Meet My Neat Business Partner: Claudio’s Journey from Wall Street to Apparel - The Shopify Growth Show (#16)
If you are a goalkeeper, for example, and you see every shot as an opportunity to get scored on, you will be scared by every shot. It'll you will see as a risk. So you will fear the shot. If instead you see it as an opportunity to do something great, you can't wait for a shot.
Speaker 2:Hi, I'm Jim Huffman and welcome to the Shopify Growth Show, where we dive into what's actually working to scale Shopify brands. Each episode, I talk to founders who've grown from idea to 7 or 8 figures, plus experts who share what's driving real results. And we're in the game too, pulling back the curtain to show what's really working. I hope you enjoy today's episode. Today on the podcast, I have someone I've been wanting to get on here for a while now.
Speaker 2:It's Claudio Sorely, and he is my new business partner for Neat. So this is a fun episode. We talk about how we negotiated against each other or with each other, however you wanna look at it, to do a deal to essentially acquire Neat together or for us to buy in and become his business partner. We talk about how the deal's going since the acquisition as we're looking to grow it. Spoiler, it's actually going kind of well.
Speaker 2:We talk about how our strengths and weaknesses really complement each other. We got the new site working. The conversion rate is 4%. The average order value went up $30. And more importantly, our acquisition strategy is kind of working.
Speaker 2:We're acquiring new customers at $20 per person. But in addition to that, we talk about our goals, how we get this to be a 7 or 8 figure brand. We get into his background with his brand that he's launched that is a well into 7 figure of what he did to hit that milestone. And if you were starting a brand today, what he would do to get to 7 figures, rate figures really quickly and how to balance d to c versus going wholesale versus going into Amazon. Even gets tactical on what he's done to create a content machine to output content in a really creative way, but more importantly, grow his social presence from 30,000 followers for his brand to over a 150,000 followers.
Speaker 2:But we also get into his background. This is a guy that grew up in Milan, Italy, came to The US at a young age, played d one soccer, went down this traditional path in New York, Columbia Law School, working at Bloomberg, making potentially 7 figures a year and left it all to go down this entrepreneurship journey. But what I found the most interesting was kind of this mental framework he uses when approaching a new business or doing an acquisition or spending 6 figures to buy the intellectual property. And it's actually a framework he took away from his soccer days as a goalie. So this is a really fun one.
Speaker 2:This is someone that I I really value and respect. And I learned a lot, stuff that I didn't know about him. So if you're looking to start a brand today or looking to grow an existing one that you have, I really hope you enjoy this episode with my friend, Claudio. So I have my now new business partner on the podcast, Claudio. We have never met in person, but we've talked a lot on the phone and virtually.
Speaker 2:He's a very handsome Italian man, which is why I I wanted to seal the steel. But, Claudio, glad to to force you on here.
Speaker 1:It's a pleasure. It's a pleasure.
Speaker 2:So let's just get right into it. How's our partnership going? We we now are business partners and have this brand together. We've they say it's easier to get out of a marriage than a business partnership and you and I are already deep on this. How's it going?
Speaker 1:Frankly and honestly, I'm very happy. I think that the key is that you guys are really good at everything marketing related and we excel at everything that is product and operations related. So you guys are the sexy part. We're like the boring guys. And so it's very, very complementary, and it allows us to know that the brand and the products are gonna be portrayed in the best possible way, and that we're gonna be looking at every single opportunity for optimization in when it comes to marketing while focusing on what we know how to do, which is designing great product and handling the technology and the logistics, etcetera.
Speaker 2:Yeah. I I agree. Like, we are horrible at making products. I know because we tried to make one and it was the most painful experience of my life. You, Tom, Tyler are very impressive at that.
Speaker 2:We'll even get into, like, what you did to pull off meat. But, like, my big takeaway is being very honest with, like, where you are strong and also where you are not strong. And so we learned that the hard way. So we're like, okay. We're gonna do a partnership, let's just focus where we're good and stay in our lane.
Speaker 2:And it worked out that you guys are amazing at everything everything we are not. And also, I think there's some to be said for just working with professionals that have been there, done that. You have, like, a very impressive d to c brand. You've been through a lot. You know things, and so it's like, oh, we need to switch warehouses or we've gotta tweak a product.
Speaker 2:You guys are, like, done. Whereas if I were doing that from scratch, I'd be at Google, like, how to switch warehouses? And it would be very painful. And so having the professionalism where people just get their job done, that's kind of taught me for this and like future acquisitions is just getting the right people in the right seats. It sounds so obvious, but that's the big takeaway.
Speaker 2:And the other thing we had is like, work together with your brand, Starelli, so we could kind of test what it's like to collaborate. And so I think that that was a big one. And also, even in the negotiation, I was nervous because Claudio went to Columbia Law School. He's got all these fancy degrees. And so when you're negotiating with the lawyer, I'm just like, this is not gonna go in my favor.
