NYLP: Welcome to the New York Launch Pod, a podcast highlighting new start-ups, businesses, and openings in the New York City area. I’m Hal Coopersmith, and in this episode, we’re going to be talking about sneakers, and stepping onto Launch Pod, we have Ryan Babenzien. He’s the founder of Greats. Welcome to the podcast, Ryan.
Ryan: Thank you, Hal. Thank you for having me.
NYLP: So tell us about Greats.
Ryan: Oh, man. Where should I start? We’re a vertical-based footwear brand that focuses on men’s sneakers. We’re coming through our second year, and we’re venture-backed, and you know, the simple fact is we’re able to make a premium product and sell it at a value price by being vertical. Other products have done this before. We’re really the first one in men’s sneakers to do that.
NYLP: So for people who may not know, what does being vertical mean?
Ryan: So we don’t wholesale to third party retailers where we see quite a lot of inefficiencies within that business model. That’s probably why you see things on sale in a retail store pretty much every week of the year. By eliminating that and selling straight to the consumer, we cut off that mark-up that retail generally takes, which is 2.5 times or more, and that’s how we’re able to keep our prices at an accessible price.
NYLP: So you chose that model because of efficiency?
Ryan: Yeah, yeah. We felt that footwear in general really is the first fashion item that’s scaled online, if you think about it, because Zappos has been around for quite a while. You know, they sell billions of dollars’ worth of footwear every year, and people are generally comfortable with buying footwear online. Nobody had done a vertical version of that for men. They were doing it in women’s. They were doing in feet fashion for women. They were doing it for dress shoes, but nobody had really attempted to do it for men for sneakers, so here we are.
NYLP: How come you guys only wanted to focus on men?
Ryan: So brands morph and change over time, and we wanted to focus on men because it’s the business I knew. I come from the men’s sneaker business. I felt like we knew how to design for them, market to them. We knew styling, and we had a category expertise around men. In the past year and a half, we’ve had so many requests from women to make certain versions of our sneakers in small sizes.
It doesn’t mean we’re going into the women’s business. It just means we’re making smaller sizes of the men’s shoe that we already make, so we’re doing that literally now. Those just hit the market last week, and we’ve gotten quite a few influential women to, whether they’re a supermodel or the head of fashion at Instagram, to be customers and be vocal about it, so it’s a great start so far.
NYLP: How did you get those women signed on?
Ryan: You know, we’ve been really fortunate. I think the word of mouth for Greats has been our biggest asset, and most of them just discovered us, whether they read about us in an article in the Wall Street Journal or heard about us through a friend, a guy that they’re friends with that talks about the brand. That’s how we…we’ve never marketed to women, and we’ve never advertised to women, so it’s pretty organic, which generally is the best way to acquire customers in the early stage.
NYLP: How did you get your start in terms of marketing and building an audience and everything else?
Ryan: Well, when we launched in beta, we had no money for marketing. We had a zero dollar marketing budget, and we didn’t spend one dollar on marketing for about a year.
NYLP: How much money did you take to launch?
Ryan: We had raised a $500,000 angel round, and almost all of that went into inventory and the cost of building a website. And then we had amassed 10,000 followers on Instagram in about three months before we had launched, and that was really…our launch strategy was, okay, we have no money to market, so we’re going to get a ton of press, which we were hopeful for. We’re going to build as many followers as we can, and we’re just going to go, and that’s what happened.
We did have a PR firm who got us coverage in all the meaningful kind of sneaker blogs and tech startups, TechCrunches of the world, Mashable, and we launched. And on the first day we launched, we had a sale every 90 seconds for 8 hours on average, and it was crazy. We were just like, “Oh, my God.” American Express didn’t work, so we had 100 bailed orders from that because AMEX didn’t work for a week, but the first day was just a crazy holy-cow moment like this is real. Like, people are here, and they’re aware of us, and they’re buying things.
So we sold through that first batch of inventory in about 100 days, and then we were like, “We need to build a bigger boat.” So went out and raised some more money and built a bit of a team, and here we are.
NYLP: How long did it take from when you first came up with the concept to your launch or your first sale?
