NYLP: Welcome to the New York Launch Pod, a podcast on new startups, businesses and openings in the New York City area. I’m Hal Coopersmith and in this episode, we are speaking to Ryan Babenzien, the founder of Greats, a Brooklyn based sneaker and footwear company. Since we first spoke to Ryan in March 2016, his company has more than doubled in revenue, doubled its head count and opened its first retail location with more on the horizon.
As Greats has grown, the landscape has become more competitive and we even referenced our first interview with Ryan.
Ryan: I’m just not sure that’s going to happen but we don’t consider them a competitor at all.
NYLP: I want to play this quote back from you in terms of what you said on the last podcast.
Ryan: Oh no.
NYLP: Ready for this? Who would you say your competitors are?
Ryan: Everybody from Nike to Sperry, basically anybody that sells footwear to men or millennial men or soon to be women, is a competitor. Everybody’s got their position, they stand for something, this and that but, you’re paying money to put something on your feet. If you sell those, you’re a competitor.
NYLP: Listen to the episode to find out who exactly, Ryan is talking about and everything there is to catch up on with Greats, in our special series called, “How you Doin’?”
NYLP: Stepping back onto Launch Pod, we have Ryan Babenzien, the founder of Greats. Welcome back Ryan.
Ryan: Hey Hal, how are you? Thanks for having me back.
NYLP: How are you? Last time we spoke, it was March 2016, things seem to be going well. We’re here in your office. Things seem to be going great, the name of your company.
Ryan: Yeah. It’s going well. This is our fourth office in three and a half years. We’ve outgrown every other one. In March of ’16, I think we were about 10 people.
NYLP: You were?
Ryan: Yeah. Is that accurate?
NYLP: That is accurate. That’s what you said on the podcast.
Ryan: Yeah. Fact check me because the time is blurred. Now, we’re almost 20.
NYLP: Back then, you hadn’t had a women’s line. Now you have a women’s line. How’s that going?
Ryan: Really well. We had tested women’s at the end of ’16, really successfully and then launched officially in March of ’17. That part of our business is growing faster than we really imagined and it’s making up a significant part of our business and will continue to grow. It hasn’t been a year yet but it’s doing really, really well.
NYLP: Well, you started as a men’s brand and obviously, you’re capturing half of the market. Obviously makes sense, expand to women. What’s been the challenge of expanding to the women’s market?
Ryan: Yeah. Women shop differently, quite frankly. The behavior’s very different and we’re still in that learning phase of, how many touch points on the site does a women need as opposed to a man? I think men are a little more direct. They know what they want. They come to get what they want, they buy it. I think women shop. It’s very different. It’s not a problem but it is a difference in how we’re going to communicate and market to women, as opposed to men.
Right now, we’re just kind of doing one singular message with one singular experience. They come to the site, the same thing happens. We’ll have to iterate that for women, which we’ll do in 2018. We wanted to get a big enough data set to understand how to best serve women when they’re shopping on our site and I think we’ll know by the end of the year and we’ll move accordingly.
NYLP: What percentage of your sales is men verse women at this point?
Ryan: It’s still predominantly men but, about 30% is women, which has grown significantly. Since March, that’s pretty fast.
NYLP: Also, since 2016, you’ve increased your styles a lot. It seems like you have the same structure of shoe but now collaborating with a whole lot of different designers.
Ryan: Yeah. Collaborations have always been something that we’ve done but as time goes on, obviously, the breadth of that is going to increase but our silhouette palette is the same, it’s just we do more unique seasonal drops and collaborative drops, which you start to look at 18 months and it starts to add up. Didn’t necessarily change the silhouette palette. For example in women’s, we do the same style for men, just in women’s sizes. We didn’t do anything different in terms of silhouette.
NYLP: What are you looking for in a collaboration?
Ryan: The one common denominator our collaborations have is, we want to work with the best in class of whatever that is. If we’re working with an artist, we want to work with the best artist, if we’re working with a watch brand, we want to work with the best watch brand. If we’re working with a car, we want to work with the best care, athlete, same thing. That’s how we start. They also have to be organic. We don’t pay to do these collaborations so they have to make sense that it’s two people that want to work together and not something that we go and pay for.
NYLP: You don’t pay for the collaboration?
Ryan: We don’t.
NYLP: Then, what’s in it for the collaborator?
Ryan: Well, different collaborators get different things. I think there is a marketing opportunity for people. There is a revenue opportunity for people but it depends who the collaborator is and they can each get a different thing out of it.
NYLP: One of the things that was interesting, what you said the last time you were on the podcast is that you have a faster development cycle than traditional brands. Is that still true?
Ryan: Still true. Our supply chain is shorter than most and that continues to get shorter. As we solidify and hone in on our silhouettes and keep that core, we’re able to replenish the core quicker so that’s still happening.
