TV shows like Shark Tank and Dragon's Den give ambitious entrepreneurs the opportunity to cast their best business pitches and reel in deals from a panel of investors.
But the biggest benefit is perhaps the most understated: exposure to a nationwide audience.
Lauren Krakauskas is the co-founder of Freaker, the one-size-fits-all knit koozie that functionally makes your beverage feel special.
On this episode of Shopify Masters, she'll explain what it’s like to pitch on Shark Tank and why they went on the show even though they had no interest in walking away with a deal.
Listen to Shopify Masters below…
They wanted us on there for entertainment value and we weren’t looking for investors...But the marketing aspect of it was amazing.
Tune in to learn
- What is it like to hire someone to run your business
- Why introduce a $1 tier to a crowdfunding campaign
- Why create a “knock-off” of your product to protect your brand
Show NotesStore: Freaker
Social Profiles: Facebook, Twitter, Instagram
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Felix: Today I am joined by Lauren Krakauskas from FreakerUSA.com. Freaker is the one size fits all knit koozie that functionally makes your beverage feel special and was started in 2011 and based out of Wilmington, North Carolina. Welcome Lauren.
Lauren: Hi, how are you?
Felix: I’m good. So tell us a bit more about this product that you sell.
Lauren: So Freakers are amazing, they’re super fun. They’re one-size-fits-all, like you said, they’re knit bottle insulators, so it’s kind of like a koozie but we kind of think of the word “koozie” as a curse word, and it makes us shutter. Just because we are trying to separate ourselves from a product that you get for free at a trade show.
Lauren: But we also make socks and they all have really weirdo, wacky designs. There’s something for everybody, so it’s not just the Fifty Shades of Neigh with a horse and a blindfold but there’s also NFL players and colleges and all of that jazz. So we are pretty set in the gift market and everything we sell is under $20.
Felix: Where did this idea come from? Where did this idea to … Like you’re saying, these are products that you typically would get for free. I want to talk a little bit later about how you message and you brand away from that image, but what gave you guys the idea to start a company like this?
Lauren: So I was living with Zach, who’s the CEO and the other co-founder, and he is a colorful and untraditional character. He has not, cannot, and probably will never work for somebody else. He assumed, and we all assumed too that he was going to end up homeless and we all accepted that. But he was my roommate at the time and he had come up with the concept for the product and it slowly evolved through time to get where it is today. But he had the concept down before we started a company of just like a one-size-fits-all knit beverage insulator that you can put some weirdo designs on.
Felix: Did you … So your roommate came up with this idea, or he had this crazy personality, he had this idea. Did you have any entrepreneurial business experience, like either of you guys?
Lauren: Oh absolutely not. Like nobody that started this business. There was four co-founders in the beginning and nobody had any idea what was happening in the business realm. We were all just artists and weirdos. Zach, again, he was the borderline homeless guy with some weird tendencies. I had just gotten done in Boston, just finishing up an International Affairs degree. I was hoping to save the world from tyranny and the impending doom that we all feel all the time. But I had just gotten a job in Korea but through the messiness of life, I found out myself in North Carolina by accident. Before I was in e-commerce, I was just in coffee shops and in denial. There was also a filmmaker that was a co-founder and a graphic designer. So we didn’t have any background in how the world of trade worked.
Felix: So how did you guys pull all this together then? Because it sounds like none of you guys had backgrounds, you almost seemed like you guys were doing totally different things in life, different stages in life. How did you guys pull all this together?
Lauren: You know, I think that, if we weren’t so naïve, we never would have. We were just like “It’ll be great.” We were a group of friends trying to work on a project. We didn’t consider it like, “This is the beginning of our lifelong career where we are going to become entrepreneurs and take over the world.” It was more like, “Um, I just kind of want to make paper mache worlds in the back room of this dinky office and figure out how to pay myself a livable situation.” And if something comes out of it, great.
So we started this business with a group of creatives that kind of just wanted to have fun. And that turned into a marketing scheme. We had no idea that this is how actual companies start. And who knows if they were before the age of Kickstarter and the age of crowdsourcing and social media support and networking on the internet. I don’t know if this was a way you could have started a business before that. Maybe I would know if I had a Business Degree, but I don’t.
This is the creatives coming together just to work on something. It turned out a beautiful, wonderful business based in happiness and trying to take care of each other.
Felix: So you had mentioned that they’re a group of creatives. Was there other people outside of the initial founding four that were involved early on?