Ryan: So there’s a lot of horror stories in raising capital, and we were really prepared to spend six to nine months in raising money before because we both…we were working, and I had a co-founder when we launched. He’s no longer involved in the company, but it’s a different story. And I took my first fundraising meeting, and I’m sitting there like this across the desk, and I’m about two minutes into the conversation, and he’s like, “Cool, where do I wire the money?” And I was like, “What?” And he’s like…I’m like, “I have to go open a bank account. I’ll call you tomorrow.”
We didn’t even have a bank account at that point, and within three weeks, I raise all the money, and we had seven people that wanted to give it to us. We took it from four, so we were over-subscribed, but we rounded up the money from four different people, and we quit our jobs in April, and we launched in August. So from April where we had…we didn’t even have a shoe. We had sketches of a shoe, but we didn’t even have a prototype. We had prototyped, sampled, went into production, built a website and launched in four months. Well, April, May, June, July, August, yeah.
NYLP: And what’s your background?
Ryan: I have paths, a curvy path of a career. I started my career in Hollywood as an agent and as a manager and then moved into the brand side of things. I became the head of entertainment marketing at Puma and head of lifestyle marketing at K-Swiss, and then I started Greats.
NYLP: And so when you were pitching investors, you were pitching them on drawings? What’s actually going behind the scenes in terms of making a shoe?
Ryan: I mean, the process is the same for all of us, whether you’re a $10 billion company or a $10 million company. You start with a concept. You draw it, put it to CAD so the factories and the developers can build something to some measurement, get that sample, make corrections if it’s wrong, which it always is. I’ve never gotten back a first prototype that was correct, you know, not drastically, but there’s refinements. And then we try to get it done within two or three correction rounds, and then you go into production.
NYLP: I’ve read that you guys want to have faster production lines than some of your competitors.
Ryan: Well, we don’t have faster production lines, technically. We have faster development cycles because we’re not going out to retailers with a collection of prototypes which are for a year from now, so you had all of that development to make the prototypes. Then you have to sell them in, and then they have to buy them, and then they have to get produced. Generally, in the industry that takes 12 to 14 months. We decide we’re going to make this, and we make it because we’re not asking for anybody’s approval, if they like the color or the style, which is what happens in the traditional model, and we do that all within five months.
NYLP: And your shoes are cool. I’m wearing them right now during this interview.
Ryan: I hope they’re cool.
NYLP: You know that they’re cool. How do you make sure that they’re cool all the time, and how did you come up with all the designs and the future designs?
Ryan: Well, we have incredible intel, really. We’re informed about the market. We see what’s happening in fashion. We see what’s happening in women’s. We see what’s happening in men’s, and good brands kind of sift through all of that and like pick the relevant points that they believe are going to be meaningful. And really in our model, because we’re so much closer to the market in terms of the time it takes to develop and put into the market, we’re much more likely to get it right than wrong. Somebody trying to forecast what’s happening a year and a half out is just harder than it is to forecast five months out. It’s really that simple.
So we’ve been pretty spot on in terms of trend moves, but we’re not designing for trend either. We stick with very classic silhouettes and then get creative about what’s happening in color and material changes in the market for fashion. That’s a way we can stay super relevant in capturing those moments if we want to, but for now, we’re still early stage. Like we can’t even keep white and black in stock, so it’s not like…that’s not a big revelation in design, but there are things that we’ve done that were very timely that did sell through much faster than we would have imagined, and that’s probably because they’re super, super current.
NYLP: What’s an example of that?
Ryan: Camouflage. Last year we did a camouflage sneaker. It was gone.
NYLP: So what’s some of the most important pieces of information as you’re looking around the fashion landscape that you are looking to pull out?
Ryan: Yeah, I mean we don’t…so we don’t consider ourselves a fashion brand. We consider ourselves a style brand, but we look to fashion to see what’s happening to make sure we’re not missing…if there’s a major color trend, and there generally is, we want to make sure we have something that’s going to be suitable. You know, if everybody’s doing navy and we do magenta, we’d be wrong, right? So we look to fashion for that and try to piece together the data points that we think are most relevant.
There’s no formula. It’s truly art, not science, and that’s what we’re good at. We think what we have the right lens and filter to pick what’s most important. It’s very early stage for us, but so far, that’s what we think we’re good at. We also have a team of advisers that happen to be some of the most influential, informed people in the world, Nick Wooster, for example, one of the leading men’s voices in the whole market.
You know, he sees everything from everybody, and then he can say, “Make sure you have this. This is one thing that you absolutely have to have.” So we have a great team that helps us do that.
