T-Shirt Business
Decisions I Made While Building a Company
Introduction
Chapter One
I am not certain why I wanted so badly to get into the t-shirt business. Thinking back to 2002 though, it was a very intentional decision; it wasn’t a venture I just stumbled into.
I have been an entrepreneur since I was very young. My grandfather, Tom Taylor, ran many small businesses and was always “flipping” residential real estate properties. I spent my formidable adolescent years working for him in various capacities. He paid me a fair hourly wage, and supplemented the compensation with lessons on supply and demand, competition, marketing, and profitability. I learned a lot from my grandfather, and he inspired me to launch my own enterprises.
In elementary school I purchased bulk lots of sports cards and sold the collectible pieces at various hobby shops around town. In middle school I purchased a pin-back button maker and sold a variety of stock and custom designed buttons to my classmates. In high school I started a small business called Solobox with my good friend Adam Van Lente to design and host websites. This venture actually earned revenue and was the most successful of my early attempts at entrepreneurship.
The logical aspect of writing code in a specific way to construct a website appealed to my methodical nature, but the business of web development at the time was tough for a pair of young cofounders. It took a long time for us to build trust with potential customers and overcome their apprehensions about our youth. This led to long sales cycles and drawn out project timelines.
In order to alleviate any concerns a customer might have about working with teenage web developers, Adam and I had to price our web development efforts at flat rates. This capped the financial risk for the customer, but created risk for us if we improperly scoped the requirements for each project. Failing to account for a feature ahead of time, before quoting a price, would mean putting in significant extra work and could erode the profitability of an entire job.
Another operational characteristic of contract web development is that the job is never actually done; engagements stretch out over long periods of time. Customers always want to tweak verbiage, modify images, or make updates. I rapidly tired of these prolonged engagements and the precarious profitability involved with being a for-hire developer.
The process of fabricating t-shirts attracted me on a creative level and the finances tempted my entrepreneurial desire to make money with swift, discrete transactions. I loved being able to make something tangible and conspicuous from an idea relatively quickly.
In a way, a t-shirt is akin to a personal billboard. When a person chooses to wear a t-shirt, they are placing a logo, message, or idea on one of the most prominent portions of their body. I liked helping people share their personality and make statements. Perhaps this characteristic lured my immature narcissism and need to be noticed. Regardless, the concept of going from a simple idea to a wearable t-shirt was exciting to me and unlike websites, t-shirts took hours to create, not days or weeks.
At that time the economics of t-shirt printing were relatively lucrative, and the retail business model for selling t-shirts was very straight forward. I could buy a wholesale garment, adorn it with an iron-on, and sell it for a price greater than my cost. Each retail transaction was short and distinct.
As RetroDuck grew, the market changed a bit and the economics shifted, but in 2002 and 2003 when I was starting out, the financial incentives for selling t-shirts online were quite worthwhile.
I was a sophomore at Michigan State University (MSU) in August, 2002 when I began down the route that eventually led to the founding of RetroDuck.
Though I was a sophomore, I was new to the Michigan State campus. I had spent my freshman year of college at Northern Arizona University (NAU) in Flagstaff, Arizona with Adam, my high school best friend and former Solobox business partner. After our year together in Arizona, Adam decided to take some time off from school. For a variety of financial and emotional reasons I decided not to return to Arizona. I transferred to MSU where I could be nearer to a girl I liked, and closer to my family.
Since I was an underclassman and a new student at MSU, I was required to live in a dorm for two semesters. I wasn’t thrilled with this situation at the time. Many of my peers who were also in their second year of college were living off campus. I couldn’t afford to get my own personal dorm room (“a single”), so the university assigned me to share a room in Mary Mayo Hall and paired me with a freshman guy who I had never previously met.
I was attending college on an Air Force ROTC scholarship. If I wore an Air Force uniform once a week, attended Air Force classes, and earned good grades my tuition and books were covered by the military. The Air Force also paid me a monthly cash stipend of $250. The tradeoff for these benefits was that I would owe the Air Force four years of service after I graduated. I did not know it at the time, but making this commitment would eventually loom heavily over my entrepreneurial pursuits.
Being new to the MSU campus, I didn’t initially have a lot of friends. When I wasn’t pursuing the girl I liked, I was usually alone. In the early months of that fall semester I spent a lot of time solitarily sitting in front of my computer. To pass the hours and stay busy I would often engage in retail therapy, browsing around eBay looking for interesting things to buy. My $250 per month living allowance from the Air Force didn’t go far on eBay, and in August and September of 2002 I began to rack up modest credit card debt. I knew I shouldn’t be buying random items on eBay, but I continued to do so anyway.
It was during one of these ill advised eBay shopping sessions that I first came across a Magnum P.I. t-shirt iron-on. An iron-on is simply an ink design printed backwards on a sheet of slick transfer paper. When the iron-on is placed on a garment with the ink side down and heat is applied against the transfer paper, the design permanently adheres the the garment.
The Magnum P.I. iron-on I found on eBay that day was of a heavily mustached Tom Selleck posing with his iconic red Ferrari and a black handgun. It occurs to me now that the Magnum P.I. aspect of the design probably called to me on an emotional level. I had grown up watching Magnum P.I. and loved the storyline of the series.