Lauren: We always had friends to help out with projects here and there, but there was no investors. Again, we did a Kickstarter for our original funding. We did everything internet based. We didn’t have any, you know, white dudes in suits telling us what the best strategy would be. We had nothing like that. I mean, looking back on it, I’m really happy for that. Forging our own path and figuring it out in untraditional ways has gotten us to where we are now, which is a really comfortable happy place. So it worked out great.
Felix: Before the Kickstarter campaign, were you guys selling any of these? Did you guys have products that were already selling at the time?
Lauren: Zach had dabbled in it. He was trying to figure out how to do it, which is why he … I think he’d gone to a trade show before we founded Freaker USA as a company. And his experience with the actual world of gift markets and retail and how this whole segment of society works. His experience with that was like, “Well, I need a team of creatives.” So that’s when he got all of us together and it was mainly a … He wanted a good brand and marketing strategy. It wasn’t necessary laid out like a strategy. To this day, we still don’t have business plan.
So it’s pretty freeform, loose flowing but he realized that if we’re going to sell this product that … Most people think of a koozie as a business promotional item that’s throw away garbage. So if we were going to get beyond that stereotype of the product that we’re most related to, we’re not … I mean, there’s a lot of manufacturing differences with what we do, but to get past this stereotype of a koozie, we would need a strong brand of colorful fun. And that was the beginning catalyst for why we came together.
Felix: So I think you and your founding team are in a position that a lot of listeners are into, which are passionate people that are creatives, that are artists and they just want to continue doing their craft the rest of their lives. But of course, there’s rent, there’s bills to pay, so they start thinking, “How can I turn my passion, my art into a business?” What tips do you have to give people that are in that situation where they don’t have a business background, they’ve never started a business before, similar situation that you guys were in? What steps can they take to try to set up their art, their craft, their passion into a business?
Lauren: I have nothing but encouraging words. You live in the right time to have no experience and still be successful. The age of the internet and starting an enterprise, it’s a phenomenal age for this. You have Etsy for starters, you have Lynda. Lynda is this online course, it’s like an online database of learning everything that you could possibly ever want to know about how to profit off of your own creativity. The tools are there, they’re there for you and they’re generally free. We had no idea and we found out about Kickstarter in early 2011. “Well, I don’t know, lets just try it out.” And 60 grand later, we have a business. So I wouldn’t be discouraged if you’re a creative that wants to figure out how to profit off a business. You don’t need experience at this point in time. The old traditional way of making a business plan, finding an investor, it’s almost irrelevant at this point. You can still obviously go down that path if you’d like, but so many more doors are open to you if you don’t have it.
And, something else I’d tell them is don’t focus on the money immediately. We didn’t pay ourselves a normal wage for the first three years. And that’s so normal, but you have to understand that you’re doing what you love and working towards a goal to have a sustainable lifestyle for yourself based off of what you love and, you know, it’s definitely always worth it.
Having a business is a lot like having a baby, and I don’t have children. Nobody in this business has children. But it’s always the thing where … Just like a baby, you have to care for a business and feed it and make sure it doesn’t die and the whole thing. And it’s all a struggle but it’s all so rewarding, which is … You know, people that do have children, they allegedly say it’s rewarding. So I’m assuming it’s the same concept and you watch it grow and you’re really proud of it and you are so much part of its life and it’s part of your life, and you know, it’s really an enriching experience. And if you can figure out a way for your passion and creativity and what you enjoy doing, that can sail you through the rest of your life. You have figured it out, it’s great.
Felix: Yeah, I don’t have children either and I bet I’m gonna make … We’re going to make a lot of new parents angry in this topic. But I want to ask though, I think with raising children though, there is kind of, I want to say a blueprint, but there’s seven billion people in the world, so it’s been done over and over again, but with a business, there is kinda no blueprint along the way. How did you guys … Maybe let me ask this question instead, what were some of the most important skills that you had to pick up along the way, as a first time entrepreneur, as someone that is more of an artist or more of a creative that you found most useful for you, on the business side?
Lauren: Honestly, we hired a person that was way more responsible and adult-like than we were. And she’s been great. She helps us, and we’re learning and we’re still learning like how the business parts of things are so bureaucratic and so intense and you have to put so much into it, but it’s always worth it, and it’s been nice to have a team of people to do this all up together. Our power structure is that we’re all working together. I guess there’s management and whatnot but at the end of the day, we’re all in this together. It’s an equal playing field, and it’s been really an enriching experience to have a dedicated team of people that … None of us knew what we were doing, ever. And figuring it out together has been a wonderful team building experience and I think we all feel like this is our baby, which is obviously for the best because we all care about it a lot. And we’ve all put so much blood, sweat, and tears and happiness, and paint, I don’t know.
Felix: Yeah, I think what you are saying about how none of you guys know what you are doing is important. One of my most favorite posters I’ve seen says something to that effect that no one know what they are doing either. It’s kind of like a learning process through the entire thing, no one’s born knowing exactly what steps to take to get where they need to or they want to be. So you guys decided to hire somebody to, I guess, what role do they come in to fill? If you can give them a title, what would that be?
Lauren: Right now, Operations. But at the beginning, we hired this girl … her name’s Alisha, she’s amazing. But we kind of hired her because we were on the road, we bought a box truck with our Kickstarter money, and we turned it into a neon-traveling, party house. We threw grilled cheese parties across the states for marketing reasons, like billboards are boring. What’s not boring? Grilled cheese, and parties, so let’s do that.
So, while we were out of town for four months I believe, we hired another friend of ours, like “Can you help us get out some orders?” And she was just so great about it, like “What’s happening here? None of this makes sense. You guys, you’re missing some key steps.” She also has an Arts degree, she’s not a business person either, but she’s just a little bit more focused on the normal steps on how to invoice somebody, which is not something we had ever thought about. But she’s one of us; we didn’t hire a suit because of their past experience and responsibility, we hired somebody that we knew was amazing … The most adult young person I knew. She’s still with us and she’s great, and she’s helped a lot but I think even without her, the steps that had to have been taken, we would’ve had to figure out regardless.
Felix: When she came in, do you remember what some of the things that she had to tidy up, that she recognized that we have to get a hold of this situation immediately?
Lauren: I mean a lot of it was logistics, it was basic “Guys, you have to ship this on this date. This is cheaper if you do it this way.” She didn’t know what she was doing either, so it was all a learning process together. But she was a really perfect candidate to … head spirit and figuring it out.
Felix: Okay, makes sense. So, I want to talk about the Kickstarter campaign, because that sounds like what kicked things off for you guys. You ended up … I think you had two campaigns, let’s talk about the first one first. The goal was $48 500 and you ended up raising … You broke through that, almost $63 000 from 2416 backers. So let’s start with the goal, how did you guys decide the goal of $48 500?
Lauren: So most of it was going to production. And also trade shows, we knew that we wanted to not just do eCommerce but actually get into a physical presence with gift stores and gift buyers, there’s so many everywhere. Trade shows are really expensive, so a lot it went to that. And then we had a little bit left over and that’s when we were like, “We should just buy a box truck, why not?” Which turned out for the best, but if we had taken that to an investor rather than a crowd funding platform, there’s no way they would have gotten behind us. “What is your strategy?” “Well, we’re going to turn an old U-Haul into a party stage and take it on the road for four months. Let’s see what happens.” That’s not a sustainable plan in the eyes of a bank.
Felix: Why do you think it worked for Kickstarter then? This kind of, I wouldn’t say … Maybe it’s the best way to say, is a not so serious approach to running a business. Why do you think people who supported this, I guess, philosophy?
Lauren: The thing about Kickstarter … First of all, crowd funding in general is a revolutionary platform. I truly believe that the world is a changed place and it keeps evolving in this direction, post crowd funding. And I think that people really appreciate a genuine character and having Zach as the face of things was really nice because, again, he looks a little homeless, he acts a little homeless. He’s really relatable and very strange but he’s lovable at the end of the day. Just being able to see this random person on the internet and be like, “I could support this $20, sure, go follow your dreams, you strange little bearded man.” And I think that really helps. There’s also the rewards, so you are unofficially buying presents, which is nice. For an investor, they would have interest. But a Kickstarter backer, they get presents. So even if it fails miserably and we don’t have a business, they still get their cool socks.
Felix: Right. And one thing I saw interesting in your first campaign was that you had this lowest tier, which is, you pledge $1 or more … And this made up over half the backers, almost 1400 backers pledged this $1 or more. Tell us about this, was it literally they could pledge $1 or whatever they want to, how was this set up?
Lauren: Oh yeah. So that was something that we introduced later in the campaign. Because I think, and I’m not sure, but I think the lowest one other than that was $20 possibly, it was something in that region. And we just decided … The algorithms of Kickstarter, the feeling of participation and the feeling of “I’m part of this” shouldn’t be limited to anybody and we kind of ate the cost sent Freakers to everybody that had an extra dollar to spare.
And it worked out great. We ended up doing that for our second campaign also we got this flood of random people because there’s all these coupon sites and weird discount apps and they started picking up “For only $1 you can get blah, blah, blah.” So we got a flood of traffic and if you look at just the numbers, it looks like we lost money on it but that drove our algorithm up, so we got the front page of Kickstarter because there was so much … Even though they were $1 pledges, they were a wave of pledges. We got bumped into the popular list and that really helped our exposure. And at the end of the day, more people had Freakers in their hands, which was our end goal in the first place.
Felix: Okay, so you used this tier almost as a way to generate virality. Get this to go, get this to spread more, and of course, like you were saying, it paid off in the end because it helped you rank higher on Kickstarter. That’s an interesting approach. I’ve never heard of that before but it makes a lot of sense.
So after raising that, well, after you broke through the goal and raised almost $63 000, what did you guys do after that? What did you guys … Was it strictly just to buy that truck, how did you guys use that money? Was it all through operations, or what did you do with it?
Lauren: Oh, we used that money so fast. So we went to production. We got a full run of production, which was, you know … Big chunk of the money went into production. We got a trade show booth, we started showing … And the rest of it was into the box truck and that’s kind of been our, it was our main marketing source there for a while. And it was the only marketing source that we paid for, and because the world of social media is free and we really, really took advantage of that one. But the box truck was great and that was our way of connecting with people and breaking bread with hopefully customers, but if not, whatever. Just getting out into the world, that was our vehicle, both literally and figuratively.
Felix: Yeah, so, you mentioned something a bit earlier, which was you knew that you did not just want to do eCommerce, you wanted to go out into retail and the way to do that was to go through these trade shows. So first, what made you come up with the decision that it wasn’t just going to be eCommerce, it had to be in physical stores?
Lauren: Most of our business isn’t online, I think maybe 30%, maybe less than that is from online sales and most of our business is coming from trade shows, going into gift stores. You can find our product in like 3000 boutiques in the U.S., it’s relatively wide spread after all these years. But the internet is what made us exist and if it hadn’t been for these platforms that we were born into just living in the age that we do, we wouldn’t be here. So I don’t think we could have started with trade shows if we didn’t have an online community and building that up, then everything else would have crumbled.
Felix: Right, makes sense, so when you go to these trade shows, like you’re saying, they can be very expensive so of course you have to make sure you are using your time wisely. Any tips there when you’re setting up a trade show, especially if it’s a product that is a brand new, launched product, how do you make sure you get the most use out of a trade show?
Lauren: I’ve been to enough trade shows at this point that I see a lot of new brands coming in and people following their creative instincts. A lot of times they will share a booth with another friend or something. A lot of them walk the shows first to make sure it’s the right market for them. Just getting a feel. I would definitely recommend walking the show before spending 10 grand on a booth.
Felix: Does that mean going to the trade show like the year before? What do you mean by walking the show?
Lauren: Yeah, go to the show just as a spectator before you delve in head first because we’ve been to trade shows that aren’t worth it. We’ve been to a lot that make our business sail for the next year. So, just finding your target market. Again, we are in the gift industry so it’s a little more clear cut for us, but we started going to outdoor shows and sport shows and licensing shows and some of them are worth it and some of them are not. Gift shows are where we thrive but it’s different for everybody. So I would talk to other people that have similar businesses to what you are trying to do. If you can, I would try to go to the show before you sign up for it and just see what kind of relationships are forged from each particular show, because they’re all different. But they do help.
Felix: So when you are walking the show, when you are taking a look at it before investing in it, you are talking to other vendors that are already there. How do you determine if it’ll be a good fit or not?
Lauren: You should talk to the show runners also and get a list of buyers and look up their stores and see if they’re … Who do you want to sell to because … Early on, we had to decide what we’re going to sell to and what we were not. And trying to make a brand is really … It can get kinda tricky because on one hand, you are like, “Yeah, you want to buy my stuff? Great, give me all your money. I don’t care.”
On the other hand, it’s like, “Well, I’m a brand, I have to protect … I have to do things that are in line with the brand.” So we ended up actually making a knock off of ourselves for people that were not our brand. CVS or some random box store is … When our boutiques see us in something like that, they get really mad. So we made up a knock off brand and made them a cheaper product. They’re still all made in the U.S.A, which is great, because one day CVS called and we want Freakers, and I said, "Hmm, that make some of our smaller, independent, mom-and-pop boutiques unfortunately craven.
So knowing what your ideal market is, is a good step, but you can also figure it out along the way. There are no rules to anything. That’s part of the beauty of living in 2017 is you can kind of make your own path. We didn’t follow any of the rules and we’re still standing. So, if that gives hope to anybody, please grasp onto it.
