This week's featured founder is an entrepreneur who was miserable in his career with the NFL and decided it was time to create a brand that matters. Meet Nate Checketts, founder of Rhone. Rhone is an activewear brand specifically for men. You may immediately associate Lululemon as a women's brand. Well, that is what Rhone is for men. Apparel is an incredibly hard industry, and what makes Nate's story so fascinating is that he is not a fashion-forward person, nor does he have a long career in the apparel logistics, or any logistics business.
This week's featured founder is an entrepreneur who was miserable in his career with the NFL and decided it was time to create a brand that matters. Meet Nate Checketts, co-founder and CEO of Rhone.
Rhone is an activewear brand specifically for men. You may immediately associate Lululemon as a women's brand. Well, that is what Rhone is for men. Apparel is an incredibly hard industry, and what makes Nate's story so fascinating is that he is not a fashion-forward person, nor does he have a long career in the apparel logistics, or any logistics business.
So, are you still wondering why Nate left the NFL to start a men's activewear brand? Of course, we unpack that part of his story in this episode. But, like every episode, we need to start at the beginning to understand how someone might actually find themselves unhappy working for an icon of a brand like the NFL. Here is Nate Checketts' startup story.
"If you look at those who have succeeded in any capacity, their journey is fraught with incredible challenges.” Nate Checketts
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Special Guest: Nate Checketts.
The Startup Story -Nate Checketts
Nate Checketts: Hi. This is Nate Checketts, CEO and cofounder of Rhone, 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.
James McKinney: Welcome to another episode of The Startup Story. Before we jump into this week's episode, I have to ask. Has the Coronavirus impacted your business? Sequoia Capital, a Silicon Valley venture capital firm, arguably the most successful VC firm in history, issued a letter warning about the impact of the Coronavirus will have on our economy, and he warned their portfolio companies to minimize expenses and sure up cash reserves. So again, has the Coronavirus impacted your business? It definitely has impacted The Startup Story business, and no not the podcast per se. The show is virus free so you can continue to listen with no fear of exposure. The Coronavirus has impacted our live event plans though, so make sure to visit our Facebook page for an update. I won't go into it in this episode, but visit Facebook.com/TheStartupStory. The events is definitely still scheduled, but there have been some significant changes so make sure to visit Facebook.com/TheStartupStory. And before I forget, I want to thank the team at Fuse Workspace for allowing me to use their podcast studio to record this episode. Checkout workatfuse.com to learn more about their various locations. They have one that's north of Dallas, and soon to be in Houston and Austin. All right, now let's jump into this week's episode.
Our guest this week is Nate Checketts, founder of Rhone. Rhone is an active wear brand specifically for men. So you know how you immediately associate Lululemon as a woman's brand? Well that is what Rhone is for men. In fact, that's really how it all started for Nate when he was given a gift and a coworker immediately gave him a hard time because the brand is heavily branded among female consumers. Man, apparel is an incredibly hard industry and what makes Nate's story so fascinating is he is not a fashion forward person, nor does he have a long career in the apparel logistics, or any type of logistics business at all. He is simply an entrepreneur that was miserable in his career with the NFL that decided it was time to create a brand that matters. Oh wait, did my mention of the NFL spark your interest? I mean who wouldn't be miserable working for the NFL right? Okay, enough with the episode teasing. Just like every episode, we need to start with the beginning of it all to fully understand how someone might actually find themselves unhappy working for an icon of a brand like the NFL.
Nate Checketts: I grew up in a big family, six kids. I'm a middle child. Like most middle children in large families, I had a lot of time by myself where I was like just coming up with hair brain contraptions, ideas. I wanted to be an inventor when I wasyounger because my poor mom was trying to keep up with six kids schedules and making dinner. She basically spent all of her time in the car. That gave me a lot of time, just me and my younger brothers who I was particularly close to. I've got two younger brothers that were all two years apart. We were always hatching hair brained ideas, contraptions, and that was everything from lemonade stands to usually we were trying to see something, trying to find a way to make money. We didn't call it entrepreneurship, but we wanted to be able to buy stuff and the required making money.
James McKinney: What did your dad do? Where did that idea come from? It's not, a lot of people have a bubblegum hustle but we can always point to some person in our life that gave us that inspiration to start something. Who was it for you?
Nate Checketts: Yeah. My dad is an amazing and accomplished business executive, and to call a spade a spade, I just I was super fortunate to grow up with him as a father, and my mom. I have very incredible parents. But my father was really came from nowhere in the sense that his father wasn't particularly well known or successful. His father was a mobile home sales person, so my dad grew up on a lot selling mobile homes and he used to tell us that the reason he was so strong is he would take these concrete blocks and he would do arm curls with him, which I'm now being a father I'm wondering whether there's any truth to that whatsoever. But he graduated from college and got a really great job working at Bain Consulting, because he was a great student. While he was there, he had the opportunity to interview David Stern, who was the deputy commissioner of the NBA. The reason this came about is because the firm that he was out, Bain, Bill Bain was looking to buy the Boston Celtics. This basically led him on a path where David Stern was impressed by him, knew that he had grown up in the state of Utah, and Utah had an NBA franchise recently acquired, same NBA franchise that's still there the Utah Jazz. Called the owner of the Utah Jazz and said, "Hey, I've got this impressive 28 year old who loves basketball, know business. You should consider hiring him. He got brought on at the tender young age of 28 to be the general manager of the NBA Utah Jazz of that franchise.
James McKinney: That's awesome.
Nate Checketts: And that launched a long career in sports. So he was doing entrepreneurial things but we didn't view it that way. We viewed him as working in the sports industry.
