On the 42nd episode of the Loose Threads Podcast, a show about the rapidly changing consumer economy, I talk with Kyle Hency, a co-founder of Chubbies, a brand that started bringing back the short short that’s now trying to own the weekend. Kyle started the brand with three friends from Stanford, after admiring the short shorts their dads were wearing in the 80s.

The brand has come a long way from the early days selling the shorts in person, one at a time. Today, it has a thriving newsletter and an ever expanding product assortment built for guys enjoying their time on the planet.  I really enjoyed talking with Kyle about the brand’s evolution and how it uses all of its media efforts to keep shopper’s attention for what was traditionally a seasonal business.

Check out the full transcript below.

Richie: [00:00:07] Welcome to the 42nd episode of the Loose Threads Podcast, a show about the intersection of consumer, retail and commerce. This episode is brought to you by Loose Threads Intel, a new company we just launched that helps brands and investors drive long-lasting growth in the new consumer economy. Learn more at loosethreadsintel.com. We also have a new weekly newsletter called Ripcord that helps you escape the noise and focus on what matters most. Sign up at loosethreads.com/ripcord. Joining me today is Kyle Hency, a co-founder of Chubbies, a brand that started by bringing back short shorts and is now trying to own the weekend. Kyle started the brand with three friends from Stanford after admiring the short shorts their dads were wearing in the 80s.

Kyle: [00:00:48] We had this early idea that we should treat our customers like our friends. So then what would our friends like? What would they want? The immediate thing that we all got stuck on was this idea of the weekend. Let the rest of the world handle the rest of the week. We are the Friday at five guys to end of the day Sunday.

Richie: [00:01:02] The brand has come a long way from the early days selling shorts in person, one at a time. Today it has a thriving newsletter and an ever-expanding product assortment, built for guys enjoying their time on the planet. Here’s my talk with Kyle Hency.

Richie: [00:01:19] Tell us a bit about yourself, your background and we can work our way up to Chubbies existing.

Kyle: [00:01:23] I grew up in the Midwest. I’ve been living out here in San Francisco for 10 years. I went to Stanford, played soccer there as an undergrad, came out of school into a finance job in San Francisco. Fast forward two, three years. I was pretty tired of that job and as chance may have it some of my buddies here, Rainer, Tom, Preston—my business partners here at Chubbies—were in a similar situation. Call it mid-20s, stuck in corporate jobs and looking to make a move.For us, we were like, “We gotta work for ourselves. We’ve got to come up with something.

[00:01:56] And I remember sitting down in some of those original brainstorms and it was like, “Look at these pictures of our dads in the 80s. Man, they’re living the life.” I’m sure you’ve done that before and you can just look at those pictures like they’re so carefree. There’s not a worry in the world. You know the world they’re living in, it’s inclusive, it’s fun. They’re definitely not working—apparently they didn’t work in the 80s.

[00:02:18] Rainer actually came from a product background being at Gap and Dockers. I came from a venture capital background, so did Tom, and Preston came from a technology background so I had a pretty diverse crew of guys all very talented, driven. Like ready to work really hard and throw all of our resources at something. Next thing you know, “We know we have a pair of short shorts designed, creating something that’s super fun, really wild.” It’s evolved into something that’s really wild. We have an awesome community of guys that have our back and we work really hard to have their back, making them awesome products, creating exceptional content for them—something we spend a lot of time doing here internally, which I think is a bit atypical for an apparel brand but something we’re really excited about over the next couple of years.

[00:03:00] And so,you know, you fast forward six years now. It’s hard to believe we’ve been doing this for over half a decade. You know we have a huge team here. It’s about 75 or so folks really young, who are really driven, really talented, love what they’re doing every day. We’ve talked about it a lot internally that we’re pretty fortunate to, in a lot of ways, be living the American dream right. We’re in corporate jobs. We gave them up. Now we wear shorts and flip flops to work every day. That’s awesome. It’s easy to get out of bed every day for sure.

Richie: [00:03:27] So you guys start leaving your job started coming together. There was no plan originally, right. You were brainstorming ideas. Talk a bit about like those very very early days and, kind of, how even the shorts came to fruition and then we can work our way from there.

Kyle: [00:03:38] So the four of us are getting together and we’re kind of brainstorming some of these ideas. We had this idea early on that we felt like the other apparel brands—call it Abercrombie, American Eagle—like guys that were targeting this 18 to 25 demographic just weren’t talking to guys like the way they should be talked to. So we had this early idea that we should treat our customers like our friends. So then, what would our friends like? What would they want?

Kyle: [00:04:02] The immediate thing that we all got stuck on was this idea of the weekend and how every week we were looking forward to Friday at 5. And that that was going to be our big angle. We could just totally dominate Friday at 5 to end of day Sunday is our zone. Let the rest of the world handle the rest of the week. We are the Friday at five guys to end of day Sunday. So that was kind of the central theme from day one.

[00:04:23] As we backed it down, then it was like what products are you gonna make, right? And so for us that was when we were looking at these old pictures of our dads and I was like “wow man they were living the life when we were kids.” They were wearing these five, six inch inseam shorts that were comfortable as hell. You know the ones that we inherited were like literally vintage shorts and all of us have similar stories where like, in college if there was a sunny day, you know, we would be out drinking in the park with our buddies wearing these vintage shorts. And so we very quickly knew that we had this really cool unique angle on the shorts front. We tried Hawaiian shirts up front. It didn’t really work as well as the shorts and so we kind of just picked the lane and went down the lane with the shorts.

