About this episode

To reach the success we’ve always dreamed of, we must become obsessed with understanding failure. The key is to analyze every decision we’ve made and outcome we’ve seen and figure out what small step we can take to make it better. Navigating and growing through these troubles will make us stronger.

Keith Nowak knows this better than anyone. He is the co-founder of Ten Thousand, an athletic apparel brand for men. Their approach has not been to create an extensive collection of mediocre products, but to create just a few products that are remarkable in their category. This has contributed to its incredible success. Listen in to hear how he went from aspiring soccer player to crazy successful business owner.

In this episode, you'll hear.

  • The upbringing and experiences that ingrained certain ideas, mindsets, and processes into Keith.
  • How being obsessed with failure helped him in the long run.
  • The link between his soccer years and his time at Immersive.
  • How to see the struggle as part of your journey.
  • His journey leading up to Ten Thousand.
  • The first step he took to learn design.
  • How he executed his launch year.
  • The catalyst for the growth he saw in 2019.
  • How he competes in a space with so many big names.
  • The challenges that came with COVID-19 and what it exposed for Ten Thousand.

Resources from this episode

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The Startup Story on LinkedIn: https://www.linkedin.com/company/thestartupstory
The Startup Story is now on YouTube: https://www.youtube.com/jamesmckinney
The Startup Story on Instagram: https://www.instagram.com/thestartupstory

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EPISODE CREDITS

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Episode transcript

The Startup Story - Keith Nowak

Keith Nowak: Hi, this is Keith Nowak, cofounder of Ten Thousand, and this is MY startup story.

Every wildfire began with a spark. Every superhero has an origin story. And every single startup has a moment that they point to as their beginning. And every founder has a purpose that drove them in the midst of all obstacles. THAT is The Startup Story.

[00:27]
James McKinney: Welcome to another episode of The Startup Story. It's been a while since I mentioned it, but if you're new to The Startup Story podcast there is a way that you can advertise your business for absolutely free. All you have to do is just leave a five star rating and a written review in Apple Podcast and if you do that I will read your review in an upcoming episode so make sure you plug your brand, URL, or social media account in that review. These episodes live on forever and so will your ad. I'm basically giving you a free advertisement for writing a review on Apple Podcast. It's my way of saying thank you for taking the time to write that review.

And with that in mind, I want to say thank you to Carter6547 who gave The Startup Story a five star rating and wrote, "I've learned so much from this podcast and I love going back and listening to older episodes. Thank you for the great content." Also, thank you to Bailey Alexis who gave The Startup Story also another five star rating and wrote, "I can't believe I came across one of the most valuable podcasts for anyone in the business world. Sooo good." Well thank you Bailey. That review also is sooo good, and thank you so much for taking the time to write these reviews. Again, please leave your brand, URL or social handles in the review so when I read them they become an ad that will last for years to come. Now let's keep rolling.

Last Friday we held a private livestream event with Ben Chestnut, the founder of Mailchimp. This livestream event allowed entrepreneurs just like you to have their questions answered directly by someone who has accomplished some incredible things within the entrepreneurial space. Those in attendance were able to receive direct mentorship from Ben, and it was an unbelievable experience. It was so good that we're going to do it again. We will be hosting a private livestream session with Julie Bornstein, the founder of The Yes and former Chief Operating Officer and board member of Stitch Fix. Julie helped scale Stitch Fix to $1 billion in under six years. Prior to Stitch Fix, she was also the CMO and Chief Digital Officer for Sephora. Julie is an absolute force of nature and you will have the opportunity to join a private livestream event where you can have your questions answered directly by her. Yes, you heard me correctly. You have the opportunity to have your startup questions answered directly by a founder that has executed numerous times and can provide you with tactics and strategies to accelerate your personal entrepreneurial journey.

But here's the thing, you need to be a member of The Startup Story Inner Circle. And look if you're not already an Inner Circle member then you missed out on our private livestream with Ben Chestnut, founder of Mailchimp. So if this is an opportunity that you would want then all you need to do is join The Startup Story Inner Circle ASAP because our recording session with Julie will be taking place on Thursday, August 13th. Don't let this rare opportunity pass you by. Just visit thestartupstory.co/VIP to sign up today so you can be part of this super private event. When have you been afforded the chance to sit with someone who has accomplished so much within the realm of business and entrepreneurship, and receive direct mentorship from them? This opportunity can truly change the trajectory of your business but it is only for Startup Story Inner Circle members so visit thestartupstory.co/VIP today. All right, now let's jump into this week's episode.

Our guest this week is Keith Nowak, cofounder of Ten Thousand. Ten Thousand is an athletic apparel brand for men and if you're like me, then the first thing you're probably thinking is why would a startup try to compete with the likes of Nike, Under Armour, and Lululemon? But that is exactly what has made Keith and Ten Thousand so successful. Their approach has not been to create an extensive collection of mediocre products, but to create just a few products that are remarkable in their category and they've accomplished this. I believe part of the success that Keith and the Ten Thousand is experiencing is due to Keith's obsession with understanding failure. We actually spend quite a bit of time discussing this concept so make sure you strap in for a fascinating conversation. Ideas and process that we adopt tend to ingrain themselves within our very being based on our experiences and upbringing. And if you've been around The Startup Story for any length of time, then you know we like to unpack those experiences from the very beginning.

[04:43]
Keith Nowak: My father is a patent attorney. He's been an intellectual property attorney for 40 plus years, forever. And so as a kid I remember distinctly to this day him always saying to me if you really want to make it big in this world, you want to make something of yourself, you've got to build your own company. You've got to be your own boss kind of thing. Not in any facetious sense, but just like he's working with a million companies. That was something that just always stuck in my brain. I didn't think of it as entrepreneurship it was just this is what my dad said, that's advice, that's a thing. I don't know from that a little bit and always had I was instilled with a very hard work ethic as a kid.

I just kind of like, my parents are both immigrants and it's been part of what we do, just work hard and just figure shit out. I think I always had this little chip on my shoulder maybe of this feeling like I had something to uncover in myself, an ability. I had something that I wanted to do that was a little outside of my reach at the moment always, but I was just compelled to kind of scratch that itch if you will. So like I mentioned, background of build your own company as a thing going always in my brain, and growing up I played soccer very seriously. It was kind of my only focus as a child. Of course as any young athlete you're obsessed with becoming pro one day, that's your dream.

[06:03]
James McKinney: Every athlete kid.

[06:04]
Keith Nowak: Of course, right? I took it really seriously and I got to play in Italy after high school a bit in third division and kind of go for it. I never really conceived of going to college. I wasn't on that path. I got the grades and I was going to go to school, but it was always like that myopic focus. I had a goal, I had a thing I wanted to do, a little bit outside the mainstream maybe and I was obsessed with it. I was always really focused on kind of trying to carve my own path. Not in an I knew what I was doing sense, just that's looking back now that's what I was doing. But at the time it just felt normal and natural to me.

[06:40]
James McKinney: you know, I want to unpack a few things before we continue on with the story. So I love the immigrant element to a founder story. There's something dynamic about whether it be a first generation American born from immigrant descendent, whether it be first generation immigrant founder. Your parents being, I'm sorry was it both parents that were immigrants or your dad?

[07:03]
Keith Nowak: My mother directly, my father was first generation here, but both grandparents very… yeah.

[07:09]
James McKinney: So with both of your parents having the immigrant story as part of it, where were they from and how did that parlay into just your general upbringing? Because I think immigrants have such a really it's a perspective I wish generationally born Americans would have, just the idea of truly understanding how much potential you have here in the US-

[07:30]
Keith Nowak: 100%.

[07:30]
James McKinney: … and owning it, whereas there are so many generationally born Americans here that just take it for granted.

[07:37]
Keith Nowak: Totally, totally.

[07:38]
James McKinney: What was it like being raised by first generation immigrants?

