24:52It's interesting because Amazon's been trying to do a big apparel push, but I imagine for a company like yours, I could imagine why you'd rather not. How are you approaching that? Yeah, we've had Amazon reach out and say, you should sell on our site. And we don't want to do that right now, at least. I've seen some other brands try and sell some of their slow-moving products through Amazon. To me, we're trying to create this more elevated, affluent brand. and to me, I think unless you're like super established, I don't know. I just feel like it cheapens it a little bit being on Amazon, but I could be swayed.

25:30We'll see how it goes. I know there are a lot of luxury brands on there, but I don't know. I don't think it fits our story right now. Yeah, I get that. And that's what I hear from a lot of, especially brands that are more in the startup phase, but going for a higher tier customer. Amazon's trying to change that, it seems like, but also I'm yet to be convinced that it's working though. I would love to hear that it is. Yeah, I totally agree. I see that too. And we'll keep an eye on it for sure. See who's jumping over there. Can you talk about the women's line? So why did that come about? What did you end up designing?

26:05What were the products and how has the reception been? Yeah, so when we launched on, when we had Shark Tank come out, we got tons of emails from women saying, hey, I wear this look as well. Now for women wearing that look, It's very much like a J.Crew vibe. It's like a preppy look. You could imagine seeing, you know, it's a collared shirt under a sweater, you know, like a cable knit sweater for a woman. And I love the look. And we were getting so many inquiries. I'm like, you know, we have to like test this out and try it. So we created a women's version of it. It's basically the same dress collar, polo, firm, semi-spread collar, but we made it sleeveless.