[00:05:04] But you know we’re really fortunate.

So there’s four of us, all Stanford educated guys that are running at this opportunity which, at the time, again, kind of looked like a bunch of wild college kids making some wild shorts for their buddies. You know we were fortunate that Rainer came from his background at Gap and Dockers where he, one, had all these connections, two, was able to—he had to learn a lot out of the gate. I mean he wasn’t exactly doing this at Gap and Dockers and so he was picking up really quickly like “How do we actually make this stuff?”

[00:05:31] I mean, we have all these crazy stories in San Francisco where, you know, our first pattern, we waited like two months on, went to go pick it up and the lady just literally disappeared, wasn’t there. And so here we are, two and a half months into working, trying to get one prototype. You know, at the time I remember being like, “Oh, we’re a thousand bucks into this and we don’t have anything”, which felt like, you know, a huge step backwards two months in. Obviously, we worked through that and were able to get our prototypes,we were able to get our product, started working with some great partners here in San Francisco and were able to get, you know, our first round of product out.

[00:06:05] You know, the first couple of years were like you make a batch of shorts. These were all the same, you know, silhouettes—five and a half inch inseam, elastic waistband—the original Chubby short. And we made it in a bunch of different colors. We dyed it every color you can imagine. At some point we made wool shorts that you literally could not wash, that you had to dry clean which, I know sounds crazy, but people bought them. So we basically just continually sold out for the first two years of our business. The way to think about it: We sold 100 pair of shorts. We took all the dollars from that and we made 300 pairs of shorts. We sold all of those and just so on and so forth. Obviously, it gets a lot more complex.

[00:06:42] You know, now we’re making hundreds of thousands of units globally. Those early days, we loved those days. I mean, some of our first hires were like our best friends from college. There was a college ambassador from all the way across the country who quit college and just decided he would be willing to join the team and we were fortunate that a lot of those guys jumped on early on.

Richie: [00:07:01] You mentioned you tried Hawaiian shirts and some other stuff. What was a moment you knew that the shorts were the answer?

[00:07:07] Oh man, this is an easy one. So after we made these original prototypes—we had Hawaiian shirts, we had a variety of kind of like basic shirts and loud shirts. We had loud shorts, we had basic shorts, kind of a whole look and we had built this whole look for the Fourth of July, which for our friend group was like every summer we drive up to Tahoe. At the time we were hanging out at Chambers Landing which is like a really awesome picturesque part of Tahoe where you basically sit out on the beach and drink all day, you know, from 10 in the morning to 4 or 5 in the afternoon. And our game plan was simply to fill our backpacks with these shorts, go out there with our crew of, call it 20 or so of us, already rocking the stuff—it was really patriotic stuff. And next thing you knew, we were just selling these shorts out of our backpacks and we sold all of them. It was pretty clear just from talking to people, they were like, “Holy cow, those shorts are wild. Where did you get those?”

Richie: [00:07:58] Was this just cash?

Richie: [00:07:59] It was just cash, literally like cash. I remember at some point it was like, “We should start using Square. That’s going to make things a lot easier.” But this was just cash out of our backpacks, screamed through it in a day. I think we all kind of came back from that and were like, “Whoa that was something, right, like we unlocked something kind of crazy.”

[00:08:17] Thinking back on it it was like this idea of, the same thing that worked for us, the same methodology: what’s going to work for your friends? Let’s make some cool stuff for our friends. And this was an extension of our friend group in Tahoe and they were all like, “Hey, that stuff’s cool. Can I buy that from you?”, which is a pretty cool product validation immediately. And Preston has these awesome stories because he was working at a tech company where, to him, the Holy Grail of product market fit was like something they were searching for at this business for a long time and so one of the big reasons he was so excited about jobs upfront was just like, there was no question. It was very obvious and clear that, that we had a business here, that we could continue to build a great product, take care of these guys, and they would buy more and more and more.

Richie: [00:08:57] And so you came back from that weekend— What then? How do you capitalize?

Kyle: [00:09:01] So we came back from that weekend and, at this time, we all have our day jobs still. We were just doing this on the side. And that continued for the first six months, eight months and, you know, over that first year and a half, two years, different groups of us joined full time. I think Tom was the first one to join full time. Rainer was immediately after that and then Preston and then myself. I was actually the last. And you could tell that there was a business there.

[00:09:23] Obviously, the first year of the business is so transformative. I mean it’s, literally they were working out of Rainer’s apartment, which is on the third floor of the same apartment building that I live in. And so this group of four or five guys was, you know, getting together every day, some of us still having to go to work, some of us being able to stay there all day, depending on what our situation was and, you know, starting to grind it out. This business was working out of this apartment. At some point, we had half of my living room filled with blue boxes. I mean, literally filled to the brim. We would pack up this huge group of orders because they were just coming in so sporadically, packed up entire elevator to take them down from the second floor and then filled Preston’s entire 4Runner with packages which we just literally dropped off at the post office. Nobody along that chain was super happy to see us. But it was a really cool experience and just like a shout out to how scrappy we were back in the day.