[07:42]
Keith Nowak: I don't think there was any overarching "This is what we do in this and this way," but there was little things along the way. On my father's side they were farmers in Wisconsin, came from Germany, tough life being a farmer. It's six kids and it was just like you figured it out. It wasn't easy and the idea of self-reliance and self-drive really was part of that upbringing for my father, and that really transferred to me. I feel like that just kind of defines me really in just I will out work anybody, I will do whatever it takes kind of mentality. On my mother's side, they came from Italy. She was born outside of Naples so she immigrated here. They came here with literally nothing, the traditional story. Dollars in the pocket kind of thing and just made it work.

My grandfather on my mom's side became a successful carpenter and figured it out with no language, knowledge. The story is my mother went to grammar school, didn't speak a word of English. Can you imagine today a kid six or seven years old, sitting in the back of the classroom, not understanding a word of the language and just being told, "Go figure it out." We don't know what to do as parents, go to school, they'll take care of it." Today it would be this whole drama around it all. I think that's just the adage you get from having that upbringing is just figure it out. There's an end goal, an end state in mind we need to get to. We're going for a better life, a better future for the family, and it's going to take a lot of work but we're just going to go do it. I think we're losing a little bit of that, not to get too much on that side.

[09:08]

James McKinney: No, let's go there, absolutely.

[09:09]
Keith Nowak: But you know I just feel like there's a lot of expectations these days, a lot of not wanting to work hard, wanting to just… I think we're losing the perspective that this was not always here. This culture, this country, what we have access to wasn't always here. This was earned, this was built. If we don't maintain that focus, it's going to go away. The reason that we can do what we do and be entrepreneurs, and create stuff out of nothing, and create jobs and pursue passions is because of what came before us, and the foundation that was built. You don't see the same entrepreneurship across the world because the cultures are different. If we begin to think this is just being taken for granted as you say, I don't think too far in the future we will not have the same opportunities that we have right now as entrepreneurs, right?

[10:00]
James McKinney: Absolutely. The innovation starts to die at that point.

[10:02]
Keith Nowak: 100%.

[10:03]
James McKinney: Because you begin to think oh this is just par for the course. My son loves, he's 12 years old going on 13, he loves the game Roblox. A huge billion dollar story out of San Francisco, but it's part of what he does, part of who he is, and it's all he knows. In his mind, I have to keep telling him, someone created this. This was not here just four years ago. You could be creating something like this.

[10:28]
Keith Nowak: That's the thing that I think is missed, right, and I think people look at it and say, "Oh well it's all been created, it's all here, its infrastructure." I think the inspiring take on that, the inspiring view on that, this is not new because Steve Jobs is quoted by saying the same thing, look around the world. Everything you see has been built by somebody, just a person. Just some dude or woman who was like, "I have an idea," or, "I have an itch to scratch," or whatever, and it was all created just by somebody doing stuff. Getting up one day, taking one step, taking another, and so forth and so on. I just think that incrementalism mindset, that patience mindset we're missing these days a little bit. I'm not that old, I'm 37 right, but I feel like even in my lifetime I've seen a change dramatically.

[11:09]
James McKinney: Oh, 100%.

[11:10]
Keith Nowak: Even in the last 10 years honestly. I think we need more of that just figure it out get stuff done, whatever it takes mentality. Otherwise we're going to lose our roots as a country, and then therefore lose all the things that give us the opportunity to be what we want to be and do what we want to do.

[11:25]
James McKinney: Absolutely. And not to get too meta but when you look at a global perspective, we are an incredibly young country still.

[11:33]
Keith Nowak: Incredibly young.

[11:34]
James McKinney: Our economy is 250 years old, almost 250 years. That is a blip on the global scale, so yes we are still figuring things out ourselves and I hope we also don't lost that hard work and grit perspective that kind of goes with everything, but back to your story. You had this vision for soccer. So when I go back to the upbringing of figuring things out and hard work. You talk about your grandparents on the farm and very blue collar. When you think of the idea that you wanted to play a game. I'm not belittling it for what it is-

[12:11]
Keith Nowak: No, for sure.

[12:12]
James McKinney: … but that, when you start thinking of the conversation, what were some of the family conversations as they had kind of done so much to build the family where it is and yet you want to play a game.

[12:24]
Keith Nowak: Just screw off and go play soccer. What's really funny that you bring it up actually, so like to dig in a little bit further into my father's side, farms, working class. My father is the first to go to college vis-a-vis the Marine Corps, so he got his way out of there.

[12:34]
James McKinney: Oh, Oorah Marine Corps right here.

[12:36]
Keith Nowak: I was all geared up to go as a kid and then I fell in love with soccer, and was like well I can't do both. But that was also part of my upbringing too was the Marine Corps mentality as well. Actually, this is completely aside but growing up the story is my father would sing to me the Marine Corps hymn as I was being rocked to sleep. A lot of Marine Corps vibes throughout the family. I'll never forget it my entire life because it's seared into my brain. Actually we had a daughter, our only child, was born five weeks ago and my wife was like, "Sing her a lullaby." I was like, "I don't know any," so I started singing the Marine Corps hymn, just passing it on you know? It's going to be part of my family now.

But yeah first to go to college, typical story right there of getting out, figuring it out, going on his way, doing his thing, becoming a successful lawyer in new York City. A whole different path to where his family came from. And what's funny is my family, father and mother specifically, were very, very insanely supportive of whatever I wanted to do, whether it was go to school, go play this game, go figure out whatever I wanted to be. You might find it counterintuitive because there was so much work into building it, but I think the work that went into it was to give the opportunity to the kids whatever it was, whether it was that generation or this generation, to go pursue the passions that you had.

Certainly there were people actually in my extended family like, "What are you, crazy? Go to law school, do the conservative thing." But no, my immediate family it was very supportive. It was always about pursue the passion, pursue the belief, be who you want to be kind of thing. I think that also inspired me to carve that path out. It was soccer at one point and now it's building companies, but it's always they've been there throughout every step of the way to be insanely supportive and there for whatever decisions we made.

[14:16]
James McKinney: That's awesome. So obviously we're not talking to you today because you are a successful footballer.

[14:22]
Keith Nowak: No, unfortunately not.

[14:23]
James McKinney: What was that journey for you and what were some of the key lessons during that season? Because again you were maybe 19?

[14:31]
Keith Nowak: 18, yeah.

[14:32]
James McKinney: 18 or 19, so coming out of this what are some things that still apply to you today as you look to build the business?

[14:38]
Keith Nowak: So when I was in high school I got a chance to go to play in Italy for summer with a team from the states and I got a trial on a few different teams. A couple of teams wanted me to come that winter basically, or that fall I should say. That was my junior year of high school. I was like all right, cool, I'm in, let's do it. My mother was like, "No, that's not going to happen. Finish high school at least and then you can go back." So I got that delayed and went after high school. Being an 18 year old kid, and by the way I was not living like in cool, I was not in Milan or anything. I was in some small town outside of Rome, nothing special.

Being an 18 year old kid, not speaking the language very well, just going again just figuring things out, was certainly a life changing experience. It was gaining understanding of new cultures in a way that you wouldn't have had otherwise. It gave me an appreciation of failure. It's like blatantly complete failure. I went there with a massive goal and after one year it didn't work out. You're 18, you think this is going to be it man, I'm going to be the next whatever, I'm going to go make it. And you don't make it. For a long time I was very obsessed with failure to be honest with you. I was actually talking to one of my teammates the other day about this. Growing up playing soccer, I would go home after every practice, have notebooks, stacks and stacks of them. I would write down every mistake I made at that practice. Missed pass here, didn't move that, whatever. Literally to the -enth degree. I always had this weird compulsion to find perfection. By no means have I ever come close to it at that level, but that was a learning curve for me, accept failure and kind of be okay with not being perfect. Obviously no one is perfect, but there's a mentality I needed to shift, the concept of failure being part of your life and then reality of it.

[16:24]
James McKinney: We've had past founders that again I'm going to say suffered from it, perfectionism. I truly believe it's an illness that can hold us back from so much. Where you were fascinated with failure so obviously you did not suffer from perfectionism to the point where it would stop you from doing something out of fear of failure, you were obsessed with understanding failure. Do you think that helped you in the long run or does it create a challenge for you because you're constantly making, to your point, a log? You're constantly making a journal of the mistake.