James McKinney: That's incredible, and it's funny just even hearing now your upbringing in the sports industry, knowing where this story ends up going with Rhone, it's like wow you immediately just start seeing and start connecting the dots and the breadcrumbs of life, it's awesome.
Nate Checketts: totally. I think what's interesting is as I started getting into high school, I remember thinking this is an impossible legacy to live up to. Youngest general manager in NBA history, there's no way I'm ever going to measure up to that. And by the way, that's true. I won't ever measure up to that. But I remember having this kind of moment of vulnerability with my dad and telling him how did you do it, how did you accomplish that? And I remember he said something to me that I was taken aback about. He said, "You have to understand when I took that job, that was a giant risk. That was like going to a tech startup in my day." The Jazz were, at the time, $10 million in debt. They were considered to be misnamed. It was always a joke that you had the New Orleans Saints which should have been in Utah, and the Utah Jazz which should have been in New Orleans. My grandpa, my mom's father, was so worried about him taking this job that he got him an interview with a car dealership in Utah just as a failsafe in case it didn't go through. Now of course over the next two years, they drafted John Stockton and Carl Malone, and things ended up working out quite well with the NBA media rights and everything else.
It's good to also contextualize the past, and that to me helped me realize when I considered my career I'm not going to go into this now established industry of sports and be able to make the same splash that my father did 30 years ago. I need to look at what is the industry now where you can go in at a young age and still have a high level of impact and ability to make decisions. Coming out of school, that was clearly what was happening with technology and the internet more broadly, how it was changing commerce.
James McKinney: You know, it's interesting too before we jump into the next steps in your journey, to hear your dad kind of unpack and add context to his story and the risk it was at the time. Because I think a lot of entrepreneurs, in fact I was having this conversation just the other night over dinner with a few other entrepreneurs, a lot of times we don't live our entrepreneurial journey with our kids, that they don't get to see everything. I think there's an advantage to sharing that. You're speaking about it right now, that your dad was giving you context for the risks at play when he took that leap to be a part of the jazz, and how you were able to see that and own that as your own as you were continuing on in your next step. So there's a value to sharing as parents our life, our journey with our kids.
Nate Checketts: Totally, and I think there's certainly a part of it where he was just seeing a son struggling with his identity and understanding his own inferiority complex, and was trying to make me feel better. What he accomplished at a young age was nothing should be taken away from that, but it is helpful to contextualize it, and it is good to share those things with our kids, and it's something that I try to share with my kids as well.
James McKinney: That's awesome. So as you're trying to figure out what y our next steps are, I'm assuming your upbringing is probably went to college, but what did you think you wanted to do as you were entering college?
Nate Checketts: Honestly, I had almost no clue what I wanted to do. I knew that going to college was the right next step. I also was out of the, there's four boys in my family. I think my three brothers all wanted to work in sports. I did not necessarily have a strong desire to work in the world of sports. I did have this chip on the shoulder is not the right term, but I wanted to be able to go and kind of prove to myself more than anyone else that I could be successful in an industry. And given our unique last name, it would be impossible to do anything in the sports world, still is today, without people remembering my father's accomplishments. I'm incredibly proud to be his son but I wanted to prove to myself that I could be successful.
So that was kind of almost the only parameter that I had. I also grew up in the northeast which is you're almost bred to believe that you're going to work in finance. I thought maybe I'm going to go into investment banking. I thought maybe I would do management consulting. But I did know that it would likely be something associated with business.
James McKinney: Okay. So as you're coming to the end of your university years, the natural again second chapter, finish high school first chapter, finish college second chapter, what was your first step?
Nate Checketts: I actually didn't finish college before I took that first step. I did graduate from college, but when I was in between my junior and senior year, I did an internship with a company called Monitor Group, which is a management consulting firm that ended up selling to Deloitte. During that summer while I was there, as consultants, I was amazed with this idea that we could eat out pretty much every night as long as we stayed in the office past a certain point, and then we could bill that to the client. Most of the people in the company started using this new service called seamlessweb.com. This is back in 2006.
At the time it just sounded wait a minute, I can go on a website, order it, and then the food would be delivered straight to the office. It seemed so natural to me that would be connected to the phone, but there was no application. The iPhone was launching that next year, and the way we think about smartphones today is just very, very different than the way we thought about smartphones back at that point. But text messaging was on the rise. I thought well you could still accomplish this, what if I could just text what I wanted? And I had this idea okay, I'm going back to class, I'm sitting in my class, I knew that there was a girl in one of my classes who worked at the local cafe, and I just asked her. I said, "Hey, I did this thing over the summer. Can I just text you what I want and you have the order ready? I only have 15 minutes between my classes, so I want to be able to grab my stuff and eat, and I pay." It just seemed so obvious to me.
Naturally, that led to wait a minute there's a business here. So I wrote a business plan about connecting text messaging to restaurants for people to order on the in between. And it sounds, again, obvious today but at the time there was nobody doing anything like that. The closest thing I could find was this seamless web experience, so that's when I wrote my first business plan.
James McKinney: So what did you do with that business plan though? Was it just really a project to get it done, or did you actually try to make some traction on that?
Nate Checketts: There was a business plan competition. There were 48 hours until submission, so I literally just wrote a business plan. I put friend's names on it and my own resume. I think I pulled an all nighter to just complete it. We ended up making it to the state semi finals and getting some funding on it. So I deferred, much to my parents dismay, I deferred this prestigious New York firm's offer coming out of college and decided to pursue this entrepreneurial journey. We ended up pivoting somewhat strangely into sports. So what we found is that the challenge of growing the restaurant and the consumer base was incredibly complex. You had to go convince restaurants that you were going to get consumers, and you had to go and convince consumers that you had enough restaurants that this was worthwhile to sign up and put credit card information. I still remember when we were trying to sell people on the idea that there was this board of successful business leaders that were all well over the age of 60, and one of the biggest criticisms from these guys were, "This will never work because if you put credit card information into your phone and you lose your phone, you're at huge financial risk." I remember thinking to myself these guys have no clue what is about to come. But long story short that was kind of my first foray into entrepreneurship was launching this company.
James McKinney: That's funny because I had a mobile startup in the restaurant space as well. It was going to grow into other industries, but started in restaurants. You're right, that is a tough space to be in.
Nate Checketts: Oh man. Really tough.
James McKinney: It really is the chicken versus the egg kind of thing, trying to get restaurants and consumers.
Nate Checketts: Yeah. You have a lot of individual operators. You have to do it based on a geography somewhat. So you can go and you can sign up a suite of restaurants. So let's say that Chipotle, which has all of these restaurants, but they're going to come to you and they're going to say, "Well, you have no presence in these 80 markets. We'll do it in this one market." So the idea of shifting into sports stadiums made sense to me, because one it was an environment I had grown up in and understood, and you could sign up one operator and get all of the windows inside a stadium or an arena, and then you could capture the audience in the stadium or arena. The downside of that model is games aren't an ongoing thing. People aren't showing up every day to go to a sports game. So we ended up raising some outside capital, growing that business, and then basically selling the IP to the San Francisco 49ers as they were launching Levi Stadium. But trust me, there were a ton of failures in that process.
James McKinney: So what year? Let's put some years on that. So what year did you start this venture? When did your raise capital and when did you sell?
Nate Checketts: So it was 2007 that we kind of officially launched. We ended up pivoting several times kind of in that initial 12 to 15 months into this sports stadium model, and really the IP sold in call it 2010.
James McKinney: Okay. So in those years, and again you were early stage in the apps as far as that-
Nate Checketts: Yeah, we were one of the first iPhone applications when we actually built that. It's tough because looking back, I think to myself we were killing ourselves to build this one thing that people… Mobile payments is still such a nascent industry and it is so easy to use, and people still struggle with it. But at the time, we thought it was going to accelerate. If I had just taken our development team and said let's build a flashlight app, we would have probably made more money than we would have trying to build this incredibly complex back end with natural language processing. We could have built a compass app or a level at the time and made more money.
James McKinney: I'll never forget the story. Early on, there was a math teacher who created a very simple game. I can't remember what the game was, but it was just stupid simple, it was 99 cents, and he was making $100,000 a month in just people buying the game. It was the heyday back then. But here you are in this environment where things are new, you're trying to tackle something that is incredibly complex from an industry and business perspective, but also from a behavior perspective. It's not something that people are used to. You had funding so there's a little bit of confidence that comes with that, but was there at any point in time that you were just like you were banging your hands against the wall why are we doing this, are we ever going to be able to pull this off, this is too early, what do we do now. What was that journey like for you?
Nate Checketts: Yeah. At any point in time, every single day I felt that way. That's the hard and good thing about being an entrepreneur is you really are on this rollercoaster. I tell people it almost makes you unemployable afterwards-
James McKinney: 100%.
Nate Checketts: … because one day you are like, we are taking over the world, we are going to be the future of mobile payments. First it's sports stadiums but then we're going to college campuses and hospitals and everything after that. We really genuinely believed we were going to take over the world at certain points. Mobile payments was such a massive industry and we were right at the forefront of that. Then there were days where it was like are we going to be able to make payroll, and how on earth did I turn away this really good, stable income? I was married at the time. My wife and I were expecting. We started having kids quite young so it was an absolute rollercoaster of emotions. I'm a complete and total failure, I can't believe I did this to my family, to we're going to be the next Apple.
James McKinney: Just one quick reminder before we jump back into our episode. Startup Story Live is going to be an incredible entrepreneurial event in the Dallas marketplace. It is still happening. Coronavirus is not going to change that at all. There's just been a shift in dates and a shift in some talent that's going to be featured. So I hope you'll visit our update at facebook.com/thestartupstory to get all the details. That's it. I just wanted to give you an update on that. Now let's jump back in to this week's episode.
James McKinney: What was the journey that led you to the point of just okay, I'm just going to sell the assets off, it's time to get out, it's time to exit and move onto something else. Did you already have your next venture in mind as to why you wanted to exit out? What was that process?
Nate Checketts: No. it was certainly, it's a complicated story and saying that we sold it makes it sound much more glamorous than it really was. The truth is that we really didn't have a choice. We weren't growing the way that we thought we would. We had some management issues. When we raised our outside capital, we brought in an outside CEO. I was young and I couldn't argue with that decision. The board ended up stepping in and letting that CEO go, and it led to a number of different factors. I basically had control of the assets and was directed to sell them.
It was a very difficult period for me because I just felt I had put my heart and soul into this for three years, and I had nothing to show for it. And created a lot of that self doubt and anxiety of I sit here and I look at it, and somebody who built a flashlight app and here we are. We had patents that we had granted to this super proprietary technology, patents that are certainly now worth a lot of money that had our names on them. We had very little to show for it. It was a complicated, difficult process and difficult personal journey.
James McKinney: When that came to an end, and I want to talk about the learnings in that but I want to talk about it leading u p to actually the launching of Rhone. But as that season was coming to an end, were you just done with entrepreneurship, just I can't go through this again?
Nate Checketts: I was. I remember getting into my car… The last two months of the business, I had basically self funded it with money I really didn't have. Any savings that I had and I put a little bit on credit cards. One of the tough things about having a successful father is people make assumptions about what you may or may have not inherited and I had never taken aside from my parents paying for my college tuition, which I will forever be grateful for, I hadn't ever taken a dollar from them including our living expenses. Both my wife and I worked through college. So she says to me, "We're not going to be able to pay our credit card bill this next month unless we do something."
I remember looking at her, looking at my son and thinking to myself my goodness, I've completely failed. This is the pinnacle of failure. I got in my car and I got out on the freeway, and I was going well past the speed limit thinking this is it. It was scary. It was a very, very scary time. That's when I remember kind of looking at myself and thinking to myself you're being so dramatic and you're being so selfish right now. Pick yourself up and get back on the horse, and figure it out. And so I went back home and I got out my whiteboard, and I figured out how I was going to pay for the next month's credit card bill, what I was going to do, and how I was going to figure out getting my career back on track. That led me to basically starting a consulting practice that not only helped me pay off my credit card rather quickly, but put us into a good financial position to take the next step in my career.
James McKinney: That's incredible. As you get back on the horse, as you move forward and make traction, what were those next steps, in a quick briefing? What were those next steps that got you to the point where the thought and the inkling of what was to be Rhone started coming into your vision?
Nate Checketts: So with this whiteboard, I realized I needed to fix the short- term gap of bringing in an income. I went out to everyone I could think of. LinkedIn was growing and I said I've got general acumen and I'm happy to assist in any way, shape or form. And as part of trying to sell the business, I had been working with Cisco sports and entertainment, a division of Cisco the technology company not the food company. I said to them, "You are trying to sell switches and routers into these sports stadiums and buildings. I was in 15 sports stadiums and I can help you get access there." That was my first consulting contract. I remember feeling guilty about what I was advised I could charge. They didn't even blink. They didn't even bat their eye. That was a big experience for me, so I ended up bringing on another two clients.
James McKinney: Let me ask you a question on that. You said you felt guilt. Again, you having to provide for your family, you just had a whiteboard session. Why did you feel guilty about that?
Nate Checketts: I had a lot of self doubt about what value I was providing. I didn't know whether I was actually worthwhile enough to be able to charge the kind of hourly rate. Now looking back at it, I was like I probably could have charged more. But at the time, it was a difficult period.
James McKinney: So you're consulting with Cisco and the journey continues on. Again, you're in the sports and I can start seeing the connecting of dots, but in my mind you're still technology, you're still technology, but that's not where Rhone is. So how do you get from there to Rhone?
Nate Checketts: The long story is that I'm with Cisco and as part of that, I end up meeting up with an executive at the NFL. I'm still trying to take t his hub and spoke model of can I go to leagues and get them to buy into the vision of what Cisco high density wireless is trying to put into sports stadiums, and now get it into every single stadium in the country. Now this particular sports executive I had met when I was younger because much to my parents dismay, I decided to start a sports camp in their backyard for kids without telling them. This gentleman, who at the time did not work at the NFL but worked at NBC, sent his two kids and I remember he was just one of the coolest parents. So when I met up with him at this meeting, I was like, "How's Drew? How's Will? I remember your kids coming to my sports camp." And he's like, "I can't believe you. I'm not surprised you're an entrepreneur, based on the fact you were charging too much money to watch my kids for a few hours every day."
But he took me out to dinner and said, "I really think you should consider coming to work at the NFL. I could use somebody with your background. Technology has changed so much over the last few years and we really need to get smarter on it as a league." And by the way I told him, I said, "I appreciate that. That's very kind of you." But I was making so much more money consulting now with these three clients than I had been as a startup founder, and I was working probably 30-50% less that I thought I had cracked the code. So I was like, "I appreciate that but it's probably not a good fit for me. I'm not super interested."
I ended up talking to my dad about a week alter and he's like, "What's the latest?" I was like, "Oh, well you know I ran into this guy who works at the NFL and he thinks I should go interview there." And he's like, "What'd you say?" I was like, "I told him it's probably not a good fit." He more or less told me I was an idiot. Didn't use those words, but he said, "You should take the interview." So I went through I think three different rounds, 14 total different interviews, and ended up getting an offer to go run the sponsorship strategy group within the NFL on new business development.
James McKinney: I know your dad comes from the sports background, but what was he seeing? Because in my mind you're with Cisco, you're consulting. Cisco is a massive name. You're doing well, you've got great work/life balance. I assume at this point you have more than just one kid.
Nate Checketts: We only had one. I think we were, not much time had passed since the company selling to this point. We're talking three months, but we were expecting our second.
James McKinney: Got it. There's probably then, since it's only three months from a time perspective, he was still seeing things as a little unstable even though they were stable.
Nate Checketts: Totally. Well, part of being an entrepreneur to some degree is you have to be an eternal optimist.
James McKinney: Always.
Nate Checketts: So when I got back on that horse, I was feeling pretty good about things. But he and my wife were like, "Wait a minute, you can have paid for healthcare and a 401K?" So I think that was… and I had other job opportunities that had popped up, but this was the first one that was probably the most compelling. It required a move. We picked our family up and we moved back to the east coast where I had grown up. I think there's a part of him that wanted the grandkids a little bit closer too if he's being honest.
James McKinney: Awesome. So you take the job with the NFL and head up sponsorships. How does that prepare you and lead us to Rhone?
Nate Checketts: So I go to the NFL. It's a completely different work environment, mind you. At a startup I am shorts and sandals, flip-flops every day. Now the NFL is still suit and tie. Suit and tie every day. You're surrounded by AstroTurf and you've got games being played on TVs, and there's football pictures. The offices have plays like painted on them. It's a really, really cool environment. At first, I'm thinking this is amazing. I didn't think I would work in sports, but this is I'm so lucky. All of my friends are like this is the coolest job you could ever have. And then I really struggled with the fact that I was kind of miserable. I loved the people that I worked with, but I hated what I was doing. I think part of it was that again, going back to that rollercoaster example, it's like being on a rollercoaster and then being told, "You know what, from now on out you're going to be playing it safe and you're going to be riding these kiddie rides." You're like, "But wait a minute, I've only experienced rollercoaster's in my career. Coolest kiddie ride ever, this is the NFL, but it didn't have enough of that variability and the risk profile. I guess I was an adrenaline junkie to a degree.
James McKinney: You know it's funny that you refer to it that way because after my second failed startup, that one destroyed everything that we had. I worked for Disney for five years. It was the season of licking my wounds .I just had to go through this healing process, had to recover the family a bit, restore some things, some trust that I might have lost in my relationship with my wife.
Nate Checketts: Totally.
James McKinney: It just, it was a season of that. But it's in your makeup, to your point, the variability, the risk, the ups and downs and the challenges that come from being an entrepreneur and doing your own things.
Nate Checketts: Yeah, and being an entrepreneur is somewhat glamorized now. I mean we're on a podcast talking about how to become an entrepreneur. And people ask all the time, like "What steps should I take?" Well, maybe you should first run away as far from this as you possibly can because in many ways, it's as much a curse as it is anything else. My wife likes to joke about this. She's like we can't go on a vacation without you wondering what the fixed costs versus variable cost of the hotel. It's like I wish I could turn it off to a degree and just enjoy going and having a 40 year career somewhere that I was very happy to work 9 to 5 and have the 401K and the stability in the family. That would be a lot easier in some ways for me and my family.
James McKinney: Yeah. 100% it would be easier. So you find yourself loving the people that you're working with, loving that you're working with the NFL brand but you're not loving what you're doing, and you can see yourself missing all that you were experiencing as a founder of your own company. How do things start developing to where it's time for you to go back on your own again?
Nate Checketts: So I had this great benefit which was that I had a very long commute. So I was commuting about an hour and a half every day each way by train. I used to call it the great equalizer. I could sleep, I could work, but most of the time I ended up reading or thinking, and I always carried a journal with me. I remember trying to kind of self-assess, and what I realized at the time was that why are you not enjoying this more. What I realized is I want to be an entrepreneur. I want to build something and I'm not okay with the fact that my first foray into this didn't succeed. I couldn't see any of the positives from it, but I had people tell me all the time, "You should be incredibly proud of what you accomplished. You raised capital, you built a team, you ended up selling the assets." But in my mind, I had just failed.
So the idea that I could have that opportunity again and not fail, nothing excited me more. I remember writing down in the journal, "I want to go build a brand that matters." When I said that to myself, it was like I knew that was what I was going to do. But I had just one big problem which is I had no idea what category I was going to go into. I had a million ideas, but I didn't know which business I was going to pursue. But just knowing that's what I wanted to do heightened me to any and all opportunities that would support that long- term endeavor.
James McKinney: It's interesting too the way you phrased it, that note in your journal, "I want to build a brand that matters." It's not I want to build a business, I want to develop this, I want to sell this. I want to build a brand that matters. If you can remember back to that moment, what was happening in your life where brand and contribution or significance mattered to you, that that's what was in your journal?
Nate Checketts: Well, a couple of things. One, being in the NFL and working on the sponsorship side, you get exposed to the greatest brands in the world, the brands that we all know. I was always analyzing who were leaders in the categories, who we were going to go after to fill a specific category. One of my biggest initiatives was working on the technology category, which at the time was owned by IBM but what I was trying to tell the NFL is this is not a single category, this is five categories at a minimum. It's really more than that. It's a very pervasive category. But I was just so fascinated with the idea of a brand and the impact of brands. And you were starting to see the rise and emergence of brands that stood for something, and to me that connected deeply with who I am as a person and the idea that doing good could also be a good business model. I had also been having a lot of conversations with just other entrepreneurs that I had stayed close to, so it was very much top of mind and I still have that note because it was important to me.
James McKinney: That's awesome. So how do you go from journal to conversation with wife, to actually leaving the NFL?
Nate Checketts: Conversation with wife might be a whole other podcast on its own.
James McKinney: But it's an important part of the story. I see all the time, if you are married you are never a solo-preneur.
Nate Checketts: No. You're not making the decision by yourself.
James McKinney: 100%.
Nate Checketts: Sure. So again I was kind of heightened to this sense of I want to be aware of something else. That holiday season that came up, which was kind of three months later, I was with our very large family at our get together and my mom every year, her tradition is giving everybody in the family pajamas. And this has ranged from the great one piecers to a pair of sweatpants. This year she gave everybody a pair of sweatpants from a very prominent women's yoga brand, and I open it up and I'm like, "Great, thanks mom, appreciate it." And my brother in law, who is much more into fashion than I am, was like, "I'm not wearing these." I'm like, "Wait a minute, why?" He's like, "This is a women's yoga brand." I'm like, "Well clearly these are men's pants. He's like, "Yeah, but look at the logo, look at the packaging." I was like, "Oh, okay, fair point."
Well, I go to work at the NFL probably like a month later that this happened and Budweiser sent a box of this same brand for the women interesting he office. They're opening it up, they're going through it, and I was like, "Oh, I have some of their sweatpants." I distinctly remember still to this day one of my closest friends, but he sat next to me and said," Oh, do you buy your underwear at Victoria's Secret?" And admittedly, I did not grow up with any sense of fashion or a perspective in terms of how brands or fashion really worked together. But I was like this is clearly a thing. People clearly are saying this is an impressive brand, but it's designated to be a women's brand.