NYLP: How did you get those high-level advisers involved?
Ryan: We asked. I mean, really, that’s what we did. There are some things that we’re really good at, and there were some things that we knew we’re not going to be good at, and what we tried to do is cherry pick the best advisers from the categories we felt we needed the most help in. And we’ve been super fortunate in who we were able to get on board there.
NYLP: And you mentioned that you’re not a fashion brand, you’re a style brand. For someone like me who doesn’t know the difference, what is that exactly?
Ryan: Well, I mean fashion is a strange business, right? It’s got all of these crazy rules. They change, like fashion changes. If you’re in-fashion, that means every season, you’re wearing something completely new. If you’re super in-fashion, you’re not wearing something from last year. It has to be from this season, or else you’re not in-fashion.
That’s an ugly business. I mean, it’s just not something we’re interested in. We’re interested in timeless classics, which is different, but you can still be fashionable by having Chuck Taylors on. That’s not a trend, right? That’s like a staple. It’s like denim, Chuck Taylors, t-shirts. Those are very classic items.
We believe in that idea, not I need to have the craziest, weirdest thing on from every season to be fashionable. And then, of course, there’s just the simple business model of it all. We don’t do trade shows. We don’t do appointments with buyers because we believe that business is…I wouldn’t say it’s dying, but I’d say it’s transitioning into something new that nobody really knows what it’s going to be.
NYLP: So what would you call your aesthetic?
Ryan: Personally or brand-wise?
NYLP: Brand-wise and personal, if you want.
Ryan: My personal aesthetic is probably very much like our brand.
NYLP: People should know right now that you’re wearing a blue coat with white polka dots right now.
Ryan: Yeah, which is a little bit crazy. This is on the crazier side, and every once in a while, I’ll wear a crazy piece, but I’m wearing a blue t-shirt and jeans and hiking boots that are Greats that aren’t out yet, but it’s very classic with this one weirdo piece, and that’s how I actually like to dress. I think it’s interesting to mix very basic things, the generic-looking, and then have that one little signature thing that makes it personal to you, and that’s my personal style.
I think we do that well with Greats. I think we have very, very familiar silhouettes that people know and recognize, and then the color palette is pretty classic, and clean, and wearable, and then we mix in crazy [beep]. You know, when Nick Wooster designs stuff for us, it’s mismatched. You know, the left shoe is a different color than the right shoe. They’re the same colors, but done in different patterns, so he mixes it up.
That’s interesting. That’s not for everybody, and that’s not…well, we would probably not do that on our own, but Nick brings that because that’s his personal style, and it allows us to expand our creative palette, and those are what we use collaborations for. We kind of work with people that push us outside of what we do for the norm, but for us internally, it’s 85% classic and 15% different.
NYLP: This is an audio podcast, obviously. People won’t know what the silhouettes are or see them. What are they based off of?
Ryan: The reality is if you know the footwear market and you really looked at it, you’d see that every single legacy sneaker brand has an iteration of each other. Everybody’s got a retro runner. Everybody’s got a technical runner, or at least silhouette-wise. Everybody’s got a high-top. Everybody’s got a cap-toe sneaker. Everybody’s got a vulcanized sneaker, and we work within what essentially are 80% of the business in terms of volume and design our own DNA and ideas into that, and that’s what makes brand brand. You know, everybody’s got a similar silhouette, but this brand is a little bit different than this brand, and that’s what makes it unique.
NYLP: Who would you say your target audience is?
Ryan: Our target is 100% millennial. That’s who we’re focused on, and in the beginning, that wasn’t our goal. We just didn’t really…we wanted to make great things for guys. We thought about consumer segmentation, but not in the age range. It was more a style range, and then what we found, the data was pretty clear that our entire audience base, 100% of it, is millennial. Now we layer…so it’s much more sophisticated today than it was 20 months ago. We have style groups within the millennial group, but the millennial group is kind of our main…like that’s the focus, and then within it, there’s subcategories.
NYLP: What are some of the subcategories?
Ryan: Well, it’s just that’s where style comes into play and budget. A 22-year-old kid out of college with his first job has less disposable income than a 32-year-old guy who’s got his fourth job. Those guys buy differently. They have different money, and they change their style, so that’s how we segment it. We have the kind of under $100 bucket that generally caters to the younger end of the millennial scale and then the over $100 bucket, which is pretty much all…it’s all made in Italy, actually, so it’s really kind of ultra-premium product just at much better prices than our competitors at retail, and that’s how we kind of segment it.