Richie: [00:10:15] So you started selling like person-to-person basically on that weekend. Was it obvious to come back and go, “We need a web site, we need to do all of this”? Like, how did the channel change?

Kyle: [00:10:22] Yeah, so the next thing we did is we had a big launch party here in San Francisco. We basically just invited our friends and we had a much bigger run of shorts and shirts but it was really cool. I think we had 200 or so people come through this event and so, from day one, I would say this business was like built for our friends, supported by our friends. The first seed capital that we brought into the business to really accelerate it was all of our friends, literally pass the hat with all of our best buddies and it’s grown and it’s grown and it’s grown and that’s, you know when we talk to our employees today it’s like, just trademark through your friends.

Richie: [00:10:54] What started to change, or did anything change, once you were all full time?

[00:10:58] So there was this transition period where Tom and Rainer were working really hard all day, every day putting in the blood, sweat and tears to get things going, myself not being in full time, at the time. You know,there’s a lot of challenges in doing that, right. You know, we worked through that as a team. We all jumped on full time, call it 18 or so months into it. It was clear that there was going to be a really great business there. We’re starting to hire people and, you know, the dynamic was very much, you’re building the business with your buddies. And it was like the Wild West. I mean, we didn’t really have any job roles. There were so many things to do. We were just basically plugging holes, right. As we evolved over time, fast forward a year, two years. It’s like, now we have 10, 20, 25 employees and you kind of have to work out of the, “Hey, we’re all doing a little bit of everything” to “Hey, here’s our new set of roles.”

[00:11:46] And so what we developed into today, and I think is something that’s really unique and special to Chubbies, is that, you know, we have four good buddies, who work really well together, co-managing a business and we’re able to divide and conquer in that way. And so I think that that’s something that has really allowed us a lot of leverage up front. Any one of the four of us could be anywhere, making a relationship, build a brand partnership and grip and rip in the first three to four years of the business, which is really powerful.

Richie: [00:12:13] And so, I guess as stuff shifted more online and you started building out the business that way. In year one, year two, like what was happening and, kind of, what were you seeing on a day to day basis as the business took off?

Kyle: [00:12:24] Yeah, absolutely. So we were really fortunate that we timed a lot of this right along the same time format that platforms like Shopify and some of these other e-commerce infrastructure guys were kind of coming out of nowhere. And so just the general cost to do what we were doing, even relative to a Bonobos who was five years earlier, was just quite a bit lower. We were able to learn from some of the mistakes they may have made along the way. And so we were able to do this really leanly up-front. So everything was direct to consumer online. Everything was pretty much selling out immediately.

[00:12:54] We realized that, in year one, we can actually kind of fund what we’re doing through pre-sales. And, in fact, in the first three years we did pre-sales and, still to this day, if you go look on our site there are things being pre-sold. It’s kind of a part of how we do business and we think it’s really interesting in that our customer knows that we’ll take care of them. And so in those early days, I mean, there were two or three months at a time where we just didn’t have product landing. And so they would just mount up, mount up, mount up and then we would take care of them.

Richie: [00:13:21] It’s interesting, I guess, if you establish that trust, there’s a lot of stuff, like pre-sales, that for other companies, would not work as much that you can, not get away with, but just make a reality.

Kyle: [00:13:29] I would say one thing that we’ve felt like is really interesting and unique to Chubbies is that our customer has displayed a lot of trust in us from day one and we’ve done everything we can do to maintain that trust and make sure that they’re taken care of. Fast forward six years, we feel really proud that we’ve raised like almost no capital and are a completely self-sustainable business with no plans to raise any more capital. And one of the ways we’re able to do that is on the back of our customers. I mean, this is how brands used to be built right. They didn’t require hundreds of millions of dollars to build a national footprint of stores in order to be successful as a brand. And so, for us, we were able to have these very unique relationships and build the business very organically.

Kyle: [00:14:12] We’re obviously very fortunate but it was also partly luck right because it was a unique time in how all these things were evolving. The fact that we could put up a site for 25 bucks a month was crazy to us. And the fact that we could go to suppliers in California and order a hundred units at a time. That was actually pretty straightforward after we got into it. First one was really hard. Then after we were doing it, it got easier and easier. And so I think that there’s something really cool happening, generally within brands, where it’s easier and easier to get something going. The bigger question, and the thing that we talked a lot about internally, is how do we maintain relevance, right.

Richie: [00:14:47] And how do you scale it.

Kyle: [00:14:48] How do you scale it and how do you maintain relevance? And for us, its value. Comes back to one word—it’s value. You have to be, it needs to be a no-brainer for your customers why they’re coming to you.

Richie: [00:14:59] As you went from selling on that weekend to selling online, part of me almost thinks that like the shorter a pair of shorts gets, the harder it is to know how it fits. And so did you experience any challenges as you went from, I assume people literally trying them on in person, to, “Just trust us, you don’t know how this will look, but like go for it?”

Kyle: [00:15:17] We looked up to a lot of people that we thought were doing it right at the time. There’s a lot of talk about Zappos, right, free returns, and so from day one we had free returns on our site. And I think it was just kind of the very beginning of that where, you know, the service through e-comm was really escalating across the board for everybody and so we’ve had a lot of those things as parts of our experience from day one and so that definitely lowered the threshold.

