Andrew: Hey there freedom fighters. My name is Andrew Warner. I am the founder of Mixergy.com as you already know. As you also know, Mixergy is home of the ambitious upstart.
In the startup world I think and you think – I know, because I’ve talked to you guys – we have a problem. People often talk about the 20-something year old guy who makes more apps for other 20-something year old guys and then sells his business for billions of dollars. Those are the stories that we hear over and over again on the popular blogs, but they’re not the only stories worth telling.
Today, you’re going to hear about how a stay at home mom turned an idea for her kids into a profitable business. Look at that, an actual profitable business.
Holly Bartman is the co-founder of Superfly Kids which makes, among other things, personalized superhero capes for children. If you look over her shoulder you’ll see them.
Right next to her, I’ve got our co-interviewee and her co-C.E.O., Justin Draplin. I invited them here to talk about how they built their businesses.
Later on, I’ll tell you about my sponsor which is… Oh, check this out, guys. If you’re selling any kind of software or any kind of membership on an ongoing basis, I know what your problem is. Your problem is you have churn. Too many people leave you for month to month.
I have a friend of mine who created a solution for me, and now he wants to see if anyone else in the Mixergy audience wants to try it. If you want to look ahead before I do my commercial break for him, check out mixergy.com/lowermychurn. That’s mixergy.com/lowermychurn. I’ll tell you more about him later.
Now, I’ve got to welcome Holly and Justin. It’s good to have you both here.
Holly: Thank you.
Andrew: Holly, before we get into the business, do you remember what a typical day was for you when you were a stay at home mom before you started the business?
Holly: Oh boy. Okay. Before starting the business I would say… Well, I have two children, and they are almost three years apart. Before the business my son was four.
It would be getting everybody up, getting them bathed, and taking Owen to preschool. Then, it was back home for Lily to take a nap, and back to preschool two hours later to pick him up. Then, it was home again for lunch, and naps for both of them. They didn’t nap at the same time. It was getting dinner ready during that time when I only had one, usually one on my hip, and entertaining them during that time, then cleaning here and there. A shower was whenever I could fit it in.
Holly: Yeah. Then, it all started the next day the same deal. It was busy.
Andrew: This idea that sent you in a whole other path in life happened because of a birthday party. What was the birthday party?
Holly: My son’s fourth birthday party he wanted a superhero party. We’re a very comic booky family, so that was not out of our realm of themes. He wanted a superhero party but didn’t necessarily want a certain superhero. It was just a generic party. We didn’t have a lot of money at the time, but I was very crafty. I knew I could make something as a takeaway gift for the kids that were coming. I made capes for each of the children as a takeaway gift. That’s what started it all.
Andrew: Just something that they could take. I guess they could play with it at the party too, and take it home later on to enjoy, too.
Andrew: Got you, okay. You knew Justin at the time, right?
Holly: No, no.
Holly: At the party one of my friends said, “You need to make these and sell them. Yeah, like fitting that into my daily schedule was…
Andrew: I see. It wasn’t until later on that you connected with Justin. Justin, what were you doing this whole time?
Justin: Oh, goodness. My background is 100% entrepreneurial. At that time I had a marketing company focused on place based media. We were doing some digital signage, some stuff with Google, kind of stereotypical marketing stuff for local businesses.
Andrew: Can you give me an example of the kind of thing you were doing online?
Justin: We were active with Google Places back when they were still developing that. Even our digital signage was over the Internet. We would go into big restaurants and chains, and install digital signage, and create closed circuit television networks that ran over the Internet.
Andrew: It ran over the Internet, but those signs displayed in person at local places.
Justin: Correct, yeah.
Andrew: Got you, all right. Holly, you had this idea. You did it for your son’s birthday party. Then, how does it turn into a business? What’s the next step you took?
Holly: Well, I started selling a few at a time. I had a store online that I started selling with.
Andrew: Wait. You know before we get into how you had your store online I think we have to admit something that happened before we started here. Can you tell the audience, or do you want me to tell the audience, what happened when we were trying to connect over Skype? I want them to get a sense of your . . .
Holly: My inability to use technology? [laughs]
Andrew: [laughs] Yes.
Holly: I married a network administrator and he is . . .
Andrew: Not me. . .
Holly: Not this guy, but he is my tech support and I call him all the time. Like, ‘What do I do?’, and he walks me through. He is my help desk with everything technology.
Andrew: I see, so the issue we had was you didn’t have Skype on your computer but you were ready. You were on skype.com on their website ready to be here.
Holly: [laughs] Yeah. [laughs] So I tried.
Andrew: And that’s part of the reason why Justin is in the picture.
Andrew: Justin is the guy who helps turn this thing into more of a tech business than it would have been otherwise. But, when you then created your first store, Actually before you created your first store didn’t you sell at craft shows?
Holly: I did.
Andrew: You did. So you went really low tech with this.
Holly: Yep , you rent a little 10×10 spot at a craft show and try to sell. So.
Andrew: So who comes to craft shows? Are there parents?
Holly: Yes. Mostly women around my age or older just to get some hand crafted items.
Andrew: I see. So it was okay that you made it yourself there. They actually like that and how much money were you selling back then? The audience won’t believe what you’re selling now, but let’s talk about that. What kind of sales?
Holly: The best ever craft show I made, I think, $3000.
Holly: In a weekend.
Andrew: That’s actually much better than I though.
Holly: That was great for me for staying at home. It was great for me at the time.
Andrew: And then you created the online store. Which platform did you use to create your store?
Holly: eBay at first.
Andrew: Okay. Why’d you pick eBay?
Holly: Because that was the only one out there at the time that I knew about.
Andrew: What year are we talking about?