A sketch of the Magnum P.I. iron-on design I purchased on eBay in August of 2002. The actual iron-on was full color and photo quality.
Thomas Magnum was a private investigator who drove a sports car (albeit borrowed), hung out with two incredibly loyal longtime friends (T.C. and Rick), and spent a lot of time with beautiful women. As a broke college student in August of 2002, I had no car, was living with a bunch of unfamiliar younger students, and was generally feeling lonely. The fortunes of Mangum’s TV character were the antithesis of my own. He was well liked and always undertaking exciting adventures. I was the unpopular new guy, meandering through a rather uneventful daily regimen.
I placed a bid on the eBay auction and hoped I might garner some of Magnum’s machismo.
Retrospective
Speed to Satisfaction
My nineteen-year-old self found the retail business model for selling t-shirts very enticing because engagement with each customer occurred as very distinct transactions. The customer bought a shirt, or shirts, and the deal was done. In some cases a customer would return or exchange an item, but that was rare and was an expected implication of selling goods online.
I characterize this type of traditional retail transaction as having a fast speed to satisfaction loop. It didn’t take me long to feel good about making a customer happy. Creating websites has a very long speed to satisfaction timeline. Contract web design requires a lot of iteration to get to an end product that a customer will love.
A benefit of being a bit older and wiser now is that I know my psyche is most fulfilled in situations where the speed to satisfaction is rapid. I like to make people happy, and then move on. I love when the same people return for another transaction, but I do not enjoy the lingering commitment of unfinished work.
The words of Apu Nahasapeemapetilon, the convenience store owner from the Simpsons TV series, best capture my sentiment about doing business with people: “thank you, come again.” As I daydreamed about starting RetroDuck, I hoped to figuratively utter this phrase many times each day, to many different customers.
Depression as a Catalyst
In a 2009 journal article titled “The bright side of being blue: Depression as an adaptation for analyzing complex problems”, Paul Andrews and Anderson Thompson Jr argue that depression is an evolutionary adaptation that forces humans to ruminate on challenging obstacles. This theory suggests that depression drives seclusion which provides time to dwell on complex problems. Depression is painful and leads to focused, almost obsessive, thinking that can eventually spur action.
I really like this model for considering depression. Looking back on the fall of 2002, I see now that I was very depressed. The root cause of my problems was that I was broke. I couldn’t afford to go back to Arizona for college. I couldn’t afford to get my own dorm room. My high school business hadn’t made me wealthy. I was downtrodden about being penniless, and began to seclude myself from the outside world.
The isolation of this depressive episode drove me to spend time browsing eBay and daydreaming. It was in the midst of this muse that I stumbled onto the Magnum P.I. iron-on and got motivated to launch a company.
Debt Perspective
I never feared debt when I was young. My bank offered me a credit card on my eighteenth birthday, and I gladly accepted. I saw debt as a way to achieve immediate gratification. Rather than save for a large purchase like a car stereo or new clothing, I would charge the purchase now and make payments later.
I was not reckless. I grew up in a small Michigan town where traditional Midwestern sensibilities about commitment and reliability were omnipresent at home, in school, and around the community. I steadfastly believed in paying my debts on time and in full, and still do today. I have never made a late credit card payment, and I have never walked away from a financial obligation. I have however, always been willing to promiscuously flirt with indebtedness.
My tolerance of debt has been a double edged sword in my life. I have never been hesitant to leverage credit to pursue a “good” idea. Some of these ideas, like RetroDuck, have thrived and coherently paid back their seed capital. When my zeal has not yielded profitability though, I have ended up servicing some heavy debt loads.
My attitude toward debt guided many decisions at RetroDuck, and this is a theme that I will revisit throughout this book.
Risk Tolerance
College is a great time to start a business. Even with a full course load and involvement in Air Force ROTC I still had a significant amount of downtime during each semester. I used some of this spare time to explore my entrepreneurial dreams. I still took naps, worked out, partied, and played video games, but I deliberately carved out time each day to daydream, plan, and eventually execute on my business ambitions.
As a college sophomore, my lifestyle could tolerate precarious financial risks. As long as I didn’t do something really stupid and get kicked out of school or lose my scholarship, I could stomach exposure to financial dangers. In general, it is easier to take big risks on a startup idea when you have relatively few obligations and possess significant control over your time.
Today I have three cute daughters, a wonderful wife, a job, and a healthy mortgage. My immediate family members are significant stakeholders in every decision I make; they depend on my contributions for food and shelter. At this point in my life taking a big risk and failing could negatively impact the people I love. I still make some financials gambles, but they involve less potential exposure to the dangers of insolvency.
I didn’t have a lot of responsibilities in late 2002. Had RetroDuck failed miserably in the early years, I could have scraped by in college eating ramen noodles and drinking cheap beer. A lot of college students in the U.S. survive on ramen noodles and cheap beer. As long I didn’t upset the administration at MSU and the local Air Force cadre who held authority over my academic status, I didn’t have far to fall.
Stay tuned! Chapter Two will be published exclusively to Steemit on Thursday, June 8, 2017.