[00:15:40] I would say, generally, a five and a half inch inseam short is highly polarizing. So there’s an audience of our community that just completely gets it. They’re in. They’re buying a lot of these things. Then there are people in the middle who are a little bit more cautious and they’ll try them out and see if the rest of the brand kind of resonates with them. And then there’s people who are completely skeptical, right? And so, as we think about our job, it’s to try to build products that are amazing for that entire group of people and focus your efforts at each of those groups accordingly.

[00:16:14] You know, I think one thing that we’ve increasingly talked about is, “How can our brand resonate across a wider audience of people, while not alienating our core guy?” And so we’ve spent a lot of time over the last two or three years making sure that what our brand stands for is something that’s really inclusive. And that is the weekend. That is fun, that is care free, that is something that everybody should be really interested in. And so as we think about the pie in the sky stuff with our brand, five, ten years down the road, how do you build into that? How do you get as many people as humanly possible excited about that? So that’s kind of what we talk about.

Richie: [00:16:48] When did the content piece start coming in or becoming serious?

Kyle: [00:16:52] I would say that the content piece was really serious early on and I think it’s a product of growing and building your brand in a Facebook-first world. When we started building our company, it was the Wild West on Facebook. I mean, there was a point in time where we realized that it would be better for us to physically mail a beer koozie to people than to pay Facebook one dollar per like. So we started sending out beer koozies to people if they liked us on Facebook. And that was like a straight up arbitrage on Facebook. Obviously, Facebook’s clamped down and all the Wild West stuff from five or six years ago and has really built into a platform that we’re very fortunate to have kind of caught the tail winds of Facebook taking this whole part of the world over.

[00:17:39] You know, as we think about what that means for your brand, for us, early on, it was like we have to create value by creating great content. And so one of the first things we did, we started every Friday was an e-mail that had nothing to do with product. We called it The Weekender. It’s all about all the wild stuff in the world and what you should be doing this coming weekend. And the purpose of it is to send you into the weekend. It doesn’t drive sales. It’s for nothing but creating a valuable experience with our customers. And we’ve done that every Friday for six years. That’s part of how we build a real relationship with our customers.

[00:18:15] The other thing I would say is early on we built an ambassador group which is a really cool and fun way to get into colleges and get word of mouth going and all these localized college campuses, one of the things we realized really early on was one of the main pieces of value from that group was them getting their groups of friends excited about Chubbies and then taking pictures of it. And then we could utilize that content and drop it in our social channels. This is just another really easy way for us to put our customer on a pedestal. And so that stuff’s become completely ingrained. If you look at our Instagram profile right now it’s like 50 plus percent just customers out in the world livin’ the life that is like Friday at five to end of day Sunday, like care free.

[00:18:53] And so, from that perspective, I think it’s always been a content business. I mean, I think now where video is really the driver of reach and volume and success ultimately on Facebook, investing in that team was like a really cool endeavor and we have, I think, one of the most talented video teams here at Chubbies, certainly one of the most productive.

Richie: [00:19:14] I think we’re seeing right now kind of this interplay between commerce companies turning into content companies and content companies turning into commerce companies. So you have, you know, BuzzFeed doing the content thing and now they have the Product Labs and Tasty One Top and all of that. On the other side, you have companies now that are the commerce started and now are now kind of building the content stuff out. It seems like your answer was one doesn’t come before the other. They both work together. How did you arrive at that or, kind of, what else was considered?

Kyle: [00:19:41] Yeah I mean I think we have a unique perspective on this. At the end of the day, we’re a brand. You have to always answer a really hard question for your customer which is, “What does your brand stand for?” If we ask our customers that, it’s fun and the weekend. We ask our customers that in post-purchase service and I’ll tell you, it’s fun and the weekend, right. So that actually doesn’t have anything to do with product. And that’s indicative of the fact that we have a broader relationship with them. And so that’s something that we aim to monetize a lot better in the future but something that we’ve just allowed to be really organic.

Kyle: [00:20:12] So we think that the content piece is going to become a bigger piece of the pie as we get into the future and we’ll continue to bring really, really cool stuff to our guys. I mean, right now, in the last year, we’ve had tons of success with literally discovering things that they would have never found out about and servicing them for them. So that’s a really cool place to add value to our customers where the next competitive brand is just simply not doing that. And so that’s part of how we’re differentiating, for sure.

Richie: [00:20:38] What’s an example that in more recent times?

Kyle: [00:20:41] Probably the best example: we developed some original content that was a DIY pool that you could build with crates, that you could pick up behind any Home Depot or wherever for free and you could essentially build an aboveground pool in your front yard for less than 100 bucks. That was our video crew coming up with a concept and executing on it and it really working. It resonated with everybody. Like, “Holy cow, anybody could have a pool.” That’s something that’s just like a kernel. It was an idea that we developed here. I think one of the guys had actually done this in college or something. You know, just a really cool piece of content that we could bring to the world. It got 20 million views on Facebook. It was completely viral and super organic because everybody’s looking at it like, “Wow, I could do that in my front yard. That’s kind of crazy.” And so stuff like that is kind of the vein of where we add value online but we’re always trying to shake it up. We have all kinds of new stuff coming down the pike.

