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Growing a Niche Product into an 8 Figure Business

A man is growing a niche product into an 8-figure business.

Life and business partners Colby and McKenzie Bauer are bringing functional and expressively minimalist accessories to market with Thread Wallets. Injecting creative designs into the sleepy category, the Bauers built the business out of their home and grew it into an 8 figure business. In this episode of Shopify Masters, we chat with Colby on the importance of hiring, rebounding from failures, and word of mouth.

For the full transcript of this episode, click here.

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Show Notes

Validating a minimum viable product with Kickstarter

Felix: Tell us more about the genesis of the business, how did it all begin?

Colby: In 2014, I was at school at BYU Hawaii and I was taking a class where they had an event, it was a Saturday, all day. Two guys flew in from Utah and they said that the name of the conference was to ideate and launch a Kickstarter campaign within 24 hours. That piqued my interest because I was very entrepreneurial. I took nothing but entrepreneurship classes. I went to this conference and I noticed that these products that they were talking about within the conference, they were just saying that you don't need to have it all nailed down. It doesn't need to be perfect, you just need to get it out there.

Their mentality was just to get the ball rolling. They used a lot of examples of smaller products like wallets that had performed really well. Simultaneously, I had lost my wallet to the ocean so I went online to find a wallet and I couldn't find anything. I was actually using a rubber band at the time. I fell in love with the rubber band that I was using, but I realized I could make it a little bit more functional and secure.

I was sitting in the conference thinking about the wallet I was using. I loved minimalism and then I also loved lifestyle brands like Vans, Stance, and Brixton. Those brands that spoke to me within the action sports world. I realized that It was kind of an afterthought, that the category was really dying. There wasn't much innovation. So I realized maybe there's an opportunity I could take hold of the wallet category, get my foot in the door, then start to broaden the product line later, and basically starting out with a very, very basic wallet.

In fact, I was kind of embarrassed by it. I went to a local fabric store and it was just a white piece of elastic I bought and I went over to my girlfriend's house. She had an old sewing machine and she sewed up a wallet. Basically, it was just an elastic loop, a better rubber band of sorts, and I loved it. It was just a little bit wider, more secure but I was thinking, but I don't like the white. I want a print on it.

So I found this company out of Utah, which I had just moved back to Utah for school. I bought some more of that white fabric from the fabric store, walked into this company and I asked him if I could try printing on this elastic. One of the guys there was standing at the heat press that you print on and I said, “Hey, do you mind if I try printing on this.” And he said, “No, let's do it.”

I said, “Well, dude, I have no idea how this is going to go down. This could melt and break your machine. I have no idea.” And he's like, “Let's just do it.” And I was like, “I freaking love you, dude.” So he grabbed one of the prints from his slot. He was printing on socks at the time and so the print was a poop emoji, just like a repeating pattern of poop emojis.

And he put it on the elastic, we heat pressed it and waited there for 40 seconds wondering what was going to happen, and opened up the heat press to find out that it wasn't melted all over the machine and the print was just perfect. I was so, so excited. That was the vision I wanted to accomplish. The doors swung open. I saw this massive opportunity because now I knew I could print any color, any photo, anything I wanted onto this elastic and then we could actually launch a Kickstarter campaign. That was where the idea of Thread came about, then we launched a Kickstarter campaign, and the rest is history.

A colorful Thread Wallet on the backdrop of fresh flowers.
Mixing function with slim and expressive designs into wallets allowed Thread Wallets to stand out in the market. Thread Wallets 

Felix: Give us an idea of the timeline. Between the conference and the first prototype, how much time had passed? 

Colby: The conference was around November of 2014. I nailed down the product that I wanted to launch on Kickstarter in January of 2015, and we launched the campaign in March of 2015.

Felix: What was the goal and idea behind launching the Kickstarter campaign? 