We do collaborations that would be, let’s say, more aggressive in style. It’s the exact same style, but in a color way that…you know, camouflage sneaker isn’t for everybody, but for the guy that’s a little bit on the forefront and a little more cutting edge, he can wear that to work, so that’s how we mix in kind of new and fresh ideas onto the exact same silhouette that we might do in navy.
NYLP: So it’s really interesting that your target is 100% millennials, and when millennials are involved, they are either a huge hit and there’s a whole lot of energy behind them, or not necessarily a hit with millennials. And I think that your brand has a lot of energy behind that. We were talking earlier that a lot of repeat customers. There’s a lot of just folks who are really excited about your brand and millennials, and why do you think that that is?
RYAN: I think millennials want to be cool. I think they want value, and I think they want to be stylish. We happen to provide all three of those things, and it’s hard to do all three of those things because you can make something really cool and stylish, and they’re generally really expensive, or you can make something really inexpensive and they’re not very cool or stylish. So that building a brand that kind of captures all three of those, that’s like desirable, stylish and accessible, is really hard, really hard, and we know that, but we felt that if we can do that and check all three of those boxes, that’s where the biggest opportunity is.
That’s what we’re doing. That’s what we’re doing. We’ve proved it at this point that we’ve demonstrated like there’s enough data to say this is a scalable business with a very large audience that will just now can grow from here, and we’ve spent 20 months making sure that we can do that, and now it’s time to go.
NYLP: What’s the hardest part about checking all three of the boxes?
Ryan: It’s convincing. Not convincing. Educating the market that I’m charging you $159 for this sneaker that happens to be made in Italy. Now on a website, that’s really hard to do. Like if it was in the store and it was in a really expensive store, it would almost get checked off by association. It’s in this store. It must be really good, and then there’s a salesperson there to tell you about the shoe, so you get the education. On a website, you have 30 seconds. That’s it. There’s nobody there to tell you anymore.
It’s like up to you to kind of look through it and actually read it and pay attention, and I can tell you that people do read it, but it doesn’t necessarily mean they believe it, right? We’re all taught to kind of don’t believe everything you read, so that takes a little more time, and that’s a challenge, and we think we have the right mix of imagery, and messaging, and validation from the press that says, “No, this really is this”. And I’ve said this publicly. I would put my sneakers down with competitors that start…we’re about a quarter less on the low end, and they go up from there.
Cut them in half, and we can all look at the materials that are in that shoe. It’ll come down to that, like ours are the same if not better. They’re made in the same region of Italy, and these are luxury sneakers, and at that point you go, “Well, the materials are the same, but I really want to buy this brand that’s been around for 100 years and that makes me feel good about myself,” which I totally understand, but if you just wanted like the quality and the coolness of something new, we offer that.
NYLP: How are you going to expand your market?
Ryan: You know, it’s a process. We’re building our own stores. We partner with exclusive partners just for awareness factors. One of those, for example, is Mr. Porter. I think Mr. Porter’s probably the best luxury fashion commerce site online, and we’re one of their faster selling sneakers against competitors like Lanvin, and Givenchy, and Gucci, and Balenciaga. We sit right next to those, and then when you compare it, it’s like being in the store.
It’s like, “Oh, these guys are right next to it? Why is it this price?” They do a little bit of research, and then they understand because we don’t wholesale traditionally, so we’re able to price it this way. It’s just more of that. Really, there’s no…we’re going to grow the business. Our goal is to just acquire more customers. We do that through a variety of marketing ways, social being a huge part of it, digital advertising. We’ll do some offline advertising, and that’s how you grow the business.
NYLP: Where are most of your customers?
Ryan: So we don’t ship internationally, so it’s 100%…at this point it’s U.S.
NYLP: Although, I read that you’re becoming international.
Ryan: We’re doing it as we speak. It may be live right now.
NYLP: I just saw an Instagram about Australia today.
Ryan: That’s right, so most of our biggest markets in North America are New York metro area and Los Angeles. That’s not unique to Greats. That’s pretty much the kind of spread, and then from there, you know, we have big pockets in Texas, big in Florida, big in Chicago. The map of other sneaker brands is the same as ours. We are now opening up international shipping for the first time, and we really did so because our shoes were being resold at 100% markup.