[16:55]
Keith Nowak: Totally. Yeah, you know it's a curse and a blessing I think to some degree. I think that's part of what's gotten me here and anybody who is in my position or most people must better positions, but they have this like unsatisfied feeling, like never satiated. I think you need that. Otherwise life can get pretty cushy pretty easily and you say, "Okay, cool, this is good. I'm great, I'm happy." Happy is very important. I think happiness is a choice, but satisfaction is a different thing than happiness in my opinion. I'll give you an example more recently. So we launch a new product Monday, our new short in over a year. Huge success. Literally every metric you can measure was massively successful.

The next day I put together a Slack with a couple of my teammates being like, "Hey, I was just thinking about numbers and this part I think we didn't do well enough on," and that was met with a little bit of hesitation. He was like, "Wait, what do you mean? We didn't crush it? I thought you said we crushed." I'm like, "Yeah." I had to pause myself once in a while and think about now as a leader what that obsession with perfection sounds like to other people. I was by no means saying we didn't do well or didn't crush it, it was like that next optimization. You don't sit in the moment and enjoy it long enough, and that has been a challenge for me personally is to find that moment of enjoyment versus that sort of okay, take a deep breath, and move onto the next one. I think that's been a hard lesson, and still am working on it to be honest.

[18:20]
James McKinney: That's awesome. I want to get to that as we get to the Ten Thousand chapter of your life if you will, but your soccer season, your career comes to an end of course.

[18:28]
Keith Nowak: Yep.

[18:29]
James McKinney: As someone who is fascinated or fixated on failure, the fact that you're not a soccer player fulltime, that whole chapter kind of wraps up for a lot of people as a failure, a lot of people see it as success as well. But what was that next venture for you? When you wrapped that up what was the next season?

[18:48]
Keith Nowak: So college, came back to the states, went to school at Boston University. It's funny, I look back at my college years now it was almost like the opposite of every other part of my life where I stopped playing soccer, I didn't train anymore, didn't work out anymore. Kind of went in the opposite direction entirely. I took four years of not vacation by any means, I worked hard and did well, but in retrospect it seems like a time where I had to reset a little bit. I went to school and enjoyed college of course. Studied philosophy which was, that was a little bit of a controversial choice in the family besides not the soccer thing, the philosophy degree was a bit of a controversial choice.

[19:24]
James McKinney: Really? Why so?

[19:26]
Keith Nowak: Just it's impractical.

[19:27]
James McKinney: I thought for sure, especially with your dad being a patent attorney, what are you going to do with that son?

[19:33]
Keith Nowak: And then the plan was to go to law school. I applied, got into a bunch of law schools after college, just decided it wasn't for me. I didn't want to do it. Right after college was my first company so I kind of moved from school to my first business. That senior year I was kind of developing my first ideas and launched my first company right after school, and then got… I've been building and investing in companies kind of since graduating college.

[19:54]
James McKinney: So that first company if I'm correct was Immersive.

[19:57]
Keith Nowak: Correct.

[19:58]
James McKinney: And can you tell us a little bit about what Immersive was, or what you wanted it to be? And a quick snapshot of the lifecycle of Immersive before it ended?

[20:09]
Keith Nowak: So you've got to cast your mind back to years ago now, 2006, remember what life was like back in 2006.

[20:15]
James McKinney: For most people, the reference I give is pre iPhone.

[20:19]
Keith Nowak: Yes, yes, and that's a very good point. Pre iPhone, Facebook was just new, it wasn't really a thing yet, and AOL Instant Messenger was the most popular social network.

[20:29]
James McKinney: And there's a segment of my audience who'll have no idea what you're talking about.

[20:31]
Keith Nowak: Yeah, possibly. Yeah and so we built technology. The vision was that at the time brands were beginning to try to find more ways to connect with customers where they were. We had a vision that we could build technology that would let brands basically be on your buddy list from an AOL Instant Messenger perspective, and then the customer could initiate a bot chat with this brand to get information, buy products, whatever. It had that sort of one to one connection between brand and customer vis-a-vis that personal buddy list. It was a cool technology for sure, but we caught the downward trend of AOL Instant Messenger and missed the upward trend of Facebook, so kind of caught in that middle world or no man's land. Raised a little bit of money, some angel money, kind of learned that process.

It was about three years or so working on that business before we got sort of hired by a brand called Mibo which was again a company that was doing a web based IM chats, and so I worked there for very brief second. I realized quickly that being within a company was not the right fit for me. At the time, I was also coming off again a major failure. You don't start a company and think this is going to end in three years. You think I'm going to be the next insert name here, right? That was another tough learning curve for sure. But I learned a ton about building businesses that way. Some deep battle wounds that still drive me today.

[21:59]
James McKinney: Let me ask a question about Immersive, and really let me ask a question about the ending of Immersive. Knowing how obsessed you were with failure and still are to some degree, do you link in your scorebook if you will, do you link failed at soccer, failed Immersive, do you link the two or are they completely separate and your soccer chapter of life was an isolated incident but really your career picks up from Immersive on?

[22:28]
Keith Nowak: Post Immersive on I was a different person, let's put it that way, I think now looking back. In the moment, you don't think about this stuff you just kind of live and you do things. But now looking back… I mean there were dark days after that company closed to be honest with you. This was 2009 by the way so this is now the height of the financial crisis. Things aren't going well on a macro level.

[22:46]
James McKinney: Anywhere, yep.

[22:48]
Keith Nowak: Anywhere. Things aren't going well on a personal level. I'm living back home with my parents, there's not… I'm not crushing it by any means and now I'm living on back to back failures basically. Two things I really wanted to make part of my life didn't work out, and that was tough. That was not easy by any means. But again you just get up and do it again. I think there's no other option. There is, there's certainly people in the world who don't get up and do it again, for whatever reasons financial, emotional, there's a billion reasons why. I'm not saying it's weak or not weak, it's just I don't know there's a million reasons you can be on one side or the other. But for me it was never a choice.

Like I said earlier, there's a chip on my shoulder. There's a compulsion to fulfill this potential that I feel. Not like I'm going to be this great person in the world, but like there's two version of myself. There's the me and the should be me. I've always had that view of my life. That's what gets me back up again. It's like not there yet, we'll do it again, you know? I guess it could be seen as a negative but I just look at it as another learning opportunity now. I try to. At the time no, for sure, it was this is the worst thing in my life. But now I've come to realize those failures aren't failures. They're learning opportunities.

[24:01]
James McKinney: Let me ask this question. I agree with everything you're saying. It resonates with my story and will resonate with a segment of my audience as well. There's going to be a segment of my audience that's the wantrepreneur, the one who has this book full of dreams and ideas but some narrative as to why they can't proceed and pursue it. Part of that is a level of fear. In my own story I have repeated failures, but when I think to why do I stay on this path when there's so many easier ways-

[24:32]
Keith Nowak: Totally.

[24:33]
James McKinney: … to navigate this life, part of it is I truly do say DNA makeup because I got to see it through my dad as well, and his story being very similar. So I can see why I continue to go down this challenge. For you, that was not your parental upbringing. There was a stable example that was presented: go to school, be a lawyer, whatever the case may be. Where do you get it from to where you don't go back to well this is such an easier journey, I'm just going to go the stable career route?

[25:05]
Keith Nowak: I don't know if there's an answer to that question. I've done some soul searching over the years on that one to be honest with you. My wife has asked that question many, many times. We've been together for a long time, since freshman year of college actually, so we know each other very, very well and she's come to live with the downsides. But I don't know man. I think it's just part of the makeup of my being. There's no really other path that I can see. It's just part of me. There wasn't a moment of choice, it wasn't like oh I'm going to choose this or I'm going to not, you know. There's never been a choice.

[25:45]
James McKinney: I think that for all of my audience that's listening, I think the inability to explain it says something in and of itself. It's the I can't see it any other way and so for those who are listening that maybe are in that wantrepreneur, you have got to get to a place where you just cannot see any other way than pursuing your own thing. And for those who are struggling within business and are maybe absent of the traction that they'd hope to have had after so many years of doing this, if you still can't see yourself being employed or seeing it any other way, then part of this challenge and struggle you're going through is part of your story and journey, and you have to keep going through it.