Richie: [00:21:36] So given that you’ve experienced kind of what you call the Wild West of some of these social platforms and are now kind of in the tamer days, so to speak, where we’ve seen algorithm changes and all that, how have you kind of architected a strategy that is not overly reliant on any one of these channels that one change that you’ve no control over could torpedo, you know, something?

Kyle: [00:21:54] Absolutely. A lot of what we do is on Facebook and Instagram and I think there’s a constant debate internally, which is a simple one: if those are the best places where you’re getting the best return, why do you need to be somewhere else? Why are you defusing your efforts? And I would say we’re at a scale now as an organization where we need to develop expertise across all of these platforms. And so we’re right in the middle of making sure that we have expertise across all of these higher profile advertising platforms and you have to be testing constantly.

[00:22:24] We live in an e-comm world which is very distinct and different from traditional retail in that, we can tell you what it costs to drive somebody to come purchase from us and we can tell you what they’re going to purchase in the future. And we have this treasure trove of data that is really easy to collect and really hard to cull through. And so for us we look at that and you say, it’s some blend of make sure you’re betting on the horses that are working for you and being productive but also make sure you have expertise across all of these channels.

[00:22:53] But also how much can you own? I mean, we talk about that a lot. Like, how can you minimize the necessity of these outside platforms by owning channels? For us, our mobile app is a great example of that. We have several hundred thousand people who have downloaded our mobile app and we can send them push notifications whenever we want. That doesn’t cost us anything. E-mail’s another great channel. Our content channels are another great channel and we have a goal in this internally. “How do you drive your own channels?” Things that don’t require you to pay Facebook per view, right. And so that’s a huge initiative over the last year for us where we’re really starting to have some great success driving those own channels.

Richie: [00:23:29] So I think one of the really interesting things about the Internet more broadly is that it’s taken what are traditionally seasonal businesses and kind of opened them up well beyond that, right. So, you started selling shorts, swimwear, stuff like that, which is a summer thing to people not on the West Coast. Talk a bit about kind of the results you’ve seen from that. What were some of the early criticisms you got about, “Yeah this is great guys but like this is a three month a year business” and kind of how has that evolved as you built it?

Kyle: [00:23:52] The seasonality is always an interesting question. I’ll tell you a quick story, just to give you a sense of how much we think about it. Probably in year two or three, we decided that it made a lot of sense to open Chubbies Australia for this very reason, right. English speaking, it’s the Internet everybody can access the Internet. Let’s open Chubbies Australia. That way, in the down months we’re not so down, right. We’ll have a whole other business that’s bigger than the state of California, you know, working on our behalf. There are a lot of reasons why that was a horrible idea by Chubbies at the time.

Richie: [00:24:25] Why?

Kyle: [00:24:26] It was just too early for us as a brand. We were too small. We didn’t have enough awareness. But there are a bunch of reasons like that why that did not make sense at the time but, strategically, like, we were thinking about it early on.

Kyle: [00:24:36] You know, I think as we’ve grown up as a brand, given the evolution of all of these tools, what we realized is the best tool for us is massive brand awareness here, domestically, where we have our core customer, where we can kind of systematically build into these friend groups all over the country right. There’s a lot of nuance to brands that are more cultural and social and so I think that there are some more sophisticated and harder things to see when you move international. But seasonality was something we talked about very early on. So, a couple of ways you can look at it: geographically, like we looked at it and we still look like that. In the winter months, We definitely see the South pick up as a percentage of total. And so, for us, there’s still a warm, coastal region of the United States that is thriving for us and that we’re always continually growing.

[00:25:23] For us, interestingly, developing retail stores is something that actually has better seasonality to it because there’s just a floor. At the end of the day, there’s X number of people walking by everyone of these stores. So that’s the kind of a sneaky one when you think about seasonality. But one of the really powerful things about Facebook and some of these other platforms is it allows you to go isolate the people, globally, who are relevant at that moment in time. And so for us, all of the seasonality means is we shift our focus season to season on different groups of audience that are relevant or are not relevant. The other thing I would say that we definitely see is your relationship with your customers, your existing customers, becomes much more important in the down season. Those are the people who are saying, “You know what, I don’t care it’s September, these things are outrageous, I’ve got to get them” or “These things are amazing. I don’t want to miss out.”

Richie: [00:26:16] So you could almost say that the content piece is essential then to keeping those people retained when it’s off season.

Kyle: [00:26:21] Keeping them interested. Giving them relevant messaging, right. The very idealistic way to look at all of that messaging is give them the most relevant message at every, at every point.

Richie: [00:26:31] But you also don’t want them to forget them that, hey you’re still there.

Kyle: [00:26:34] We’re still here. We’re still adding value all year round. And for us, we’ve pretty systematically, over the last six years, reduced the seasonality. All that to say, seasonality and apparel are like, just is what it is. For us, it’s actually quite a bit muted. Most seasonality in apparel is based around Christmas. And so, for us, Christmas is around half the size of summer. And so we’re just much less reliant on that where everybody else is. So there are a bunch of reasons why that’s actually really positive for us as a business. Our suppliers, we never compete during the same times with our suppliers. And so that’s something that’s pretty interesting about what we’re doing.