Colby: First, validation was key. I liked the idea of a minimum viable product and that was preached time and time again at school. You have to just have the bare bones of your product and then let it grow. I love that idea, but the problem with validation is you can get false validation because most of the time you're asking friends and family if the idea is good. Most of the time those friends and family are going to say, “Yeah, it's a good idea,” and you just take their word for it.

What Kickstarter allowed was for random people to be exposed to this idea and then they have an opportunity to put money down on the product if they like it. So then validation becomes true and you can rely on that. For us, it wasn't about hitting a home run, raising hundreds of thousands of dollars. It was more about getting the product idea validated enough to get the ball rolling. And that was my approach. Not to hit a home run, but just to get on first base, then we'll work to second base, and third base, and so on.

Felix: How do you know when it’s time to put your product in front of a market for validation? 

Colby: I didn't realize what we had until we went to farmers’ markets. We were out in Hawaii, the year later. This is 2014 still. We had made a few wallets and we decided to take some of this product to a farmer's market. I didn't realize because like I said, it was the simplest product. I was really embarrassed by how simple it was. I was like, “Anybody could do this. Why would anybody buy it? Let alone for $15.”

When I took them to the farmers market, I got to see this face-to-face feedback that was priceless and can't be really replicated online. There’s a dialogue around the product and then there's also facial expressions and conversation around, “Oh, I could buy this for a friend or oh, so and so would love that style.” Then you get to see the buying behavior. To me, that's when you really can see if the product will actually sell.

It may be different for others, but for us, it was that face-to-face at the farmers market. That could be at a trade show or some convention or some pop-up shop that you run or whatever. But ultimately, there's so much value around that in-person interaction with a product that you can't really replace.

Felix: So you’re saying in these face-to-face interactions there’s this validation for the viability of the business, but there’s also this validation that gives you that internal belief to keep going.

Colby: Early on, that's what entrepreneurs need especially in the circumstance I was faced with. I was newly married and I was about to graduate college. It was a fork in the road for me because when I talked to my father-in-law, asking to marry his daughter, he said, “You have to take care of her or else I'll kill you.” And I believed it.

He's kind of joking, but at the same time, I felt the weight of that. He was from a very “A plus B equals C” mentality when it came to his career. That put a lot of pressure on me to really consider going down that route, which I had an opportunity to work at my dad's financial planning firm. He set it up so that I could one day take it over. So that was very enticing. In fact, I went down that road for a little bit. I had done a few summer internships and I realized that I needed that time to go down that road to realize that's not what I wanted to do.

“Oftentimes you need a bad experience to be able to check that off the list so that you can confidently go down a different route.”

Oftentimes you need a bad experience to be able to check that off the list so that you can confidently go down a different route. But I needed that like you're saying Felix with just the motivation, the energy to know that I was landing on something. I needed that confidence to pursue Thread because otherwise I probably would be in a corporate job right now.

Early on especially entrepreneurs need energy. They just need people to believe in them first because that leap is so scary. Like I said, especially when I was newly married and trying to establish a family. If you can surround yourself with people, maybe people you don't know or people you do know that is going to help motivate you and get through those scary times. That's what I would recommend.

Felix: Did you have other moments along the way that encouraged you and gave you that energy and belief in yourself to continue growing the business? 

Colby: 2020 has been a crazy one, as you know. But besides 2020, there are ebbs and flows of business, no doubt. One of the best pieces of advice I had was a strong business owner won't let the pendulum swing too far one way or the other. When you're succeeding and you're doing really well, you can still keep an even keel. You can still be level headed. You celebrate, but you don't get too high because it potentially can come swinging the other way.

So when it does swing the other way, you can emotionally be stable and not let yourself get too down. Because if you're swinging too far on both sides, that's when it really starts to shake and your mental health can suffer, and then therefore the business can suffer. So keeping this pendulum under control and what I would also consider a “shallow rock bottom” which is basically when things start to fail if you run into failures that you're bouncing back, you're rebounding from those failures as quickly as possible.

You're not going too deep and letting yourself get too dark, because fear can paralyze you. You're trying to learn from your mistakes as quickly as possible and bounce right back up. That was the best piece of advice during times like this. And to answer your question, as the ball has gotten rolling, I don't think I ever questioned that the ball would stop rolling. I always felt confident that it would keep going, but there are pivots along the way.

And just like anyone knows, success isn't just an A to B, it's usually A, B, C, D. It's back and forth. It's a zigzag. So being able to adapt and evolve and pivot, and pivot in the right ways is the most crucial part of entrepreneurship because ultimately every business is going to be faced with difficulty. That’s the best characteristic you can have. The ability to adapt.

“A strong business owner won't let the pendulum swing too far one way or the other.”

Felix: You mentioned a “shallow rock bottom.” What have you learned about setting it up so that you can rebound from these failures along the way, without getting bogged down in the setbacks?

Colby: I'm going to answer in maybe a different way. My mom has suffered from alcoholism my whole life. I've seen her go down this very deep rock bottom. In fact, I don't know where rock bottom is. It just keeps going down and from the outside perspective, the answer can seem very clear. When you're going downward, it's scary and it's hard to see clearly.

What I would recommend is surrounding yourself with people who can see clearly when you're not and that means really hiring the people that can see differently or see it from a different angle. That is so crucial. Hiring your weaknesses is number one. I rely very heavily on our executive team to help me see things from a different angle and to speak with candor when they do and not to be afraid. I'll be able to swallow whatever their opinion is. I want to hear it. I need to hear that, in order to make the wisest decision.

Oftentimes we're scared of hearing the truth. Maybe we're too prideful to hear it or just scared or whatnot. But ultimately we've tried to create a culture where candor is at the forefront so that nobody is going to feel offended if they hear somebody's opinion that's very contradicting. It’s not going to explore where it's going to cause contention. Then on the flip side that people are also comfortable sharing the truth or sharing their opinion and seeing it from their angle.

Ultimately, we rely on every angle. Our finance guy, he's going to see it from a finance angle that I have seen or that our creative officer wouldn't be able to see or that our marketing or operations. They all see it from different angles. When we can come together and see this problem or potential failure. if we can see that from all different angles, we can avoid it. That way, we can acknowledge, okay, we're going down the wrong path. That to me is a shallow rock bottom. Being able to realize you're going down a dark hole before it's too late before it's actually too dark to feel any hope of getting out.

Adaptability: your greatest asset as an entrepreneur 

Felix: There are some people out there who might not have a team yet, but are surrounded by friends and family who have opinions and advice on how to run a business. Do you have any recommendations for those people, on how to filter that feedback? 

Colby: That one's tough because I try to be humble and really try to sit on their side of the table. Our world, especially with politics, not to get political, could use more of that. It doesn't mean you have to agree or believe the same way at all. In fact, you'll probably walk away being maybe more convinced of your opinion. But ultimately we need to hear each other out. That approach to business is you ask questions all the time and you ask them to everyone.

It doesn't matter if they're an executive, if they're even in your company or if they're just customer service rep or whatever. You ask questions and really listen. And try to sit on their side of the table because they might say something that you didn't think of. But ultimately, if they don't and it doesn't feel right, that gut check is okay, but at least you try to see it from that angle.

Then that might open up something else. I don't know the answer Felix, to the question of when to filter what’s right and what’s wrong. . Sometimes it's not as black and white. Sometimes it's not just one is right, one is wrong or one is good, one is great. Sometimes they're maybe equal and they're just different. It’s really hard, but I've trusted my gut along the way. I don't know. It’s a feeling thing sometimes and obviously, the heart and the mind can work together.

When the heart and the mind can align, that's when it feels right. I usually don't move forward if it's just the heart, or gut in this case. If I'm feeling, “Oh, that's the right way,” I don't make a decision based on that. I use that to then collect more information so that then my mind can click with that as well and then vice versa. Maybe the mind is saying one thing, but then it doesn't feel right. I wait until both the mind and the heart are really on the same page and then I can feel confident in it.

A model displaying a leopard print bag by Thread Wallets against a white wall.
Understanding customer feedback to adapting their business was key for Colby and McKenzie Bauer. Thread Wallets

Felix: When collecting all this product feedback, either in person or through the Kickstarter, was there anything you encountered that prompted you to change the direction of the product? 

Colby: Definitely. In fact, I'm reading a book, “Delivering Happiness” by Tony Hsieh. He's the founder of Zappos. Before they really started focusing on customer service being their core competency, they were focusing on offering the right shoes and whatnot. But until a customer said, “I got my shoes. I was expecting them to be here in five days. They got here in two. Best customer service ever. You guys should start an airline.” Until that customer said that, Tony wasn't really thinking that Zappos' core competency was customer service.

That comment from a customer really changed the route of their business. For us, it was more of a sense of marketing because I thought this was a guy wallet. When I first started this, I did not think women wanted a minimalist wallet. I was just thinking, guys carry their wallets in their pocket, girls carry it in their purse or a big clutch and they need to carry a lot more. I was thinking, “Oh, this is a front pocket wallet. This is nice and minimalist.” Ultimately, we noticed that girls, because of the style and the print and then also it was kind of an alternative to carrying a purse around, so they would attach it to their lanyard or whatnot, that's when we realized, “Oh, maybe our audience is more female.”

We started changing our marketing a bit and I'm so happy we did because females buy way more than males. Now, our audience is 80% female, 20% male. I couldn't be happier with that. We still offer things to guys, but that definitely changed based on the customer's reaction. We changed our marketing. Another part of that was the product itself. We had a key ring on our wallet, but we didn't offer a lanyard at the time. So we would see all these girls carrying around their wallets on these lanyards, but there was usually a lanyard that they got at some convention for free.

It was just some dinky lanyard. We realized those lanyards are functional. There may not be this huge fashion statement but they're functional. People are using them. Let's make them match our wallet. Let's give them something a little bit more quality. Use leather, use better hardware, and give them something cute. And that product was born from the customer telling us that's how they were using it. And the same goes for our Chapstick holder as well. I think you have to listen very carefully to what your customer is wanting and then adapt.

“You have to listen very carefully to what your customer is wanting and then adapt.”

Felix: You mentioned one goal was to bring innovation to the wallet category. How much awareness did the target market have when you presented the product? 

Colby: One of the brands that were up and rising was at the time, 2014, was Stance socks. I remember listening to the story of Jeff Curl when he was coming up with Stance and he walked the halls of Target just looking for a category that was sleepy and that could just use some life. He went through beauty, he went through all these different categories, and then he came to the wall of socks, which was all he saw was just a sea of white on the wall.

I don't think he needed the customer right then and there in Target to say, “We want expressive socks. Give it to us now.” He internally saw, “Why in the world aren't we creating really cool socks?” And then he sought validation in that from customers. The same goes for me. I started to explore different categories and the wallet fell into my lap and I realized, whether or not I ever heard the words, “We want a slim, minimalist, expressive wallet,” that the wallet category as I scrolled through Google was the same black or brown bifold that had been around since the '80s, the George Castanza wallet.

It needed some innovation. It needed some life pumped into it. So that's all I needed in order to really start down that road and then it became clear as we started to get the wallet actually in people's hands to fill that validation.

Felix: Are there other companies you see doing well in 2020, that are capitalizing on sleepy categories by breathing more color and life into them?

Colby: Yes. If anything, 2020 has opened the doors for entrepreneurs and creatives. Shopify was really placed at the perfect spot to get their idea off the ground easily. A lot of times people ask me, is this a good idea or will you help me come up with an idea? I've realized that you don't have to reinvent the wheel at all. In fact, a lot of times the product that you're thinking of, even though it might exist already, a lot of times people go, “Oh, yeah. But somebody is already doing that.”

It's like, “No, that actually could be good. The fact that they're doing it, and it's succeeding actually means that there's something there.” Maybe you do a different twist on it. Maybe you change it up a bit. For us, that was putting art on wallets, say for instance protein powder or something that there are a million proteins out there. Maybe that means you're targeting a different demographic at a different price point.

Maybe that's cyclists or hunters or whatever it is. You don't have to reinvent the wheel per se, but maybe you just take that wheel and you target it to a different audience or you change the price point. Maybe it's a different business model. There's plenty of companies out there on the market now and you've seen them in the last five years just sprout up like crazy.

It's so smart to just focus on one category and find that niche because you can succeed in just a niche these days, due to ecommerce. Whereas, I open a brick-and-mortar, say, for instance, wallets. I'm not going to fill a whole store with wallets. That just doesn't make sense. But now that I can sell them online and the whole world is my audience, it makes sense. So now we can pick smaller niches and we can get more granular and we can get more fun, more expressive or whatever the core competency is. 

“Just focus on one category and find that niche because you can succeed in just a niche these days, due to ecommerce.”

Felix: When you look at the website there are tons of designs, how many different designs did you originally launch with? 

Colby: It's tricky. To this day it's hard to know how many designs is optimal. Early on, because it was our only silhouette, we started out with 36 designs. Due to the way it's produced, we didn't have minimums from China. We didn't have to order 100 of each style. We actually raised enough money in that Kickstarter campaign to buy the printer, then we could do one-offs. We could make 10 of one style or 20. But the minimum didn't matter. So that allowed us to explore what our customer wants.

We threw a lot at the wall. We threw out 36 designs and just saw what people gravitated towards. From that, it slimmed down. We got to see, “Okay, this is our demographic.” These are the colors or styles they want. Then we've introduced lanyards and Chapstick holders and bags and things. We've had to even slim it down further because when there are too many options, you get paralyzed, you can't make decisions- the decision paralysis.

So we've had to keep slimming down and trying to find that optimum amount. But it's also smart if you can throw a lot at the wall in the early stages and just see what sticks and let your customer talk to you.

Felix: What about these days? How nimble can you be with the product designs before getting the inventory?

Colby: We do have minimums. We're produced in Vietnam and China and so yes, there are minimums. I'd say the majority of businesses are going to fall in the boat of having minimums. So you might not have the luxury of just throwing a ton at the wall in terms of style. I would say get a few different samples before you make a production run and get that face-to-face feedback around focus groups. Do what you can to feel more confident before you pull the trigger on maybe a $20,000 order from your factory.

I don't really know the answer just because I only know from my experience. We had an opportunity to test a lot and we didn't have to hit the minimum. But the principle still applies: throw a lot at the wall and that might mean different product categories in general. That might mean different demographics, target demographics. So you might talk with one focus group that's more into dancing and the other one is more into soccer. And you just get feedback and maybe for some reason a demographic is more attracted to your product.

I wouldn't give up too early. You don't want to give up on something that all you have to do is change the price point by a dollar and all of a sudden, it works. There’s a lot of tweaking going on in the early stages, and even now, we're constantly doing that. It's constant optimizing and refining. You just have to listen. You have to have your ears perked, for sure.

Why price point is crucial to word of mouth marketing

Felix: This product seems ripe for repeat purchases, do you have a lot of repeat purchasers coming to your store?

Colby: Currently our goal is a 30% return rate. It's currently 25%. 30% is good for us because we're acquiring so many new customers that we wouldn't want it to be all returning. So we found a good balance actually having 70% new customers and then 30% returning. That might be different for each business. But there are quite a few returning customers and a lot of it comes from the price point. It’s low enough that you can buy multiple. It's also the price point that fits for a gift purchase.

There’s a lot of gifting with our product. It really does lend itself to a repeat buy. Right now, if I was to start a new business, I would try to come up with an idea that lent itself to the word of mouth marketing. Because currently, we're so reliant on Facebook and Instagram ads to drive the traffic to our site that I envy the people like Purple Mattress or Peloton bikes, that word of mouth marketing is the bulk of their traffic.

I would try to come up with a product that I know people are going to talk about and recommend. When you can get that, the flood of traffic that is organic and then repeat purchases is high.

A phone case wallet attachment from Thread Wallets.
Having the validation from customers and applicable pricing allowed Thread Wallets to scale. Thread Wallets

Felix: Is there something about a product that you can identify that makes word-of-mouth native to the product? That makes it a product people want to talk about? 

Colby: I've been thinking a lot about that. In fact, I've just been asking people what are products that you talk about? And I've been trying to see and really make note of products people talk about. Usually, I would say they're a higher price point, unfortunately. That's not ideal. And the reason people feel the need to talk about those high price point items is because they need to justify their purchase. Whether or not if they're justifying it in the right way or not, they're needing to justify the purchase.

Felix: They need someone almost to agree that they made a wise purchase.

Colby: Exactly. “Cool. You made a good purchase there, dude. You're good.” Okay, thanks. Tesla is one that's just high word of mouth because it's a status symbol. If it's brand-related and they pin it as a status symbol then those people talk about those because people are prideful by nature and they want people to know them, notice them. Those things commonly get talked about. I think within certain demographics, things get talked about.

So for instance, moms when they're pregnant or they just have a baby, literally, the only thing they talk about is that. I just know because I have two little girls. When my wife is pregnant, I know that the girls are going to huddle and they're going to talk about birth and babies and things. It's not a hit to them, it's common because that's an important thing going on in their life and they want to pull together a community, right?

Sometimes, it's hard. Sometimes pregnancy is really hard and you just need help. So anyway, you're talking about products that help, right?, “Okay, my baby is not sleeping. What products do you know that will help?” The SNOO is this bed that helps get your baby to sleep and it's magic. And my wife talks about it non-stop.

It's when things can bring value to you or to someone you love, then it's an automatic word of mouth. It's going to happen in conversation. That's one for babies. I skateboard. There are things that we talk about in skateboarding, “Oh, hollow trucks, they're lighter.” So you need to get hollow trucks. That's just a given now. To me, in each industry, there's going to be different products that people talk about and the different reasons why they talk about it. But to be able to put yourself in a situation of, “Would I talk about that? If I received that, would I want my friends to know and why?” And then once you pinpoint that, then I think you got something.

Felix: When you’re getting ready to go to market with a design-focused product, and you’re collecting all that feedback, what do those conversations look like? 

Colby: Yes, the process is twofold. You have to segment both art and science. So the art is the style, the graphic that's on the product. The science is what makes up that product. The silhouette itself. If you removed art, is this product a good product? Is it functional? Does it serve the purpose that people are wanting? You have to ask two separate questions.

“You have to segment both art and science. The art is the style, the graphic that's on the product. The science is what makes up that product.”

Early stages, you're gaining first validation on the product itself. Set art aside and you're just asking, okay, does this work and who does it work for? Once you can nail down the who, then the art becomes a little bit more clear, so then you can start to validate that. Maybe you land on, “Okay, this works for, again, hunters, surfers, and gym-goers.”

Now you throw a camo on it, you throw a hunting orange on it and you ask hunters, “Okay, is this something you would use, and do you like the style?” Then you ask the surfer the same thing with the surf styles and then go down the line. Then you start to get a feel for, “Oh, okay. This product works really well for the gym-goer because…” Fill in the blank. They want their hands free when they're working out, whatever it is. You fill in the blank there and then you go, “Okay, that works really strong as the silhouette. Now, what styles do the gym-goers want?”

They probably want something that looks somewhat performance-driven or something that you'd see on a Nike shoe, right? And then you can now validate the art. You have to ask different questions for both the silhouette, the product, and then you also have to ask about the art and get validation on both. When you marry art and science, it gets tricky, but it's fun. It's honestly my favorite thing is the art side of things.

Felix: How does the strategy change between marketing towards acquiring new customers, and marketing for encouraging repeat purchases? 

Colby: It's pretty much the same marketing. You just start to tweak it and optimize more. As an example, we focus internally on email and SMS for our repeat. Those are our biggest sources of owned marketing channels that we can get them to repurchase. We’re limited, right? We have to get people in this funnel first in order to be able to utilize those channels. So to acquire customers, we're looking at ads very heavily on Facebook and Instagram ads that drive people into this funnel and then we can follow up with email and SMS and become more reliant on those.

I don’t try to get too wide in the tactics or add more bells and whistles. Every year, there are so many different new marketing approaches, right? Offline marketing or otherwise. You can constantly be adding to this engine but ultimately, it might not be about adding more to the engine, it might just be about tweaking the engine and refining it and making sure it's efficient.

Our approach right now is really just optimized. Let's look at the email. How can we optimize our email flows? How many campaigns do we send out a week? Who are we sending them out to? How can we segment those people out? Same with SMS. And the list goes on and on about optimizing. Currently, I don't think that we need more. We need to go deeper into what's existing. Oftentimes it's just so hard to say no when someone goes, “Okay. Here's this new tactic of marketing. Here's the ROI that we got.” It's really hard to say no to adding more, but I think you're actually better off if you just keep with what you know and what works and just go deeper into it.

Depth versus breadth: why you don’t need to market on every platform

Felix: What tips do you have to help someone focus on what’s already in front of them, rather than the next shiny thing? 

Colby: Your approach to business. I always look at it as you're building somewhat of a vehicle. Now, you have to build the vehicle, but you also have to know where you're going with that vehicle. That’s number one. Why am I building this vehicle is the most important question you can ask yourself. Once you have that, then everything can be built around that. But I would say, that the first vehicle you're building is probably a bike. You're not building a car at this point, you just need a simple engine. You need a chain, wheels, handlebar. You just need the basics.

A lot of times that's dependent. What the “basics” are is dependent on the product and who you're targeting. For example, we had Instagram in 2015 when it was really getting going and influencer marketing was strong. We saw that opportunity and we knew, okay, instead of going into Twitter and Pinterest and Facebook and Instagram let's just go as hard as we can in one of them.

We don't need to add more. So let's just focus on one and go really hard at it. If that was to fail for whatever reason, then we have a shallow rock bottom when you go, “Okay, cool. Instagram didn't work.” So you want to give it enough legs, enough to find that out, but you don't want to go too deep down that road and go, “Oh, crap. We spent too many resources here.” Let's back it up.

Have a shallow rock bottom. Maybe it wasn't Instagram. Maybe it was Pinterest. Let's go test Pinterest. Luckily, we landed on Instagram working. So once we found out, okay, influencer marketing, we want to test that. Now, it's our approach to influencer marketing. How do we leverage influencer marketing? Because right at the beginning, nobody really knew influencer marketing.

Influencers were charging everything from $100,000 to $200 and it was like why? Nobody could understand that, right? So we took the approach. Our strategy there was let's not have any strings attached. We're not contracting anything. We're just going to send them products. So we just said, “Hey, we'd love to send you products, love what you're doing, love your feed. Do you have a shipping address we can send to?” We'd send them a product. And if they posted, awesome. If they didn't, awesome, whatever. And that was our approach to it.

We just doubled down on that really hard because then we started to see these organic posts and these posts were not sponsored, right? These people just love the product and they were speaking authentically. So anyway, we started to see that and we went deeper on that. And the same goes for every single tactic. I don't think you need to go too wide. I mean, to understand what it takes to build a bike, relying on other people so other people have done it before you.

And usually, you find those people on podcasts. I listen to podcasts. Early days of Thread, I'd probably wake up at 4:30 or 5:00 and just start listening to podcasts and reading articles and Shopify Masters being one of them. I tried to absorb all this information to know, “Okay, what do I need to build this bike? Even though it was a simple engine, I just needed to see it from all different angles.” Then I realized, “Okay, cool.” The bare bones of our business are A, B, C, D and that was it? That's all I needed. It differs for every industry, product, customer base, you name it. But simplicity wins the day 10 out of 10.

A model standing before the ocean with a lanyard wallet from Thread Wallet.
Moving beyond wallets, Thread Wallets is taking on all products that you can carry. Thread Wallets

Felix: You mentioned recently you started expanding to other products. How did you know it was time to expand the product line? 

Colby: Early on I wanted to launch backpacks. And I asked my mentor. It was the second year of business and I said, “Should I do that? Should I not do it?” He's said, “You'll know when you should do that.” I said, “How?” He's like, “You'll just know. You'll feel it. You'll feel that it's the right timing.” I've been holding on to that day of when do we launch backpacks because that's my vision. It's all things carry.

I haven't felt that yet and I'm still waiting and I just realized the further down this road we've gotten, I realized I'm so glad I didn't get into that for so many different reasons be it margin or cost of goods, you name it. I'm just glad I listened to my gut there. When you're thinking of an idea, you should have a grander vision of what it can turn into. Reading an article recently about some of the direct to consumer native brands that have hit over 100 million, all of them had, if not maybe the mass majority of them, were surrounded by a small category that had an opportunity to grow into a broader category.

“When you're thinking of an idea, you should have a grander vision of what it can turn into.”

That’s part of the vision that you need to have. Is this road that I'm going down, can it grow into something bigger? Maybe I'm wrong here, but when they were doing shoes, Nike probably had an idea that this could turn into more than just shoes. But they strategically chose shoes from the very beginning. They got quite literally their foot in the door with shoes and then they could expand that later.

So to answer your question, Felix, from day one, I knew that wallets were just our foot and door. It was a category that needed some innovation and I knew I could bring that, but the bigger vision was: that was just a way I can get on the shelf and then later on, once we could build the brand and the audience size, then we could turn it into something bigger. So starting with the end in mind is extremely important and then having a plan of your steps to that end goal is also important.

Felix: You mentioned it’s been a year of learning and change. What do you think has been the biggest lesson that you or the business has learned that has changed the way you do things as a business?

Colby: The number one characteristic amongst all of our employees has been humility. It's in one of our core values. When I'm hiring, that's probably the number one characteristic I look at and ask questions around that to get a feel. Is this person stuck in their ways or are they able to evolve. Are they able to listen to others and not be contentious and all that? To me, the result of being humble and having a team that's humble has resulted in our success.

I don't think we would have gotten to where we are without humility. So that's become more and more apparent through times like COVID where humility is so crucial. Again, going back to this pendulum, you can't swing too far one way or the other. You can't get too down. You can't get too prideful. So being able to be in control there, it just goes to show that making decisions out of humility and being more conservative actually could pay off in the long term.

To give you an example, it could be very enticing for me as the founder to go and raise a bunch of money, right? A number of companies within Utah are doing it and that's kind of almost like a stamp of success “We raised X amount of dollars.” To me, I don't care about that and my personal approach is I don't really care about social media. I don't care about being the face of the brand at all. That lends itself to being more conservative so that now when COVID hit, we're not reliant. We're not in debt. We're not having to report to a number of investors.

I can now make decisions not based out of that stress. We can be in control of our own destiny and we're profitable. That all goes along with having the end in mind because, for Thread, the end for us is building a legacy brand. Something that will last a hundred years that can promote good, that can promote education, and it's not about a quick dollar. It's not about flipping a business within a few years and selling out for millions and then watching it die.

We want to build something great. And having that in mind helps you make solid sound decisions that are built for long-term success. And humility is so attached to that because as you're finding success, it only gets more and more tricky to say no to investors that want to give you money and the list goes on of just being the face of the brand and whatnot. Humility is one that I've learned over the past, I wouldn't say just a year, but just years of running a business is so crucial to our success.

Special thanks to our friends at Shopify for their insights on this topic.
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