Speaker 2:But you are, like, more than transparent, and you're they'll be like, here, talk to them, talk to that, like and so I I really appreciated that because we haven't done a lot of deals. And so when you get to the nitty gritty, you can be very insecure in what you don't know. So I I thought that was also revealing.
Speaker 1:Well, I will say two things. One of them is you should always be skeptical of the other party just because it's just healthy. Like, generally you shouldn't take legal advice from the counterparty. At the same time, in my case, because I've been in in this business, but I'm generally in business for a couple of decades now, I know that when you're setting up a partnership, if you haven't set up the structure so that everybody's happy as you succeed, you're just punting problems later. So and I am I'm I'm, like, I I I'm really transparent as a person, and I would just feel really bad if I knew that, like, you were gonna get screwed down the road.
Speaker 1:So I prefer to be very transparent and say, okay, let's get something and either we find the deal or we don't find the deal then then then live with that on my conscience.
Speaker 2:Yeah. And even when I was talking to, like, my own legal counsel, they're like, this is really good. Everything here makes sense. And so I probably asked too many questions, went back and forth too much, which meant our legal fees were way too high. But hey, lesson learned about that one.
Speaker 2:The the other thing for people doing deals is like being alignment with the end goal because it's not like, hey, let's do neat together and we're just gonna pull all the cash out and let's go buy some Lambos and some some diamond bracelets or whatever. We're very aligned like, no, reinvest everything back into the business. It's about growth because we have these other businesses that can kind of pay the bills. And those are things that maybe might sound obvious, but if you aren't aligned, man, that can be Ross. Because as you and I talked to finances and numbers, we're like, how much more inventory can we buy?
Speaker 2:How much more can we invest into growth? And then that's fun when when you're aligned. I completely agree.
Speaker 1:And in fact, one thing that I think has worked well is at no point in time in all these months, either me or you has come to each other and be like, by the way, I spent this extra $55 on something. Can I get a refund? We're both like, whatever it's needed on our side or your side, we just take care of it, and we know that's the deal. We're just trying to grow business. Obviously, if you need to buy an piece of machinery, that's a business expense.
Speaker 1:But otherwise, we understand that we're two business entities that are just putting in sweat equity and making investments towards a common goal. And so I really appreciate that because I I can see it, you know, working really well.
Speaker 2:Yeah. No. I agree. I mean, we'll see these photo shoots, the the talent's getting more and more high maintenance. So if their coffee orders get extravagant, I might have to send an invoice.
Speaker 2:Yeah. No problem. So for people that are like, okay, what are these guys talking about? Like, who is this Claudio guy? We will get to the intro of Claudio.
Speaker 2:But, again, he had this brand, Neat, that I was working with him on his other brand and he started to show us this product and I'm so skeptical. I've worked with so many brands. Like, I actually would, I get scared by fashion for return rates for a million reasons. He shows me this product, he sends me one and it freaking works. It's someone that used to live in Texas and used to have to wear a suit to work that was, by the way, wool because that's the only suit that I had.
Speaker 2:I remember, like, walking outside in Texas in the summer for one minute and just sweating through everything. And, like, when I tested the Need shirt, I'm like, wow, this worked. And so I wanna talk about something you did to pull off me that I've never heard anyone do is you are like what Tom and Tyler be like, hey, let's make this product. You found the IP for this and bought it and built a brand with it. And I don't hear a lot of people out there in the secondary IP market buying something and then repurposing it for a consumer brand.
Speaker 2:Can you talk about the process of how you found this IP? Because as this is going well, in the back of my mind, I'm like, what's some other IP we can get our hands on?
Speaker 1:Yep. So it was really a matter of just happenstance and and direct connection. One of our board member for Storale as a company is also on the board of INSEAD Business School, and he was pitched as part of some INSEAD event, a new technology for sweat management. And it was really designed on the back of NSF, which is, I think it's National Science Foundation grant, to help the military develop better fabrics for soldiers in hot, warm conditions. So it was really meant as a performance fabric.
Speaker 1:They came to our offices, they pitched us the technologies, they have several technologies in the portfolio, and I realized that we were just not that interested in the use for a performance use case, but then I looked at the need patent, which at the time was called fresh, and I and I thought this is something that every guy going to work in a New York City subway in the summer needs. And I thought there's massive potential. And so I kept staying in touch with the CEO of the company, and I offered to commercialize the the brand the patent. But at some point, she came to me and said, we're going bankrupt. I'm selling the IP.
Speaker 1:It's gonna be a competitive bid process. The process was starting in July, and I knew that none of the big companies will be ready to pull something really fast, so I thought I actually have a shot. I pulled together some funds, made a made a bid, low 6 figures, and won it. And we paid for that and then I was able to raise some money from our current investors and start the brand. Now, where that leads to us partnering is that we spent a year actually turning the patent into a product because a patent is just a piece of paper that is supposed to describe a process or mechanism, but doesn't mean that you have a product ready to order.
Speaker 1:So it took us a year and quite a bit of money to get to the point. And then as we started launching the brand on a relatively small budget, that's when the pandemic hit, right as we were launching it. And if there's something that people don't care about during a pandemic as they're sitting on their couch is whether they look sweaty. So they just kill the use case and basically put meat on, basically like in the freezer until later on my investors started saying, okay, are we doing something with this? And I started saying, look, this requires real marketing muscle.
Speaker 1:I don't think we're good enough and we wasted a lot of waste to spend a lot of the money leading to the pandemic. I gotta find a creative solution. And that's when we met and you said, I suck a product, but I'm good at marketing and growth. And I said, opposite. Let's do it together.
Speaker 1:And that's where we are.
Speaker 2:That's so impressive for you to have the cojones to see that the IP is available, take action, and get funds to do it. Because I think a lot of people might be hesitant to do that. But maybe it's
Speaker 1:the fact you already had trust in investors that would be down to do this just from your your network. Like, what was the mindset? Was there any hesitation not to do it? So no. Honestly, not because I I've learned from playing soccer actually as a goalkeeper that you can completely change the way you experience your reality and and and affect your level of of enjoyment.
Speaker 1:If you are a goalkeeper, for example, and you see every shot as an opportunity to get scored on, you will be scared by every shot. It'll you will see as a risk. So you will fear the shot. If instead you see it as an opportunity to do something great, you can't wait for a shot to go. And that's the difference between wanting to play and be excited and be, like, all scared.
Speaker 1:And so similarly, I try to approach life towards that is an opportunity to shine. And so the reason why we invested in Nidia is because it fulfilled a couple of criteria that are key to the way we look at e commerce. We don't do fashion, we don't do vitamins, we do painkillers. And what that means is that we look at products that address a very, very clear physical need, whether it's injuries in soccer, whether it's sports bras, which we'll launch later this year, whether it's sweat. It's something that affects people physically and emotionally.
Speaker 1:And we need to have a solution that is ideally IP protected and very, very effective, that is also demonstrable in the way in which you market in this digital age. If you have all three factors and the need affects a mass market, then you're onto something that can turn into a huge success. Because I know how to market it, I know the product works, and I know it's affecting something that is gonna be eye catching because it's a heartfelt need.
Speaker 2:That's such a good distinction because it's gotta have that mode or that point of differentiation, right? And it's got to solve a real problem rather than like, oh, here's another cool brand that looks like all the other ones. Because I think it's easy to fall on that that line if you don't look at it as a pain cooler killer. By the way, great, like, mindset talk on the goalie analogy. I'm totally gonna steal that.
Speaker 2:Cause I have this idea of like play offense in your mind. Cause you know how it is when you're a business owner or founder. I don't know about you, but I can go down a doomsday rabbit hole. It's like, oh, we lost a client. All these other clients, like, they're not going like we want.
Speaker 2:And I'm like, oh crap. You know, everyone's gonna fire me. I'm gonna have to get a job as, like, a tree trimmer out here in Seattle but I try to, like, catch myself and be like, no, actually, we have all these good things going for us. Let me play offense in how I can make good things go for me but I don't know if you have to find yourself doing those pump up talks to yourself. They're
Speaker 1:definitely I It definitely it it definitely affects it, but I because I I played goalkeeping competitively and I was always playing with older people, I I I found myself dreading the games because I I had so much reputation that I built that I was afraid of losing it. And also, I'm gonna reinforce stereotypes about Italian men, but I'll I'll I'll I'll slide it. You know, a lot of people say, oh, you have a beautiful wife. How how how the heck did you get such a beautiful wife? So I'll explain how this applies to that.
Speaker 1:When I was single, and I was single for a long period of my life, I will often have to go and talk to women. This is old school. Okay? So like you go to bars or you go to places and you actually have to meet them with jobs. Apps.
Speaker 1:Yeah. There's no DMing. There's nothing like that. And that requires you to put yourself out there. Now this is also true of getting a job or whatever else.
Speaker 1:Right? But I I relate to that, and I think it's kinda funny. So if you're in a bar and you see a beautiful woman or feel like men the beautiful a handsome man, and you know that you're gonna have to make yourself vulnerable, if you think of it as there's a chance they're gonna totally reject me and my ego's gonna be hurt, of course you're gonna be very timid. But if you look at it as a chance, oh my gosh, in literally thirty seconds I may be sitting next to her or him and have a conversation with this beautiful person that may be the love of my life, then you're like, what do I have to lose? And you just stand up and do it.
Speaker 1:So I tried to apply that obviously right now. Now it's not in that context anymore, but it applies to many opportunities that come by. I try to look at the upside.
Speaker 2:That's awesome. And I think it changes your whole demeanor when you approach a situation like that as opposed to being passive. Very cool. So one thing to kind of wrap up me, like, I'm feeling like I'm on a high right now with the we like have the new photos, the photo show went well, the new website's up. We've been able to small sample size, by the way, people.
Speaker 2:But we've increased the average order value by like $30. We've got ads going. It's at, like, $20 cost per purchase. I'm like, let's take this puppy to the
Speaker 1:the hair cell rate is close to four percent, I think. And just to give you a sense, yesterday, was talking to another CEO and he asked me what I was doing and I showed him need. He was like, this is a really cool website. Like, how how did you pull this off, etcetera? That's when I made made an intro to you.
Speaker 1:It was because they looked at the needs side and they
Speaker 2:were big kickbacks if we work with them. Thank you. But it's a great yeah. It's like, I'm so fired up for our website. So like, what's the goal here?
Speaker 2:Like, because what are we doing over the next year? Because one thing that Claire and I talked about is like, the advantage we have is like, we don't have a lot of overhead, so we can reinvest, but we also we're both a little impatient. We want to grow. We're not trying to like risk like all of our family's assets to pour into it, but we also want to go aggressive. Well, what are your thoughts on like the risk tolerance scale on how we get this thing up the curve to mid seven figures?
Speaker 2:So I think that
Speaker 1:if the growth continues the way that I think we can support and we get a good return on ad spend, and essentially we are fueling profitable growth because we have no SG and A. So every marginal dollars that after you covered media is essentially profit, then I think we'll be in a steady place and on our own we can certainly grow organically and we can leverage some of the inventory financing options that are out there to start scaling the orders. That by necessity, unless the growth is really, really explosive and you you you hit on some of the notes that, like, companies like True Plastic have been able to do, it's gonna be hard to go ballistic. So So we're looking at a at a steady but rather gradual slope. And I don't think there's anything wrong with it so long as we're heading in the right direction.
Speaker 1:The alternative is we, you know, get into 7 figures, and then we go out and raise money. But raising money has pros and cons. One of being that we essentially hire a boss for ourselves because we'll have to report to to someone. And right now, we make the decisions and we take risks and we do it with a smile. So I would rather not raise any funds and just do it on our own, but we'll have to evaluate as, you know, as we enter 2025.
Speaker 2:Yeah. And and like dilution is very real and it it pushes the goalpost back on what we wanna do. But the good thing is these are good growing pains and problems to solve. But I'm a big fan of don't try and be over clever at the expense of doing something stupid. And so I'm like, okay.
Speaker 2:Let's kinda keep going down this track. But I think it'll be felt lost to keep doing check ins on some of these big strategic moves because this kinda leads to the next thing. Another thing that I like about a partnership, I had a small stint. I was a finance major. I had a small stint in investment making.
Speaker 2:I still love nerding out on spreadsheets. And usually, that's a skill set I bring to the table. Claudio is better at that than me, and it's a little annoying because of his background. So I I wanna get into Storrelli, but talk to me, like, talk to me about Claudio pre d to c entrepreneur and kind of leading up to that? Because you kind of had a more traditional path.
Speaker 1:Yeah. To some extent, I was born and raised in Italy and in Milan, and until the age of 16, I lived there. Then my parents asked me whether I wanted to study abroad, and they had sent me out to study abroad for a couple of weeks every summer since the age of nine. So I was used to being away, and I ended up in Dayton, Ohio where I spent a year.
Speaker 2:Just the Milan of North America, absolutely. Exactly.
Speaker 1:And, but again, like looking at the, you know, different way of looking at things, you could assume, okay, well, you're spending a year in The US as an exchange student, you're in Dayton, that's a bad thing. But I ended up in a great family. They were a soccer family. I had a brother that was also applying to college. And even though I was 16, because of a combination of factors, I was started to get looked at by colleges, and I ended up taking the SAT because my peers were, even though I was younger.
Speaker 1:And for a number of chances, I was able to get into college at the age of 16. So then here I am. I'm a 16 year old Italian boy who barely speaks English, and I can go play division one soccer in California or go back to Italy and do two more years of high school. And I looked at the company, and they looked at me, and we all started crying, and I said, I have to do this. So I went I I joined my fir freshman and sophomore year, I went to Santa Clara University, which is in Santa Clara, part of Silicon Valley, as the Silicon Valley was exploding.
Speaker 1:Played in a national championship division one because I just happened to be in the one of the best soccer teams in the country. Completely random because, by the way, I was 16 and I set the bench. Hey. You're on
Speaker 2:the team. Yeah.
Speaker 1:Yeah. Exactly. I have a d one trophy at home. It's it's the second place, but I have a d one trophy here. And then I do two years, and then I'm there, and I have perfect grades.
Speaker 1:I am a, you know, d one, like, nationally ranked athlete. I'm a foreigner, and I think I'm, like, perfect shoe in for bigger schools. I'm just, like, check all the boxes. So I applied to Stanford, lucky I got in. So all of a sudden, I'm 18 years old and I'm a junior at Stanford.
Speaker 1:I graduated Stanford by 20, and the internet bubble exploded. So then what do I do? I can't get a visa to stay and work. I can't get into business school. So I think, you know what?
Speaker 1:I'm kind of a nerd. I've studied philosophy and economics. I go to law school. So that's what brought me to Columbia Law School. I go to New York.
Speaker 1:I get to law school. I can't even drink legally in law school. In fact, the dean of Columbia law school gave me drinks at, like, reception, and I couldn't even drink legally. He doesn't know. But, like, you know, he was breaking the law.
Speaker 2:Like, how come I'm measuring? I've been drinking wine since I was five. Is ridiculous.
Speaker 1:Yeah. So end up doing law school. I graduated '23, and I am realized I don't wanna work for a law firm. I passed the bar. I get a job at a big law firm, I'm like, I gotta do something else.
Speaker 1:So I throw a hail Mary. I applied to a consulting firm and got into McKinsey. Well, I joined McKinsey and Company, but because I was a postgraduate student, they placed me with people that are coming out of business school. People that come out of business school normally have years of experience and actually have done something in their business. I had done nothing in my life.
Speaker 1:I had just played soccer, studied law. I barely knew how to open word. So I started at McKinsey. I get my butt kicked essentially because it's basically like a training camp. And then from there, ended up staying five years and then moving on to Bloomberg where I ended up helping run and start a number of businesses.
Speaker 1:By the end of my career there, I was maybe 32 or so, I had been given the C level role, like chief operating officer of billion dollar enterprise technology division. So I was, like, just flying. I mean, I was working directly for one of the founders of the company. Like, I was on my way to steady 7 figure salaries, like, was set, but I just didn't want it.
Speaker 2:Like, ten years in New York on Wall Street, that's, like, thirty years and, like, business years. It's it's so intense. That's insane. Yeah.
Speaker 1:But I believe but I didn't I didn't want that lifestyle. I just didn't see that maybe I was reckless at the time because, you know, when you start making a lot of money and you don't have kids, you don't have you have the expenses that you have, you just think whatever money will always come. I appreciate a lot more now than I did then. But so then I started out of my basement. I started a company, which is, you know, Australia Sports because people I was playing soccer in the city and people were getting hurt, and they thought why does nobody solve the problem.
Speaker 1:And as I was doing that, Adidas ended up taking a look at what we were doing, loved what we were doing, and so they flew me out to Germany and they said we'll we'll fund your series a.
Speaker 2:Wow. Wait. How did first, how did they get on the radar of Adidas? How did they know about and for people listening, do you was your flagship product gloves or was it the padded guard?
Speaker 1:The flagship at the time was something that didn't actually come to fruition as the easiest as we thought back then, which was a head protection. Gotcha. So concussions are a pretty serious problem in in soccer. More and more professional athletes are having long term damage as they age, and we know that head protection can reduce the risks, but the research out there hasn't quite reached the kind of levels that make the evidence convincing, and there's no institutional interest or incentive to push for additional equipment because nobody gains really, aside from brands like mine. So so that never spread, and I don't see it spreading for for a few years.
Speaker 1:The pandemic put a lot of youth soccer on its knees, so if anything, it's made things worse. So, you know, what Adidas told me is great, but, you know, you gotta leave your job, your cushy job, and go do this full time. So that was 2015, and that's when I left, and that's the last time that I earned a real salary essentially. But since then, I've been building a portfolio of brands and companies on the back of that. So that's what that's what brought me to where we are today.
Speaker 2:Dude, that's amazing. I didn't know the exchange student component or the now. I knew you're a big soccer player, but that that's amazing. We're up to a whole side podcast on your highlight reel of your greatest moments, but that that's a sidebar. So, Starelli, I mean, it's insane the traction that brand has gotten with professional soccer players from goalies using the product.
Speaker 2:How did you go from, you know, getting seed round from Adidas to where you're at today? What are some of those inflection point points with growth, whether it's like wholesale or d to c or under like, figuring out ads. Like, talk about some of those milestones and and growth you've hit.