Richie: [00:27:11] When you started this, how big did you think the market was for this? Like did you play into these total addressable market equations in your head? Or like you were just like, “I think there’s something here and let’s run”?

Kyle: [00:27:22] That was not how we built our business. We didn’t build this business saying, “There’s a 100 billion dollar market and we’re going to build it through this and then we’re going to sell it and we’re going to take this”. For us, it was about paving our own path and there are a ton of businesses that have done this really well. Over time, for us, the total addressable market is pretty irrelevant. We’re going to pave our own path and build this into this whole weekend behemoth. “What are the iterations of what that could be?” is a pretty interesting question. And then if you start thinking about those markets you’re like, “Oh, okay yeah. That’s different if it’s actually relevant to that group of people.

[00:27:56] You know, for us, part of what’s really cool about the way that the Internet’s evolving is that it takes these small markets and makes them really relevant. In the past and in my venture capital world previously, we wouldn’t be looking at anything that was less than 10 billion dollars in market potential, right, because we wanted these massive returns. That’s not an equation that people do anymore in these types of businesses because you can build a massive community that drives huge volumes in something that didn’t even exist before. But at the end of the day we’re in men’s bottoms for men’s swimwear, we’re in men’s outerwear, we’re increasingly in ladies swimwear and ladies bottoms. These markets are huge markets. You know the thing that we talk a lot about is maintaining relevance three days out of seven every week, right. Okay, so that’s a huge market if we’re highly relevant all three of those days. And so we think about it from a couple different vectors but it’s never really been much of, you know, the discussion internally.

Richie: [00:28:54] So I want to talk about the financing piece a bit. You alluded to before that you started pretty reasonably on the financing side, which I want to talk about, but also transition over into, physical goods is an incredibly capital intensive business to begin with. You add digital marketing in which, again becomes an immensely capital intensive business. How have you been able to navigate,and why did you navigate it as you did, without hundreds of millions of dollars behind you?

Kyle: [00:29:17] So we’ve raised about 10 million dollars of capital over time to be able to continue to fund growth and make sure we’re taking care of our customers. That’s at the core of why we would ever do it. You know, we need to make sure we take care of our guys or we won’t exist as a business. From day one, all four of us were very aligned on doing this real lean and mean and that required us to operate in a certain way, right. Very ingrained into the culture of the business here is doing more with less. Absolutely. We are, you know, David fighting Goliath here. There are huge businesses, Abercrombie, American Eagle, all these guys going after our demographic, and they have huge, huge budgets to take us down, copy us. They’ve all done it, right. And for us, it’s about sticking to core, building our own vision, sticking to what we’re good at, trying not to be everything to everybody but doing so in a way that’s really scrappy.

[00:30:11] And so, some of these things, you know, we did pre-sales to fund a whole season at some point. We sold a reverse subscription at some point where we would collect cash up front for a year subscription and then deliver shorts to you over a year. Very obviously that doesn’t work for scale because the value is not there for the customer. But we did these really scrappy things and we still do all kinds of really scrappy things to make sure that we’re lean and mean and we operate in a really clean way.

[00:30:39] For us, building a profitable sustainable business is a part of how we build this into something really special over a 20 year time horizon. And so, you know, we’ve had a couple of rounds of financing at this point, in most cases to invest more in inventory, make sure there’s enough stock on the site. It continues to be a thing that happens with our customers in terms of like, “Man, I really want these but they’re out of stock again.” And that’s partly because we buy our inventory more lean but it’s pretty pervasive throughout how we do business. One of the things we’re really focused on right now is building our retail footprint out. And if you talk to any other brands at our scale they’re talking about investing in a quarter of a million dollars to build a store. You know our first stores are all, they cost some $20,000 to build out. And that’s one tenth that’s completely dislocated from the standard of what people do. And that’s because we’re scrappy. And that’s because we have a team of young folks here who are runnin’ and gunnin’ and they know what our brands about, they know what’s important.

[00:31:35] We operate really leanly. We have a really great young team that works really hard and is really bright but at the end of the day it has been really important to be capital efficient from day one. And I think a part of that is there’s a slew of e-comm businesses that have raised hundreds of millions of dollars. At some point you kind of lose control of what you’re trying to build and you’re kind of forcing something into something it’s not. For us, we want to build something that’s really comfortable, organic and is not forcing ourselves on our community and our customer base. I mean, our growth profile is completely throttled by the fact that we want to be profitable in our first order, that somebody comes in the door so that the entire lifetime of the future of that customer is just gravy, right.

Richie: [00:32:15] Which is a radical idea.

Kyle: [00:32:16] That’s wild. Like, “Holy cow, a brand growing up today, why would you do that?” And we have a lot of debate around that very topic like, “Why?” But that’s doing business right as far as we’re concerned. Like, if you were starting the same business 25 years ago, what would you have done? And so, for us, I think we’re just sticking to some core principles and making sure we’re doing it right.

Richie: [00:32:37] You alluded to a bit like the inventory kind of stock out piece. What’s the mix of the business or kind of the take on core styles versus more seasonal trend driven stuff and, kind of, how do you predict and kind of plan around that?

