The government spends billions of dollars each year on goods and services, and by tapping into this vast marketplace, small businesses can secure lucrative deals, gain steady income and heightened visibility. In this episode of The Agent of Wealth Podcast, host Marc Bautis and guest Richard C. Howard dive deep into the world of government contracts.
As a career military acquisitions officer, Howard oversaw $82B+ in DoD contracts, and has advised and trained over 400 companies as a consultant. He’s the CEO of DoD Contract – which guides, trains, and mentors small business owners and sales executives through the government sales process – and the host of DoD Contract Academy Podcast.
In this episode, you will learn:
- The benefits of selling to the US government as a small business.
- How small businesses can find opportunities to sell their products or services to the government.
- How small businesses can stand out in the government procurement process.
- How small businesses and startups can utilize the Small Business Innovation Research Program.
- And more!
www.dodcontract.com | DoD Contract Academy (Podcast) | Usaspending.gov | Sam.gov | Small Business Innovative Research Program | Bautis Financial: 7 N Mountain Ave Montclair, New Jersey 07042 (862) 205-5000 | Schedule an Introductory Call
Disclosure: The transcript below has been lightly edited for clarity and content. It is not a direct transcription of the full conversation, which can be listened to above.
Welcome back to The Agent of Wealth. This is your host, Marc Bautis. I’m joined by a guest for today’s episode, Richard C. Howard. Richard is a leading authority on US federal government contracts. As a career military acquisitions officer, he oversaw $82B+ in DoD contracts, and has advised and trained over 400 companies as a consultant. Richard is the CEO of DoD Contract, which guides, trains, and mentors small business owners and sales executives through the government sales process.
Richard is the host of the DoD Contract Academy Podcast, and speaks extensively on the nuance of federal contracting strategy. Richard, welcome to the show.
Thanks for having me on, Marc.
I don’t think people even realize that government contracts are out there. Can you start off by explaining this market size, and some of the benefits of selling to the government as a small business?
The Benefits of Selling to The US Government as a Small Business
The US government is the single biggest purchaser of goods and services in the world. When people think about government spending, most immediately think of big defense contractors. But in reality, the government buys just about anything you could think of – from defense and weapon-related spending, to tai chi instruction, to commodities, to food. Think about it like this: Every military base is basically a small town, or city in some cases. All of the infrastructure that goes into that town or city is paid for by the government. And they have a mandate to buy from small businesses.
So whether you’re in – cybersecurity, accounting, legal, you’re selling food, you have a franchise, you have a training business – the government is most likely buying in your area. It is very rare that I find an area where the government isn’t spending money, so the spending is vast.
The government has to buy from small businesses, yet less than half of 1% of US small businesses are actually participating in the government contracting process, despite the high spending levels.
Alright, so there’s a lot of opportunity here. How does a small business find the contracts?
How Small Businesses Can Find Opportunities to Sell to The Government
Because we’re talking about the government, there is a lot of regulation that exists to ensure there’s fairness and that the public can see what the government’s doing. So everything the government spends money on – with the exception of a couple classified contracting avenues – is public knowledge.
So, as a small business owner, you should ask, “Does the government buy what I sell?” To find your answer, go to a website like usaspending.gov and begin searching public records to find out what the government spends on.
Whatever you sell, it probably falls under something called a North American Industry Classification Code, or NAICS code. When you go into usaspending.gov, type in what you sell under NAICS – for example, accounting. The website will suggest different codes that you would fall under. You can click on that, and sort it by small business spending.
You can quickly see how much the government spends on small business contracts in your industry and area of focus.
Are these contracts location specific? Does it help if a business is located near a military base, for example, or does it not matter?
It depends on what you’re selling. By the way, government contracts certainly extend past the Department of Defense and military bases. There’s lots of different federal agencies that spend money.
Okay so once a business owner discovers how much the government is spending in their niche, what’s the next step?
Once you know that the government buys what you sell – if it’s local, they buy it in your state, or if not, you can work anywhere – the next step is to register your company. You can do that at sam.gov. That’s where all registering and most of the solicitations take place.
So when you go to sam.gov, you’ll find instructions on the screen for registering. Of course, you need to have a legal business in the United States, and come ready to register with your EIN number.
All in all, the process takes a couple weeks sometimes, but at the end of it you’ll get what they call a CAGE code and UEI number – these are federal identification numbers for your business. Once you have those, you can start bidding on contracts.
By bidding, do you mean writing proposals?