Felix: That’s an interesting approach where you already had a lot of retail stores, a lot of boutiques that were carrying your product, carrying the true brand, the true version, I guess, of your product and now you had a much bigger store come along, like CVS in your case, and they wanted the product as well. But you realized that I can’t sell to CVS the same thing I’m selling to these boutiques because not only is it bad branding for the customers because they’re like, “Hey wait a second, I thought I was buying … I thought this was a small mom-and-pop shop brand, now its in CVS.” Talk to us about this process. How did you know to, not how did you know how to do this, but how do you begin to create a different version of the same product to sell to a different type of retailer?
Lauren: Things like CVS, and I’m trying to think of other things that coveralls has been in, let’s just say a Walmart as a blanket example. They don’t care as much about brand recognition, they care about just selling a ton of product and getting it out of their door, making a lot of money because it’s on a large scale, but their margins are different, they have a different way of doing everything. And it felt weird going from a small mom-and-pop independent boutique to a Walmart situation. It wasn’t fluid. And also of course, the stores would get really mad and since they are our main source of business and we love them and respect them, we didn’t want to taint that relationship.
But even going to the technical, logistic side of things, a bigger box stores want a way cheaper, cheaper, cheaper price than an independent boutique in a small town. So it wouldn’t have worked anyway with our current pricing, so we made our product thinner and smaller and less branding went into the packaging. We just found ways to cut cost but still have a quality made in the U.S.A product and then we hopped it off on them.
Felix: So these big box retailers, they were, I’m assuming are attracted to the product that you have because of the original true version of it. They weren’t like, “Hey, wait a second, we want the exact same thing you’re selling to these boutiques.” They didn’t care about that?
Lauren: I think they cared a little bit but at the end of the day, it was up to us whether … They wouldn’t have been able to buy a Freaker at its normal price, too much goes into it production wise to get down to the price point that they are used to. End of the day, it’s too expensive of a product for what they are looking for. I think they did want the original product, but they couldn’t have had it for the price that they were asking for, so we worked with them to find a good compromise in the middle, and it was a win-win, because they got the thing they wanted and we got a big account.
At the end of the day, it wasn’t made in China, which was really important to us. If we said, “No you can’t buy Freakers, have fun with the rest of your life,” they would have just gone to a knock off and manufactured overseas, which kind of defeats our whole purpose, which is local economy, local business, small independent makers and doers, and creative and fun. Nah, nah, it’s not gonna … If the knock offs were made in China and that’s what took the business from the big accounts, it would have been very antithetical to what we’re trying to …
Felix: So you were trying to make it work. Can one, I guess the high end product versus the mass market version, can those two … I guess you can call them brands or sub brands, I’m not sure what you want to call it, but can they help each other or do you try to keep them completely separate from each other. Like you would never want a customer that is typically shopping at these boutiques to discover the Freaker brand at CVS?
Lauren: Yeah, you know when we first did this, this was a couple years ago when we decided to do the knock ourselves off … I almost said knock ourselves up and not ourselves off … When we first decided to do this, they had a lot more icky, gross feelings about it, like “We’re lying to our customers, our beloved fan base.” But the more I thought about it, the more I realized that they … Our customers love us because it’s a small business ideology. They want to help their neighbors, they love the silliness of the product.
At the end of the day, it’s just helping a small local economy, which is a lot of what we’re trying to push through our marketing and helping other businesses and our whole process is kind of focused around this made in America, small creative makers, let’s push them up and onto another level, and have them be actual players in this gift market game. So the more I though about knocking ourselves off to sell the big box stores, the more I really appreciated the psychology behind it that I hadn’t really understood before, which is, this is that this is the same Freaker, we’re still making it in America, it’s still the same mill that’s making it for these big box stores, it’s still the same … Our money is being put in local economy no matter how you look at it, whether the brand is stupid or not. That helped me a lot and started to feel a lot more proud of the decision after I talked myself through the actual economics of the situation.
Felix: Yeah, that definitely makes sense. So I do want to talk now about what you were saying earlier about how this is a product that people are typically give for free, they get swag, stuff we all get. These are things that businesses give out as promotional material. How did you guys approach the market and message that this was not like those free promotional products, and what kind of obstacles did you have to overcome when you’re trying to market a product that could be gone for free?
Lauren: Storytelling. I’m going to blame it all on storytelling, and personality, and brand and you know, when we launched our first Kickstarter, you weren’t … Well first of all, the product is a little bit different. It’s not neoprene, it’s knit, it’s all U.S.A made, whatever, that’s irrelevant. What is relevant is the branding behind it, that there was a face to this product, it was just some strange little group of people that were trying to do something different. And I think people really connected with that. They thought more, not necessarily an art product that’s on the consumer market but there’s these random people and they kinda represent the original American dream of “You can be anybody and figure it out.” And I think the story behind the product was more important than the product itself in the beginning. And that evolved into a full fledged brand and business, but I think that sense of community and sense of personality and actual humanity behind a product was our launch gate.