Kyle: [00:32:49] So our swimwear business is probably the most explosively growing piece of our business and that particular business is highly print driven. And so that one in particular is, we kind of characterize as non-basic. So separating the two I think is important as you think about our business. Then there’s like these are khaki shorts, these are navy shorts, these are, you know, Nantucket red shorts and that piece of our business is really what we’re built off of. And so that’s much more of an evergreen where we’re trying to stay in stock, expand what it means.

[00:33:22] So something we’re excited about that we launched this year was basically five and a half inch inseam and also seven. So it’s still a short short, still above your knee. But now it’s like, anybody that was interested in the brand but that was, say they’re 6’3” or 6’4” and it just doesn’t make sense, now you can try these out. These are the same length as the short from J.Crew. But also just extending those basics. So, drawstring shorts do really well for us, lounge shorts, just kind of casual. Comfortable and quality are like the big things that our customers gravitate to when they’re talking about our product.

Richie: [00:33:55] It’s interesting I guess because, if you keep this very kind of type P.O.V., you arguably can push any product through it, right? You could be a seasonal business but you could also not be and move well beyond that if you choose.

Kyle: [00:34:06] Yeah, like why would this business that started online, our business, selling five and a half inch inseam shorts, why could they sell a pullover in October? Reversible pull over that competes with Patagonia. It costs $125. Right. That, it’s our brand. That’s what they would be wearing with our shorts in October. And so that business is great for us. The stuff we have coming out this coming October is excellent. And so outerwear is a hugely growing business for us because it’s what our guy is wearing during a different time of year. It’s a generally pretty good example of how we can expand into other parts of his life. And yeah, for sure, like Chubbies is short shorts, short shorts is Chubbies. But at the end of the day, there’s a huge piece of our audience that is like Chubbies is the weekend. And that’s where we see the future of the business for sure.

Richie: [00:34:53] Talk a bit about the retail piece in terms of, when did you start experimenting with it? When did you start to realize there was something there and, kind of, where is that headed as well?

Kyle: [00:35:01] Yeah, so retail’s probably one of our biggest growth initiatives over the next three years and something we’re very, very excited about. I think it’s easy to get caught up in the in person versus e-comm and duhdedah. At the end of the day, these are customer relationships and these guys and gals need to have excellent experiences. And so, what is a better experience with our brand than going into one of our stores? Like there really is not a better one. So it’s something that we feel really passionate about something that we’re investing a lot of time and resources.

Kyle: [00:35:30] We’ve been doing it here in San Francisco for the last three years. We’ve had a store in Union Street that’s just done better and better and better and better every year. And we learned along the way. I mean, it’s a good example of the difference between a company that’s just plowing dollars into this versus letting it occur, letting it happen. And so when we look at our retail business, I mean we started three years ago doing a holiday pop up at a shop next to our favorite bar in town thinking it was a really cool and unique location. I mean that’s literally how we started and we learned something. So we kept it. We kept this little pop up shop, built it through the spring. Next season we were blown away by the scale we were able to drive in there and we were even more blown away that it didn’t compete at all with our online business. It was just completely incremental. It was a whole new audience of people here in the same demographic. And so we’ve seen that as we’ve now expanded.

[00:36:21] So now we have stores in Atlanta, Houston, D.C. and Austin, Texas. So we have five stores right now that are full time stores that are all doing really well. And so that’s a pretty big piece of how we plan on doing business in the future. And we’re just building great experiences in there. And you can go in and grab a Budweiser from one of our store reps, right. I mean it’s a really cool experience to be able to try this stuff on.

[00:36:45] You know, I think the other thing that we’ve seen in the stores that’s really cool is, for things that are not the five and a half inch inseam short, well, one, you can go in there and try that thing on and see if you like it. And most people that try it on really love it. But if you want to try something else from us, you can actually feel it and touch it and get the sizing and all that stuff. So there’s a real service and I don’t think people give enough credit to retail stores and how much service and discovery that they actually add to the whole process. It’s totally incremental to everything else we’re doing in our business. It almost doesn’t compete at all outside of just the resources here at HQ to manage it.

Richie: [00:37:18] And then talk a bit about like the gender kind of split. So this obviously started as a guy’s business. It sounds like it’s moved increasingly towards women as well. How did you approach that? When did you approach that and where is that headed?

Kyle: [00:37:29] It really started with this idea that we need to build something that’s completely inclusive. And it just didn’t seem right as we were looking at all the all of our user generated content. It didn’t seem right not to develop products for our gals. It was clear that there were girls buying men’s stuff already and living the life, wearing stuff that didn’t fit that well which kind of sucks. So we’ve developed some great products for them. There were moms, sisters, aunts that were buying gifts for their sons. So, during some times of year, it’s a third of our business, gifting for their husbands, sons, you know, brothers, all that. And so, for us it was a really logical extension.

[00:38:09] You know, I think we had a lot of conversation internally around Chubbies “The brand.” Does that make sense for the ladies? And I think the unilateral feedback from the ladies we asked was like, “Yeah, like basically invite us to the party. We’re ready to go.” And so it became a really easy way to introduce the ladies to the business. But it’s definitely a different business, right. It’s more fashion driven. It’s more service heavy and those are all the things we’re learning but we’re definitely tiptoeing into it, like we did retail. Like anything else that we do.