NYLP: Internationally?
Ryan: Yeah, so like in China, Hong Kong, Taiwan, Korea, in the sneaker market, there’s resellers. They’re traders, right? They buy and sell high. They try to get things that are limited and then mark them up. They saw an opportunity. They started buying stuff from us, thousands and thousands of pairs, freighting them over there themselves, and then just selling them for more.
At first, it was a 25% markup, then it was a 40% markup, then it was a 70%, and now it’s 100%, and when it got to double the price, which is back in November, I was like, “Okay, this is crazy. Like we should be serving this client.” They’re going to pay more than you pay for it here because shipping is pretty expensive, but it’s going to be less than double, so that’s where we are.
NYLP: So you decided to ship internationally?
Ryan: Yep.
NYLP: And where are the shoes stored?
Ryan: So we have a variety of warehouses that we use through our third party logistic company, and we try to be as efficient as we can, and it’ll be from one warehouse to get you into an area that you, you know, proximity-wise, but there are a couple across the country.
NYLP: And shoes, it’s pretty difficult because guys have different size feet. It’s hard to plan that market for different size guys. How do you guys…
Ryan: Yeah, I mean I think that there’s a ton of data on foot size averages, so we kind of didn’t go into it completely blind. We understood like these sizes are more prominent than these sizes, and we used a very traditional size run from a very big sneaker brand, so we thought, “Oh, well, this is 40 years’ worth of information. They must be right.” And actually they weren’t.
We found sell-throughs of a certain size…Unless our customer has different size feet than the average American, they were wrong, so we refined our own algorithm. You know, we’ve refined our size scale, and now we’re within a tolerance of like 2% of not being correct on our orders, so we learned a lot from historical data, and we correct and reiterate, and that’s how we get better and better.
NYLP: Who would you say your competitors are?
Ryan: Everybody from Nike to Sperry, basically anybody that sells footwear to men or millennial men and soon to be women is a competitor. Everybody’s got their position. They stand for something, this and that, but you’re paying money to put something on your feet, so if you sell those, you’re a competitor.
NYLP: How are you going to compete with the bigger names? I mean, Nike…
Ryan: We’re competing with them now. We’re competing with them on quality. We’re competing with them on style. We’re competing with them on price, and we’re competing with them on just the audience being bored, you know? They want something new, and they want to support something new, and they want to support something different. I can show you on my phone from the last week alone I get a lot of people that actually try to contact me directly, so they try to do it on Twitter. They try to do it on Facebook. They do it on Instagram, and the messages are everything from, “I haven’t bought anything for ten years that didn’t have a swoosh on it, and I bought my first pair of Greats and I’m never going back,” to, “Thank you so much for trying to disrupt an industry that’s very inefficient and charging more for footwear than we need to be paying.” So it’s very early yet for us, but I truly believe we’re making a huge impact in the business.
I think that at the end of the day, this is about saving people money. Like that at the end of the day, when all of this stuff that I’m talking about, cool this, that, we save people money, and we give them something that’s really good, and to me, I think that’s a great reason to run a business.
NYLP: It’s wonderful. I mean, I love the shoes. What’s to stop, you know, one of the big gorillas to say, “You know what? We want to have a vertically integrated brand, and this is going to be a spinoff brand.”
Ryan: Nothing could stop them other than the majority of their revenue comes from retail, and to unravel that would take years, so it’s unlikely. It’s not impossible, but I don’t think Nike’s going to turn around to its shareholders and say, “Hey, look. We’re going to cut our revenue in half for the next five years, and our stock’s going to go to zero, but then we’re going to come back because we’re going to have more margins and be a vertical company.” They could absolutely do that, technically, but I don’t think…
NYLP: Or they could spin off another brand.
Ryan: Look, everybody’s selling more online, and that’ll continue. That doesn’t mean retail’s going away, and that doesn’t mean that traditional brands are going to become fully vertical, and that doesn’t mean we’re going to be fully vertical. We still use partnerships like Mr. Porter for different reasons, but technically it’s a wholesale relationship, and we’ll have a few of those.
