I Built & Sold a $100M Brand with These Marketing Tactics

Hey everyone. Today we have a very special guest. We're joined by Preston Rutherford. He's one of the co founders of Chubby's and he's got a new startup marathon and he's going to come in and dissect your entire marketing strategy when you're trying to grow your business. He's going to give us the lessons learned, the biggest mistakes he made. He's going to give you some cheat sheets and he's got some very controversial takes on some things you should for sure not do in your marketing. Let's get to today's episode. You started Chevy's, you were in that kind of direct consumer E commerce. And then obviously Chubby's expanded and did full distribution and everything. And for folks who are unfamiliar with the brand, it's kind of a lifestyle clothing brand. And I, you know, you and I met because you're writing a bunch of awesome stuff in what I would call the, the very unique screenplay format where it's like CMO character, CEO character, CFO character, and they're all talking back and forth to each other about kind of problem, common problems and how you solve them. And I'd say one of like the core themes, like if, if somebody's just tuning in for a couple minutes of the show today, one of the themes of your work is like, wow, marketers are way too short term focused and they're way too focused on believing that the data they're looking at is like 100% accurate and absolute when it's not. And is that the right read and kind of like tell us the background story of like building chubbies and like how you came to those assumptions. If my takeaways from your writings are right.

Yeah, totally. So. So from the perspective of answering the first part of the question, is that the correct read? Yeah, I'd say that's spot on. But maybe that's more of like, I don't want to have an antagonistic tone of like, you all are so short term focused. You're a bunch of idiots. And I know you're not saying that.

So you could blame me.

Yeah, no, no, no, I know, but like just addressing the tension of like, I know I need to build a brand and I know I need to invest against it, but it's hard because it's harder to measure. And we've been trained on this short term feedback loop that is really, really effective and in all ways, or in a lot of ways worked extremely well for many years for folks. And so anyways, yes, you're spot on just this notion of like brand building for modern brands and how to do it and how to implement it. Because I think a lot of the information that I had while I was quote unquote growing up was like research and big company stuff and stuff that to me just didn't feel applicable at all. It was like, oh yeah, well they've been around for 100 years. Or oh yeah, they've got like a 50 million dollar marketing budget or whatever it might be. So it's. Yeah, the intention is like, try to make it real for folks like us who are just going out there trying to build, trying to build brands and then the format. To your point, I tried a bunch of stuff, like threw a bunch of stuff at the wall as I was trying to just convey these ideas in ways that were kind of like fun, I think, for people to read, fun for me to write, and allowed me to get to a level of like, you know, maybe like nuance and resonance without being like, I'm telling you from some high horse of like, what to do. But more just like, no, man, I have had every one of those one on ones or meetings myself. Like, I've been the person who doesn't get it. I've, I've banged my hand on the table being like, we have to do this brand thing and then getting a response, being like, but what are we going to get for it? How much money are we going to make? And me just like, I don't know, but we gotta do it. So now that I've been out of the business for a bit and done some reflecting on like all of the mistakes that I've made, it's been somewhat helpful to be able to process. And then just the notion of like feeling like you're in the room with people, I think at least to me, allows me to sort of like humanize it a little bit, make it a little bit more engaging. And that's the way that all of this stuff manifested for me was like in a conference room or over zoom on a one on one or in these exec meetings or whatever you want to call it. And it seems like we've all had it too. And you know, we scan Twitter and LinkedIn and these people are just like, you know, I just, I'm making a million a month on my Facebook ads or I just got purchased for a billion dollars or like, Here are the 10 pieces of creative you need to run or the 10 ad formats that are going viral right now or whatever it is. And I just kind of felt like, because I was this person, like, I was reading this stuff and I was like, we got to do this. Let's do this. Let's drop everything and do this. Um, and it felt like no one was like, kind of, I don't know, like, speaking to me at my stage, trying to just be like, I'm an idiot. Just like, you're an idiot. And we're just trying to figure this stuff out. Like, I'm not trying to be the. The person who knows it all sort of thing, but, like, if I can speak from some sort of, like, I didn't know. And here's me just trying to wade through it and figure out in some form of a format that can potentially be engaging. Well, shoot, let's try it.

I think a lot of people who watch this show are in a seat that you were in a few years ago, right. They've got a small budget, they've got a brand that's growing, and they're just trying to figure out what to do. They're trying to look at the hacks, look at the examples, do all of those things. And can you give them a little bit of a treasure map of some mistakes that you made that they could not make so that maybe they could have a, if not easier, at least, maybe quicker journey to success?

Yeah. Fewer gray hairs and sleepless nights would be awesome to bestow upon humanity. First point I would make is just the classic as it relates to Chubbies. I was one of four founders. They were 10,000 times smarter than I and then I was the one making all the mistakes. So I can speak to the mistakes being hyperbolic. But then all about the team, all the credit to the team. Any success that Chubby's had to the team, just a tiny, itty bitty, itty bitty bit. I guess maybe the credit I would take is like, I was the one making all the mistakes that were just so obviously bad that then it became obvious that this isn't the way to do it. So then they. They fixed everything. But. So making sure I put that out there. But like, some mistakes to try to avoid. I've been thinking a lot about this, obviously. So like three things, and some are more marketing centric, some are less. But one is just like, how I wouldn't. I would be so. And this is like more general. I would be so slow to take on additional fixed costs early. Like, we want to hire, we want to. We want to get help, we want to get the best people. But that is one of the things that causes. Is Sort of like the, the main problem that then causes us to be so short termist in the first place because we need this crazy fast cash turn. Because if we don't get the fast cash turn because we have no buffer in our P and L because we've taken on, we've hired all these people, we've gotten a nice office space, you know, we did all these things that you don't necessarily have to do early on if we don't drive that fast revenue like we put cat because we already got cash out buying inventory, you know what I mean? So if we're or building the product or whatever it is, so then if we're also allocating working capital to then drive revenue to then turn that stuff that we're doing into cash, if it's not paying out right away, like we just go out of business. So that's one of the main things that is totally unsexy. Like, and I'm not saying fire everybody, but I'm just saying that's a big deal. And it doesn't feel like marketing, but it is marketing. Because if you have more cash, you can spend more and if you have more cash, if you have more buffer, you don't need the cash to come back right away. And it's needing the cash to come back right away that causes us to just maybe make the mistake that it leads to. Which is just like chasing roas, particularly short term revenue based roas where it works at the, Everything works at the beginning, right? I mean, I think that's the thing that everyone learns. Because you, when you start a business to the extent you can rise above some level of noise, there's latent demand that hasn't been tapped into. Like that's fundamentally why you started the business in the first place. So every dollar you spend is both high roas and highly incremental. Because if you didn't spend it, they wouldn't know about you in the first place, right? So like you're generating the awareness and so you're doing the brand marketing, you're filling funnel and you're emptying the funnel kind of like all at the same time. But those are like the highest intent folks, right? Like you started the business because they were, they were, you got some signal from the world that there was this untapped need that was just sort of like people's hair's on fire because they need this thing. At least that's the hope when you start a business. So the second mistake that I would sort of like say try to Avoid is just like, listen to your gut as it relates to like, if I'm feeling increased friction, the solve isn't friction, meaning like customer acquisition costs going up or it's harder to do xyz, like just the performance of my paid or my doctor or whatever you want to call it. Marketing in general is I'm feeling headwinds. I would suggest that the first the way that you audit it is not to necessarily jump to the solution being make my doctor more effective, make my website convert better. Yes, those are important. Those are probably problematic, but one of the things that I learned is like, at least from like a perspective and I'm speaking very like e comm centric sort of thing, but maybe it's applicable more broadly. But like step back and just be like, what truly is the total addressable market of my Shopify store for my particular category, given the awareness that I've achieved? Right. What, what was just so stunning to me was like, at the end of the day, the amount of shopping, just overall, like consumer spending that I'm accessing with my Shopify store is like 6% of total retail sales, if that makes sense. So like 85% of retail sales is brick and mortar. 60, 70% of that is owned by Amazon, Macy's, Walmart.com Etsy, eBay, et cetera, et cetera. So if I'm not in any of those places, like, I'm spending 100% of my marketing dollars on 6% of purchase opportunities. And purchase behaviors are extremely sticky. So they're just people I'm never going to touch. And everyone's like, Shopify TAM is different. Right? But one of the things that mistake that I, that I made was just like, no, it's about my ads. I need to double my variance. I need to do a complete audit, complete CRO overhaul on my website. I need to test new channels. I need whatever all hands on deck. And I think one of my lessons was spend some time on it. But the opportunity cost of the time spent really diminishes on trying to fix that. And what the solution broadly might be is you're not reaching enough people with content that gets them to feel and remember you and your product isn't available broadly enough. And that to me wasn't a realization that I had. So that was a big mistake that I made. And then the third mistake that I would call out and then I'll just shut up because there are infinity more mistakes that I can make is just this general idea of questioning our assumptions, particularly as it relates to what brand marketing means. So what do I mean by that? I think I