Speaker 1:So I think that the first key step, and it's something that is continuous evolution, and it's key central to our thesis that I mentioned earlier, is we always excel the product. There is no no player well, I'm sure there's some people that will give us a one star because whatever. I see one stars even in the best of products. But but in general, we are very well known in the market for having a really good product that is looks good, does what it's supposed to do, lasts a long time, and is premium priced, but in a fair way. I'll give you an example.
Speaker 1:You can go to Lululemon and just buy regular leggings that have no special characteristics other than some nice fabric and piano of $120. We'll charge $90 for really technical padded leggings for goalkeepers that are meant to without impact. It's underpriced if anything, but we know that the buyer is probably a mom buying for a 12 year old kid. And so we can't outprice the mom or we don't wanna be the brand only for the rich the rich spoiled kids. So it's a fair price, a bit premium and really solid product.
Speaker 1:That was step number one. Then the brand was born in 2010 actually, which is before even Instagram existed. If you think about it, it's crazy. It's now fourteen years old. So we started in a more traditional way.
Speaker 1:And if anything, we weren't the first adopters in the online game, or at least we weren't among the first brands that were like, wow, this is the trend. So we invested a lot in B2B, Dick's Sporting Goods, the retail stores, and that got us to break in 7 figures. And then what has allowed to climb the 7 figures ladder is internationalization one, two leveraging Amazon as an additional distribution channel, and now which is phase three is really getting the ads done correctly. And that's what we started doing with you on the ads management side and what we started doing with our social media content and ads team.
Speaker 2:Mhmm. That's very cool because it's always interesting to hear the playbook of going from idea to six, seven, and eight figures, but it's like, at the time, really amazing product, figuring out wholesale retail, layering in Amazon on top of that, layering in d to c. That's pretty impressive to kinda go up that ladder. If I
Speaker 1:was starting today going to your podcast title, I will skip b two b, and I will skip Amazon. Because if you have a really good product and you're good at explaining what the product does in an intuitive way, And then third, you know how to manage the mechanics of running ads on Facebook and Meta and the other channels. You have all the ingredients that you have to go from 0 to 8 figures within a span of three to four years, I think. So if you're going to start with the d two c play, when would you think about layering on Amazon or layering on wholesale and retail? Wholesale depends on the product.
Speaker 1:For example, a product like Storale has such a niche limited set of stores that right now I I for us brings 7 figures, but it's after a lot of investments. Think I may not even bother, but if you are if you have a product that has, for example, say there's a lot of running stores or general athletic stores, if you have a product that is like a perfect sock that avoids blisters, then you probably can have 400 stores ordering $20,000 a year, that's real money. So I think you've even to sell it to stores, you need to have proof of traction because the buyers are gonna be impressed by the product, but they also wanna know that some people will come into the store looking for the product. Mhmm. So I will say you get to 7 figures first, and then you start worrying about b two b as an additional channel.
Speaker 1:Amazon is a tricky one because Amazon is either a destination for price comparison from people that already have an intention to buy on your site and just look for a better price or a better shipping option, in which case it's not really additive. You could argue it increases conversion because it just makes the user so, and it's hard to obviously know. But I will say that in most cases it's cannibalistic. Because also you got to think even if your conversion rate is increasing by 10%, you're giving up at the very least 15% in Amazon fees on those sales, so most likely you'll probably even. However, if you're in category where there's a lot of organic traffic, you may be able to get some of the passerbys in some sense.
Speaker 1:And if over time you get really good organic visibility, you may be getting way more traffic and and organic visibility via Amazon than than your own website, but it's highly contingent on the product. Yeah. You need to be at the right time. If you go in a well established category where there are products that already have 10,000 reviews, good luck getting any organic visibility. It's just not going to happen.
Speaker 1:But if you're in the category that is about to explode and you're one of the few players, you may go from zero to 100 on Amazon because of that. So it depends on the nature of the business.
Speaker 2:Yeah. That's a good call out and yeah. Great if it's good for new customer acquisition but tough if it's like, oh, they know about your brand. Let me go to Amazon and see if I can get it faster or cheaper and and then they can can be kind of a detriment to the the brand.
Speaker 1:It messes with all your attribution metrics, and you don't know anymore whether whether your ads are working or not because there's no easy way of knowing. I have no way of telling about the life even the lifetime value of my customers because they may buy two things here and two things there, and they're not tracked together. So it's
Speaker 2:it's hard.
Speaker 1:If you're able to avoid, like we'll probably do for Neat, then you just have such a better look into your universe.
Speaker 2:Yeah. You get better insights. You can make better decisions. I I do wonder, like, I I get nervous about the competitive landscape of what we offer with Neat. And then two, like, can we put a flagship product on there to acquire customers, but then hold back inventory so they come
Speaker 1:to the website? But it's that that that in itself is tricky. Yeah. I mean, you could use Amazon. If it's a competitive category, you can invest in Amazon to, like, steal market share from competitors, but it's an expensive proposition.
Speaker 2:Yeah. Hence the fundraising potentially. But Yeah. Exactly. One thing you're doing really well with Sorely so anyone that has a a consumer business, eventually you're going to be in a content battle and it's a battle with yourself and your team.
Speaker 2:Like how do we make enough content to feed the beast, whether it's for ads or for organic social. And then by the way, it's keeping up with new content formats and styles and making it relevant. You've kind of cracked the code with something you've done on content for Starelli, and it's really helped us with ad creative and it's really helped just build up your organic following. You wanna talk or share a little bit about what's working on the Stirley content machine?
Speaker 1:Yes. It was 2020 and the world was just in shambles and I didn't know if brand was going to survive. And when we figured out that it was going to survive, by then I had basically half of the marketing team had gone and then we didn't have any resources. We didn't have TikTok and we were sitting at about 30,000 followers on on Instagram. And we had a very pretty Instagram page because all the posts were curated, but it was not very engaging.
Speaker 1:At that point, I realized that ads and content on platforms like like Instagram should not be thought of as postcards or too focused on product and to, like like, you know, like like a selfie where you selfie. That's what I used to call it. It's like, it's not a selfie. It's supposed to be entertaining entertainment. And if you entertain the the the user, then the user then starts knowing your products, but it's through that process.
Speaker 1:You have to provide something of value. Otherwise you're just being like vain, you know? Look at me, look at me. So at that point, I started looking for influencers that could be good faces of the brand, and I connected with with a guy who at the time had 100,000 followers on Instagram, was already over a million on TikTok. And I said to him, will you just come work for my brand?
Speaker 1:Exclusive for my brand. I'll let you do other freelance work for other brands so long as it's not in the same space. I'll put you at a retainer, and you're gonna create content, content, content on a weekly basis, and you're gonna post it on Instagram, and you're gonna create our YouTube or TikTok and YouTube, and you're to create ads for us. And over time, he built his own team, right? So we have a project manager person that helps us with coordinating the shoots and manages the calendar.
Speaker 1:Then we have a team of two ongoing product content creators that are basically the faces of the brand. And then we have guest creators that we bring on board. This team then led by the main content creator works directly with your ad management team, which then helps generate briefs for ads and then also edit some of the ads. And this little ecosystem, which is ultimately like five or six people, creates all of the content that people see, whether in the form of social media content or ads, and took us from 30,000 to 155,000, I believe, followers on Instagram in the span of what now it's three years. And I think half a million followers on TikTok and high performing ads that we use to fuel growth.
Speaker 2:It's really a huge unlock, especially because we have somewhat dedicated to content creation and the speed of iteration is amazing to where we can give storyboards or scripts or let them kind of run and give us stuff. But it's it's creating that machine that that for me has been the most inspiring. So with me, we're trying to figure that out. So if anyone is a content creator that sweats a lot, hit us up. We we could do a do a similar deal.
Speaker 2:But no, man.
Speaker 1:It it's been really cool to see how that cooks. One comment or one thing. One issue with the strategy that we have that is addressed in part by the by the nature of what we do is that if you have one face all over your Instagram all the time, it does end up kind of annoying people a little bit. Mhmm. It's less of a problem for us because what that person does is so physical and so active that what you're really focusing on is not the face of the person.
Speaker 1:It's the fact that the you're seeing the body like flying and doing things like all these saves, etcetera. So it's spectacular in nature. If you're a fashion brand, there's a fine balance. For needs, it's more likely to require a team of creators, which is why it's harder to crack, especially on a on a budget, but but it's something we need to figure out.
Speaker 2:Yeah. That that's a really good call on the distinction of something that's in actions for, like, soccer as opposed to something that's more kind of essential apparels like meat. That's a high priority. Two more questions. One, you know, it's pretty impressive what you do with Sorely.
Speaker 2:Now you've not you've got meat going that I'm obviously, like, super fired up about. You have really a really impressive kind of performance sports bra that you're gonna be launching. What's kind of the end goal here as you're standing up these different portfolios of companies, even before the podcast, we're talking about another thing that you're launching. Talk to me about like the next five to ten years. What's the main goal on what you're trying to do with this portfolio model?
Speaker 1:So I ultimately I guess I'm I'm already living my my my dream in the sense that I'm already doing it. I just don't feel that I have I don't feel successful yet, but I'm already doing what I love doing. I wake up, I'm happy, I wanna work. I I look at my emails, I look at stuff, and I I'm excited to see what what's new. And so what I love about the portfolio that we're setting up is that the portfolio that we're setting up supports my lifestyle, so it provides the cash flow that I need to survive, pays the bills, feeds the kids, and at the same time, each one of the companies has equity value.