How Small Businesses Can Stand Out in the Government Procurement Process
What can a small business do to separate themselves from the others trying to do the same thing?
Good question. This is really where most companies fail in selling to the government…
Once your business is registered through sam.gov, you will begin to see what’s called a request for proposal, or RFP. At that point, a business can begin writing a proposal. But, the government is very regulated in how they buy products and services.
For instance, if I saw an RFP come out that the government is looking to buy a $3 million landscaping contract for base X, I can’t just pick up the phone and talk to someone to get my questions about the contract answered. Now, if it’s a big contract, the government will answer most questions publicly through sam.gov. In those cases, you might get some answers that can inform your proposal.
But otherwise, you won’t be able to set up a meeting with a government worker. You won’t be able to develop a relationship…
So, before the RFP comes out, there’s something called the market research phase. Let’s say you’re a software developer, and the government is putting a command and control platform together, and you have a great user interface for that. Well, it’s during the market research phase that you can engage with the government if you really want to have a shot at landing the contract later on. Meaning, before the RFP comes out, we want to know who is doing the purchase, and we want to know the details of the opportunity ahead of time.
If you want to differentiate yourself from the rest of the herd, you want to look for things like a request for information or sources sought. When those come out, they’re squarely in the market research phase. At that point, you can set up a meeting with the government.
I recommend small businesses to respond to requests for information. They’ll answer questions like:
- How long have you been in business?
- Do you have past performance?
- What do you think of the approach the government wants to take?
And, you’ll be able to suggest things. For instance, when you register your business, there are different certifications. Examples include:
- Small business certification
- Woman-owned small business certification
- Disabled Veteran-owned small business certification
If you happen to have one of those certifications, you do have a leg up, because the government needs to set aside a specific percentage of contracts to those certified businesses.
But, back to the market research phase, you can actually recommend that the government lists the contract for a specific certified group. So, you’re helping the government write the solicitation, and you can give yourself a leg-up if you suggest a certification you have.
Okay, so you’re trying to influence the decision a little bit. Have you ever seen a case where a small business had a product or service that the government isn’t spending on, but they propose it to them?
Yeah, there are a couple of ways to do that. I would say if you take away one tip on selling to the government, it’s to get meetings and build relationships with the people that actually buy what you sell. There’s a lot of ways to do that, but mainly through research.
If your business sells a product or service that the government is not actively looking for, but you want to sell to the government, the government needs two things: A requirement, and funding.
The Small Business Innovation Research Program
If it’s an innovative solution of some kind, for example a patent, you can go after something called the Small Business Innovative Research Program, or SBIR. Any government agency that spends a certain amount of money in research and development has got to contribute to this program. So, the SBIR program spends about $4 billion a year on innovative research and development contracts with small businesses.
This is a way to basically propose your product or service to the government, because they have funding in the SBIR program. If the review panel thinks that what you have is innovative, and that it would achieve a government need, you can win one of those contracts.
Phase one of SBIR is kind of low dollar. Let’s say, for example, you’re creating a VR training system. In that case, phase one might just be a feasibility study. You might propose that the government uses a VR or augmented reality training system to help maintain or fix aircrafts, for instance. Well, that might resonate with the board. That first phase one event is probably going to be somewhere around $100,000-$150,000, which is small for government contracts.
But, what you’re really doing is:
- You’re establishing past performance with the government, because now you have a contract.
- They’re now going to help you find people in the government that would potentially sponsor you.
Now you can’t totally rely on the government SBIR office, you also need to put yourself out there to find a sponsor. If you find somebody willing to sponsor, but they don’t necessarily have to have money, they just sign a memorandum of understanding for you to go to phase two.
Phase two is to develop a prototype, or set up a demonstration. There could be a lot of different things that you’re recommending, but that’s the phase two piece.
The Small Business Innovative Research Program is really great for getting your feet wet. Even if you have a developed product but you’re modifying it for government use, that would also qualify for the program.
Going back to finding these opportunities, my father actually had a government contract through a larger corporation. He created a pellet that went into 50 caliber ammunition. He wouldn’t get the government contract himself, but General Dynamics or Olin would go through him to create this component of their contracts with the government. Are there opportunities like that out there?
Yes. That’s a really good point. There is a variety of ways the government can buy things from a small or large business owner. For example:
- Sole source contracts.
As a business owner, you need to understand how the government is buying what you’re selling. That’s something that you can do pretty easily with the research tools the government offers.