Felix: I was going to say that, that is important that people are buying, investing, supporting the story that you’re telling, otherwise you become a commodity and then they start comparing you to these [inaudible 00:30:05], which is a terrible place to be in, so it’s great that you guys recognized that and were able to tell the story behind it. And speaking of approaching the market, you mentioned on of the key, I guess, places people buy or key reasons people buy things from you is in the gifting market. How is the gifting market, gifting demographic, different than I guess the non-gifting demographic?
Lauren: You know, I’m not sure since I haven’t had any other experience in business. I just know how our people are and I know that they’re very … I get emails all the time that are just so funny and I think they realize that they’re going to be talking to a person rather than a robot in India, not, well, you know.
Felix: It sounds like your business makes a … Your product makes a lot of sense for the gifting market, the gifting … I guess the people shopping around for gifts. How do you approach your marketing? How do you make sure that you, not to start taking advantage of that, but you are making sure that you’re positioning your business in a way that taps into this desire for people to give your product away as a gift?
Lauren: The gifting market is interesting, everything we sell is under $20. That in itself is like, we’re set up perfectly for the gifting. We have over 400 designs and they range from things that are super weird like Tom Cat Cruise is a really fun one, it’s this cat wearing a bomber jacket with a tooth in the middle of it’s face, but then we also have colleges and NFL and plain ones. Golden Gulls is one of my favorites, it’s a bunch of seagulls wearing old lady wigs. So we have a ton of humorous things that are really right for the gifting, and we kind of focus our design process around what would be a good gift. And one of ours is called Dad, there’s just a pair of underpants with hairy legs. But the marketing aspect of it is interesting.
And there is two things that I’d like to talk about with marketing, the power of being genuine and who you actually are, and also understanding the role as an entertainer. It’s 2017, everything that you do that hits the light of day is marketing. The way you dress, how you talk, what you talk about, the environment you create for yourself. It’s all about what you’re putting out there for the public to judge you on. For a lack of a better word, you’re a living and breathing marketing machine. Once you accept that, it’s not a science, it’s just being alive at this age, it takes a lot of pressure off of you and your marketing strategies. We have been able to market ourselves as a brand, and I don’t have to adjust my language or attitude or humor to fit into somebody else’s fit and guidelines, which is really wonderful. So I just go into a manic spiral and whala! It’s our brand. So if you can mold yourself into your own brand, you’ll always be on point.
And I think people really recognize what feels genuine and what feels real and if you’re just honest about who you are and pump it every day really greatly into your marketing, I think people would really appreciate it. And for us in particular, most of us are inherently silly and kind of a reverent, and we aren’t big fans of rules, and I think that struck a chord in the kind of corporate blandness. It sounds cliché but it works if you do you. But that also comes with one catch. Absolutely be yourself, it works way better than trying to … “Well, I saw this in a magazine, and I think it works for them, so I’m going to try that too.” It’s not going to feel as good. But also be yourself but please realize that marketing isn’t a cubicle job, it’s a job of an entertainer.
I know a lot of people in marketing and they think of themselves as a clerical or psychologically desk bound, but it is an entertainer’s job. You could be selling the most boring product in the world, but it’s literally your job to make it fun. I think more marketers should learn from drag queens, like RuPaul is the ultimate marketing genius. She sold men in dresses to the entire world, and she makes a fortune off of having fun, she’s a great time, but at the end of the day, she’s hard core business. And anybody needing a marketing pep talk, just go down a RuPaul spiral, we all have a lot to learn from the drag queens.
Felix: I love that. So speaking of being an entertainer, I likely suppose where you’re always entertaining, you should always be marketing, but don’t fear that pressure of “Okay I can turn it on, I can turn it off.” It should be a part of your DNA I think is what you are getting at. Now, what are some ways that Freaker USA as a company makes sure to entertain your customers or potential customers, but how do you guys entertain them?