Our job is to reach the most customers at the most efficient cost, to sell the most shoes. Because when we get you to be a customer, we know from our data that we’ve gotten over the last year and a half that you’re supremely satisfied with the Greats product, and you’re going to buy it again in the very near future. So it comes down to that for us in terms of strategy, so if it means that 20% of our stuff comes a wholesale relationship just because it’s cheaper to be in the store and get a new customer that way and he’s going to buy, we’ll add that into our marketing mix, and that’s the tactic we’ll use.
We’re really agnostic to the channel in how we acquire customers. We just want to maintain value in the product we make for the customer, and if we can do that, we’re going to do it.
NYLP: And why do you think people keep on coming back? It’s more than just the value. I mean, I’m wearing your shoes now. They’re just very comfortable. Is there…
Ryan: Yeah, you know, look. Comfort is a very personal thing, and certain things fit you well and certain things don’t fit you well, and if our stuff fits you well, you’re probably going to be more comfortable, and that’s why for you. I like to think that we spend a lot of time thinking about that and trying to do the best we can, but we have people that say, “These don’t fit. I would love them to fit, but they just aren’t right for my feet.”
That’s happened. That’s just the way it is. There are certain brands that I like. I can’t wear certain shirts because they just don’t fit my shoulders. I mean, you know, that’s the way it goes, so I find something that I like that does fit me, that makes me comfortable. I think, you know, comfort, style, price, you mix all those things together. It’s not one or the other. It’s kind of all of them, and hopefully we get them all right and we’re right enough for us to build a big business.
I know we have one of the best satisfied customers in the footwear business by metrics that measure this. I know we have the lowest return rate in the entire footwear industry in North America. It’s less than 8% where Zappos is 35%, so people aren’t returning it. They’re buying more pairs very quickly. They’re writing us that they’re really happy, which is a measurement in that promoter score measure customer satisfaction, and we have a 71.
That’s up in the Apple territory of how people are happy with an Apple product, and that’s the rarefied air that we live in. So far we’re doing okay.
NYLP: And people are recommending you, you think, because of these three qualities that you have?
Ryan: We would say style, quality and value. That’s how we would talk about it internally, but we don’t message that out there. Like that’s not like a statement we have written on a box.
NYLP: I just want to know why people are so excited about this.
Ryan: I mean, we make really good stuff for a really good price. I think like at the end of the day, I don’t care how much money you have, everybody loves a deal, right? So people feel more satisfied when they say they got something that they know is worth more, whether it’s on sale or it’s not on sale. They just say, “Hey, this is cheaper than it should be because they don’t sell it to a store,” or, “Hey, I got this on sale at Barney’s because it was 70% off,” and you feel good about that.
Like everybody loves a deal, so we have a deal mechanism built into our value proposition. It’s like this shoe would be $450, but it’s not. It’s this price every single day. Here’s why. People like that.
NYLP: But you’re more than just a deal.
Ryan: Yeah, we’re more than just a deal. If it wasn’t well-made or if it didn’t make you look cool or at least feel cool, nobody would buy it, right? So we have that. All of that goes into the product, and then of course, there’s just this simple fact that it’s convenient. I think more and more people that are…no, I don’t think. It’s pretty well-documented. People are just buying stuff online more. They’re buying stuff on mobile more, so we have a 24/7 retail shop open. It’s called the Internet.
NYLP: If you’re listening to this, you’re on the Internet already.
Ryan: Hey, guys. There’s a thing called the Internet. You should check it out.
NYLP: So are all the shoes made in Italy?
Ryan: No, some are made in Italy. Some are made in Asia, and some will soon be made in other territories. We don’t really have a provenance commitment. We say, “Where can we make the best style, and where is that factory?” If it’s a luxury sneaker, it’s Italy. If it’s a performance sneaker, it’s Asia. Now we don’t make performance shoes, but we make performance style shoes, and if we use a blown EVA running sole, which we do, that’s coming out of Asia.
There’s no choice. That’s it, so that’s where we make that style. We’re going to be doing some stuff in the Dominican Republic because they do fantastic hand-sewns. You know, if you do a hand-sewn moccasin, Sperry makes like all of their stuff there, and they’re really good at it, and so we’ll go where they’re good at making the style we’re trying to create.
NYLP: And one of the things that kind of plagues the apparel industry is labor practices overseas. How do you monitor that?