Speaker 1:So I'm creating both cash flow and then a call option for upsize potential in the future. My goal is to grow this portfolio and ideally keep the companies as much as possible and turn them into cash cows that can return funds to investors. And when we realize that that's not the best use of the company because by nature they're going to be profitable, then sell them and just monetize them. And so in five years, I'm hoping to be in a point where the portfolio is now in the tens of millions of revenue overall and can be packaged into a very sizable exit, which then can allow me to redeploy capital and buy other businesses or start new businesses because that's what I like to do eventually is kind of run my own PE or holding company with a lot of companies kind of like what I'm doing now, but on a bigger scale.
Speaker 2:No, love it, We're so aligned and that's kind of what we talked about in the early days, but it's pretty cool to see it as it's like kind of slowly coming to fruition, man, but super excited. The last question that I have is what's the nicest thing anyone's done for you in your professional career?
Speaker 1:Two examples that come to mind. One of them was before I was starting in store early sports, I was still at McKinsey and I was trying to figure out how to even break into this space. And I read that the owners of soccer.com were actually two brothers that had started the company in 1994, and they were entrepreneurs. So I called the support line of Soccer dot com and I chatted about some product and they say, by the way, I heard the brothers are there. Are they still there?
Speaker 1:He's like, yeah. Yeah. They're here. Are they approachable? Yeah.
Speaker 1:Yeah. Super approachable. Can can you I was like, is there any chance that I can, like, be passed through the office? Sure. So pass me through the president's office.
Speaker 1:I leave a voice mail, and I basically say, I'm an entrepreneur in in in soccer. I admire what you've what you've done. I'd love to have some mentorship and ask you a few questions. Please call me back if you can. And they actually one of the brothers go back to me, full of life, full of personality, and for a period of time at the very least, and we're still friends, took me under their wing, invited me over, showed me what they were doing, pulled a couple of funny pranks on me, they're just very funny guys, and and introduced me to the the space and gave me a lot of tips.
Speaker 1:And I thought, you know, for absolutely nothing in return other than the satisfaction of helping another human being in in in which they maybe saw themselves, you know, twenty years earlier.
Speaker 2:That's pretty cool, especially when they have nothing really to gain from it and you're like, especially that phase, you're so malleable. It's like, don't know what to do here. So very cool, man.
Speaker 1:Can I tell you a funny prank they pulled on me? Yeah. Yeah. So they they're based in North Carolina in the same town where Adam and Eve is based, which is the largest sex toy business in the world. And when we went to we took me out to dinner, then somebody one of maybe the owner of Adam and Eve also joined the dinner, and we will you know, we talk blah blah blah.
Speaker 1:Then eventually, went back to New York City, and I was just starting to date my wife. And a huge brown box arrived in my land my my doorstep with you know, from Hillsboro, Indiana. And I thought naively, oh, soccer shoes, balls, and I'm there, and I open it my now wife. And I I cannot even name the things that were included in the package. All kinds of sex toys and and weird fetish dates.
Speaker 1:And they were, like, I know those guys. They were just laughing their butts off and then all of a sudden, I had this, like, repertoire of sex toys that was I could have opened
Speaker 2:a shop.
Speaker 1:And Yeah. There needs to be some sort of payback for that. That's awesome, man. Well, for where should people go if they wanna see more of what you're working on at Claudio? I guess I need to be more active on LinkedIn.
Speaker 1:You do a great job. I don't I don't really. I'm one of those guys that kinda built in secret and just does it. So it's it's hard to see, clearly follow you because you best to keep it up to date on Neat. And then otherwise, look off on my LinkedIn because I'll be talking about the sports bra brand that we'll be launching at the end of the year.
Speaker 1:And I'm very excited. We're obviously we're collaborating. So it's gonna be fun.
Speaker 2:Yeah. It it's it's super impressive between that need. I think we've got some fun launches going on. And yet, I'm gonna come visit Claudio in Italy. He goes there every year and he doesn't know, but I've invited myself to come stay with I can sleep on the couch, but excited for the the neat Italy retreat.
Speaker 2:I love it. So I will be showing up there.
Speaker 1:Yeah. So you can come anytime. My mom will come.
Speaker 2:That's right. I mean, I'll see you in Dallas soon. I gotta keep you posted on that. But, Claudio, this was awesome, man. Thank you.
Speaker 1:Thank you so much. It was really fun.
Speaker 2:Thank you for listening to the Shopify Growth Show. If you found this helpful, be sure to subscribe and leave a review. It helps other Shopify founders like you find the show. Want more Shopify advice? Sign up to the Shopify Growth Insider newsletter by Growth Hip, where we break down the top five growth tactics every week.
Speaker 2:Remember, you're not in this alone. Building a Shopify brand is a grind, but you got this. Keep testing, keep scaling, and don't run out of larges on Black Friday like I did. Have a good one.