Lauren: Let’s just go down the very, base line, basic … Say you order a Freaker off the website. You go through, you find something you like. From the minute you press “Buy”, the experience you are going to have … Or shipping confirmation is really weird. Like all our newsletter situations, like when we send you your tracking numbers, it’s really like, “Hey buttercup, how you doing? You’re looking mighty finely.” It’s just an unexpected retail experience, and when you get your package, we have very strange boxes that tell you that you smell pretty. Then you open it up and it’s all gift wrapped and each one of them comes with a personalized love note, depending on your order, you’re gonna …
There’s one that I really like, one of our love notes is, it’s a cat jumping up in the air for joy with a litter box that has a little bit of pee, shaped like a heart that says “You’re in our hearts.” And I love it so much, but I can’t imagine … Like I ordered a lot of packages off of the internet, and it’s about 70%–30%, where 70% is just going to be a product in a cardboard box. The other 30%, just a little bit of personalization or companies that make me feel a little bit special or like I’m supporting a real person and not just an Amazon warehouse. They always get my repeat business. So I’ve tried to learn from my own personal experience of what works on me. I don’t know, maybe somebody being a little outside of the box always works on me. So let’s apply that to our own business and see how we can make people feel when they get our products.
So far it’s been working. We get a lot of great feedback on, like “What are you doing? I love it but what’s happening?”
Felix: I like that. I think it’s important that when you have these chances to interact or make a first impression on your customer, you shouldn’t necessarily always follow what you see other people doing, right? Because a lot of times, you just get a plain, like you’re saying, an Amazon box, you open it up and there’s your product and that it, there’s no kind of delightfulness to getting it, there’s no delightfulness to reordering it because you expect something new, expect a new surprise, and I think that’s a great way to encourage people to continue to support what you guys are doing, so I think that is an awesome idea. What about in terms of content? Do you guys create a lot of content around the … It’s kind of funny talking about koozies because you don’t typically think of it being an entertaining thing, but what about in terms of marketing or content when you’re displaying ads or things like that, do you guys find ways to entertain through that as well?
Lauren: Oh, absolutely, yeah. After I get off of this call, I’m going to the grocery store to get a bunch of fruit and glue googly eyes on it for a photo shoot. I mean, we try to … We started this business with the idea of having fun and sustaining a lifestyle where other people that have a creative inkling can join our team and, and we’re not millionaires and we can support ourselves and the main original goal was to be happy. And I think that’s transpired and I think we have attracted a lot of people who share the basic foundational goal of, don’t be a miserable situation. I watch a lot of The Office and with Dunder Mifflin I think about a lot in this environment. I love that show so much but it’s also a good guideline on what not to provide your employees with. So obviously we have a lot of fun here.
Felix: And speaking of being authentic, I think one of the ways that is shown through the most was in I believe Zach’s appearance on, or Zachary, I’m not sure what you guys call him, on his appearance on Shark Tank. I actually do remember … I watch Shark Tank a lot, but I do remember this remember a bit and I went back to read more about it, and his personality does shine through and a lot of the investors liked him as a person, but what happened? Give us what you guys were looking for. You wanted, I think, $200 000 for 10%, I think you came in saying you had $350 000 in sales, which I think is a lot more than most people that come on Shark Tank looking for money, but what ended up happening?
Lauren: We never really wanted an investment from them anyway. We do stuff like that purely for marketing. They had actually found us through Kickstarter and they emailed us two months after our Kickstarter ended in 2011. They were like, “Hey, do you want to come on this show? We won’t make you do the actual application process, you can just do it.” We were like, “I don’t know, that contract seems really scary. I don’t know.” Then we thought about it and they called again a year later, and so we were one year into business, they wanted us on there for entertainment value. We weren’t looking for investors that sounded antithetical to what we were trying to do. But the marketing aspect of it was amazing. We were only a year in, so we over valued our company, went to them and had a great time.
And that did more for us than I think getting an investment would. We get a lot of recognition. Zach gets pulled over on the streets five years later. “You were that weird guy, weren’t you?” “Boop boop, what’s wrong with you?” “You’re great.” That’s kind of what we were going for. It doesn’t matter, don’t take yourself so seriously, you don’t need this guy that’s being mean to you in a suit to give you all his money to succeed. You’re already a success, you’re on national TV, it’s free, it’s great marketing. And you’re having fun, so that’s all that really matters.
Felix: Now we’ll talk a little bit about to running the business itself because you mentioned earlier that you guys are in 3000 boutiques and these big box retailers, how is this all managed? What happens behind the scenes? I can’t imagine you guys running around and trying to do all this craziness that you guys sounded like you started with. How do you manage all this today?
Lauren: We have an amazing team. We have a great, great, great team of … Our sales manager, he lives in New York, actually. He’s the only one that’s not in the office every day. He didn’t graduate high school, he’d been working at Radio Shack, he’d never owned a computer before he was 32. Just not who you would expect to be in high level management in a relatively successful company. But the way he can flirt with these old white women is magical. Recognizing people’s skills that are not in a traditional, on paper resume kind of skills, there’s a lot of magic to personality and just being yourself. It works, it works, they love him. We all love him, it’s great. So the fact that he didn’t know what an email was by the time he was 29 is irrelevant. He figured it out, he’s hard working, and being motivated is way more important than having a built up resume.
