EPISODE

18

Unbound Merino's Strategy for Growing Into a Multi-Million Dollar Brand Through Crowdfunding, Dan Demsky

with

Dan Demsky

In the last episode of the Minds of Ecommerce Podcast, Wilson Hung of Kettle and Fire shared tips to Grow Through Grocery Stores and Amazon.

Dan Demsky is co-founder of DTC apparel brand Unbound Merino. They've successfully used crowdfunding to get the brand started, and still use it to this day as a growth strategy. In this episode we talk about storytelling in marketing, dive deep into Dan's strategy for launching through crowdfunding, some actionable tricks for a successful campaign, and how million-dollar brands can still use crowdfunding as a marketing channel.

Raphael Paulin-Daigle:
Hello and welcome to episode number 18 of the Minds of ecommerce podcast, where founders and executives of high growth ecommerce brands share with us their top growth strategies today. Our guest is Dan Dempsky. He's co founder of Unbound Merino, a multimillion dollar ecommerce brand selling, you guessed it, Marina Wool, clothing. And today we'll talk about how they've grown the brand to about $4 million in what? Three years?

Dan Demsky:
Yeah, three years.

Raphael Paulin-Daigle:
In three years. And they all started with a Kickstarter or a crowdfunding campaign. So I'm your host, Raphael, Paul, and Daigle. I'm the founder of Splitbase, a conversion optimization agency for direct to consumer e commerce brands. And this is minds of e commerce. All right, Dan, welcome to the show.

Dan Demsky:
Hey, how are you?

Raphael Paulin-Daigle:
I'm good. Thanks so much for being here.

Dan Demsky:
Thank you.

Raphael Paulin-Daigle:
So, Dan, I'm really excited to talk about the growth of the brand today because you've had exponential growth. And everything started from a crowdfunding campaign. Today. You said you sell in over 100 countries. You're about finished a third year with about $4 million in revenue, all pretty impressive. So tell us a bit more about the first day you started the brand. Was it on Kickstarter? On Indiegogo? Tell us more about how it started.

Dan Demsky:
Yeah, it was on Indiegogo. Well, I had another business. I had a video production agency, and I was really just tired of what I was doing and pitching and being in the service business. So I was really looking for a product business to create, but I didn't really have an idea of what product. All I knew is I wanted to launch some kind of product and I wanted to sell it online. That was as much as I knew. So it took years of coming up with ideas and some maybe good ones, a lot of lousy ones, until we landed on unbound Merino. I'll save the story of how that became the idea.

Dan Demsky:
But we decided on doing a crowdfunding campaign, mostly because my partners and I were too busy with our other company and one of them had a full time job to be able to go all in on a new company and also didn't have the cash to be able to risk on something completely new that we didn't know whether would work or not. So crowdfunding was a way for us to test if we can find some product market fit, which was the most important thing. And the second and closely, the close runner up to the most important thing was to be able to have some startup cash. So crowdfunding solved both of those problems. So we worked for a year and a half building up this campaign, hoping it would be a success. And it was, and that's how the company started.

Raphael Paulin-Daigle:
Amazing. So you just said a year and a half to build that campaign. Let's dive into that further. What's the process? So, I know a lot of people think that, oh, my God, some brands are just creating Kickstarter campaigns and it's something they do in a week. You're saying a year and a half. What went into preparing for that campaign? What was the process like?

Dan Demsky:
Well, we had an idea for this clothing brand, and we knew how we pictured our product being in terms of quality and fit and the style assortment that we would have. But we had zero experience making clothing and we had zero connections in the business. So we weren't interested in creating a crowdfunding campaign to get some cash as a get rich quick scheme. We're trying to build a real company, and a real company needs a real brand, and it needs real good product because you need customers to come back and you need word of mouth. So we had to figure out, and we didn't know how long it would take. It ended up taking a year and a half. How do you make clothing? So first we had to find manufacturers, and we needed to find fabric suppliers, and we needed to figure out, how do you guide them to making the clothing that you want to make so that it fits the way it fits? We hobbled things together in a very amateurish way, but we figured it out and we grinded and grinded. As we built out the brand, as we built out the messaging for the brand, we started filming pieces for our video, we started testing our product, testing prototypes.

Dan Demsky:
So it ended up taking a year and a half of just getting it all together. And the finished piece was that finished campaign where not only did it allow us to figure out how to make the product, but the crowdfunding campaign also forced us to really hone in on what our messaging was and have a really tight brand. So I think a crowdfunding campaign, in a way, is one of the best. It's almost like creating a business model pitch, but in the most practical way, because once you pitch it, people can actually vote with their money and buy your product and give you that head start to get it started.

Raphael Paulin-Daigle:
And I love how you're putting emphasis on the product market fit, because it's not just about raising money, it's really not. It's also about validating your message, making sure that when you're actually going to spend money on ads and building that brand and really building the website that your messaging resonates with your audience. And having that crowdfunding campaign as a way to validate that, I think is a critical part of the process.

Dan Demsky:
Right. And it frames your thinking because I remember I saw some sales speaker many, many years ago talking about selling strategies where there's features and advantages and benefits of a product. And the benefit is where you want to hone your messaging. How does this benefit the customer? So everything we did in this campaign was let's think like the customer and we're just another crowdfunding campaign. What makes us so special? We had to really hone in on what is it that makes it a benefit to that customer and only speak in terms of that customer. And we built the whole campaign around that.

Raphael Paulin-Daigle:
Totally. So let's start with building the campaign. Right? So you need to have that initial messaging. Obviously, you don't have data yet. You don't necessarily know how it's going to be perceived by the audience and your customers. So what was the first step? How did you decide what the messaging was going to be? How you communicated the brand and the benefit? Was there a process for that that you followed?

Dan Demsky:
Well, the Product came to be because I discovered Merino Wool when I was trying to pack Lighter for my Honeymoon. We were going away. We didn't want to haul around a lot of Heavy Luggage. And I found this Reddit Post which explained how Merino Wool can help solve that Problem because it's antibacterial and odor resistant, so you can wear it multiple times. And even if you sweat through it, it won't retain the sweat and it will never smell. So instead of packing 14 t shirts for a two week trip, or whatever you bring, you can bring two or three and you'll be totally fine. So I started, this is the perfect Product for me. But I was so dissatisfied with what was out there in the Market.

Dan Demsky:
And right where I live in Toronto, all the Stores in which you could buy good Quality merino Wool are all right in my area. So I went to all these stores, but it is all made as Activewear or Outdoors Wear. So I was really sold already on the Benefit of Merino Wool for the Purpose of Travel. But I was really dissatisfied with the fact that you couldn't get a nice Fitting, stylish but simple t shirt that you can dress up or dress down. I just identified that Gap in the Market myself and it was for me. And I actually thought that if this product doesn't work. At the very least, I would have made a ton of prototypes, and I'll make the shirt I want, and for as long as they last me, I'll get some shirts that I want. So I was okay if it didn't work because I wanted the Clothing myself, and at least I would have tried.

Dan Demsky:
So the Message came very naturally. And I think that that was what prompted us to start the Business in the first place, is that we knew the Value Proposition before we knew how to make the product.

Raphael Paulin-Daigle:
I love it. I think that's one of a very key lesson for our listeners, where at the end of the Day, you didn't make up some crazy Story or anything like that, or you didn't just create the product to make money. It was because you had a story around that and you really utilized that story thinking. There's probably a lot of people that have the same problem that would relate to my story and really use that as the main vehicle for your marketing. And I think that's super important.

Dan Demsky:
I think it's not talked about enough is the timing. I have quite a few friends who've started really successful ecommerce businesses, and I would look at these guys and awe, like, wow, what a great business model to have an ecommerce business. And I would love to have that. And that's what prompted me to start thinking. But a pattern that I recognized was that a lot of the companies started with that same aha. Moment where they felt there's something not in the market that they wanted themselves. So my friend started a hair extension business for his wedding. His wife was so dissatisfied with all of the hair extension ecommerce companies that existed for a million reasons, and they thought, we could do this better.

Dan Demsky:
And my friend started a vinyl skins company and a very similar. Everything else in the market is really bad, and I can do better. So it was the first time where I had this moment where it was not just some clever idea, but I felt, this is missing. The thing that I want is not there. I can do this. This is my shot. So when I had that realization, that's when we went all in on let's do this and let's do the crowdfunding.

Raphael Paulin-Daigle:
And Dan, are you still using that story as part of your marketing as much as you did in the beginning?

Dan Demsky:
Not as much as we did in the beginning. I think that there's a little bit more of a personal touch in the crowdfunding stage, where people care a little bit about who the founders are, and it helps build a little bit of trust, but I think that we're more established now, so we've taken a little bit of a backseat to the brand and not made it about us. Plus, it's like people are buying themselves. They don't need to look at me anymore.

Raphael Paulin-Daigle:
Yeah, totally. It's always an interesting curve where, when and how to use that story. We actually work with a lot of skincare brands where the origin story is very similar. This person really wanted a certain type of product and couldn't find it, so they decided to create their own. And then it was very popular and then it ended up evolving into a multimillion dollar business. It's funny because when you look at those customers, a lot of times people said they bought from the brand because they related and identified with that story. So I think it's a great reminder what you're saying to just the power of storytelling in marketing.

Dan Demsky:
Yeah, we talk about that a bit, like, how much do we want to be in it? And if we do, does it have anything to do with ego? Is there a benefit to this? In conversations like this, it's interesting. And people get to see that it came from a real need. And I'm someone who really loves to travel. I'm not materialistic, needing to show expensive brands and have expensive stuff and have a million outfits. I like the simplicity. When I travel, I want to travel for being able to immerse myself in the culture of wherever I am, being able to sit in the bars and if I'm lucky, make a connection with some locals and get to learn about them. And it's all about the experience and luggage just gets in the way. It's just like this thing you have to drag around and it makes things hard.

Dan Demsky:
So just being able to be nimble while traveling, it just appealed to me so much. And that's why I looked for a lightweight to travel. That's why I discovered marino wool, and that's when I discovered the hole, because I'm like, hey, I want someone with a nice shirt. I want to have some nice stuff, need a lot of stuff. I need less stuff.

Raphael Paulin-Daigle:
Let's go back to the crowdfunding. You've had a lot of success with that initial campaign. What would you say were the main, other than the story, of course. What would you say were some of the main elements that really contributed to that campaign success?

Dan Demsky:
So I'll tell you, the one thing that I think we did that was unique, that pushed us over the edge to giving this campaign momentum and getting it started. So we did an Indiegogo campaign, not Kickstarter. And the reason we chose Indiegogo is because it was a lot easier to communicate with the people that work there. Kickstarter is kind of much bigger, and they don't talk to you. You set it up, you're kind of on your own. And when we started talking with Indiegogo, we cut a deal with them that said if we were to reach 30% of our funding goals in the first 48 hours, they'd feature us in their newsletter. And the newsletter is a very, very big piece of marketing that could drive a ton of orders and a ton of revenue. So really what we needed to start the business was about in the $60 to $70,000 range.

Dan Demsky:
But because we cut this deal, we said that we really only needed 30,000. The reason we said we only needed 30,000 is because it was a lot easier to get 30% of 30,000 than it is of 70,000. And so we thought, okay, we need about $10,000 orders, and we needed to guarantee that we get it. And we had no way of guaranteeing that we get any orders based on putting a product up on a crowdfunding campaign. So I set out to lock up as many friends and Family to support us by buying a t shirt or anything that they could buy. So I did two things. First, I went through my entire Facebook friends list, and I sent a know, a copy and paste message. Very easy to ignore.

Dan Demsky:
Just say, hey, dude, I haven't talked to you in a while, but for the past year and a half, I've been building this crowdfunding campaign, and it's going to launch in a month. And I really would appreciate if you can, there's no pressure, but buy a t shirt. It's going to be the best price that we're going to ever offer for it. But it's also something I really believe in. I worked really hard, blah, blah. So I got all out to a ton of people. A lot of them replied and a lot of them didn't. But the ones that did, I needed to make sure that they would follow through.

Dan Demsky:
And I've gotten asked messages, as I'm sure you have, and I'm sure everyone has, or can you please back my crowdfunding campaign? Or can you vote for me on this thing? I'm trying to get votes or whatever, and they're very easy to ignore because you can always tell they're copied and pasted. So what I did is anyone that replied that showed any interest or that was close enough that I really felt like I could rely on them to give a little support. Three days leading up to the campaign, we did an individual video for each person. So it's just one take. I loaded up the webcam. I'd be like, raphael, it's great to see you. Remember I talked about that thing last month? Well, it's launching today, and we've been working for so long, and I really appreciate your support. It means so much to me.

Dan Demsky:
And it's just purchasing a t shirt. It's not a huge deal, but no pressure. If it's not a good timing for you to buy anything, whatever, but you'd be making such a difference in my life, and this is a labor of love here, and blah, blah, blah. We did those for three days. All night, we were drinking whiskey, so some of them got crazy funny. But each one, I would export video so it'd say the person's name. So Raphael, mov or MPEG or whatever it was, and I'd uploaded it as a private link on YouTube. And then I would send that to you.

Dan Demsky:
And then you get this thumbnail where you see my face and I'm talking in a video, and it says your name. So you're like, okay, this is not, like some mass thing. And then you'd see I was actually talking to you, and I think that sort of forced people to at least reply. And some people said, hey, dude, you know what? I'm between jobs right now. I really just can't be spending. No worries. But a lot of people were very happy to support. So that first $10,000 we got so fast, you'd see Brian, my brother, and then we'd see Sandy, my business partner's cousin.

Dan Demsky:
And I remember these names coming in. I know this name, I know this name, I know his name. But then we hit 10,000. And because that happened very fast, we were all of a sudden trending on Indiegogo because we had so many, so fast. So all of a sudden, I remember this name, Johannes, this guy from Berlin. I have no idea who that is. And then orders from all over the world started trickling in. It sort of took a life of its own.

Dan Demsky:
And then we started driving ads to the campaign because we just wanted to stay trending. We already knew we locked that newsletter, and that was going to come out in the following week, but let's just stay trending. So we're driving ads to the campaign to keep the page traffic. A successful campaign with a little bit of a momentum that we started. And sort of got a life of its own. That is the single most important thing we did is making sure we locked up that initial momentum. And we worked really hard to lock that up using friends and family. And that was, I think, the best thing we did to get this thing started.

Dan Demsky:
If we didn't do that, I'm convinced that there's a good chance we wouldn't be here, wouldn't have gotten off the ground.

Raphael Paulin-Daigle:
Wow, awesome. Well, thank you so much for sharing. Now, let's say we put that aside and you were to start this whole thing all over again. Is there anything you'd do differently?

Dan Demsky:
So, two things. I may have considered putting a women's line in there, too, because we built our business with just the men's line. Our customer base is all men. And as we expanded into Facebook ads, we've grown our men's customer base exponentially. But we have a very small amount of women buy our stuff, so we only have a one woman's product, and we're going to be very slow to release more stuff. And there's probably a lot of stuff we could have done to build the list in advance of launching our campaign, and we did zero. And some people are shocked by that. The people who really do crowdfunding campaigns and have experience with them, they do a lot of build up to build a list that they can, when the campaign launches, they have that traction from people who signed up.

Dan Demsky:
We did none of that, so we could have had more traction. But for the most part, we focused on the product, we focused on the brand, and we focused on that. I'm not in any way change much in the long term. Perfect.

Raphael Paulin-Daigle:
So my last question was, you've had lots of success starting the company with a crowdfunding campaign, but now that you are a bigger company, would you still consider releasing new products through crowdfunding campaigns as a sort of form of validation or to test the market?

Dan Demsky:
Well, we did. We did a second campaign, and the reason we did it was not for the validation this time, but it was solely for the cash, because we got to a point where we were growing quite rapidly and we couldn't afford the amount of inventory that we needed to sell, like with the lead times. So we needed to get a lot of cash, and we were thinking of any ways that we could do it. So could we land a loan? Which was tough because our business was so new that the bank wouldn't give us one. And we weren't comfortable going to ask for a large amount of money for friends and family. The other option was to get an investor, and we really didn't want that because I'm running this company with my two best friends, and we're having the time of our life, and we didn't want any, especially that early in the business where a little bit of money may have been able to be worth a lot of equity. So we were really reluctant to go down that path. So we thought, let's do a crowdfunding campaign again for a new product.

Dan Demsky:
And that was the hoodie. And we could sell all sorts of different packages with our other products. And it was not really just to see, is this hoodie going to fly? We felt like it would. It was more just to have another real injection of cash. And we did $400,000. So we did about almost $400,000 in the first campaign, and we did 400,000 again for the second campaign. And that completely got us over the hump. We circumvented any need for any outside investors.

Dan Demsky:
We didn't have to go get a loan, which from friends and family. We couldn't get the loan from the bank anyway. So it solved such a big problem, allowed us to grow, and it was just an amazing option for that, too.

Raphael Paulin-Daigle:
Totally. And I'm guessing you could already use your existing customers as a way to fuel that campaign as well.

Dan Demsky:
Yeah, we had a big customer base already. This time we didn't go and beg friends and family to buy. We didn't really need them this time. They already did their part. They already helped us, and we were grateful. So I didn't feel like bothering them again. So it was a lot easier the second time. It was still a lot of work in terms of positioning the product and getting the videos together and all of that stuff.

Dan Demsky:
But in terms of having that initial momentum, it was very easy because we've already proven that we do make a good product and our customers like their stuff, and they're very eager to support us again and to get a good deal from bagging it through crowdfunding. So we're not sure if we're going to do it again, but it's a great option. It's a great way to launch something new, to be able to really tightly position it. And if you have a customer base already, to get some serious momentum and not have to front your own cash to be able to put it into the inventory.

Raphael Paulin-Daigle:
Love it. I love that you're saying this, because I feel like there's probably a lot of ecommerce companies that think of crowdfunding as a way to start the business, but then completely dismiss it as a way to keep growing the business. And I love that you've taken that approach.

Dan Demsky:
Thank the lucky stars for crowdfunding, not just for starting the business, but for that moment when we needed that cash injection. It's there, and it's such an amazing way to position a product and to get cash. It's one of the greatest things that could have ever happened to young entrepreneurs. Or it doesn't matter young or old, but entrepreneurs trying to start something new or just trying to grow something that they already had. I call them millennial infomercials. You don't need to pay for tv time. You just got to put it together. It's awesome.

Dan Demsky:
I love crowdfunding, and I think everyone should consider it at any stage.

Raphael Paulin-Daigle:
Dan, thank you so much for sharing all of this with us. If there are like, three takeaways, I mean, there were so many takeaways, but if I have to resume that into three that I think are really great to remember is, number one, the power of storytelling in a campaign. Right? Don't just start a campaign because you want to make money. Build your campaign around the origin story that people can relate to. If you want to grow your crowdfunding campaign and really build that momentum, don't hesitate to reach out to friends and family and definitely plan it out. Don't wing it and message people as it goes live. Really have it planned for a long time in advance so you're able to even take advantage of those things like getting featured and getting in the newsletter. And finally, don't hesitate to use crowdfunding as a way to keep growing the business.

Raphael Paulin-Daigle:
Just as you said, I think there are a lot of companies that could benefit from it, even if they would just consider it. So thank you so much for being here, Dan. If people want to learn more about you or your brand, where should they go?

Dan Demsky:
You can find on Instagram at unboundmerino or unboundmerino.com. Or if you want to hit me up, I'm Dan Dempsky. Dandemsky on Instagram.

Raphael Paulin-Daigle:
Awesome, Dan, thank you. So, hey, thanks.

Dan Demsky:
Thanks so much, man. It was great talking to you.

Raphael Paulin-Daigle:
All right, that's it for today's episode.

Raphael Paulin-Daigle:
In the next episode, you'll hear from Ricky Joshi, co founder of Sapa Mattresses. It's an amazing episode packed with tons of value, so make sure you don't miss it.

Raphael Paulin-Daigle:
If you'd like to get our cheat sheet of growth strategies from the top minds of e commerce interviewed on the podcast in a summarized, easy to implement format go to splitbase.com/cheatsheet to download it for free right away. Now, to make sure you don't miss any of the new episodes, subscribe to the podcast and if you've liked what you've heard, make sure to leave a review in the iTunes store or wherever you listen to your podcast. And finally, if your e commerce store does over a million dollars in online sales and you're serious about growing conversions as efficiently as possible, go to splitbase.com assessment to get a free analysis of your website and find out. What's the number one action item our conversion experts recommend that you do next to boost conversions.

Raphael Paulin-Daigle:
Thanks again for listening. This is minds of ecommerce.

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