Let’s say you own a company that is licensed to do HVAC. Over time, you’ve built a relationship with the government office that purchases contracts in construction. From that relationship, you learn that next year, Hanscom Air Force Base is going to be building an office building, and you have interest in installing the HVAC system. But, you aren’t able to take the full construction contract.
What I recommend you do is look through a website like usaspending.gov to see which construction companies have done that type of work with the government – illustrating past performance – and reach out to them about this upcoming opportunity. The fact that you’re bringing them this opportunity sweetened the pot for them to work with you, involving you in the project.
If you reach out to three companies like that, you’ll get at least one or two bites to form an agreement and go after a large contract together. That’s very helpful for a small business, because the big company can handle the proposal writing, and so on.
Artificial intelligence is all the rage right now. Do you see AI being used to uncover some of these opportunities, or to help small businesses in this process?
It’s interesting that you bring that up. Two of my recent episodes on the DoD Contract Academy Podcast were about AI in the government space.
One of them is called Govly, which uses artificial intelligence and machine learning to enable government contractors, OEMs, and distributors to accurately plan for government purchases years in advance
The other is called Rogue, which is an AI tool specifically designed to help businesses write proposals for government contracts. It kind of works like ChatGPT.
Business Financing and Government Contracts
What happens if a business needs financing to fulfill an order from the government?
First, it depends on the contract. If it’s a SBIR contract, where the business is developing something for the first time, then you can win the contract before you have to start development. But those are research and development contracts.
So let’s say you win a small services contract that involves employing 20 people. The small business will have to pay those individual employees before the government pays the small business. That’s because there’s about a 90 day turnaround time on invoicing to the government.
Now, there are certain financing houses set up specifically for government contractors. One thing to know is once you win that government contract, it’s one of the most secure contracts you’re going to have. So a lot of banks know they can count on the government paying the business.
That’s also one of the reasons companies go after government contracts – because it increases the value of your company.
Are Government Contracts Recession-Proof?
In addition to AI, the other thing that we’re constantly hearing about is this looming recession. At a high level, how is government spending compared to other industries?
Government spending is more stable. I always recommend that business owners – small or large – have one stream of income from commercial sales and another stream of income from government sector sales. The government is spending year over year, whether there’s a recession or not.
But I would say that the government experiences difficulties in different ways, and typically at different times.
Usually, if you have a three-year government contract, for example, you’ll receive that funding month over month. Now, there are times when the government shuts down, or when there is sequestration. The government can terminate a contract for convenience. But if they do, there are regulations to protect the companies that held the government contract.
That’s good. Well, we’re just about out of time. Richard, thank you for joining me today. You did a great job explaining how businesses can leverage government contracts as well as how to navigate the government procurement process. What’s the best way for our listeners to contact you or learn more about your advisory coaching services?
Your listeners can go to dodcontract.com to schedule a consultation. On the website, we also have courses available. And of course your listeners can check out my podcast, DoD Contract Academy, on whatever platform they like to listen on.
Great, we’ll link to those resources in the show notes. Thanks again, Richard. And thank you to everyone who tuned into today’s episode. Don’t forget to follow The Agent of Wealth on the platform you listen from and leave us a review on the show.
The sizes small, medium, and large only fit 15% of men properly in terms of clothing. Stantt is a business that has created over 99 different shirt sizes to actually fit to ensure confidence and comfort. On this episode of The Agent of Wealth Podcast, host Marc Bautis talks to Co-Founder and Co-CEO of Stantt. Marc and Matt talk about how Matt transitioned from corporate America to changing the shirt business by creating his own company.
In this episode, you will learn:
- How Matt transitioned from his corporate job to successfully launching Stantt
- Tips on how to build your brand and overcome some of the biggest challenges a new business goes through
- Why Matt looked to bring on investors from the beginning and how they’ve helped shape the business
- Online vs. in-person store predictions for after the Coronavirus
- And more!
Tune in now to find out the ins and outs of starting your own business!
Bautis Financial: (862) 205-5000 | bautisfinancial.com | stantt.com | [email protected]
On today’s show, I brought on a special guest: Matt Hornbuckle. Matt is the Co-Founder and Co-CEO of Stantt, and I’ll let Matt tell a little bit of an intro into his company, but they’ve revolutionized the men’s shirt industry. Welcome, Matt.
I brought you on for a couple of reasons.
One: I think the story of Stantt, how it started, how it got to where it is is an incredible story. And, like we were talking about earlier, I come across so many people that feel like they’re trapped in their jobs. Hopefully, you can give some motivation.