Nobody cares, we hire people all the time that don’t have … I barely even look at the resumes at this point, it’s all cover letters, personality, and your motivation. It’s 2017, nobody needs to have gone to college. Or your Communications Major degree or your Communications degree is almost irrelevant.
Whether or not you can have a good attitude and have a good work ethic is really all that matters and a lot of the businesses I’ve seen that are popping up that are similar to ours.
Felix: Definitely. What about the, I think you said you had over 400 designs now on the site, how do you guys manage that? Do you guys carry inventory for all 400 designs?
Lauren: We did up until two weeks ago. Inventory management is not my favorite subject in the world because it is really hard. It’s so, so hard. When we finally, after six years, we found a warehouse that has really figured out the whole system and we finally made the call and just gave it to them. So up until last month, we were housing hundreds of thousands of products in our warehouse and it was a lot. But I’m glad that we did it, I’m really happy that we had the experience and we know the basics of what’s happening in that world, like how to basically manage it, what the problems are to look for, you know, it’s just all logistics, which isn’t the fun part of anything but …
Felix: How did you guys do that transition then? Did you guys just show up and dump all these koozies at them? How did you guys move from you guys holding it to working with a third party?
Lauren: You know, I like your stories so much better than the reality that I almost want to just go with it. No, it was a lot of planning and preparation and actual logistics that we had to figure out but now that it’s done, we feel a lot more breathing room and we’re able to get back to our basics and what we started this company for, and strange video shoots and just doing what we love, having fun with it and being with our friends and making a career out of it, somehow, someway, every day. So we are back to that, so logistics is not the most exciting part, which is why I personally feel like a big burden of inventory management hell lifted off my shoulders.
Felix: Nice. So what do you guys want to focus on now? Now that you don’t have to do such a boring and complicated task. How do you want to spend your time, how does the company want to spend their time these days?
Lauren: Marketing, you know, I think we want to get back to our roots. Not that we truly left them, they just got muddled in the actual heaviness of running a business every day. It’s way more than we expected it to be, which is fine, it’s great, you know, wayward love. But now that we have a little more free time without inventory management and shipments and these worldwide logistics, I think that we’re going to do more strange initiatives. Last year, actually for the last two years, we took a band on tour in our box truck and we did some strange things. They are amazing, they’re called Harmonica Lewinski, actually the sales manager I was talking about, he’s the drummer. And so we’ll take them to some of our stores that sell well, like we have a couple surf stores that do really well, so we’ll just bring out the box truck and make grilled cheese for everybody.
Felix: So you guys still have this box truck, you guys haven’t given up this box truck, I guess you’re still using it.
Lauren: We have not given up on the box truck.
Felix: That’s funny. Yeah, thanks so much for your time Lauren. So FreakerUSA.com again is the website. Anywhere else that listeners can tune into to keep up with all the craziness going on over there?
Lauren: Yeah, bring it on, like all the social media stuff, let’s do all of it. And the box truck may be coming to a town near you, let’s break some bread. Eat some cheese.
Felix: How do they see where the box truck’s going?
Lauren: Sign up for our newsletter, it’s not boring I promise, and we have weekly giveaways from other American made companies. This is one of my favorite parts about my job is that I get to do a lot of research and find these other makers and doers and people that are making things locally and following their dreams, that I do a weekly feature on a different company every week. Yeah, it’s really great. There’s some amazing things out there that I would have never would have realized if I hadn’t started delving down this path. And a lot of people are doing a lot of things that is really encouraging. It’s a really beautiful time that we live in, if you just look at entrepreneurial trends and what not, a lot more people are breaking out of traditional mold and just doing something different and it’s working really well and I’m very proud of every body.
Felix: Awesome, so again, FreakerUSA.com, we’ll link all of the social media stuff in the show notes, and again, thank you so much for your time again Lauren.
Felix: Here’s a sneak peek of what’s in store for the next Shopify Masters episode:
Speaker: You will always have to try to make yourself redundant as an entrepreneur in whatever you are doing. So early on you … For us it was this journey, right, was three of us were doing pretty much everything and we hired someone for the kitchen or early on, just clean the floor or cut the vegetables.
Felix: Thanks for listening to Shopify Masters, the eCommerce marketing podcast for ambitious entrepreneurs. To start your store today, visit shopify.com/masters to claim your extended 30 day free trial.
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