Ryan: We are so young, and we do our best to make sure that we’re working with compliant factories, and we are. Am I over there auditing the age of workers? No, I’m not. I’ve been to all the factories, and I go there every quarter. I’ve never seen anything that looks strange. But then again, maybe the owner of the factory puts on a presentation that makes me think there’s no grey area here, we’re compliant with the laws. And we’re using…I can’t remember what the service is called, but there’s a rating where factories have to have a certain rating, and we use those types of factories.
It’s an area that we’re sensitive to, but we certainly aren’t saying…that’s not our core value, although I’d like to make sure that it never becomes a problem, but we’re early. You know, those take…even if you think you’ve vetted the factory, it’s hard to be 100% sure, so I’m not comfortable making any statements about it, but I’m also not shy of saying we do our best.
NYLP: Right, it’s an effort.
Ryan: Yep.
NYLP: What has your growth been?
Ryan: I mean, our growth has been exponential. We’ve grown, in terms of revenue, I’m not going to say numbers, but we’ve grown 5x in less than a year, and that’s with being out of inventory, so we probably would’ve grown 7x had we been able to make the stuff fast enough to sell in the same timeframe. That’s a challenge or a problem, but a solvable one.
I think the bigger problem in a start-up is like not having enough demand and making too much stuff and not being able to sell it. Our problem is completely the opposite. We can’t make enough stuff to sell to the people who actually want it, and now that we’ve opened up international, it’ll be even…it’s a bigger opportunity, but it may be a bigger challenge, but those are challenges we’re willing to face.
NYLP: How are you going to overcome those?
Ryan: Well, we think these problems are solvable with being fully-funded or raising another round of capital, and having production capital extended to us, which we’re on in terms of kind of revolver credit line. Because we’ve shown that we’re able to turn the product so quickly that banks will say, “Hey, these guys can go out and make this stuff and pay us back in 60 days. This is a pretty safe bet.” And we’ve demonstrated that for two years, so we’re getting our creative finance options together.
NYLP: And one of the things we didn’t touch on, but Brooklyn is so important to being your brand.
Ryan: Yeah, Brooklyn. Born in Brooklyn, that’s our hashtag, or one of our hashtags. I was living in Santa Monica when the idea for Greats happened and actually we raised our money, and I said…we raised it and I was like, “Hey, you know, Greats really belongs in New York.” And the first thought was all the media is here. We’re going to rely on press so much. Like we need to be closer to the editors and the magazines, which are all here, and that was enough for us to say, “Yeah, let’s put it in New York.”
And then I was like, “Well, Brooklyn is continuing to become this, and specifically Williamsburg, it’s like becoming a curated style neighborhood around the world.” In Japan, they call it “Brooklyn Style.” In Paris, they call it “Brooklyn Style.” It’s like a look, a feel. It’s an identifiable style, and I thought that…I do what I do. I do my kind of observer thing. I go into Williamsburg, and I look around, and I go, “Okay, there’s a hotel from London opening over there.” So the real estate kind of indicates a lot when you’re a real estate attorney.
Apple store is going to be built over here. Ralph Lauren is going to open a store there. J. Crew is coming over there. This is becoming a shopping neighborhood, and there are people with money, so you look at…you do the how much people make, and you go, “This is a neighborhood where we want to be because there’s local customers here.” Everybody that’s coming to New York to visit is going there if they’re between 20 and 40. They’re going to eat there. They’re going to shop there.
They want to spend a…they have a nightlife, and I felt…and then there was never a men’s sneaker wear that was founded there. So all of those three things together made it an asset to be there, which it’s turned out to be. I mean, we were invited to Paris to be in what is considered the best store in the world, Le Bon Marche. It’s a 140-year-old retailer, very high end, and they did a store takeover in September that was all about Brooklyn and the brands from Brooklyn. And obviously us being the only sneaker company, we were part of that store takeover. And that’s resonated globally for us, and it continues to.
NYLP: So headquarters is there.
Ryan: HQ’s there. I live there.
NYLP: It’s always been there.
Ryan: I’m only here because of this.
NYLP: So how many people are working with you right now?
Ryan: We’re ten, ten people now, which is still pretty lean for the size of our business in terms of revenue. We have an amazing team. We just made an offer to a new COO which hopefully joins the company very, very soon, and we’re adding more from there. I think, you know, based on our growth this year, we’ll probably be closer to 20 people by the end of the year, but it’s growing fast.
NYLP: How’d you come up with the name Greats?