You were working in corporate America and you decided to come up with an idea, and executed it to build a company. So, I’m really interested in hearing your story.
First, how did you guys come up with the idea of Stantt?
I think like many startups, it started with a personal frustration. My personal frustrations, my business partner’s frustrations: being able to find clothes that fit well.
We were in the corporate world, wearing dress shirts every single day, and nothing ever really seemed to fit quite right. So, we decided to do something about it.
The journey started with us knowing really nothing about the apparel industry at all. That allowed us to ask what industry insiders thought were dumb questions at the time. It really allowed us to look at things in an objective way and in a very consumer-driven way asking: how do we want it as customers?
That’s really what sparked the idea. We were both not perfectly happy in our corporate jobs. We were making decent money and were very comfortable, but at a certain point, it just wasn’t fulfilling.
We made the decision to leave the job and try the startup world. We went into an industry that we knew literally nothing about beyond buying clothes.
Download the checklist on what to consider when starting a business
It was a huge risk, but at the end of the day, it’s been by far the most rewarding thing I’ve done in my career; being able to build something completely from scratch. Nothing at all existed like we’re doing it now: the brand itself, the website, the distribution that we have. It’s been such a rewarding experience getting to build the company and getting to surround ourselves with really amazing, smart, and talented people, and getting to learn from them along the way.
To give a little background on Stantt, you’ve taken basically that small, medium, large, extra large and expanded it to really create a more customized, more perfect fit shirt for men.
The idea is if you look around, you’ll notice that nobody is built the same way. The big “aha” moment is when we looked at a lot of data, we found that small, medium, and large only fits 15% of men properly. That’s not right. We should be able to find clothes that fit well.
Using a lot of body-scan data, we built a sizing system; an algorithm where we have over 99 unique sizes. We provide a couple simple inputs, our algorithm runs and matches you to your size.
Each size is named after a street after New York City. So, say you’re a Madison Avenue, you select the options that you want, and we can make and deliver the garment in only 7-10 days. Supply chain perspective, very low inventory allows us to offer a lot of optionality. We recently expanded into pants as well. That was our big initiative coming into this year; expanding a similar concept into pants where a lot of men struggle to find pants that fit well. We have a huge, huge size range there as well.
Full disclosure, if anyone looks in my closet, they’ll see it’s full of Stantt. I’m one of those 85% of the people you mentioned that buying a small, medium, large, extra large size shirt does not work for me. Once I found Stantt, it was great in that. You mentioned it’s very simple. You take 3 measurements and based off of those measurements, it fits into 99 different variations of shirts.
How did you come up with: let’s take these 3 measurements versus some other measurements? You mentioned you were in corporate America, but you weren’t in a retail space, so it’s something that probably really came out of left field in terms of how you came up with it.
It was a lot of trial and error, to be honest, and looking at a lot of data. That’s always been a core of Stantt; we’re really data-driven. We didn’t want to just make up a bunch of sizes.
The first place we started, we looked at the measurement used when people traditionally shop. With dress shirts, the neck is the first place a lot of people normally go. We found that the neck measurement only is a .15 correlation to the rest of the body; that leaves one of the reasons why shirts don’t fit that well today.
Then, we looked at the other correlations. We saw that with chest and waist, we could tell a lot about the rest of the body, particularly back into the neck, there’s a .85 correlation when we have those 2 measurements.
That was a really big “aha” moment. We kind of assumed that the industry does things because it’s the right thing to do. Then, you see a glaring datapoint like that and say: why do we always buy by neck size when it doesn’t tell you a lot about the body? Having that data really gave us the confidence to say: this is the right way to do it, the way that we’re trying to tackle the problem.
At what point did you actually say: alright, we’re on to something, so let’s leave the current jobs that we’re at? Was it as soon as you had an idea, or were you actually manufacturing shirts and had gotten that far along in the journey with it?
We followed the, I don’t want to say the “normal” entrepreneurial path, because there is no such thing. But, I think the pretty standard story here where there’s a lot of nights and weekends working on the concept and really figuring out the sizing system, the algorithm, some really basic manufacturing, getting some samples in.
We were still in our jobs as we were working on those components, but there’s a certain point where you can’t dip your toes in both sides of the water. That’s a terrible analogy, but you know what I mean? You can’t spread yourself thin and do things the right way.
So there’s that moment where it just felt like, we need to try this full steam ahead. We did initially after quitting our jobs, a kickstarter to validate that there really was a need for this in the market. That gave us some confidence and a starting point of 1,000 customers that we could learn from and got that first batch of first made, and just started running from there.