[26:25]
Keith Nowak: Absolutely, man. People ask me how do you know when to start a company. I've had that question a few times. It's like well from an idea perspective, it's when that idea burns a hole in your brain and you can't think of anything else in the world, you just obsess on this one thing. But that's different from being an entrepreneur. I think that's I have an idea. Being an entrepreneur, and again there's many, many, many that are better entrepreneurs in this world than I ever will be probably but they all have a similar story. There's pock marks of failure across their background. There has to be, right?

[26:57]
James McKinney: Always, always.

[26:58]
Keith Nowak: This thing is just too damn hard to do it well every time, right? There's a lot better ways to make money, a lot better ways to have a work/life balance. I think you can launch a company, have ideas, but until you have that again obsession with I want to create something, I want a company to be the expression of my vision in the world and you can't live with that not happening, you haven't made that leap mentally. I don't know if you can force yourself. It's either like partly repetitive, just reps will get you better at it, you'll get more comfortable at it. I think partly and this goes back to the fear part, I think partly is fear driven. What if I don't do this well, what does that mean about me and my whole life? What if I can't figure this out? I'm not going be that person I think I'm supposed to be, so you're like I've got to do this again. That can't be the case, that's not possible right? And lastly it's I think a lot of it is finding the right business to work on, in the sense of for me all previous businesses were all intellectually interesting. They were like this is a cool idea, this can make money, this is a cool way to spend time. Ten Thousand is the first one that comes from my soul, it's like part of who I am.

[28:08]
James McKinney: Oh, I love it.

[28:09]
Keith Nowak: It's not like I'm doing it because I want to solve a white space in the market, or check a box of being an entrepreneur. This is like the intersection of my personal and professional lives. That makes the journey a lot easier.

[28:25]
James McKinney: I love it. And I want to accelerate our time together to get to Ten Thousand. There's so many questions about your journey leading up to Ten Thousand I want to jump into those, because our audience doesn't know what Ten Thousand is. So we're going to get there, audience, I promise. From the time of closing Immersive, can you give us some bullet points of your journey leading up to Ten Thousand?

[28:46]
Keith Nowak: Yeah, super-fast hit list. First was like time in the desert, wandering around aimlessly, taking on some consulting gigs here and there. Again, this is like 2009 and 2010. Startups now are becoming like a thing in New York, so I've done one. People are like you've done one, come hang out here, help me do mine. Nothing really kind of evolved, a bunch of ideas, a bunch of iterations. Then I got hooked up with this organization called Tech Stars which is an accelerator for startups. I was employed by Tech Stars as a consultant kind of, gopher kind of for the company, just being around and help with whatever they were doing. Through that met some people. Through those people met the family office that I worked for, for a few years, as an investor.

I think that's where things really started changing dramatically in my career perspective. I worked there for a few years. Basically joined as the family office I was working for did a bunch of fund investment, investing in VC funds, and they wanted to accelerate their direct investing so I helped kind of run that process and run point on finding and managing direct investments. Through that process met a lot of amazing entrepreneurs. We invested in 50 or so businesses when I was there, mostly seed Series A kind of companies. Became close friends with the founder Lloyd Parker of Everlane and so those companies blazing the trail of B to C brands really gave me a lot of the inspiration and ammo to kind of go after Ten Thousands. So I can kind of dovetail that in with my origin story of Ten Thousand, but that's kind of the hit list of what I did in that period of time, basically from there just launching the company.

[30:16]
James McKinney: You know, it's funny whenever I hear entrepreneur stories that have an element where they're in the entrepreneurial circuit but they're not doing their own thing just yet, it reminds me of the challenge it must be for someone who's a recovering alcoholic to hang out with friends at a bar.

[30:35]
Keith Nowak: Yes, that's a great reference.

[30:36]
James McKinney: I'm not touching that, I can't touch it. Now, as you're hanging around some incredibly successful brands, helping them on the investment side because you're working for an investor and a fund, what was percolating internally that actually got to the point of wanting to start your own brand? How did you get from helping brands to I want to start my own now?

[31:02]
Keith Nowak: Well, I think the overarching feeling in those days I'm as good as these guys are honestly. Really, it was like maybe that's hubris, maybe that's arrogance, I don't know but it was like cool, they're doing great things, they're really interesting people, they're doing great businesses, but I don't see any special sauce here. I'm look cool, they had an idea, they worked hard, they got lucky breaks along the way which is of course a major part of it all. They just figured it out and worked hard, right? I was like I can do this. This gave me more confidence that I could be that person that I wanted to be. Yeah, that was kind of the overarching feeling. I tried to learn a lot, as much as I could, and really start pattern matching and understanding what made for a great business versus a mediocre business. But honestly in the end you've got to just do your business. I don't think there's a playbook for building a company. I wish there was, there isn't.

[31:56]
James McKinney: So many people monetize on the idea that there is some type of playbook and it's just not. That's why I created The Startup Story was to your point you saw these great founders and you said to yourself they're normal people, I can do this. They're normal people that executed well. I am not minimizing what they did because they executed really well and for someone like myself who has a graveyard of failed startups in my past, I know how hard it is or how hard it can be to execute well. But nevertheless, there are infinite things that one could start a business based on. You went with apparel. Why and how did you get to Ten Thousand?

[32:41]
Keith Nowak: It's a confluence of a few factors, so bear with me for a second.

[32:44]
James McKinney: No worries.

[32:45]
Keith Nowak: Basically, a couple things. One was like I mentioned to you we invested in Everlane and Warby Parker, and I've always been a bit of a brand nerd, just like a design… I just like design and brand stuff. I was just fascinated just naturally with what they were doing as high quality curated product brands in crowed wholesale driven businesses. This is cool, this is exciting, this is fun was one major piece of it.

Secondly which is as an athlete I had worn every brand, every product out there over the years and as I was kind of moving now out of being an athlete, being more of just a dude staying healthy… So real quick, after soccer, went to school, launched my first company. The one piece I mentioned is during those dark days after my first company, it was pretty depressed to be honest with you. My father was always a runner, always been a big runner, and he's like you've got to get your endorphins going and you've got to get back interesting he game to feel better. I was like I don't want to run, running sucks. Running is to train for soccer. But I became obsessed with endurance sports.

I got into marathons and Iron Man triathlons, and so just went down this huge, deep rabbit hole of endurance sports for a long, long time. As a guy, just trying to be healthy, trying to live a good life, use fitness as a lens for my personal growth as a human I realized that there was like one, no brand really spoke to me anymore. There was the Nikes of the world really about pro athlete workshop and really built for the teenage athlete and the team sport kid. I was like yeah, I don't really care about LeBron James anymore. He's phenomenal obviously, but doesn't resonate with a mid-twenties, early thirties guy anymore as inspirational.

And then the product side of things really just partially because finding a great pair of workout shorts is actually really hard. Most products on the market are low quality because they're built for the wholesale model so they're optimized with that margin. The buying experience is pretty poor online specifically. Nike's site has 180 pairs of shorts. Why is one $30? Why is one $90? What the hell is going on here? I just want a pair of workout shorts. So that was part of it too was the customer frustration. The last thing was like a vision of just the explosion of functional fitness. CrossFit boxes, boutique fitness studios, the Barry Bootcamps of the world, Orange Theory, Equinox. This absolute explosion of functional fitness and kind of to my point before like no brand was built from the brand up for this customer.

The best option we had as guys was like Lululemon's men's business, and that was built as a women's yoga brand. Great product for sure but it doesn't have that core resonance with like me as a dude, doesn't speak to me the same way as other brands I was buying from spoke to me. So I just looked at all that and was like shoot, this is an interesting amalgamation of opportunities here. This is an interesting moment to be in. that was basically it. For context, I had zero apparel experience. I had zero marketing experience. I had dodgy at best fundraising and entrepreneurial experience and so I think we had mentioned a little I think you need that sort of naivete. You need that sense of like look at the world. You need to have that sense of not knowing the challenges or otherwise you're not going to start.