Holly: 2008 I believe.
Holly: 2007-2008. So eBay was not very old at the time just as far as the crafty world was concerned. So I started out there.
Andrew: I see. It had been around for about 10 years, but you are saying that in the crafts world it wasn’t as competitive as it is today, and so you were able to stand out. What kind of sales did you do when you were selling on eBay?
Holly: A few hundred a month.
Andrew: Okay. At about what? Ten bucks a piece? Justin’s smiling. This is like the old days. It seems like a really small company.
Holly: Yeah. Oh yeah.
Andrew: Meanwhile, Justin, at the time what kind of sales were you making? If you’re selling to Google then you’re not doing just a few hundred dollars right?
Justin: Oh no, I wasn’t selling to Google I was using Google. I was reselling Google for some of our services.
Andrew: Oh I see. To local businesses . . .
Justin: Yeah. . .
Andrew: you were selling Google ads. Got it. But still, you were doing significantly more in revenue and you weren’t attending craft shows. Or were you?
Justin: No craft shows for me. The marketing company that I had started at the time was my fourth of fifth company that I had started. First year in business, which was when I think I met Holly, we only did like a hundred thousand.
Andrew: Oh a hundred thousand in sales?
Andrew: Oh that’s pretty respectable. So then how did the two of you meet?
Holly: Well, my business kept growing and growing and it was like a blob taking over my bedroom. It invaded my closet. It invaded my dresser.
Andrew: All this from E-bay?
Holly: Yeah and I switched to Etsy.
Holly: And that was better.
Andrew: eBay and Etsy allowed you to sell so many that your house was overrun with capes?
Andrew: What did you do differently from other people? Aside from the fact that you had a different product than other people are selling. What did you do that you can pass on to my audience to teach them how they can sell more on platforms like Etsy and E-bay?
Holly: I think that my customer service was really good and word of mouth was great because of that. I also customized. Which at the time customization wasn’t a big thing on Etsy.
Andrew: I see. What kind of customization would somebody ask you for?
Holly: Like the color of the cake, the design on the back and on the initial. So they got to pick everything.
Andrew: And you did that all yourself at the time?
Holly: Yeah, it was crazy.
Andrew: Whoa, Yeah.
Holly: But then I hired a friend of mine to help out and she was a stay at home mom as well.
Andrew: And you were just sewing at home, cutting at home, the whole thing?
Andrew: Whoa. All right, so that sounds painful to me but that also is what allowed you to customize so much. You weren’t buying them by the truckload from China from a company you found on Alibaba.
Andrew: You were doing it yourself. I got it, okay.
Holly: From start to finish, it was all cut out myself and everything, so.
Andrew: So Justin, how did she connect with you?
Justin: She was blocking my door with her fabric.
Andrew: Oh, you guys are neighbors?
Holly: No, I had to move out of my house. My husband kicked me out of the house, my business, and he said it’s taking up too much room. Get out of here. Take it all some place else.
Holly: So I rented a tiny 200 square foot space. It was teeny little area. That wasn’t quite big enough, so I ended up doubling the space to 400, so.
Andrew: Unbelievable, okay.
Holly: And so it was a winery building in my town. And so that’s where I rented some space, and that’s where Justin also rented space.
Andrew: I see.
Holly: We were neighbors at the winery.
Andrew: And so she was blocking your door, and what did you think when you come from our world. People in the audience, I think, relate to you a lot more than they relate to Holly in some ways.
Justin: Maybe but we’re Michiganers. And so I don’t know how much translates, but . . .
Andrew: What’s a Michiganer?
Justin: From Michigan.
Andrew: Oh got it. Okay, all right. So you’re Michiganers.
Justin: We hail from right here.
Andrew: Gotcha. Okay. That’s the shape of Michigan.
Justin: So yes.
Justin: So, yeah, my background is in business. When she was rolling out fabric, I was . . . The first time I met her I was having to walk over her fabric to get into my office because she rolled it down and took the whole hallway.
Justin: And I just said, “What are you doing?” And she explained that, “I’m making these superhero capes for kids,” and the only reason I’m going to say this is because she’s already said it. My thought was she’s crazy.
Andrew: Meaning crazy what? That it’s just not going to work.
Justin: Yeah, I was like, there’s no way you can make a business out of selling these silly superhero capes.
Andrew: You know, Justin, I’m glad you said that. Actually when I saw this was coming up on the calendar, I thought somebody made a mistake and accepted a friend of theirs in and said, “All right. Let’s do this interview with my friend. She needs attention. She’s starting this company. It’s not working.”
And then I looked it up, and I realized how well you guys were doing. And I said, “Oh, I’m the one who made the mistake. This is unbelievable.” So, yeah, I had the same thought you had.
Andrew: So you said, “It’s not going to work, but . . .
Justin: Well, my background is in marketing and business development. And I said, “Well, okay, there’s 30 million kids in the age range that would want this cape. How many of them would want a cape?” And I determined that it was pretty much all of them.
Justin: You know, and then I started thinking from a business perspective and a business development, once your foot’s in the door and you have a customer’s attention you can sell them other stuff. And at the time I think Holly had done masks.
Holly: I’d done some masks and blaster cups.
Justin: And some blaster cups. And so I was like, “Okay, these are some small add-ons, but then we can add a t-shirt. We can expand the superhero theme line into other things, and just continue to add on to the offering.
Justin: And I realized very quickly that those numbers add up fast when you take a 30 million target audience plus add-on products, then all of a sudden there’s quite a market. Being able to sell it across the country from one central location makes all the difference in the world.
Andrew: I see. I wouldn’t have realized that. You’re right. How many of them would have wanted capes? Of course, I got a feeling that there’s some adults in my audience who bought these.
Holly: You didn’t factor in adults who want it.
Andrew: So all right. So you offered to help her sell it, or offered to help her do what?
Justin: Well, initially I said, “Hey, I think I can help you sell these.” We started talking, and she basically wholesaled to me. I created my own brand, my own marketing channels, and the expectation I made upfront was, okay, if this works, I’m going to want to be partners because I don’t just want to be a reseller of stuff. But we started that way and I think it was like two or three weeks into that . . .
Holly: Yeah. [laughs]
Justin: . . . Two or three weeks into that I gave her so many orders that she kind of had to quit taking orders. And I remember this was Christmastime of 2008. I think it was about the end of October that my site went up. Two weeks into November I was bringing her literally stacks of orders. And when I first set it up I wasn’t expecting a quick turnaround. I was calling in credit card numbers which totally distracted me from my other business and what I was trying to do. And I’d go over with literally a pile of orders and knock on the door very cautiously because I knew she was about to snap.
Justin: And she’d be in there on the floor with just orders spread out with this, can you give them the look of despair?
Holly: I can’t recreate that, I don’t think. I don’t want to.
Justin: She was not wanting to answer the door any more. Because she was just. . .
Andrew: You were taking the orders on your site. What did you do that allowed you to get so many orders?
Holly:. He marketed.
Andrew: How? What was the marketing that you added?
Justin: Well initially she had her own website. So she started Superfly Kidz and it was Superfly Kids with a “z”. It was fine as a brand name. Until you actually built the brand, but there was no value to the brand name.
Andrew: People can’t find it if they’re searching for Superfly Kidz with a “z”. So what was your name?
Justin: Kids Capes.
Andrew: Kids Capes.
Andrew: Got it. So much more SEO friendly.
Andrew: What else did you do?
Justin: Well, that first two weeks that was really it. And then she kind a. . .
Andrew: Oh, so just changing the name allowed you to get that many hits?
Justin: Well, it was changing the name. It was putting some energy into tagging the website correctly and building it the right way.
Holly: I didn’t do anything. I didn’t do any marketing. Nothing at all.
Justin: Yeah. You would not have found her.
Justin: So we targeted online advertising. Did some Google ad words so we had both organic and natural search. . .,
Andrew: In a couple of weeks you did that already?
Justin: Well, at launch we had it structured the right way at launch. When somebody searched for super hero capes when I started, the first two sites were sites that were no longer active. And these were the first two search results coming up in Google.
Andrew: So it was easier for you to get to the top.
Justin: Oh, yeah. And I saw the traffic. I think at the time there was for super hero capes alone there was 4,800 searches a month.
Andrew: I see.
Justin: The top search result was a company that did not exist and had not existed for a couple of years.
Andrew: Okay. So you got kids capes. I see how you’d rock SEO on that. How do you feel about that, Holly? I’m looking at your eyes and I’m noticing almost a misting.
Holly: Well, I was happy as can be to have someone else doing all that stuff. He took over handling payroll, and shipping, and credit card processing, all of that. I was so happy. Because that’s all the stuff that I don’t like doing.
Justin: She wanted to make stuff.
Holly: Yeah. Yeah. And that’s how we continue to be divided in this company. I’m in charge of production. Justin’s in charge of the business and stuff.
Andrew: And you guys are now partners?
Andrew: Okay. So I can ask this question without ruining the relationship, because you can’t just separate at the end of this interview. Justin, why didn’t you just say, “Hey, this whole idea will make sense. I’ll just go and outsource this to someone in China.” I can find someone on Alibaba.
Justin: Well, it’s funny. Ali and I actually had that conversation to start. That was always an option for me. It was either going to China, or hiring in a local seamstress and keep 100 percent. I tried to be delicate in the way of bringing that up to Holly because one, she had a great product. Two, she knew what she was doing. Three, the customization that she could do was not easily replicable unless you knew what you were doing. Four, she’s a workaholic as you can tell from just being a stay-at-home mom. As far as a partner goes, really I couldn’t ask for a better partner. I certainly didn’t want to go in that direction, but it was something that we talked about when we were arguing. . .
Andrew: Discussing. Sounds like it was a little bit heated. Neither one of you seems like you’re pushovers.
Andrew: Can we get you a little closer on camera? Maybe push the camera back on. I want to make sure because we’re going to have to crop a bit of it to make sure that everyone fits in. There you go. Great.
Holly: We’re not really the same height either. I’m much shorter than he is. I
Justin: I’m slouching. I’m leaning forward.
Andrew: I see. So it was brought up, but, Holly, you have skills and a work ethic that can’t be matched by some stranger online. Justin you have the ability to sell that can’t be matched if you try to outsource that to somebody else, and so you said all right we’re going to partner up. What was the breakdown? Do you own an equal amount of the company?
Andrew: You do. Okay. All right. So now you’re in it together. You decide that you’re going to let go of both of your domains and then buy one domain together. Super Fly Kids. Is that right?
Justin: No. So actually she had the Superfly Kidz with a “z” and she also owned the Superfly Kids with an “s”.
Andrew: Oh, I see.
Holly: I did something right.
Andrew: I see. And so you said, “Let’s make a brand.”
Justin: Well, not even yet. We knew that in our heads down the road we’d become Superfly Kidz again, but I actually went from Kids Capes and did a . . . It was Kids-capes. That’s how terrible the domain actually was.
Andrew: Yeah, I was going to say, I can’t find Kidscapes and now I see why. The dash. Okay.
Justin: Yeah. And the dash will just forward you to our current website, or at least it should. But I wanted one without a dash. I wanted a little bit more of a brand recognition, so I actually launched Powercapes with no dash. Trademarked it and so I had a little bit more protection . . .
Justin: . . . and started marketing it Powercapes. And I started that as soon as I realized that this was going to work.
Justin: So as soon as the sales took off, I pulled the trigger on a new website. And then we came together as Powercapes. From there, we actually added new domains as we launched products. So we created Tutufabulous.com which sold tutus and princess stuff. And then we added Herohuggers was belts and, get it, Herohuggers?
Andrew: Oh, yes. I’m trying to search for all these as we’re talking, and I see now the tutu site leads to superflykids.com/tutus. Got it.
Justin: Yeah. So they all now forward to our primary brand, which is Superflykids which is once again, from a marketing perspective, we knew that that was probably going to be the name we ended up with. But from a marketing perspective from where we were at, it made a lot more sense to do these individual more targeted brands until we could build a database of customers, you know, make a transition into a brand.
Andrew: This stuff is so cool. I can’t believe nobody’s made this before because, yes, you can buy really junky capes or you can buy really expensive capes. But I don’t want either one of them, you know. You want something that looks fun but also doesn’t cost 160 bucks. You know. We’re in the tutus. For 25 bucks, you get these tutus that look real and also look fun.
Justin: And you can customize them.
Andrew: And you can customize them? For how much more?
Justin: It’s the same price.
Andrew: Oh, really. So if I get the punk princess tutu, I can customize that?
Holly: You can pick your own colors.
Andrew: Yeah. I see.
Holly: You don’t have to do punk princess at all.
Andrew: So then how do you go from being overworked and overburdened by Justin’s knocks on the door to suddenly being able to keep up with this demand now that it’s growing?
Holly: I hired more people.
Holly: It wasn’t just me. So we gradually hired one person here and there.
Justin: It wasn’t that gradual.
Holly: Well, yes. Yes, it went pretty quick by then. And you know, we moved to a larger space probably, what, four or five times we moved into larger and larger spaces.
Justin: Yeah, we moved a lot. Within two years, I want to say we moved probably four or five times.
Justin: Within the same building to bigger units.
Andrew: I see. That helped that it’s within the same building so the landlord gets to lose one lease and replace it with another.
Andrew: What else did you do to allow yourself to bring in new people and keep the quality where it is?
Holly: Well, because I made everything, I . . .
Andrew: Oh, did we just lose you?
Holly: Yeah. I was able to train them how to do it. And because I’m hands-on right here all the time . . .
Andrew: How do you train someone to do this right? What’s the process for doing it? Frankly, I know this sounds like a very amateurish question, but I always thought, I edit my interviews. Great, I’ll hire someone else who’s an editor and say, “Here’s my raw interview. Edit it.”
I did that and it would take them forever because they edited spending way too much production time. The file size output was way too big. And so on and so forth. And I realized it’s not them. They’re not making the mistake. I’m making the mistake. They’re doing it one way. I have another way. I have to really clearly document it and train them using this step by step process. And once they know that, then they could adjust and improve it. What was your process for getting them trained?
Holly: It’s the same. It’s exactly the same.
Andrew: So you show them exactly. Here is how to make the cape.
Holly: Yep. And the way that I put them together, it’s such an assembly line, it really goes quite smoothly.
Andrew: So each person does just one thing, moves it to the next person.
Holly: Yeah. We have people who just cut the capes and we have someone else just serges the outside of the cape. We have another person who does the Velcro. We have someone else who cuts all the initials.
Justin: And I think something else, one, I think Holly understands business intuitively a little better than she gives herself credit for.
Justin: You know, one of the things that she did early was, when I met her, she had figured out, per piece, what she should pay somebody. This was before we had 20 employees. You know, she knew that, per piece, this should be what we should pay for this. That was her plan. I think that was how she was compensating the one part-time person. From a business perspective I saw that immediately, and I thought she knows what she’s doing. She understands that if you put forward the right incentives and the right structure that people want to get better, want to do a better job.
Andrew: I see. So you kept paying per result.
Andrew: When you pay per result one of the challenges is that people want to rush through to create more results, and then the quality suffers. What do you do to make sure that the quality stays the same?
Holly: If in the beginning when they were rushing they would get it back to do it over again, but they wouldn’t get paid to redo it. So it was in their best interest to do it right the first time.
Andrew: So, was there…
Holly: So it’s in their best interest to do it right the first time.
Andrew: How would you implement that specifically? Here’s another example from my work. After this interview is edited and posted up on the site, we will have a virtual assistant download the interview, run it through a program that will visualize the audio wave, and then tell me… and then post it on a board, and tell me if your audio is too quiet, and mine is too loud or vice versa. So by visualizing it all on the screen in one second you can see wait there’s a very big soft spot here. There’s a mistake. That took me a long time to figure out to make sure that we do some quality assurance here. What’s your process for doing that?
Holly: Well, because of the assembly line setup that I have, each person who touches it is critiquing what’s happened before they get it. So…
Andrew: I see.
Holly: When we have a finished product, there’s a person who’s packaging it who’s looking at the quality of the sewing. Then the person who’s shipping is also looking at the quality. So…
Andrew: Okay. So is it as formal as a checklist? Or as formal as a few things that they’re supposed to look for? Or more informal and they just say this looks right, that’s what we create and we’ll move on?
Holly: It’s more informal I suppose…
Holly: ..but because we’ve done it so many times they know what to look for. So…
Andrew: So meanwhile the…and by the way, I recognize Holly you are more of a business woman… I think we’re doing a good job showing that. One of the way people can tell is you’re the one who’s wearing the company t-shirt with the company’s name on it. I’m sure the audience sees it throughout.
Holly: Well, any time possible.
Andrew: I’m not forgetting too that we started this story with you being a stay at home mom. The kids don’t disappear just because the business is doing well. In fact, it became a real challenge for you. Do you remember one of those low points where you were working hours and hours?
Justin: I’m getting a call now.
Holly: There we go…
Andrew: There you go…
Holly: Well, you know, the funny thing is that most of the people that work here are moms.
Holly: So in the beginning, when I had… when my kids were… right now they’re 12 and 9. But when it started they were little, little, and we had a babysitter that babysat the kids that needed summer babysitting.
Holly: We had her come in and babysit for the kids at work. So I brought my kids into work, and we had a babysitter.
Andrew: Here at the office so you can see them…
Andrew: …you can be aware of what’s going on got it okay. Was it a low? Was it one of the challenging… one of the big challenges or am I imagining it?
Holly: It was a huge challenge, yeah. The kids are used to coming into work, we have a big Lego bin, lots of coloring books. I mean there’s… they’re very comfortable here.
Andrew: I see.
Holly: Yeah, and I have a dog who comes in all the time too. So, she babysits her too… my fur baby. She has to come in too.
Andrew: What’s the dog…
Andrew: What breed?
Holly: She’s a feist. But she’s… everybody here, except Justin, loves her.
Andrew: I used to hate dogs, and then I would go into offices where someone would have a dog. I’d have to go into meeting with the dog. I don’t even like dogs! Now I have to find a way to deal with this and the meeting. What don’t you like about the dog? What makes you uncomfortable?
Justin: How much time do we have?
Andrew: Oh go for it!
Holly: Oh, she’s good.
Justin: No, we’ve had dogs. So I like dogs. I really do. I just don’t think that we were meant to have them as pets. I think that animals were meant to be in the wild. I just see them as wastes of time, energy, money, and just emotion. Not to mention the fact, that when they have their wonderful little accidents in the office…
Andrew: Ah. Yes.
Justin: Zuki doesn’t do so much, especially now that she’s a little older. Although now she’s probably going to start doing it again now that she’s getting older. Getting into trash, and just… and they’re dirty, they’re just blech. No thanks.
Andrew: Are you dating someone?
Justin: I’m married.
Andrew: You are married.
Justin: We have a three year old and a one year old.
Andrew: I see so you feel like, you know what why would I invest my love and attention in a dog that could just mirror some of it back? Yeah, maybe it’s magnified, mirror it back vs. investing my time and love, and affection, my wife, my kids, people who are going to grow emotionally with me. That’s what you’re feeling.
Holly: I don’t have enough love for all my people [??]
Justin: That’s along the lines of my thinking. My thinking is there’s so much more needed for humans. I’m not going to lie. It drives me crazy the amount of energy people put into protecting pets and all that stuff. Meanwhile people are starving all over the world. People are being abused and all that stuff. If that energy was redirected, I just. . . but good for them.
Andrew: But think if you ever have to go into therapy as a couple, as a working couple.
Holly: Yeah, we tease about how we’re married. . .
Andrew: Would you really have to do that?
Andrew: No. Okay. It seems like you have a good relationship. But I have to say you’re so different.
Holly: Yes. Very, very, very different. But we’ve had a lot of ups and downs.
Andrew: What do you mean? What’ a down?
Holly: Oh, you know. Bickering, or not agreeing on something we both feel very strongly about something that we like. . .
Justin: In a way it is like a marriage. We are very different. We have to figure out how to communicate to one another. We’ve had to build trust. Things happen that draw some of those trust. . .
Andrew: What’s the thing that would draw that out of the two of you?
Justin: There’s an instance when we moved into our new big facility. We have our territories. We tend to get over territorial I think when I’m asking questions about production, and when she’s asking questions about marketing, especially early. Before we really trusted and respected each other in their respective fields I suppose. We’d both be like, “You don’t know what you’re talking about. Mind your own business. Stick with what you know” kind of thing.
Holly: Get out of my space.
Justin: So it took time for us to involve each other in both sides of the business because it’s important.
Andrew: How could you involve Holly in marketing? How did you?
Justin: We have a weekly marketing meeting now that we’re both in, that we discuss ideas. Part of it, we’re both stubborn. So just because she didn’t want me ask about manufacturing, didn’t mean I was going to stop. Just because I didn’t think she knew what she was doing with marketing, didn’t mean she was going to stop. Over time we provided feedback. So I would say, “What about this and this and this with manufacturing.” And she’d be like. . . early it was, “You’re a complete moron.” It became as I gained knowledge some of my ideas have been helpful and same with marketing, originally it was like, “Oh my gosh. You can’t do that. Here’s why. Here’s ten reasons.”But now more and more ideas come forth from her that we’ve been implementing. So it’s just that learning curve of starting something from scratch, trusting each other, being patient with one another with what we know. And a lot of that is communication.
Holly: Having a better understanding of each other’s roles too.
Andrew: Do you have a tip for how someone can talk to a co-founder about the co-founder’s work without coming across as judgmental or bossy?
Justin: Honestly, don’t worry about that. Don’t worry about. . .
Andrew: Just be open.
Justin: Be open. And that’s something that we’ve struggled with. I have a tendency to piss people off. Cool. I get that. Fine. I’m working on it. But I’m. . .
Andrew: You’ve pissed off every dog lover in my audience.
Justin: I love dogs. I love dogs.
Andrew: No. No. Don’t back away. It’s OK. JustinB: Hey, I said that at the beginning. I’m not backing away.
Holly: But then I have a tendency to take things very personally. So if you point out something I’m doing wrong, it’s very personal to me.
Andrew: So don’t you need somehing. . . So what did you do? You just learn to accept it or. . .
Holly: Well, I think I said, “Justin, stop being so mean” and he said, “Okay. But this is what I’m really trying to say.” We figured out how to talk to each other.
Justin: You have to fight through it. That’s the problem.
Andrew: I feel like Justin you’re an organized thinker who has some process for communicating tough things to other people. And since Holly’s here we’ll ask about that. So if you wanted to say, “Holly this cape is just stupid” if that’s what came to your mind. How would you say it instead?
Justin: I would say, “Holly, this cape is stupid.”
Andrew: Oh, you would. And then she felt bad because it’s something that she created. How would you deal with that?
Justin: We’ve actually had this exact discussion. And the problems come up when that isn’t addressed immediately.
Holly: I would stew about it.
Justin: I’m going to be straight forward and honest with exactly how I feel and truthful to a fault. Without caring how people take it or taking that into account. And that’s part of my personality but part of my responsibility as a human being is to try to be more aware of those kinds of things. And I’m open and I think Holly would agree that I’m opening to changing those things to be more accommodating. At the same time I’m stubborn so it’s a slow progression. But additionally it’s Holly being able to say right then, “You don’t need to say it that way. Could you say it this way?”
And then being open and honest with each other about that. And being willing to make those adjustments. But once again be willing to fight about it. Being willing to not worry about oh how are they going to feel about this? It’s okay I’m going to piss you off. You can piss me off back. No big deal. Let’s work through it instead of playing games or ignoring or hiding it shoving it away or whatever. Our fights are less dramatic.
Justin: We don’t fight anymore. I mean, I don’t think things really build up that much anymore. And I think that was kind of the biggest problem early learning when things are building up. Reading each other. Calling each other out. Those kinds of things I think we’ve gotten a lot better at.
Andrew: Do you remember when you did your first million in revenue?
Justin: Our third year in business.
Andrew: Third year. So it wasn’t at a party or an awareness that this is a big milestone?
Andrew: No. Okay. What got you there then? I guess the low hanging fruit was SEO. A name that is easier to search for. And some change in the structure of the site. What’s the next step for growing your sales to allow you to get to that first million in revenue?
Justin: Honestly, I’m not going to give myself too much credit. It’s been a lot of low hanging fruit.
Andrew: What are some of the other low hanging fruit?
Justin: We hooked up with Zulily. Within six months of them opening. And we had never really had a plan to go after retail. We’ve been very flexible though with our business model. And they approached and said, “Hey we want to buy,” I think it was like 250 capes or 300 capes or something. “Can you give us a good deal?” All right. Here’s a price. They did a promotion and it’s a three day sale kind of thing. Within 30 minutes of the sale launching it sold out. They wanted more inventory. So we increased it to like 500 or 600. An hour after that they were like, “Well we sold out of that too. Can you bump it up more?” And we bumped it up again and we said, “We can’t.” Because they wanted it to ship when the sale was over.
We already had to negotiate to get an extra three weeks of production time because we didn’t have the capacity yet built to produce those items. So that was one of those things that we weren’t even going to pursue retail at that time. Because we had enough things going on. I had reached out to Zulily and all these deal sites and not getting any responses. And then all of a sudden we get a call from them and I think, “Oh you responded to my email.” “Oh, you sent us an email?” Whatever. As long as we’re doing the sale now I guess that’s all that matters.
Andrew: Zulily is like a flash sale site. Kind of like Groupon, but just for kids.
Holly: It used to be.
Andrew: I see now it’s more than kids clothing.
Justin: And we’ve done Groupon and Living Socials because we’re vertically integrated and making everything here we can make those work.
Andrew: Why? What’s the difference? It looks like you did a Groupon recently. They’re still actively sending you traffic right?
Justin: Maybe. At this point you don’t even know those details.
Andrew: So how does it help you to be local to do business with flash sale sites? I would think that if you can’t meet demand and that’s the issue that you had with Zulily that maybe you do need to go outside the US.
Interviewee: No we can meet demands.
Holly: We can meet demand now. That was our first try.
Andrew: I see. That was the first time you were surprised by a big order. Now if you’re surprised by a big order what do you do to bring on more people and create more product?
Holly: We haven’t had to. We’ve been able to keep up.
Justin: We would need a quarter million dollar order that’s due by the end of the week kind of thing to even think about having to buy equipment. At the time we didn’t build up any inventory. We were still playing catch up. When we first got a hold of Zulily. Now we’re talking about putting in an order for 80,000 meters of fabric. At the time we were still going down to Hobby Lobby and buying every piece of fabric they had on the shelves and still making capes that way.
Andrew: I see. So what you’re saying is, because you’re selling something there isn’t a lot of competition in, and many of the manufacturers of the small ones aren’t that competitive, it’s easier for you to get the small wins than, say, someone who I mentioned the top of the interview, a guy who creates an app and then gets lost in the app store and gets lost on Product Hunt, gets lost on Tech Crunch. They’re competing with too many people who are too sophisticated. You’re not doing that.
Justin: I think we can compete more and more with them as we finished the rebranding to SuperflyKids just last October. It’s not even been a year yet. That’s put us in a different realm.
Andrew: Why did you do that? Why did you bring it all in?
Justin: Long-term, being able to cross-sell from Power Capes to Tutu Fabulous; it was hard to get people to understand that we were the same company. But, you got a boy, most people have more than one kid. If you’ve got a boy and you want to sell them girl stuff, it’s a lot easier to introduce the girl stuff in the same brand.
We also wanted to try some new marketing things, possibly get into retail. If you’re going to get into a Target, you don’t want to have, “Well, we’ve got our Power Capes brand, we’ve got our Tutu Fabulous brand, we’ve got all these different brand.” You want, “We’re SuperflyKids.” So we wanted to be able to present a unified front along those lines.
Andrew: I was looking to see if maybe content marketing was something you did, but you have blog.superflykids.com that has just one post and doesn’t seem like it’s active.
Holly: We’re working on that.
Andrew: You are.
Justin: Actually, when we did the conversion, a lot of our blog stuff didn’t get put into the new blog.
Justin: So that is an issue. We are aware of it, and we are working on it.
Andrew: Okay. Is it embarrassing that I just brought it up right now?
Justin: Hey, for all these good stories about app developers, when you’re dealing with website people that’s one thing I’ve realized, is that they generally have their own timeline and have got to work through bugs and all that kind of stuff. It’s tough.
Andrew: I know what you mean. It seems so easy, and it should be so easy because you’re just talking about unifying blog content, right? It should be a snap. They probably tell you it is, and then it’s not. I run into that stuff all the time.
Justin: You’ve got your wish list of 500 things, and you’ve got to prioritize. The blog is just low priority at this point.
Andrew: What else do you do? You still do Google Ads, right?
Andrew: I see search ads. What else works for getting new customers in the door?
Holly: Facebook. We’ve been doing more on Facebook, and we’re working on Instagram and Pinterest.
Andrew: What’s worked on Facebook?
Justin: Not much.
Holly: Giveaways, but it creates excitement.
Justin: From an analytic standpoint, I haven’t seen a lot of sales growth that I can directly correlate to Facebook. That’s probably my biggest disappointment, versus Google, it was easy to say, “Oh.” They have a cost-per-acquisition where they can tell you exactly how much per order and use your average order size and all that kind of stuff. I think Facebook still has a little bit of a ways to go in that regard.
I think the biggest single thing that we put energy into this year was retail. Initially, it was Holly, a couple of other people, and myself would go to these first couple of trade shows for kids’ products. Now it’s Holly and one or two of our staff. But getting into these big box retailers, the independent toy stores, getting more product in shelves, not just direct online.
Andrew: Into places like Wal-Mart eventually?
Andrew: I heard you talk about that a moment ago. What about this? We connected with you through Karen, who works at a PR firm.
Andrew: I’m looking at you guys on NPR, it looks like you guys were on NBC News, you got Fox to cover you, Huffington Post somewhere there’s an article. How’s PR doing? Is it an effective source for you?
Justin: For sure.
Andrew: What’s your PR strategy? What’s your PR goal?
Justin: Increased brand awareness and increased sales.
Andrew: So you’re hoping that when you get Fox to cover you, even the local affiliate, it’s that people will eventually go to your site, type in search terms and come with… and you’re then trying to measure how much money you’re making verses how much your spending on PR. Is it that kind of deal or is it just rates of profile?
Justin: It’s both. It’s all of the above, you know, we got a, Good Morning America did a special on us that generated our single best day of direct sales ever.
Andrew: I see.
Justin: More than paid for PR for I don’t know, we figured it out couple years or something. And, you know so you do have those home runs, that’s definitely a home run PR placement. We have a lot of the small ones, the locals that we don’t really see any sales bumps from.
But you have how many people did you reach that now know the brand, potential for building those links organically online to well known, well ranking Websites. You know that’s a huge piece of SEO, you know, just comes with the territory. Instead of paying a SEO expert, which I don’t believe really exists, to do link building, you know our philosophy has been you know do something we’re talking about and the links will get built. And, that kind of goes with the PR of all these Websites and Bloggers and stuff writing about us.
Andrew: I want to do a quick plug here, and then come back. The plug is actually for something that I should have said earlier, talk more about. It’s lowering your turn. As I said to everyone in the audience if you’re running a membership site were people pay you on an ongoing basis like I do.
You probably have a problem were… or if you’re doing what do you guys think of the ad. You guys don’t have a repeat business. You ever wish that you did like us, were you can say, we’re going to do cape of the month club we know every month what our revenue is because we’re charging the same.
Justin: That’s a great question. I’m glad you brought that up.
Andrew: Oh, do you have that?
Justin: I’d like to introduce your listeners to the sore program, which is a super fly organization of active recruits. It’s a monthly program were each month you get a mission and the mission included a comic book stickers, super hero gear, and a real life mission to go out and be a real life super hero.
Andrew: And I see it. Only available at [??].com/subscription. We’re not done with the interview I still have to ask you about your revenue and a couple of other things. I see and is this a continuity program? No.
Justin: So, we launched it last year, we did the rebranding that was one of the things that kind of got lost because of the subscription merchant processing. You know being able to… that’s a different model then a general e-Commerce store.
And the software that we were using had some hiccups that, that didn’t make the conversion. Basically saying, as we would have liked. So we’re actually reinserting that into the super fly kid’s platform. Because it had its own domain, own structure, own shopping cart because it had to because of the membership.
Andrew: So now what you’re doing is selling three months at a time were before you allowed people to keep buying until or keep staying subscribed.
Justin: Yeah, well they can still do a subscription now but it was that transition that was… it wasn’t cleaned like we would have liked it.
Andrew: Here’s the thing that I discovered. I though great people are paying on a monthly basis as long as they’re happy we’re going to continue to do business with them. The problem is that stuff comes up, credit cards expire, there are issued with the credit card company. And, you have to go and hunt them down and deal with it.
Well that’s the issue that I had, and it was driving me nuts. And, I talked to friend of mine he said, you know I’ve got this software that does it. We used to run a SaaS company where he had the same issue and he built something for himself and now he’s productizing it.
And basically what it does it looks for these issues good low hanging fruit that you discover and then identifies it and allows you to… and frankly not allows you to solve it, the software solves it. I don’t want to say too much because he’s just getting started. I will say this to anyone’s who’s out there I am using this, I watched it go from idea, to software, to now beautiful software.