Where to Start: Trial and Error
You mentioned the trial and error, and really going through it. I kind of picture you guys in a garage. Was it basically a spreadsheet where you were trying to correlate? At some point, there’s just a big technology component to this. It’s not just about making shirts. How did you come up with taking the 3 measurements and really translate those into the 99 different sizes of shirts?
Our “garage” was Hoboken: Panera and Starbucks of Hoboken on Washington Street if anybody listening knows that Hoboken area. We spent a lot of hours, to the point where they knew our orders and names; that was the office for quite a while when we couldn’t afford actual office space.
I think there was a pivotal moment where there’s the data and the hypothesis testing, but then we needed to start bringing in some real experts. In particular with clothing, a pattern maker; someone who can really bring the thing to life, what’s cut out with the laser machines that’s ultimately sewn together.
We knew pretty quickly that in an area like that, we needed someone with true expertise versus us trying to figure that out. We found a really amazing person that’s still working with us today, who helped translate the data and the thesis into a real product that we could start testing with people.
I still remember very vividly, we did our first fitting event (we still have a bunch of pictures of this) at a coffee shop in Hoboken. We begged and pleaded all of our buddies to come and we had shirts hanging everywhere and tried to collect as much data as we could.
I think that was the moment that we really got to see it in action beyond just my business partner and I trying a shirt on. When you have people who don’t know the process and have all different body types, that was when we were like: ok, we’re on to something here; we have to make this really happen.
Was that what gave you the impetus to give the kickstarter?
We did the kickstarter before. Part of the kickstarter process is a little bit chicken or egg; some kickstarters were under some fire with some major campaigns raising millions and millions of dollars and product not being made.
So, when we did our kickstarter, we had done that initial test and felt really good about it. We had some manufacturing lined up, but we had started planning a kickstarter way before that. So, we felt really good about it going into it when we pressed go live on the campaign.
That’s the nature of kickstarters; it’s a community of people who want to support entrepreneurial endeavors. The platform has changed a lot; it’s gotten a lot more corporate-y. But when we did it, it was very much just a community of people trying to support newness and innovation. We had a lot of it buttoned up, but there still had a lot of pieces to figure out.
Was the success of it really when you said: full speed ahead after this, it looks like we’ve got something here?
Yeah, it’s funny because I think a lot about that. Was there a moment when I said: this is it, let’s keep doing it? But, I never really doubted it, as weird as it sounds.
As cliche as it sounds, we were going to figure this out and we were going to make it happen. I think there were moments along the journey where I said to myself: this feels better.
Each of those success points gives you more confidence in the product market fit that you’re finding and the product itself that you’re building.
That’s a constant thing we’re doing today:
- What’s the right channel to go through?
- How do we start scaling?
It’s different level of scale than it was on day one, but it’s still the same idea where we’re trying a lot of new things and some validate things and some disprove things. Constant testing, testing and improving.
On that, is that what the name Stantt represents?
It does. It comes from the phrase “constant improvement.” Stantt is spelled S-T-A-N-T-T. The first “ST” is from “constant.” Then the second at the end is from the word “improvement.”
It’s you, your partner Kirk, pattern-maker, and the 3 of you have to figure everything out? You’re the technologist, the sales and marketing person, figuring out relationships with manufacturing?
You initially started out online only in terms of distribution? So your kickstarter goes out, you fulfill those orders, and then what? Did you start up a website and basically hope that orders come in through there?
Yeah, we knew from day one that the core group of kickstarter customers was our priority; make sure they’re happy with the product.
There’s no better way to build a business than loyalty and driving repeat versus bringing new customers in. It’s way more efficient to do it that way.
So, our core focus was on those existing customers and through a website. We found some partners who could help build out a website in an efficient manner, so we got a website up and going.
While the website is a very important part of our business, we also realized that with our particular product, the touch and feel was invaluable; getting to try the garment on, having all 99 sizes in front of you.
At the end of the day, fit is subjective. We’ve had twins with identical measurements end up in different sizes because one likes it trimmer and one likes it looser. We found that that in-person experience was invaluable.
We’ve spent a lot of time, done a lot of pop-up stores in New York and New Jersey. We were going to do some more of those until Covid-19 happened, so we’re evaluating when the right time is to do that again. We’ve also been able to partner with many of the best retailers in the country. We work with Nordstrom, Mitchells, Richards, etc. They have all 99 sizes in the store, people can try the garment on and hone their size before buying.