So I started doing some analysis and talking to my brother in law who had initially brought this up, and what we found is that you had in the active wear category, men were being serviced by these brands that we had grown up with, the brands that were predominantly wholesale. More than80% of their business was through wholesale. They sold probably 55-60% of their product to men and the rest were to women, and then you had this huge emergence of female focused premium brands, brands that were at a 40-60% price premium to these men's brands but less than 15% of their sales were to men. On the men's side, there was no one. Nobody who sold more than 80% of their product to men in active at a 40-60% price premium to these big market brands that we had grown up with. And that was kind of the a-ha moment for us.
James McKinney: And I love that you're not a fashion person and you got to there. I love that component.
Nate Checketts: Well, I think at the end of the day being an entrepreneur is you see opportunities where others don't sometimes, and it goes back to that idea of being an eternal optimist. If I had worked in this industry, I would have been the first one to tell me all the reasons why this wouldn't work, how hard it is to actually make product, how hard it is to build a global supply chain, how hard it is to source and nominate fabrics, and get to margin, satisfy customers, and reach stores. But my ignorance was probably my best aid in saying, "Oh yeah, we could do that. Yeah, we could definitely do that." That's what creates the momentum and gets you started to the point where you're willing to take a leap. I think it's one of the reasons why disruption so often comes outside of industries versus within them.
James McKinney: Oh my goodness, that's incredible. So as this idea is percolating, as you're now seeing the analysis, you're seeing the market, you're seeing the opportunity, where is your wife with this?
Nate Checketts: I will say this about my wife. She is the most supportive person you've ever met. She was kind of indulging this thing that I was doing on the side because she was seeing energy and excitement from it, which I didn't necessarily have with my every day job. It was kind of like if this makes you happy, I want you to be careful because I'm really enjoying this stability that we've now created. But if this makes you happy I'm supportive.
But there's another wrinkle to the story that I haven't yet discussed, which is that I have a chronic health condition. I'm Type 1 Diabetic and being Type 1 Diabetic, you're managing your blood sugar levels every single day. There's highs, there's lows, everything you eat needs to be quantified. You need to think through how exercise impacts your levels. To a very real extent, you face your own mortality on a daily basis. If you give yourself too much insulin or not enough insulin, you face hospitalization or even death. So that was on her mind more than it was on my mind, but I was really burning the candle at both ends in trying to get this business off the ground.
I was not ready to leave a fulltime job and fully commit to it for the stability reasons, but I knew that it required a huge amount of work to get it off the ground. About a week before our launch, I was staying up late working on the site with these outsource developers that we had hired, and I went to bed having given myself some insulin for food that I was going to eat but then forgot to eat because I was so tired. I was like two weeks of basically staying up until 1 or 2 in the morning, and then getting up at 6 and getting on a train. I fell asleep and I had diabetic seizures. My blood sugar dropped so low that I woke up in the hospital.
James McKinney: Oh man.
Nate Checketts: That was kind of the real wakeup call. That was when my wife looked at me and said, "Something has to give. You either need to stop this nonsense of this little startup that you have on the side, or you need to kind of go after it." And the truth is that was really scary for me. At the time we had two kids and I just started thinking through all of the different factors and risks. I walked away from what is now Rhone for a period of time, and essentially put it on the shelf for three or four months. My brother in law, who was my cofounder and helping on this, four days after my hospitalization his kitchen and house nearly burnt down from an oven fire. Their oven had been recalled but they hadn't noticed it, and so it sparked in the back, caught on fire. We were looking at each other, we were like we are crazy. We both have good jobs, we both have families, we need to stop this. But we ended up coming back to it and then kind of jumping in with both feet, and ended up launching the brand.
James McKinney: Four months is not a lot of time to forget those the seizures, the house fire, whatever the case may be. So there has to be a very compelling draw to want to leave the stability and continue to go back on the venture you were working on.
Nate Checketts: Yeah, there is. I'm clinically nuts is the only tip. Nothing else seems to make sense.
James McKinney: So as, now let's jump into the Rhone story. I feel like we can go for so much longer but our time unfortunately is coming to an end, and that's the case for so many of these incredible episodes with great founders as yourself. So as you are launching Rhone, there's so much that comes into the launching of any company, let alone an apparel company. A brand that you want to do something that has not been done before in the men's space specifically, and you had so much learnings from your previous startup. So in the launching and starting of Rhone, what lessons did you have from your previous venture, whether it be the way you raised capital, operations, whatever the case may be, client acquisition. What lessons did you learn from that tech startup that applied to how you started and grew Rhone?
Nate Checketts: Well there's a lot. But in the interest of time, I would say it really boiled down to one thing and that was spending time on things that really delivered value and credibility to the business, and not spending time on things that didn't do that. My first startup, I was really focused on what the logo would look like, what the name was, what my business card said. In the next business, it was can we make great product and that's pretty much it. That was the focus. Then it was how could we grow, what are the channels of distribution, what are the connections that mattered. Every hour, every minute spent was focused on delivering and driving value, whereas in the first experience it was almost like playing entrepreneur versus really creating value.
James McKinney: How did you fund it from the beginning?
Nate Checketts: Well in the beginning, it didn't require a tremendous amount of capital. A little bit that me and my cofounder put in for product development, but we decided we were going to need to raise some capital to do our first inventory run. So we basically went to friends and the pitch was we know almost nothing about fashion, ecommerce, and retail so if you're going to invest don't put more money in than your significant other or partner would be upset if you lost, because you're probably going to lose it.
James McKinney: I love it.