He’s going to let a handful of people from the Mixergy audience in. if you’re interested go to it’s just on my domain. Go to mixergy.com/lowemyturn, mixergy.com/lowermyturn. Turn as in, you turn and loss your customers month to month.
It’s been fantastic for me, he’s not ready to launch it but I said, ”You’re helping me out tremendously I want to give you a free spot to show my appreciation.” And that’s what I’m doing right now. When you go there you’re going to see just a Wufoo form that I insist that he put up because I wanted him to have a way of collecting my audience’s information. And, then he will probably personally follow up with you. But the software’s developed it works. My team and I don’t even touch it. I told him I will use it, as long as I don’t have to do anything. Anyway, that’s what’s there mixergy.com/lowermyturn, it will do it for you. All right, sales right now. What kind of revenue are you guys doing?
Justin: The only number we’re really putting out there publicly is over two million.
Andrew: Over two million dollars in sales. Net margins, are they more than 15%?
Andrew: They are? It looked like significantly more based on the size of the smile.
Justin: Maybe. They are fine.
Andrew: Are you making more money as entrepreneurs than you were in your previous jobs? You, Justin, for your business. You, Holly, the job before you — before you left.
Holly: I was a teacher before so.
Andrew: Okay. All right. You definitely are. And Justin?
Justin: It depends. Honestly, it depends who you ask. If you ask my wife, no. If you look at the whole balance sheet and all that goes into, absolutely yes. You know we spend a lot — we put a lot right back into the business. You know, I tell people that they think oh you are making money hands over fist you are growing so fast. Growth is really expensive.
Andrew: Why? Where does the money go?
Justin: You got to, you know, instead having an inventory of ten cage you need to build an inventory of a thousand.
Andrew: To allow you for growth. What else is big that we wouldn’t notice as outsiders?
Justin: Equipment, increased office space.
Justin: More staff.
Andrew: That’s why you are saying you put the money back into the income statement. Into the — not the income statement. It’s just the balance sheet. You are buying your assets and investing them into your business and that’s something you told Jeremy Weisz in the pre-interview that you have no outside funding. The whole thing was started with about a hundred bucks but when you make money you bring it back in and you invest in more products, invest in more space, invest in more equipment, invest in raising your brand name, etc.
Justin: Correct. That’s the thing and we have no debt.
Andrew: No debt. All right and as — we talked about Holly’s origin story but Justin there’s something cool that happened to you when you worked at a car wash that led you down this path. Do you remember what that was? Do you know what I’m talking about?
Justin: I do but I mean basically what it boiled down is, you know, I was 14 years old working at a car wash, doing all of the hard work and the owner was sipping on a Diet Coke in the bay not really doing much. I thought, well that’s pretty cool. I want to do that. However, I can’t really — I’m not that kind of owner because I just I — an idea comes in my head and I have to work on it. Like I don’t sit back and I don’t drink Diet Coke so.
Andrew: But you know what that’s — when people say that if you are an entrepreneur you get to take off whenever you want and sit have Diet Cokes or martinis whenever you want. They are lying. These are the self-help rule guides but the part that you mentioned is the freedom that comes with entrepreneurship. The fact that you can say I have this idea I can implement it. I have this idea for a new direction, for a new name, for a new marketing, for a new product and yes you have to work it out between the two of you but you can get to implement it because it is your business.
Andrew: Where someone else might say, “Hey come on guys, you are crazy. Justin, PR forgot about it. It’s a loser game . Don’t spend money on it.” Here you can say I think it will work. Let’s test it. And here’s the other cool thing you can do because it is your company. After the Sandy Hook tragedy, you got a phone call. Holly, do you remember the call I’m talking about?
Holly: Yup. Well, we received a call and they said that someone who was . . . a neighboring school and they wanted to give capes to all of the kids at the school and they said, “Is there any way you can help us out?” We said, “Yup, where do we send them?” And we sent, I think, it was five or seven hundred capes?
Justin: Yeah, it was. We said, “How many do you need” and I think they said, “Well you know if you could give us like ten or twenty that would be great” and we said, “Well how many do you need?” And I think they said, “Five hundred.” We said, “Great. We will send you 500.”
Andrew: Five hundred capes you sent out to some kids who are deeply affected by this tragedy. That’s one of the coolest parts about the story. Congratulations on your success. I’m so lucky that we connected with you. Frankly, like I said at the top of the interview this isn’t the kind of interview that’s easy for me to find. You people are not here in San Francisco. They are not walking around the Mission District. We don’t have friends together who happen to build apps, but this is the kind of story that I think is important for people to hear. This is the kind of story that I think it’s outside of the tunnel vision that the mainstream start-up media has which is here’s a guy who started an app, raised a million and then another million and so on and then ended up selling it for a billion dollars. Those stories are all not true. This story is really the antidote to all of those stories, and I’m proud to have you on the site. Thank you so much for doing this interview.
Holly: Thank you.
Justin: Thank you. Actually, one more thing.
Justin: In San Francisco, we started one of our branding initiatives was Super Run which is a super hero themed fun run. It’s a 5K and a fun run.
Andrew: That’s so perfect for this city. Everyone is walking around in costumes. Yes.
Justin: We will actually be in San Francisco on March 28th.
Andrew: All right. I’d love to get together and see you in person and do the run too. I’m a runner.
Justin: Yeah, bring all of your camera crew and all sorts of fun stuff. All right.
Andrew: I would fricken love it and I have a baby I can probably but in a cage.
Holly: There you go.
Andrew: Cool, thank you. Congratulations on your success. Thank you all for being a part of it. Bye everyone.
Holly: Thank you.