Spoken to lots of people over the years that have been in the apparel businesses, they're like apparel sucks. It's like super hard, cost challenges, blah, blah, blah. At the time I was like I don't know, let's go do it. If you had that context of it's a really hard industry you wouldn't necessarily have gone in that direction. I think that should be inspiring to for us as entrepreneurs, like you might feel inadequate because the industry is lean with experts or whatever. But experts are pessimists. The experts don't believe in the opportunities that you may see because they're mired in the minutia. If you can step back and detach you can see things that maybe experts can't see.

[36:25]
James McKinney: And let's just be honest too, most experts are not doers anyways.

[36:28]
Keith Nowak: Correct, for sure.

[36:30]
James McKinney: So the experts that are giving their, I'm using air quotes, thought leadership on the idea are usually not the ones that are in the trenches willing to execute. But again, you called out all the things that you didn't have as far as apparel experience. You did have some fundraising experience but minimal. You worked with an investor but aside from setting up the legal entity what was your step one in all of this? How did you even get started? You're talking about design and you had no design experience, so what was step one for you? Because I think a lot of people step one probably trims out 95% of people that have an apparel idea.

[37:06]
Keith Nowak: My first step was call people that know more than I do and I just started networking, talking to people, asking questions, learning. My first objective was make a product. None of this is going to work unless I make a product, create something that I think is actually better than the competition. That was like the first step. But I had no idea what the hell I was doing. I had a design, I didn't know a single factor. I don't mill, I don't anything.

So luckily, again luckily, a lot of luck along the way of course with everything, I met a great designer who had been at Ralph Lauren a number of years. He had worked on their RLX lounge, their more sport functional line. He had just left, starting his consulting gig, and so I was like cool, I'll pay you a little bit of money to help me figure this out. He was connecting me with factories and mills and vendors, did early designs of stuff. I had a great founding partner too, founding investment partner who put a little bit of capital in, a good friend for many years. I was a broke entrepreneur, I had nothing to invest in the business. Went from there basically. Took us about a year and change to make that first pair of shorts. We thought okay, this is a great product. The first ones were horrible. The first 12, 13, 14 months were like this is never going to happen, there's no chance we're going to make a great product.

Again, just going back to that obsessiveness mentality, maybe it was the fear of failure, muscle memory, whatever we just were obsessed. I was obsessed at getting the thing right. Once we got that first product right we were like okay, we've got a shot at this. This is actually better than we can buy in the store. Then it was just about okay how do we actually put a launch together? How do we build a company? Our first pass that launch was I'm not going to call it a failure but it was not a success. In the sense that we launched early 2016. We got some great coverage in like GQ and Details, really cool press outlets day one of launch, but we sold through our first production run in like two or three weeks. We thought it'd last four or five months. We're like this is amazing, this is so cool, but being a cash strapped, inexperienced small company, we didn't restock for the entirety of 2016. We just could not meet the demand.

[39:15]
James McKinney: Really?

[39:16]
Keith Nowak: Just couldn't figure it out. It was just production times were slow, we were not prepared to respond that quickly. We'd restock, we'd sell out again in a day. It was this constant spiky, up and down year. So we look back at 2016 like we're calling that our beta year. It was the year we just had to test the waters, figured it out, made a lot of mistakes. Went back to the drawing board a bunch of times. So that was like a soft launch, a beta launch. Okay we need to figure out the back end here. That was the takeaway was like this isn't going to work if we can't meet demand. There's nothing there if we can't meet demand. So spent a lot of time figuring that out and then kind of got off the ground again in 2017. That's what we consider our first real proper year in business 2017.

[39:58]
James McKinney: That's incredible. I want to talk about year one though because I think there's a couple things you said there that really resonate with a common theme that throughout many of our Startup Story episodes, and that's the you didn't know much about design so you went and just networked. You found a ton of people, talk to a ton of people, make a lot of connections. You were with people. Then you talked about you being a broke entrepreneur, not having investment capital and so you found an investment friend to kind of be that initial capital. So many people have this idea, and I think part of it is media driven, is that entrepreneurship is a solo journey. This is something that you can self-contain. There are those stories, but they are the anomaly, they are not the norm. what I love about just those first illustrations that you talk about, those first two examples, was that it required other people to help you kind of kick things down the road a bit. But nevertheless, at this point in your first we'll say 14 months as you were going through the bad designs if you will, were you fully employed by Ten Thousand or were you still with the investment group?

[41:01]
Keith Nowak: So I left June 2014 I think it was from my job at the fund and was full time in Ten Thousand, but not taking a salary by the way so everything was going into the business. That was kind of my main focus from that point on. Then I said it took us probably until the end of 2015 to really make that first product we really thought we could like launch. So a year and a half basically.

[41:24]
James McKinney: Now looking back though, being that you had such a long time to get the right product, would you have left so early to completely work on Ten Thousand or would you have maybe tweaked your timeline a bit?

[41:36]
Keith Nowak: Yeah. For a while, I was doing both for sure but I'm a big believer, a bit of a cliche of course, but in a burn the boats mentality. It's like one dream you've got to be in man and there's for me to have this sense of like this has to work, otherwise you're going to always sort of it's easy to be like eh, it's 6 o'clock, I'm just going to go kick back and watch some TV the rest of the day because I know that my pay is going to come in tomorrow regardless. You need to have that sense of like this is not going to happen unless I do something about it to really make it work. So I don't think so. At that point I felt like we were getting closer. I felt compelled by the idea. I believed in it and I was like let's just go for it.

The one thing you touched on about the solo journey is really interesting. To fill the picture in, our founding investors were the first partners in the business and then I met my cofounder, COO… I'm CEO, he's COO, shortly thereafter, kind of right towards the tail end of 2015. Without partnering with him we would never be anywhere near where we are today. We're very yin yang but in a very, very good way. The funny story is he actually left his, he was Harvard business school, Sullivan & Cromwell lawyer, like the smart one in the relationship by far. He left his law firm job to launch his own men's active wear company and we met sort of doing both simultaneous. We're too early and we're too close of an idea to not partner up, let's partner up. I think all those decisions along the way of finding the right team, whether serendipitous or by choice, is 100% critical to success though.

One thing I would say though about that it's certainly a team effort, but I would say though being an entrepreneur is a very lonely journey though. I don't think that either you have people around you and you need people to support you. It's a very, very different journey than even being employer of one in a company.

I think it's very hard for a lot of people to endure that loneliness, endure that solitude. Whether it's even like with your family, you go home and it's like, "How was work?" It's like if I began to tell you the number of things that went wrong today, the number of decisions I had to make, the number of challenges that I faced, it's not going to be productive. Everyone is going to be like what the hell are you doing with your life, this is crazy, right? So you keep it inside. You bottle it up. It hasn't gotten any better by any means, that side of things, but I guess I would say to anybody who is listening and actually gives a shit about my advice if you feel that way, that's normal and it's not bad. It's not like a problem, it's part of the journey. It's something that I guess hardens you and makes you tougher.

[44:04]
James McKinney: That is a key truth as to why I get hit up by publicists all the time for interviewing a hired CEO, and it's like no I just interview founders because to your point, it is a completely different journey. I want to add one more layer to this before we continue on with the journey and you talking about, you talked about your wife. There is a dynamic to entrepreneurship when we are married.

[44:28]
Keith Nowak: Totally.

[44:29]
James McKinney: Especially the burning the ships mentality. What was that conversation like for you, especially given again the history, you had a stable job, you're now leaving when you don't have a final design yet? What was the marital conversation like?

[44:45]
Keith Nowak: Yeah, you know I appreciate you bringing that up actually because I say it tongue and cheek but I'm 100% dead serious when I say it, my wife was like my silent cofounder. Without her by my side, none of this would have ever been possible. There were moments, not moments months, years where she paid all the bills, and she was not crushing it by any means. She was working nonprofit job so to give you context of what life was like back then, we were super broke. But similar to my parents in those early days, she's just been always full in, 100% on board, this is what we're going to do.