You can have the best of both. If someone likes to just be at home, get a tape measure, get some measurements, order it online, and have it shipped out to them.
Or, there are some people who still like the physical touch, they like to physically feel their shirt, they can go to Nordstrom, Nordstrom can measure them, they can sample whatever fit they come out to; if they like it, or they have the opportunity to modify it.
You started online. Was the goal that this would be a word-of-mouth, or did you throw a lot at Facebook ads, or was there some other way? How did you get the name out and the brand? How did you build up the brand name?
The original marketing strategy was to focus on that core 1,000 kickstarter customers that we had; that they had the product in their hands, make sure that they love it, drive repeat, make sure they’re happy with the second version of the product, etc.
We started some limited digital marketing and at the same time, we found an opportunity in (many of the listeners might be familiar with) Chelsea Market in New York City. We actually found an opportunity to do a pop-up there, so we jumped on that opportunity. It was hugely successful; getting guys in the garments in person and then transitioning them to the website business. Those were our very early days where we spent a lot of our time and effort.
As you’re building this, and testing stuff out, improving, aside from your partner and the people you were working with, was there any mentor that you had going through this at any point of the building up the business? Or were you just winging it and hoping for the best?
Yeah. We’ve been so fortunate in so many ways to have mentors throughout my life. I think the mentors come and go and a lot of it is relevance to what you’re working on at the given time. We certainly had a lot of people support us along the way and continue to support us. It’s been a huge, huge part of what we do.
It’s funny you bring mentorship up because that’s part of what we’re working on rolling out now. It’s a program where we can help support mentorship moving forward; finding people who really need more mentorship in their life and finding mentors to match them with. That’s something to watch out for that we’ll be rolling out in the next couple of months.
The Biggest Challenges of Growing a Business
Where to begin? I think the first stage was getting a really good product that we were excited about. What we launched with is not what we have today; it’s evolved in many many many ways.
Where did you go to source the material for the shirts? How did that evolutionize over time?
Originally, we way overpaid through what is called “jobbers;” people who bring fabric together and price it up, then sell it to you. Eventually, we found a representative from a single mill. So we were working with them more or less exclusively.
As we’ve gotten bigger, we now source from (I honestly don’t know the numbers) 12-15 different mills across the world; really the best mills out there. It’s one of those things where you kind of have to start with something, especially if you don’t know the industry inside and out.
Then, as we brought more amazing people into our network, we’ve been able to really expand on the things that matter most to the business; sourcing is one of those. We’ve brought some people in when we’ve struggled to find one mill to work with, and he came in and knew 20 mills right off the tip of his tongue. With one call, it really just expanded everything.
That’s kind of back to the idea of mentoring and bringing in people way smarter than you, it’s such an important part of growing the business. There’s people who have been in the apparel industry their entire lives, and we better learn from them and bring in their expertise.
You can’t do everything by yourself. What are some other challenges that you had to go through?
I think pivoting through some of the scaling, where we started online only, started doing the pop-up stores, saw some great success there, but then realized the inherent challenge of scaling that particular model.
Discovering what we can do on the wholesale channel; it wasn’t something that we didn’t really consider at the very beginning of the company and realizing how big of an opportunity it is, and making sure we are catering the product to that customer (when I say customer it’s the store owner or the buyer).
Evolving and pivoting the company, infrastructure, and the people as we go through those changes has been a really fun challenge to work through.
You mentioned partnering with Nordstrom and some of the other stores like that. Do you have to go out and train their employees? Because this is probably something different than what they’re accustomed to. They have to know how to fit, sell, the value of the shirt. Is that something you guys would go out and train?
Absolutely; it’s one of the most important things that we do. We have an amazing team that focuses solely on that. The pearl of our product is that you get something that’s personalized to you, it fits perfectly, it’s a really really simple process.
I think with any business model, there’s inherent challenges. One of our inherent challenges is just making sure people know how to sell it. You compare our selling process to normal custom, it’s so much easier to do. But, you still need to be trained on it, no matter how easy it is to do.
Particularly with the larger department stores, there’s more turnover than in the smaller specialty stores. So, it’s an ongoing thing that we work on improving, and make sure that people consistently stay educated on selling our product. Now, we’re rolling out a totally new product category, so we have to train everybody even if they know how to sell the shirts. So, that is one of the most important functions within our business.
Referring to the pants that you’re rolling out, was it a similar process? Was it: we’re going to take a couple measurements from the lower body and then from there, you’ll come up with a customized or fitting pants size?
Exactly. The big “aha” with the pants was that you buy your pants based on waist and inseam. The challenge with the waist is that your waist tells us really little about the rest of your legs, like your butt area, your thighs, calves, etc.
We have 3 measurements: waist, seat (which is basically around the large part of your butt, for lack of a better word) and length. With those measurements, we could tell so much more about the shape of a person’s lower half of the body and can create a size that fits that versus what the industry does today, which is waist. There’s slim cut or regular cut, but it doesn’t get to the level of fit and specificity that we can.
I guess you can take a lot of what you learn from shirts and apply it over to the pants side of things. How have things been the past 3 months during a pandemic?
They’ve been tough. It’s obviously very terrible what’s happening. I think everybody’s experiencing this in their own way.
I think that’s true for businesses, too. It’s impacting different businesses in different ways. Speaking to our specific situation, there’s 2 major challenges:
- One is the channel we’re selling through essentially shut down; I won’t say completely, but almost completely for a period of time through the different stores we sell through. Fortunately, stores are starting to open back up.
- The other inherent challenge is that customer behaviors relates to clothing.
We’re sitting home, people can’t see that I’m in a t-shirt right now. I love wearing my Stantt product, but sometimes you just want to wear a t-shirt. I think there’s going to be a fundamental shift towards more casual clothing that’s already happened and it will carry over into the workforce and the office . That’s something that we’re working on; evolving our product and offering to cater to that. It’s been a tough go and I think it’s going to be for our category, a slow and steady recovery.
No one can see me, but I actually have a Stantt polo on right now. That could go to that more casual look. What is the timeline on pants that you have projected; when they’ll be available?
We’re selling them in some stores now. Stores closed down for quite a while, so as they’re opening back up, we’re training them and selling them. We’ll work on getting them on the website probably towards the end of the year, but the goal is to have it in most stores by the end of the year, a significant portion of them.
If someone walks into the store and gets measured, what is the turnaround for them, both the shirt and the pants?
7-10 days. It’s super fast. What’s really the silver lining for our particular offering is that there’s going to be an increased scrutiny on inventory; it’s what’s really hurting a lot of retailers right now and brands also.
Retailers are rejecting orders or not actually taking in what was ordered. We’re trying to make sure we’re positioned for strength, where we have this whole size system, really fast turnaround, and we also have no inventory beyond the try on sizes, which is a huge huge benefit to the stores.
One of the things I’ve always liked about ordering them online is that it saves all my measurements. I think that’s kind of the Amazon model; make this thing as simple as possible for someone to purchase. You go on, it shows you what size you are, and it’s like click click and all of a sudden the thing shows up in a couple of days.
We’re simple creatures. We want something that fits well, but we don’t want to spend the time going through the process.
Did you see any trends in terms of online versus store going forward, or is it basically looking at both channels and keep moving and try to expand in both channels?
The impact on retail has obviously been devastating. I think that retail is not going to look the same. I think this pandemic has accelerated a lot of trends by 5-10 years. I think it’s that idea that retail isn’t going away, but it’s certainly going to shift dramatically.
We still do see it as a very important part of our business and our product, but it’s not something that we can solely rely on. So, we’re also spending more time on the website and we’ve certainly seen tons and tons of reports out there.
I’m not going to even try quote data because that’s not my expertise area, but there is certainly a shift happening of people buying more online versus in retail. I think a lot of that’s here to stay for good.
You have people who weren’t comfortable or didn’t want to buy online for some reason trying it. I think we need to be competing aggressively in both channels for sure, then eventually doing more pop-up stores again in our own retail. I think it’s something we would love to look at when the timing is right.
In terms of custom shirts, you guys were one of the firsts in here Do you see copycats or people trying similar strategies of making a custom shirt? Maybe not the 3 measurements, but something similar?
Yeah, I think the reality of the world today is that it’s easier to launch a business than ever before. I’m oversimplifying this, but:
- you find a supplier
- you build a sizing system
- you can be up and running
It’s obviously way, way, way more complex than that, and we know the data points and tens of thousands of customers that we fit and we’ve been able to refine our system from, so it’s not to say that it’s easy to do. But, yeah, I think any category these days, you’re going to see copycats and people trying to solve similar problems in different ways.
We’re really focused on doing it the Stantt way, making it really unique to us, making it incredibly simple and doing good along the way.
I noticed on your website that it said that you guys are donating proceeds to the Harlem Children’s Zone. Is it part of that mentorship shift and that mentality that you guys are taking?