Ryan: That’s a good question. You know, we were spending a lot of time and we were going through that exercise where you write down names over and over and you just have legal papers and lists and lists and lists and you cross them down. And some iteration of Greats was always on the list, great this, great that, and it kept staying on the list. And after a couple of weeks, we were talking about how we were thinking about design, and it was about classic silhouettes, classic silhouettes.
And then I just said, “We’re going to pick the greatest silhouettes in men’s footwear and design our own versions of those.” And then from there we were like, “Let’s just call the company Greats.” And like we went out. We’re like, “Yeah, Greats,” and we’re like, “Whoo.” And we looked at the URL and somebody owned it, so we found out who it was, and we emailed them. We’re like, “Hey, we’re interested in the URL Greats.com. What do you want for it?” And he’s like, “$35,000.” I’m like, “[beep].” So we were stuck on the name.
We weren’t going to let the name go, so I was like…I went…you know, thank you, Godaddy.com. There’s a free plug. I go to GoDaddy, and I type in Greatsbrand, and Greatsbrand was available for $12, so we bought it, and we launched with Greatsbrand. We were called Greats, but the URL was Greatsbrand.com. We launch, we go through our thing. We sell the shoes. We make our second hire, and I say…and we were talking about it, and he’s like, “Should I try to go back?”
I told him the story, and the guy that owned it happened to be a Korean guy, and the guy that I hired happened to be a Korean guy. And he’s like, “Well, let me write to him in Korean. Maybe we can…I’ll make up a story that I’m a poor student from Jersey and tell him I want to do something with this URL.” And sure enough, he did. We bought that thing for way less than he originally quoted, and that’s how we got Greats.
NYLP: I’ve never heard that story before.
Ryan: Yeah, it’s not well known, but it’s a great story, and since the time we bought it, we had it valued, the URL, because you can value the value of it, and we’re up about 15x from what we paid for it, so we could sell the URL for 15 times more than what paid for it.
NYLP: How do you come up with the shoe names?
Ryan: That’s a more difficult process, but we like to try and name things after things in Brooklyn when appropriate, and we let everybody get involved. We put a pad up on the wall, and people come in, and write names when we’re thinking about the name of a shoe, and kind of vote on it, and that’s how we do it.
NYLP: What about the Bab? Is that named after you?
Ryan: The Bab was named after me.
NYLP: Okay.
Ryan: No voting, and I didn’t name it, so my co-founder at the time, that was the last shoe that he was involved with. It was the third shoe we ever did, and he was like, “Hey, let’s call this one the Bab.” I was like, “Yeah, sure. That’s fine.” Like, you know, it was just an afterthought, and it’s actually our best seller.
NYLP: Not surprisingly.
Ryan: It’s the right style for the right price. I don’t think the name had anything to do with it.
NYLP: You’ve also gotten celebrities involved with your brand in unique ways. How have you done that?
Ryan: You know, I’d like to say we had some master plan about going out and getting celebrities to buy our product or wear our product, but we didn’t. Having come from the entertainment industry, I did that, actually. At Puma I did a lot of celebrity seeding. It’s a great technique. It’s a great tactic, actually. We just didn’t do it yet. We were planning on it, but everybody that you see that’s wearing our stuff has generally come to us because they’re interested in wearing us, and we did a collaboration with Marshawn Lynch from the Seahawks.
We’ve done two of those now. The first one we did sold out in 59 minutes. The second one we did was an even bigger one, and it didn’t sell out in 59 minutes. It sold out in like two days, but we made a lot more of it, and like they came to us. I mean, they’re in our demographic. They follow us on Instagram, probably. They’re definitely reading about us in the press because we get quite a lot of press, and they realize like, “This is the kind of brand that I want to attach myself to,” so they become customers and then from there, sometimes they blossom into something more meaningful.
NYLP: So Marshawn Lynch approached you guys?
Ryan: He did. His team approached us. He was interested in doing something. Essentially, he wanted to do a luxury shoe at a price that he felt his audience would be okay paying. He was totally right about it, and we were very fortunate to be able to do that.
NYLP: Ryan, I love the shoes. They’re great. The name says it all. Thank you for stepping onto the New York Launch Pod and sharing your time with us.
Ryan: Thank you for having me.
NYLP: And if you want to learn more about the New York Launch Pod, you can follow us on social media, @NYLaunchPod, or visit us at NYLaunchPod.com.
SHARE THIS:
