Ricardo and Marina Larroudé cofounded their namesake footwear brand, Larroudé, in 2020. Just six years later, the New York–based company brings in nine figures in revenue.
Larroudé earned a reputation for high-quality products made on a direct-to-demand model to reduce waste. Behind the scenes, Ricardo and Marina invested in vertical integration. The Larroudés, both of whom are Brazilian, opened their own shoe factory in Brazil in 2023.
We sat down with Ricardo to learn more about his strategies for driving revenue, the lessons he’s learned as an entrepreneur, and the challenges Larroudé faced on its path to success.
Table of contents
- Did you start Larroudé with a formal business plan? How granular or high-level is your approach to planning?
- What marketing tactic had the biggest impact on your business in the first six months?
- How did you approach paid media in the early days of Larroudé? Have you changed that approach over time?
- What’s Larroudé’s approach to third-party marketplaces?
- What’s the biggest blocker today for growth?
- What challenges do apparel brands uniquely face when seeking financing?
- How do you think about new product releases? Which drives more revenue, classic or trend items?
- How do you drive repeat purchases?
- How do you use AI in your business?
- What have you learned from building and maintaining your ecommerce website?
- What’s the next challenge Larroudé is tackling?
Did you start Larroudé with a formal business plan? How granular or high-level is your approach to planning?
Our business plan was just a risk assessment of whether the business was going to work or not. But I didn’t make a map that I would try to follow each block and turn right and turn left. Instead, it covered basic unit economics, size of the market, why there was a problem, and how I could solve it.
We also don’t have a marketing budget. When people come to me and say, “We’re on track to hit the numbers for March,” I don’t really care. Instead I ask, “Where are you versus last year at this time? Is your ramp of growth consistent?’”
I believe in having the right principles and culture and tests. But I don’t want to run every step that people need to do.
What marketing tactic had the biggest impact on your business in the first six months?
The cheapest way—and if you’re manufacturing with a high gross margin business, the best way—to get your product out there is to find opinion-makers and tastemakers and get the products out there as gifts.
The one simple piece of math to think about is: If your product costs $100 to make and you give 10% away, your product costs $110. If you’re selling for a big markup, that’s not what’s going to break your business. It’s cheaper to gift products than to think about a customer acquisition cost where you spend a lot of money on paid media.
How did you approach paid media in the early days of Larroudé? Have you changed that approach over time?
Early on, we didn’t have the expertise or the depth to run paid media. You need to have some minimal traction to be able to run paid media, and paid media is a lot about trial and error and learning what works for you.
I tried agencies; I kept having people come in and give opinions. I’m a guy that didn’t do this before three years ago, but right now, I talk to most people and feel like I’m an expert.
Don’t underestimate the need to constantly learn. It’s constant iteration—looking at what works and what doesn’t work. The faster you do that and the quicker you iterate, the better you get at it.
Now, I’m doing internally what I used to be doing with third-party service providers. This happened in shoemaking, too: We’ve internalized. The company is constantly verticalizing. We find that we can add value to the customer in a profitable way by doing it ourselves instead of outsourcing.
What’s Larroudé’s approach to third-party marketplaces?
Ninety percent of what we’re doing is pure direct to consumer (DTC), and we’re systematically cutting off marketplaces that don’t add value. I like my own business much better than these marketplaces. I’ve not seen value add by having intermediaries between myself and my client.
Our return rate from marketplaces is much higher than what we have organically on our website. Our organic return rate typically is less than 30%, but on some marketplaces, it was hitting about 70%. There’s something off there.
What’s the biggest blocker today for growth?
Capital. We’ve been able to scale, and every day we get more profitable at what we’re doing. The only thing stopping me is that I’m growing faster than my capital.
We’re looking for ways to finance the demand more than trying to find the demand for ourselves. That’s the biggest pain. If we’re selling 50% of what we’re selling on pre-order, we are turning our inventory, on average, almost twice every month.
We’re doing 20 turns of inventory every year. If I had four times more inventory in-house, imagine what those sales would have been. Last year, our biggest category was sneakers, and I was out of stock in sneakers for half the year.
What challenges do apparel brands uniquely face when seeking financing?
I think there is a systemic problem in financing businesses that are more brand-related and intellectual property-related.
In apparel, you develop all these collections, and you spend money to develop a brand, but when you work through a profit and loss statement, none of that is capitalized. On the other hand, the money that went into Shopify, or to the development of our product, or to marketing, or Facebook, that runs through your P&L 100% the first time you do it. So then it looks like the margins are much slimmer than they actually will be in the future. Because it should be easier going forward. Now I can just send an email and get a sale done.
How do you think about new product releases? Which drives more revenue, classic or trend items?
Good new products are the biggest indicator for revenue surges. We’re in the business of trying to solve clients’ problems, and we typically solve them by launching new products. That’s a good driver for us. When we launch new products, it’s also content for our engaged audience.
But about 60% of revenue comes from things that are repetitive in some way, such as silhouette or color. Being vertically integrated allows you to take advantage of that so much more. If you have a shoe like the Samba, for example, you just keep doing Sambas in different colors, and in colors that are in vogue right now.
Overall, I say that 80% of sales come from 20% of the products. But you never know where the new 80% will come from, so you have to keep trying. You have to lean into the winning ones and you have to try the new stuff, because trying the new stuff is how you’ll find the new winners. You have to create a machine that allows you to do that—and do that quickly. We see a winning product over the weekend, and we launch a new color of it by Monday. Some companies take nine months to do that.
How do you drive repeat purchases?
Once customers trust a product, you don’t have to gain their trust in the brand. All you have to do is have something that solves another problem. If they have an event, and you have the perfect solution, and it’s fairly priced, they’re likely to buy.
We also see that some categories of shoes are better than others for follow-up purchases. Once people believe in the silhouette, it tends to be easier to sell the same silhouette in different colors.
How do you use AI in your business?
We use AI for demand planning and production planning. We’re developing our whole architecture so we can vectorize all the data individually and then create a data layer that is connected through AI.
We’re also testing AI for advertising. We’re now using the AI image and video generator Higgsfield and other tools of that sort. We’re seeing quite scalable content creation with AI. On the creative side, it’s more of a brainstorming machine.
What have you learned from building and maintaining your ecommerce website?
Everyone wants to customize their ecommerce site, but understanding the importance of simplicity in having things out of the box was a learning experience.
Shopify has been quite helpful. A lot of people have used it, so the tools that are there were built because other businesses had the same issues.
We also learned how important it was to be thoughtful about how apps could interact with each other. It’s better to be simple and fast than to be highly customized and complicated.
What’s the next challenge Larroudé is tackling?
Organizing my tech stack and transitioning to headless to increase site speed. It’s not a challenge yet, but it’s a big thing for us.
We think the biggest correlation to conversion is site speed. Creating a seamless digital experience to customers is the best thing for scale. That’s going to translate into speed, conversion, and marketing efficiency.
Ricardo Larroudé is CEO of footwear brand Larroudé. He runs the company with his wife, Marina. Ricardo, who has a background in finance, manages Larroudé’s day-to-day business operations. Marina leads the company’s creative direction as chief commercial officer (CCO). She led a successful career in fashion before launching Larroudé with Ricardo.
Responses have been edited for length and clarity.
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