Richie: [00:38:35] What’s been the most expensive and cheapest lesson in the last six years?

Kyle: [00:38:40] Being located in San Francisco is a really tough challenge for us as a startup company who is trying to be sustainable because San Francisco is increasingly one of the most expensive places to be, period. Globally. And so we had a lot of conversation a couple of years back around, Man, should we take this business somewhere else?” We ended up falling out on the side that the best people were here and we need the best people to build this over the long haul and we’ll have to be scrappy and figuring out how we’re going to do it. And so I would say that that was a big decision that we made that is very expensive. But I do think it’s worthwhile for us as a business.

Richie: [00:39:21] And also cheap?

Kyle: [00:39:23] I’ll talk to some of our content stuff because I think it’s really interesting. I mean I think, when we were thinking about our business and where we’re going to invest dollars, one of the things that’s not obvious is to take your marketing team and, you know, what would typically be a team of eight to ten or so marketers doing a lot of distribution work, we’ve very much taken that team, split it in half. Half of them literally create droves of excellent content and if they’re not creating content, they’re working with outside partners who are creating content for them. And so that team, the makeup of that team, is literally half distribution type folks, when you’re thinking about people doing email, people doing ad buying, people doing a lot of that side of the marketing house, and then the other half is creating tons of content.

[00:40:08] And so I would say as we think about how we make a difference in the world how we make sure that we have tons of reach but really low cost to get that reach, it’s because we have high quality content. And it’s not obvious to build a team of four or five people doing that. But we’ve we’ve done that here and we see a ton of economics and results from that. That’s part of what allows us to be profitable in the first order when we’re acquiring folks. So I think that’s something that’s unique and a little bit of a hack but something that, you know, as we move deeper into being a video first, you know, world, I think it’s going to continue to pay for us.

Richie: [00:40:43] How are you looking kind of at the brand landscape in terms of, you know I could count the probably number requires in my hand that are buying these brands. There are a lot of funds invest in them, driving them to somewhat ridiculous valuations. How are you looking at that and kind of where does Chubbies fit within it?

Kyle: [00:40:57] Yeah and you know we talk a lot about this internally. You know, Bonobos making better fitting men’s pants was just acquired by Jet and Chubbies, the most radical shorts on the planet is a pretty direct analogue, right. And so we’ve had a good amount of conversation. For us, we’re not building something to sell it. We’re building something to be meaningful. And we’re building something that, if it’s meaningful, over call it a 5, 10, 20 year time horizon, will be valuable. The last two years have done nothing but validate the strategy, right, which is go reach all these customers, prove that you have a real community and a customer base, prove that you’re taking care of them, you’re creating unique value and then scale it. All of that stuff has been very validated by all of the activity you’re talking about.

[00:41:47] And so we feel really great about where we are situated there but we also look at the next five years and we’re really excited about everything we have in front of us. I mean we have retail as an awesome growth channel for us as a business. We’re investing more in our mobile app and the content that’s gonna be in there and we’re investing even more deeply in our content team and starting to look at working with outside brands and, in some cases really big brands, to actually sponsor some of our content, right. So, imagine a world where we can partner with massive global brands and bring even better content to our team, with even bigger budgets.

[00:42:22] We look at the next three to five years and there’s so much opportunity in front of us. We just need to go get it. We need to execute and make sure that we’re building something that’s unique and valuable on kind of a macro level. That’s the level we’re always talking about it at is, you know, let’s have huge impact on the world. Let’s go get the 3 million people who have opted into our content. Let’s keep growing the size of that as well.

Richie: [00:42:44] And then where is the name from?

Kyle: [00:42:46] When we started the business, I mean, we were really looking for something that you could not feasibly imagine to be in New York fashion show. Like the Chubbies New York fashion show is ridiculous. And we had this list of ideas that were all in that vein there were all kind of cheeky and kind of funny and quirky and we dropped Chubbies while we were beer tasting with our buddies or something. And it was just clear that there was something talkable about the name Chubbies. And so that was the first one we dropped and people did not stop talking about it all day. So we were like, “I think we named it guys.” Every single name we talked about up front was pretty cheeky and wild.

Richie: [00:43:24] How much was the domain?

Kyle: [00:43:27] We actually did have to go through a kind of a crazy, like chubbies.com was a kind of wild, weird web site previously and so, you know, I think we ended up buying it for like 30 grand or something.

Richie: [00:43:40] That’s pretty good.

Kyle: [00:43:40] But it was definitely not an apparel site previously.

Richie: [00:43:44] You can confirm that much.

Kyle: [00:43:45] I can confirm it was not an apparel site previously.

Richie: [00:43:48] Awesome, man.Thanks so much for talking.

Kyle: [00:43:57] Cool.

Richie: [00:43:58] Thanks for listening to the Loose Threads Podcast. Join the newsletter at loosethreads.com and feel free to leave review on iTunes. We always appreciate it. Thanks to George Drake Jr. for editing this episode. I really enjoyed talking with Kyle about the brand’s evolution and how he uses all of its media efforts to keep shoppers attention for what was traditionally a seasonal business. We have a great roster of upcoming guests including Max Levchin of Affirm, Dan Widmaier of Bolt Threads and Dave Barden David Kind. Thanks for listening. Talk to you soon.