By no means has it always been easy or like there's been conversations for sure, but at the end of those conversations the feeling has always been let's do this thing, we're in it, this is where we're going. Whatever we end up doing, wherever this ends up taking us, we're going to love that journey along the way. Without her this would be, I wouldn't be talking to you let alone running a company, let alone probably still sane. A lot of stuff would have gone sideways a long time ago.

[45:42]
James McKinney: Yeah, and I bring that up because there's so much, again back to the portrayal of entrepreneurship. There's so much bravado that is put into this image of entrepreneur. There is so much humility that one goes through in this. Especially when you have a family to work with in the journey, so I appreciate you sharing that.

[46:02]
Keith Nowak: Absolutely. Yeah, of course.

[46:03]
James McKinney: So now you, in 2017 you consider the beginning of Ten Thousand. So now for the audience, talking about the design challenges, the capital challenges, the production challenges. 2017 you consider really your real launch year in the apparel space, in the athletic apparel space. To be even more specific the men's athletic apparel space, correct/

[46:24]
Keith Nowak: Exactly, yes.

[46:25]
James McKinney: So in 2017 how did you execute well that year given the challenges and learnings from the previous year?

[46:33]
Keith Nowak: Not well maybe is the answer. It was okay, you know? We got the ground, we got going. That year was about focusing on marketing, like how do we grow the demand now. Now we can meet demand to some degree, how do we grow demand? This was still me and my cofounder, just the two of us. We raised a little bit more capital. I was again lucky to have connections like Dave Gilboa of Warby Parker who was an early investor in the company, Brian Spaly of Bonobos and Trunk Club are the early investors, a lot of guys like that joined the broader team early and helped me navigate those early days.

And how I got in touch with those guys if that's a question like how do I meet people, just go crazy. Dave I met because we invested in Warby but the funny story I'll tell is like Brian Spaly it took me six introductions from six different people to him before he took a phone call with me. I was nobody, of course, why would I take this knuckleheads phone call, who is this guy right? Just you've just got to go for it and just got to not stop at anything. It sounds easy but like it's just the thread through all this for me has just been a never say die attitude. So 2017 was good, got going, figured out some marketing, starting doing some paid social media marketing, and did pretty well.

I think we did decently well that first year and really kind of got things going. 2018 did a little better, launched more products, kind of got into the groove of how we do this thing, how this all works, sort of see the matrix. I know if I do X, this is produced, whatever, this is the outcome of that input, whatever. 2019 was I think a real transformative year for us. Last year we grew 4X over the previous year and really kind of just put a lot of major things in place. From there, it's been pretty fun actually for the first time in a few years.

[48:15]
James McKinney: Being that I now you are a student of your own business and especially when it comes to studying failure points, what do you think was the catalyst for the growth you saw in 2019?

[48:27]
Keith Nowak: Two core things. So we got supply chain running but with not like at all sufficient really. It was still kind of like stop/start. So just being able to have enough product for a continuous period of time, to learn how to market, like learn the levers of marketing, learn the stories that we needed to tell, what creative worked well in this ad unit. Those just nitty gritty details, we had to have a few good months of strong inventory position, just get reps, just learn. And then what that also brought those was just a fulfillment of a really, really high repeat rate we've always had. So since day one we've had a very, very loyal, very strong repeat rate. Once we were able to kind of figure out the product mix, the supply chain, the new customer growth, that repeat rate just sort of kicked in and now drives over half our business monthly is repeated revenue. Now we just kind of use that almost as like a predictable recurring revenue stream now that we can fulfill that demand basically if that makes sense.

[49:26]
James McKinney: Half your monthly business is repeat customers?

[49:29]
Keith Nowak: Yes.

[49:30]
James McKinney: Buying a second, third, fourth, fifth pair?

[48:33]
Keith Nowak: Correct, yes.

[48:34]
James McKinney: That's incredible.

[49:36]
Keith Nowak: We're very proud of that. You know, I wouldn't say it was a thing we did like we're going to make this a thing of our business. It's just again back to doing the small things right. Making great product, telling a good story, getting a good brand. Standing for something… I think actually if I was to say we made one good decision along the way it was being myopically focused on shorts on the men's market. Owning a product for a customer has been the biggest driver of success in our trajectory so far.

[50:05]
James McKinney: Have you felt any tension to go beyond shorts? I feel as though as a customer if there's a brand of something that I love so much it's like I want you to make something else or even more so for you, you look at it from a revenue perspective of we're doing so well in this category, a complimentary product would naturally be X, Y, and Z.

[50:23]
Keith Nowak: Yeah, certainly. Massive pressure, and most, 99% of apparel businesses grow through merchandising. They launch more things to sell more to the same people. But they also are mostly plagued by the same retail challenges. Inefficient cash flow, markups, mark downs I should say, next or last season stuff, massive fashion risk. We don't face those challenges because we're so obsessed with a core product line. I think you have to do that to earn the right to make more stuff if that makes sense. So for a very long time, we've got more stuff, we've got pants, we've got some shirts, now we're expanding the product line because the vision for the company has become the hub for men's training. We can't be that with just shorts, but we had to be that with just shorts to earn the right to say to our customers, "Now trust us for other stuff."

Now we've got very, very large customer list. Really high repeat rate, and now growth for us is a lot about feeding more products into the machine. Hopefully they're all good, everyone loves them and buys them a bunch. But for example we launched new short on Monday, swim train hybrid short so for like a beach day, or travel, whatever. We had our second biggest revenue day of all time and we had nearly an 80% repeat rate on that day.

[51:41]
James McKinney: Wow.

[51:42]
Keith Nowak: So like just the customer base we've built by being true to our product, true to our brand, telling a coherent, thoughtful, simple story for so many years has hopefully given people the confidence that whatever we make is going to be as good as those things.

[51:56]
James McKinney: What I'm hearing as you tell the story of the growth, especially when it comes to the repeat side, you have really fostered a tribe, a community of Ten Thousand, I almost don't want to call them consumers anymore because it's beyond consumers. Consumers sounds transactional. You've built a fan base that just wants more and more of your product.

[52:20]
Keith Nowak: Thankfully, yes and our customers are awesome. So we did some stuff along the way to curate that. My cofounder and I emailed personally the first 2,000 customers we ever had. Little things like that was part of our journey over the years. We can't just be a poorly funded Nike or Lululemon, that makes no sense. We're just going to lose for sure if all we are is a worse version of them. So you've got to look inward and be like what am I good at personally as a human, what is my strength and then what can we take that to be a business strength. Again, back to obsessiveness and details and small things. That's what we do well is small things. Our products are really, really good because every detail is like nailed, obsessively nailed and that fostered a really, really strong community that we're beyond thrilled to have the chance to work w.

[53:09]
James McKinney: You know, without knowing as much about the apparel space as you now do, if someone is thinking of coming into the athletic space obviously the first brands that come to mind are the Nike's, the Lululemon's like you mentioned, the Under Armour, Project Rock is this massive brand out there right now.

[53:26]
Keith Nowak: Of course, of course.

[53:27]
James McKinney: How do you compete in this space where those are the brands people go to? How have you done it so well?

[53:34]
Keith Nowak: If I was to bottle it up I'd say we've tried to compete on different plains. That sounds lofty and generic, but like I said we weren't going to compete by just making a bunch of stuff that was mediocre and marketing it through the traditional channels. That wasn't going to work so we created one thing, really really good shorts. We created a clear marketing channel like direct to consumer, online, through our own website. We didn't get diverted by anything else. We just wanted to own that and we believed that if we could build that foundation it would lead to something that we could build on. A lot of brands in our space kind of our vintage, in and around our years of launch, a lot of them have gone very broad, really wide with their product assortment or their storytelling.

Look, I'm not smart enough to know what's going to work down the road. I don't have a crystal ball and I'm certainly not the smartest guy in any room but I do know that if you own something, if you give a person a non-transactional reason to come to your site or to your brand, that creates something that's long lived and model-able to the level that transactional revenue is not. That's what our focus has been how do we become not a transaction? How do I give you more of a reason to buy my shorts again and again isn't just because we make stuff.

[54:54]
James McKinney: I love it, absolutely love it. You know 2019 was a great year for you. 2020 is a different year for everybody.

[55:00]
Keith Nowak: It is.

[55:01]
James McKinney: How has 2020… let me reframe that question. When you came into 2020 what did you think this year was going to hold for Ten Thousand? And then let's talk about that adjustment that had to be made because of COVID.

[55:14]
Keith Nowak: Yeah. So coming off of 2019 we were like let's go man, this was awesome 2019, we did some good stuff. We've got this huge, so part of 2019 strategy was to leverage that repeat rate we always had. It's very different doing like $100,000 a month and doing like $2 million a month when you're talking about repeat rate. Very different animal. So we had to get those big forward numbers. We had to kind of grow the new customer base to a size that could actually drive real revenue on the repeat side. That was the goal from 2019, a very simple goal, grow our first time monthly cohort size. We did that.

The 2020 goal was to use those cohort sizes to grow more efficiently because of a lot of free revenue at that point and to then invest more aggressively in marketing because you have that baseline of repeat. We had big ambitions for 2020, multiple X growth over 2019 was the plan as well. That went well for like two and a half months basically, and then mid-March happened and we were all like what the hell is going to… the future going to hold now? We had no idea. We revised down projections for Q2 dramatically.

We've always been a very lean team by design. We're 10 people basically and that gives us a lot of strength. So we're 10 people, we're lean on that front. We've also been very conservatively financed. We haven't raised a ton of venture capital. What I think has given us strength in moments like this because it gets very… it's a lot easier to retrench and turtle up if you have to in these moments if you're not laden by massive head count or investor expectations, or fixed costs in retail. We could be like all right, no matter what happens the next few months we're going to be alive by doing X, Y, and Z. that was the first objective, like just survive, just be around after all this. Honestly, a lot of startup success comes down to being the last man standing to some degree, right?

[57:05]
James McKinney: Absolutely.

[57:06]
Keith Nowak: Just be a cockroach and just stick around long enough.

[57:11]
James McKinney: It's a game of attrition. I say it all the time, entrepreneurship is a game of attrition.

[57:15]
Keith Nowak: 100%. So that was the focus there is let's just be alive. So but we saw pretty quickly going into April that as big brands were kind of suffering and pulling back, CPMs on paid social obviously dropped, we all are aware of this. But for us what was really fascinating was not only were the conversion rates staying the same, they were improving in multiples. So we almost doubled conversion rate from March to April and then grew another like 50% from April to May. So our CPAs fell to the floor so we're like whoa, this is crazy, let's get aggressive. Let's invest aggressively in marketing, and we blew through projections by multiples in Q2 which has been great because at the same time we had record level repeat numbers as well. So basically on both fronts the business last month has been stronger than ever on acquisition and on repeat performance.

The only down side is we've blown through inventory super quickly because we pushed back deliveries, we pushed back production in mid-March. We were like we don't know what's going to happen so we were busy playing catchup. But for us, the short answer is Q2 has been our most successful months and quarter ever, return on profitability in April was still growing, will grow 2.5-3X this year with all being profitable at this point as well.

So for a lot of businesses that has not been the case and I certainly don't mean to be cavalier if people are suffering through this and it's been a challenge for them. But I think it goes to support the story of how we've been focused and obsessive on the small details to got us to be there. The team we built is a phenomenal team. They're amazing people. Not every business has done well. Nike for example you saw their Q1 reports, down 40%. Not every business in the apparel world or the fitness apparel world has done well in the moment so I think it's a testament to how well we've been able to do on the small things that's gotten us the chance to not only survive, but thrive in this global pandemic world.

[59:09]
James McKinney: you know, it's interesting you bring up Nike's performance over the first quarter because we had a two day livestream event in May called Startup Story LIVE where we had Erik Huberman, the founder of Hawke Media, join us for that. One of the things that he saw because they help manage social ads for some big brands is that a lot of the big brands were pulling out advertising dollars during the heat of the pandemic if you will, while smaller brands were seeing the opportunity and going all in. it's still just to this day blows my mind that big brands would look at this pandemic crisis and start pulling advertising dollars out because in their mind, they look at the brick and mortar retail side of things.

[59:52]
Keith Nowak: Exactly, that's right.

[59:54]
James McKinney: Whereas brands like Ten Thousand that are D to C and can control the delivery side of the product and the brand itself just went all in and are seeing great success from it. Now let's talk about some of the challenges that COVID created, because is your product made in the states?

[60:09]
Keith Nowak: No. So we manufacture mostly out of China historically. So that was one risk that we felt potentially was going to hit us from COVID was ports being shut down, countries being shut down, delays on all that stuff. Independently of any COVID stuff, we had been sourcing new factories in Vietnam and Columbia, pre the whole thing just because we wanted to diversify, get some lower costs, help grow margin, et cetera. So what kind of happened was funny. In the early COVID days while China was slowing down, Vietnam and Columbia were firing all cylinders. We got deliveries out of there, and then as China kind of reopened and Vietnam and Columbia slowed down we pushed stuff to China. We balanced pretty well between those three countries and I think that goes to show the importance of we use this term a lot, being anti fragile. It's a term people use in many contexts, but like I think it's the key to building a good business. A lot of I think VC funded companies don't think like that. They're like let's go in all in on one thing. Great, cool, if it works phenomenal but we always wanted to be a bit anti fragile so we've always thought a lot about diversification, duplication, downsides and I think that's an example of how that strategy came to help us.

[61:24]
James McKinney: You know that's incredible. I love that you had the foresight to see that prior to the pinch that COVID created. But one of the things that I say that came out of COVID is it exposed weaknesses for every business.

[61:36]
Keith Nowak: Exactly, for sure.

[61:37]
James McKinney: What did COVID expose for Ten Thousand?

[61:40]
Keith Nowak: Great question. There's two things that come to mind immediately. One is while retail is a big focus for us for growth. We have a pretty hopefully cool ideas on how retail comes to life for the brand. But now is retail a thing anymore? And when is it a thing? I don't know. Again, I don't have the crystal ball to tell you what's going to shake out in the retail world. So a lot of our plans for this year for retail have been put on hold while we figure out what that world looks like. I would say it's not a weakness but I feel like a hiccup in our future planning.

Then you know the other thing that we think about a lot right now is what the office team environment looks like going forward. I'm a pretty simple person. I like to be face to face, in the mix with you to connect. It's like if we're going to discuss something I want to be in the room, hash it out. Adjusting to a remote workforce was tough. We're still a small team so it's not been impossible, but culturally we've been set up we're all in one room, we're all in it together, that's been a big I think strength of ours. So figuring out how to adjust to today's world from that perspective has been a challenge that I didn't think I was going to have to face. Never was I like oh, of all things I need to worry about in my company was how to manage a remote workforce. I know people do it all the time, brands are built like that all the time, but I think if you go into it with that mindset it's very different than if you are forced into it. So that's been something we're working through right now is if and when we get back in the office how do we manage in the meantime from that productivity. It's not easy.

[63:08]
James McKinney: There's a meme that became really popular during the beginning of all this remote workforce stuff when it said for years CEOs have been trying to solve remote workforce but it took a virus to solve it for them.

[63:20]
Keith Nowak: Totally, exactly.

[63:22]
James McKinney: Necessity is the mother of all invention right?

[63:25]
Keith Nowak: For sure, that's for sure.

[63:27]
James McKinney: So as our time starts coming to an end and we start bringing your story to a close, what do you hope to see? If we were having a "where are they now" episode for Ten Thousand let's say in five years, where would you hope that conversation goes? Where is Ten Thousand in five years from now?

[63:41]
Keith Nowak: Yeah, that's a great question and I would say if you asked me that question six months ago I would have probably deer in the headlights answer, just because we were so in it and we still are for sure. But now we've grown, we've got a team around us. My cofounder and I had more time to think about what now. What is this all going to become? We're more confident than ever that we're building this thing big and impactful in this industry. So I would say our goal is to go for it. We want to make a business that has the impact of a Lululemon or a Patagonia in our space. We see an opportunity there and we want to be that brand that is number one or number two in our niche. If we can do that, and a very big successful business.

But more importantly I want this to be a win for me and my team. That's the driver for me. I want this to be a win. Absolutely just home run, knock out of the park win to mix metaphors or whatever. That's what we're going after. Like I said earlier we want to become the hub for men's training, we want to own that space. That share of wallet, that share of mind, and hopefully down the road we're looked at in the same conversation as the Lululemon's of the world, the Raffaele of the world, that Patagonia's of the world and me and my cofounder are in the same conversation as Yvon Chouinard of the world.

[65:04]
James McKinney: Love it.

[65:05]
Keith Nowak: That's what we're going for and we want to make this thing as big and as successful as it possibly can be because we believe in it, also because we have a lot of wood to chop still. A lot of ideas, a lot of things we want to still get done, and we're by no means close or even… we're just getting started is kind of my feeling right now to be honest with you.

[65:20]
James McKinney: I love it, I love it. One of the things too that I like to, that I want to ask you in particular being that 2019 was a great year, you had a great first half of 2020 despite global chaos that was taking place. Do you feel as though you are in the clear of all the potential risks that could destroy what you've built so far?

[65:41]
Keith Nowak: Literally had this conversation this morning with an investor of ours. We're thinking about raising more capital now and how we manage that. We're caught in two minds because we know, we were very confident that we'll get to where we want to get to this year, at which point we can raise more capital at a higher valuation to be a better business. But I'm also part of me is like I have no idea what's going to happen in the next six months. Forget COVID right now, there's like again I don't want to get too deep but it's like cultural shifts happening interesting he country and again, I don't know enough about any of these issues to speak on any of them intelligently but I feel like it's the fallacy of every generation but in my lifetime this is kind of as scary as I've seen it in a long time. Not just scary, but lack of certainty, lack of-

[66:25]
James McKinney: There's a lot of unstable ground right now.

[66:27]
Keith Nowak: Yes, exactly, that's a good way to put it. And so no, to answer your question simply no I don't believe… I still believe that we could be out of business tomorrow. I still have that sense in me of uh oh, don't screw up, don't take your foot off the gas or your eye off the road, again whatever metaphor you want to use. But I again just to spin this in my optimistic perspective, I think it's a good mentality to have. I think you should always maintain that perspective. I think it's when you get too confident, too over confident and be like yeah we've got this, we figured it out, it's good, we're cruising now is when you get bit in the ass. I tell the team all the time look guys, we are still unproven. We're still tiny, we're miniscule. We don't matter in the world at all yet. We need to work hard to get there. I think that if we can maintain the anti-fragility mindset, the beginner mindset, and the culture we built so far we'll weather any storm that comes. I'm confident about that for sure.

It's I think when we start getting too ahead of our skis or something that we're going to be caught off guard by something. I don't want this business to fail. If our product sucks and we suck as leaders and a team, the business should fail. But it shouldn't fail because we got caught off guard about cultural or macro shifts, or we raised too much money at too high a valuation. We should control the business to be able to be adaptable to those situations. Businesses were built in a lot worse environments than we are in right now and became super successful. People built businesses during the Great Depression and financial crisis, the plague. There were times in the world when things were way worse. So that's our mindset here, just let's stay focused on the core stuff and we should be able to figure out whatever comes.

[68:09]
James McKinney: I love it, absolutely love it. I want to honor our time together. Final couple questions I ask every founder, and the first is about gratitude. We've talked a little bit about it already but we don't get to where we are today because we did it on our own, and I believe those founders that think they did everything on their own they end up isolating themselves and ultimately it'll lead to some type of failure, whether it be relational failure or business failure. I believe that we stand on the shoulders of others that got us to where we are today. So when you look back on your entire life's journey, who are all the people that contributed to the success that you are experiencing today?

[68:43]
Keith Nowak: We discussed them already but just to put a pin in it, my parents for sure. I couldn't have asked for better folks to be honest with you. My wife when she was my girlfriend, and then my fiancee, and now my wife, again without her I'd be in a puddle somewhere crying myself to sleep every night basically. Then I'd say thirdly is my current business cofounder. Like I said, we're very good balance to each other. I'm probably a little too aggressive and optimistic and wide eyed, and we would have burned through probably way too much cash and too many ideas too fast without him as part of the team here. So I think those three people are who I'm grateful for and who helped us get where we are.

[69:25]
James McKinney: Oh, absolutely love it. And our last question, we've been talking to tens of thousands of listeners right now and I want to afford this opportunity to my audience to take the conversation from the tens of thousands down to the one, as if this was a coffee chat with just you and one of them.

[69:41]
Keith Nowak: Totally.

[69:42]
James McKinney: What do you say to that one?

[69:45]
Keith Nowak: Look man, don't listen to my advice. I don't think of myself as worthy of giving anybody advice. I'm learning as I'm going as well. If I were to give you advice as a frustrated entrepreneur trying to get over the hump or figure out the path from here to there, I would say two things. One, embody patience. Learn patience. None of this has to happen overnight. There's no time clock here. There's no one measure who is the fastest. You need to do what you want to do with your life and if that takes you a little longer than anybody else, who gives a shit? It doesn't matter. No one's keeping score at the end of all this. If someone raised more money or someone did it faster or younger, or whatever, just go through your journey, be who you want to be, and you'll conquer the challenges ahead of you if you care enough and spend enough time focusing on it.

The second bit of advice I would give is enjoy the process. Be happy. Choose happiness along the way because life is too short, not to sound cliche, and we should be thrilled we have the chance to do what we're doing. Even in the worst of days, it's still an amazing thing to be able to do what we want to do every day. I had those challenges. When I begin to think about time differently and be more patient and actually try to be in the moment and enjoy and be happy, even in the days that were the worst possible days, I became a better person, a better entrepreneur, a better husband, a better leader. All that matters in the end is that you focus on those small things, do those little details right every step of the way and the big stuff will come.

I guess last, last thing I would say is again, cliche, I'm filled with cliches, you don't run a marathon by thinking about 26.2 miles out of the gates. You take one step and then another step, and then another step. That's what entrepreneurship is. People say it's a marathon. It is, it's springing a marathon really is what it is. But either way you won't get there by thinking about the whole thing out of the gates. Love it, enjoy it, be patient and you'll figure it out because everyone is smart enough to do it, no one is smarter than anybody else who has gone through this journey. It really just comes down to grit and grinding it out.

[72:00]
James McKinney: Once you've had few moments to process all the value Keith brought us in this week's episode, please hit me up on LinkedIn, Facebook, or Instagram and share with me your thoughts on this episode. Lastly, if you've been around The Startup Story for any length of time then you know how much emphasis I put on the idea that entrepreneurs support other entrepreneurs. So please visit tenthousand.cc and buy a pair of their shorts. If not for you, then consider buying a pair for a gift. This small task is the least we can do as a thank you for all the value that Keith delivered us today. Remember, entrepreneurs support other entrepreneurs and this is our way of supporting Keith for his support of us. All right, now for my personal ask.

The Startup Story community has been so incredible about sharing our podcast with others, but we have more stories to tell and more people to reach. We too are a startup and word of mouth is everything, so please follow us on Facebook and Instagram @TheStartupStory or on Twitter @StartupStory_. If you're on LinkedIn, please search for The Startup Story and follow our company page. LinkedIn is a really powerful way to raise awareness of the show. But the most impactful way you can help us grow our audience is to leave a review on Apple Podcast. Or if you listen to the show via Spotify, then please simply share the podcast directly from your Spotify app or wherever you listen to the show.

These simple actions can make a huge impact in getting these amazing founder stories out to the masses. And please make sure to tag or mention The Startup Story when you do share so that we can connect with you and say thank you directly. I'm so incredibly appreciative of the fact that you listen to the show each and every week, and I look forward to sharing these amazing stories with you every Tuesday with hopes of encouraging and inspiring you to start your story.

If you like this podcast and are thinking of creating your own, consider talking to my producer Danny Ozment. He helps thought leaders, influencers, executives, and authors create, launch, and produce podcasts that grow their business and make a real impact in this world. You can contact him today at emeraldcitypro.com/startupstory.

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August 04 2020
Keith Nowak, founder of Ten Thousand

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