Nate Checketts: We raised about $150,000 initially through almost all $10,000, a couple $5,000 checks.
James McKinney: That's incredible. I love it. That's such a solid pitch, too.
Nate Checketts: Yeah, it was very honest. It was very brutally honest.
James McKinney: So two people that to your point don't come from fashion, don't have retail experience. What was your process to understand designs, to understand what consumers wanted, to understand fit? Just all the things that come from apparel that you are doing so well now with the Rhone brand, but that wasn't the case. How did you fumble your way through it? And I apologize if it wasn't a fumble but in my mind I have to think there were all kinds of fumbles that took place. How did you get through that?
Nate Checketts: Yeah. I look back at our first run of stuff, and I think it still was better in many ways than what was out there, but I want to hug all of our customers that bought that first round of product, because when I compare and contrast that to where we are today, we've obviously come a long way that way. But we partnered with experts in space and we had no fulltime employees really for the first three or four months of the business. We are in a very different place than I think a lot of the digitally native brands that launch today, with almost like this clear playbook. It's build a hero product, raise a bunch of money before hand, hiring a branding agency to do all your logo work and creative.
We were so scrappy in those early days. I hear about teams launching their first product, they've got 20 plus employees. I'm like I was part time on this, but it was really about finding experts in the space and asking a lot of questions. I'm a very curious person by nature. I ask a lot of questions and usually when I get the first answer, it sounds like you're very much the same way. It's what makes you a great host. Tell me more about that and how does that work.
So you start to challenge a lot of things that you don't even realize you're challenging, you're just trying to understand them as a consumer. Why on earth wouldn't there be a pocket specifically meant to hold your phone? We were, at least to my knowledge, we were the first in men's shorts to put a pocket meant specifically for your device in there. Now it's like everywhere, but at the time we had not seen it before, it was just a question. Our socks have this silicone pad in the back to prevent slipping down and that just came from the annoyance of having socks slip into your shoes. It's like why wouldn't you put something that prevents it from slipping in? it's like oh, well because nobody has ever brought that to us before. We're like, "Can you just do it?" And they're like, "Well it's going to cost more." We're like, "Yeah, that's okay." So it's just a lot of asking questions and working with smart people.
James McKinney: What was your launch strategy? Right now, first of all what year did Rhone launch?
Nate Checketts: 2014 officially.
James McKinney: So 2014, Instagram was around. Now Instagram is like a place a lot of products get a lot of awareness. I don't know if that was part of your strategy in 2014 at the time.
Nate Checketts: Nope.
James McKinney: How did Rhone come out the gate? A lot of people thinking right now well James, that's easy. We leverage Kickstarters, we leverage Amazon Store, we leverage Instagram. What was your go to market strategy with Rhone?
Nate Checketts: I would say we fumbled through it as I kind of outlined. We basically had developed five core products that we thought were necessary to go and build the brand, and then we leveraged digital channels of distribution all through Rhone.com. So the initial idea was that we would be 100% direct to consumer. We had spoken with the founders of Bonobos and Warby Parker and tried to understand what was happening in the landscape.
The truth is that, and you see a lot of these digitally native brands that are starting right around that time because every single category for the first time in a long time was up for grabs with a super low cost of entry. There was still arbitrage opportunities in terms of digital spending, Facebook, Instagram, et cetera and it was really just let's go into a category where there's not another digitally native brand already, and let's go and try on this category. We happened to pick an incredibly complex one, but we had these five products and our main method of sales was email.
In preparing for our launch we ended up bringing in a third cofounder. Had these pass along cards and we used to hold competitions to see who could give out the most of these to basically get people to go to the website, and when people went to the website the only thing people could do was enter their email address. So when we launched, I think we had accumulated somewhere between 5,000 and 8,000 emails just through friends, family, networking, et cetera. And that led to us doing sales immediately, but we weren't spending a dime on advertising. We didn't even know how to.
James McKinney: If you were to launch Rhone today, knowing what you know, how would you do it?
Nate Checketts: I would definitely align on the product that I think presented the biggest market opportunity.
James McKinney: And this is five years ago mind you. For listeners, when I say how would you do it now, it's five years, that's all we're talking about.
Nate Checketts: Yeah, five and a half, almost six, but yes I would have centered around a hero product. I would have pushed that hero product really, really hard. I would have had a team on the performance marketing side that was ready to kind of push ad sales and spending. I would have invested more in the upfront site infrastructure. It was basically me doing the Shopify template and this outsource developer in Pakistan that I had hired for $15 an hour. And then our social media strategy which was super sophisticated was my cofounder tweeting about us before we had even registered our handles, and I was at this zoo at the time with my kids and I'm panicked, and I start going and registering our handles. So when I look back at what we went through, it's a miracle we survived because we really didn't know what we were doing, we just figured it out along the way.
James McKinney: But you always wanted to be direct to consumer. You never thought I want to go to big box, it was always we are the brand, I want to own the consumer experience?
Nate Checketts: Well that part was clear and the reason why it was clear is because we were seeing what was happening in the space. When I say we didn't know what we were doing, we were students of the industry and we read a lot. It just, again, became clear that you had these huge incumbent brands that were so heavily reliant on a channel which is predominantly through retail, and as online transactions picked up in scale you knew these companies weren't going to get sophisticated fast enough, that they were going to get caught in the trap. Consumers were going to shift dollars away from retail spending and that would present an opportunity for new brands to come in and disrupt. That part we understood. That was the main philosophy.