can put myself in my shoes when I think brand marketing. I think Jon Hamm, Mad Men, sitting on a couch, three martini lunches, not knowing how much money you drove from the ads you did. Like backroom deals, good old boys club, whatever you want to call it. But just like the opposite of accountable marketing that I can measure, that I know drives my business that is available to folks, to your point, who don't have endless money. And so that was an aversion that I just had. I felt that it was visceral. So anytime you said brand marketing, I said get out of my face. Said if it doesn't show up in platform reporting tools like in Facebook, ads manager or whatever, it doesn't exist. So I think just the realization that one of the sub mistakes was just this general idea of like, I think everyone knows about my brand, but no one knows about my brand. So there's no way I can have a big business if no one knows about my brand. Like if my awareness is sub 1% or whatever. But that feels, that feels amorphous and not actionable. Like how do I get awareness? Yeah, you can measure and stuff like that. But just the general, like first principles. Like I need to have a set of people who know me and feel something about me. Like if I look at my own purchase behaviors, I am, I am not making objective purchase decisions. Like just look at my credit card statement. It is completely emotionally driven. I mean, I'm looking right here in my office and there's a bunch of stuff that I just got in the mail. I'm like, what am I, what, why, why did I buy this? And it's because I felt something, you know, about this brand and it's took over. And yes, there was some rationality associated with it. But I'm looking over here, I'm like, it wasn't their doctor that got me maybe ultimately, but there was a bunch of stuff that they were doing beforehand that got me to go. And whether it be existing for a long period of time or doing just amazing, funny or interesting content, but they were doing a lot of stuff that wasn't driving short term, measurable revenue as part of their strategy. And I think that's the problem. It's just this notion of another mistake. Lack of balance, right? So like we spent 100% of our marketing dollars and it was all evaluated by how it drove short term revenue. And like that just felt like the right way to do it. I remember we were written up in a Wall Street Journal article for being so data driven. And so it was like we would take pride in this stuff and it was just. It ended up being completely wrong to not to measure, not to be data driven, but to not be thoughtful enough about are we measuring the right things? You know, not stepping back, like just using, like this, this easy. Oh, well, the day is right there. I mean, like this drives everything. This drives all capital allocation decision. So anyways, variety of mistakes that, that I've made, we can dig into any or I'd be happy to go into more. But those are some mistakes where what I would do is just find balance. Know that you need to reach way more people than you're reaching right now. And you need to do it with content that gets people to remember and feel. And it's probably not the creative that you're now. If you've been around for a bit and you've been chasing roas and you've found that like, you look at your ads and it kind of feels like you're one of those wacky, wavy inflatable tubements at a used car dealership, right? Trying to convert people with a big CTA and a lot of urgency. Maybe it was, maybe it was effective at the beginning when you were like, brand is all that matters. But we all go through this stage of like, oh God, look at the creative that I'm running right now. Is this, Is this truly everything that I'm putting out into the world? So that's probably the big thing. But you got to measure it and so you got to find ways to measure it. But it is all measurable and it's wasting more money if you're just doing short term, only because it by definition gets more and more expensive over time. I mean, meta just reported earnings and average cost per ad is up 11%. So it's just like, do you want to have average costs increasing 11% every year if you're not going to just like do anything that helps to fight that? And the only way to fight that is by getting customers that don't have to click your ads and they still buy, right? It's like, what are you doing to drive that kind of purchase behavior? Most folks aren't doing nearly enough.

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What did you all do to. So like I can imagine if you're you know, going to start a clothing company and decide to start to sell shorts and there's a ton of optionality for people like you know, how do you ever break through the noise? And so was it just that you kind of figured out how to use Facebook much better than any of the competitors and Facebook was getting much more popular back then so you could get leverage in that way? Like why did you manage to break through the noise and become such a successful company in that space?

I would, I think that the first thing that, that we did was we had very. I'm gonna talk brand and I'll talk product and then we'll go to the, the obvious things like so what, so like how did you, how did you rise above? We felt there was a, we felt there was a brand gap. Right? I mean if you, and there were some recent news, don't want to talk about it. But like 13, 14 years ago, Abercrombie and Fitch was like what cool was in, in like men's apparel, right? And it was this just such a thing that was like I viscerally hated it as did the three other co founders. And it was like it was very easy then to just be like, let's be the opposite of that. Let not take ourselves seriously. Let's call ourselves chubbies rather than some like highfalutin name. Let's, let's, let's just be welcoming. Let's like embrace someone not having a six pack and standing in jeans, spraying you with cologne and listening to.