Yeah, absolutely. There’s so many terrible and great things happening in our world right now. We want to be part of the change and part of the good.
That’s a big reason why we’re supporting that particular group. We partnered with one of our investors, Harlem Capital Partners to help support that particular group, which we’re really excited about.
The Most Important Step: Just Start
So how many years has it been since you left your corporate job?
I’m so bad with dates. It feels like a year sometimes, it feels like 20 years sometimes. I think we left in 2013.
Would you do it all over again?
Absolutely. It’s kind of like when you work out, you lift heavier and heavier and heavier weights, or run longer, longer, and longer.
What we knew at the beginning is nothing compared to what we know now. I love that process. It’s almost forced learning; there’s no other way. You either fail or you learn and grow.
It’s been a fun process. I’ve learned so much in so many different areas I’ve never expected to have expertise in, or even any experience in. So, absolutely.
And, it’s freedom. At the end of the day, you always report to somebody. Whether you have investors or no investors, you’re in a corporate job, whatever it may be.
But, the ability to have an idea, say: let’s do this and make it happen. I was running innovation in my last career, and just the number of reviews and meetings and changes and tweaks and watering things down versus: let’s just make this happen, get it out there and see what works and what doesn’t work, and improve it. I love it.
You’d recommend that similar: you have an idea, you want to do it, just go for it?
You just have to start.
It’s always the hardest part.
You have to start. Everybody’s situation is different; if you have family to support.
Everybody’s situation is different, but at the end of the day, if you don’t start, nothing is going to happen. The only thing I can recommend is to break it down into really small, simple things.
It’s so easy to get overwhelmed if you start to list out every single thing that needs to happen. Just start with the 2 or 3 things that move it forward.
You don’t need to have your legal structure from day one. You don’t need to have your accounting systems. Eventually, you’re going to need that stuff, but figure out what’s most important to move it forward. Start the momentum and just keep it going and going and going. It builds over time.
Did you start a formal business plan or did you kind of just wing it when you guys first started?
Even to this day, it’s a question of: how far in advance do you plan?
We’ve gotten now into a quarterly planning cycle where you have 1 year, 3 year, 5 year-type vision/goals. At the end of the day, you just have to be scrappy and you have to be willing to change and pivot.
Originally, people wanted full business plans and things written out, but things change; especially early on. Every month, every week things would change.
We would always have those guiding pillars, but we tried not to plan too far out. We still try not to plan too far out.
I think with bigger corporations, you kind of need some of that, but with the scale we’re at now, we can be very nimble and just execute on the next 3 months’ goals and pivot in between if we need to.
Did you initially fund it from a combination of savings, the kickstarter, proceeds, or did you have investors early on?
We started with our own money and then the kickstarter. We knew pretty early on that we wanted to bring on some outside capital just to keep things going.
It was not a simple: buy a few pieces of inventory. There was some significant overhead associated with it, so we brought on some angel investors pretty early on. We’ve raised a decent amount of money since then, nothing crazy.
Our last round, we had a corporate strategic come in on the series A, which has been an amazing experience; having somebody who truly has our best interests in mind and expertise that they’re willing to lend, and people’s time. It is a very very large corporation that has a lot of experience.
We have so many angels surrounding us who are incredibly smart and have been a big part of the journey, mentoring and helping us along the way.
The money from investors is one thing, but getting their experience, help, and knowledge.
We’ve been, I don’t like the word luck, very fortunate with who has gotten involved with Stantt. You hear horror stories: capital coming in and taking over, liquidating the company when they don’t want to.
But, our investors are nothing short of amazing. A big part of it is the intellectual knowledge side beyond just the capital. We lean on a lot of our investors and ask for their advice all of the time.
I can see that definitely being a big-going back to not mentorship, but really, how does this thing keep moving along, getting better, improving? That’s one of the ways to do it.
Absolutely. Surround yourself with people way smarter than you.
We’re just about out of time, Matt. How best can someone reach out to you? How best can they get more information on Stantt?
You can check out our website, www.statntt.com. Or, you can reach out to me directly. I’m [email protected].
Or, if you want to see an actual shirt, you can come to my office. I’m most likely going to be wearing one.
And, once stores start to open back up, we’re every Nordstrom and better and best men’s stores across the country. You can find a list of those stores on our website as well.
Thank you Matt. I really appreciate you coming on.
Thanks so much Marc, I really appreciate it.
Thanks everyone for tuning into today’s episode. Until next time, have a great day.