But we did quickly pivot into allowing for a wholesale opportunity because of some research that we read that basically found that men made their clothing decision based on one, what they already own, and two, what they see in store displays. Whether or not that's still accurate, at the time that's what the data showed so we just decided however we can get into a man's closet, the better. If our main competitor isn't going to show up in an Equinox or a Nordstrom, let's go there, let's go show up there, get into a guy's closet, and then when they want to add more product they can come to us. That's let us become a number one men's brand in Equinox, number one men's brand for Peloton, one of the fastest growing men's brands within Nordstrom.
James McKinney: As you push to continue to build Rhone to be, per your journal, a brand that matters, what does the growth of Rhone look like? If we were to have this where are they now episode in five years, what does Rhone look like?
Nate Checketts: Well, numerically we have some big aspirational goals in terms of what we're trying to achieve. We believe that Rhone can be a billion dollar brand, can have a significant impact in terms of the way men live, work, and think from a content perspective. But more than anything, I want to make sure that from an internal culture perspective that we remain an incredible place to work, a place that supports individual pursuits and passions, and that we continue to stay committed and rooted in the principles that we built this brand on. That remains fundamental to everything that we do.
James McKinney: What's your vision for the female capsule, the women's capsule that just launched recently?
Nate Checketts: That was a fun thing to do. That was really a give back to our internal female team. We have more female employees than we do male employees. We wanted to do something to honor and pay homage to them around international women's day. Now, the capsule sold incredibly well. Within 48 hours, started breaking on sizes for products so it certainly will make us look at that category more closely. But for now, there's no immediate plans on the horizon of doing more women's.
James McKinney: Awesome. Well there's so many more things that I would love to ask but I'm always big on honoring our founders time, and so there are three questions though that I never walk away from it without asking because they're just so critical. The first one is one that my wife actually asked me in episode 50 when I unpacked my story and I had her interview me, because she is so pivotal in my story. She asked me if I thought are entrepreneurs made or are they born that way, and I want to ask you the same question. do you believe that an entrepreneur is born to be an entrepreneur or is it something that they learn?
Nate Checketts: I think it's both. I think to a degree, the risk taking nature of an individual and the desire to kind of have that risk is somewhat innate, and I think it's a blessing and a curse. But there are entrepreneurs of all kinds, shapes, and sizes and so it's impossible to kind of package everybody neatly into this box. So in many ways I think that I'm a very different entrepreneur today than I was when I started back in my first startup. I would say good entrepreneurs are made. Certainly there are people who are more prone to taking risk and starting businesses, but I think it's probably the latter of those two.
James McKinney: That's awesome. So when you look back on your entire journey and all the people that have helped contribute to where you are today, this last question is about gratitude. And I ask this question because I believe that if we forget all the people that helped us to get to where we are, we forget all the shoulders that we stood upon to see how we can see things now, we begin to isolate ourselves and that isolation will ultimately lead to our failure because we start thinking we can do it ourselves. I'm a big believer in community, and so when you look back on your journey, who are the people that you point to with such immense gratitude for their contribution to your journey?
Nate Checketts: That is a very long list, but at the very top of it would be my wife as well. She's an incredible pillar of support who has believed in me in times when I didn't believe in myself, and then my family members in general who have been there for me. I have the blessing of coming from a very large extended family too. I have over 60 first cousins-
James McKinney: Oh my goodness.
Nate Checketts: Imagine launching a consumer business where you have a built in audience to say, "Come and buy and share." And I have to mention the team at Rhone. I just hae an amazing team that believes in and supports me, and supports me knowing how imperfect and flawed I am as a leader, and still with that they still support me. So I've got a long list of people I'm grateful for.
James McKinney: That's awesome, I love it. I absolutely love it. For the length of this episode we've been talking to the tens of thousands of people and I consider The Startup Story to be a digital mentor for everyone that chooses to subscribe and to listen. And one of the gives that I can give to my audience is a chance to have that one on one with a founder. So while we've been talking to the masses, I would like to bring the conversation down to just you and a signle founder. Whether that founder is someone who's started a business and is just frustrated with the lack of traction they're getting, or they're comparing their journey with another startups journey and they're not where they are, and therefore they're finding themselves in a place of discouragement. Or maybe they're an entrepreneur who has tried time and time again and just continues to get punched in the face and just can't keep going on, they're about to call it quits. Or maybe it's the entrepreneur that I call the want-repreneur, the one that's got a 9 to 5 and a book full of ideas, and is riding that hour and a half subway just journaling but has some narrative as to why they can't move forward on that dream or that business that they have, or that brand they want to build that matters. Whoever that persona is, whatever one resonates with you specifically because of your personal story, I'd like you to speak to that one person. What would you have to say to that person?
nc : I want to speak to you, the defeated entrepreneur, to let you know that I have been there and that success is not a straight line. It is absolutely filled with starts and stops and zigs and zags. If you look at most anybody who has accomplished anything, it has been fraught. Their line has been fraught with failures. And the most important thing that you can do is to pick yourself up, dust yourself off, and keep moving forward. Take steps forward every single day. Failures happen for a variety of reasons. They happen for timing. They can happen for bad partners. They can happen because you've made mistakes. But the only thing that matters is that you decide to get back up, take accountability, and start taking action to move yourself forward.
James McKinney: once you've had a few minutes to process all the value Nate 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. Rhone is a startup that is making a tremendous amount of noise in the active wear space. One easy way for you to support Rhone would be to visit Rhone.com. That's R-H-O-N-E.com and purchase something there for yourself or the man in your life. Another way to support Rhone would be to connect with Nate directly on LinkedIn, and we will include a link to both of those, to Rhone.com and to Nate's LinkedIn profile. We'll include both those links in our show notes. Remember, entrepreneurs support other entrepreneurs so let's show up for Nate Checketts and Rhone in a huge way. And now for my personal ask.
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