NYLP: With these faster development cycles, how are people engaging with your shoes? Are they buying more of your shoes, do these shoes go out of style quicker? What does that mean for the consumer?
Ryan: Our core styles don’t go out of style. We just think they’re evergreen and classic.
NYLP: Do not go out of style.
Ryan: Do not go out of style.
NYLP: Never going out of style.
Ryan: Well, they haven’t in our lifespan. That’s not to say they won’t at some point, but in the three and a half years that we’ve been in business, the styles that we picked are relatively classic and have not gone out of style. Now, there are trendier styles that exist in the market, that have come and gone within those same three years and we generally don’t really play in that space.
If fashion is a hype vortex, we try to live around the outside of it instead of getting right in the middle of it where you may become in fashion and then out of fashion very quickly. Fashion cycles are turning faster than we’ve ever seen so we try to stay on the edges of that.
NYLP : You don’t consider yourself fast fashion?
Ryan: Definitely not a fast fashion company, not even close. We have fast fashion like supply chains but we’re not a fast fashion company. we’re not making things that are here today, gone tomorrow, relatively low quality and fall apart quickly and get traded away because they’re not cool anymore. We want to make things that last and stand the test of time.
NYLP: Your customers, how many pairs does one of your average customers own?
Ryan: Well, we have different tiers but I would say, our average customer has two pairs.
NYLP: What are your tiers?
Ryan: Well there’s super VIP, there’s people who have 10 or more and those are the top, top. There’s thousands of those people.
NYLP: There’s thousands of those people?
Ryan: There’s thousands of those-
NYLP: With 10 or more? You throwing parties for them?
Ryan: Not yet but we should. We’re working on a kind of VIP ambassador program on how we would … If you buy 10 pairs from us, you should get more than an email from me. We’re working on that.
NYLP: Yeah. You should be having a party. Where’s the fun vibe?
Ryan: The thousand plus club. Yeah. We’re working on it.
NYLP: Once a customer buys a pair, how likely are they to come back? You’re saying that your average customer purchases two pairs of shoes but how likely is someone to buy another pair once they …
Ryan: Yeah. Without getting into the confidential metrics of our retention …
NYLP: We wouldn’t want to do that at all.
Ryan: No, we wouldn’t do that. No. We have a high likelihood and we have a better than average retention. While it may not happen in the first week, in the first six months, we see great retention, six to 12 months, okay retention. As a brand now, that understands what behavior looks like over the course of a year and having enough inventory to support that demand, which is something we weren’t able to do up until very recently, we just didn’t have enough inventory, we can start to strategically figure out how to increase conversion over the course of 12 months, 18 months, 24 months and so on.
NYLP: One of the things that you’ve done since we last spoke to you is that now you have a showroom here in Brooklyn, your own showroom and you were born as an online brand. What does it mean for you guys to have a physical presence?
Ryan: We were always digitally native, e-com first but always knew we’d have physical locations.
NYLP: You always knew that?
Ryan: Always knew that. It was in our first pitch deck. We’re later than we thought we would be for different market reasons, not whether we could or couldn’t, but the studio that we have here in our office is a shoppable environment and you can come in and buy shoes. We take appointments, Tuesday to Thursday and Friday, Saturday, Sunday, it’s open to the public and we opened a couple months ago and it’s been performing really, really well.
We see crazy conversion at the store level. We’re converting close to 50% of the people that walk through the door and that’s a crazy metric. Online is nothing like that, for anybody. It shows the power of the complimentary value of a physical presence with a digital brand and that’s when it works best. The studio was our first and we’re going to open traditional stores or what would be perceived as traditional stores, starting next year.
NYLP: Are people going to walk out with a pair of shoes once they visit the store or is it more like a show room like Bonobo’s and then they order it online?
Ryan: Yeah, no. We carry inventory. We don’t carry everything but we carry a good assortment of inventory for you to walk out. We think it’s about choice. We found that most of our customers actually want to walk away with a product so that’s what we do. We think that works. I think showroom, I understand, the bigger the SKU count with size complexity in pants and shirts, can create a challenge to store that inventory on-site, where shoes is a little less complicated.
NYLP: You were born as an online brand and part of your value proposition is that you are offering discount as opposed to some of the larger shoe brands. Now you’re expanding into traditional retail. How does that value proposition change?
Ryan: We’re not offering discount. We’re offering value. The value proposition does not change. There’s price parity across … If you’re a Greats customer that wants to buy online or mobile, price is the same as if you want to buy in our store and the prices are the same if you want to buy with our one key partner that we have, which is Nordstrom. That’s about customer choice and convenience, which, that’s pretty important. Prices will be the same no matter where you buy them. How we do that is, our magic.
NYLP: I imagine you’re making less money through Nordstrom.
Ryan: Right. There are other benefits. It’s a huge network, marketing free, access to great customer and you balance all that out and it just makes sense. Again, we knew we’d have a wholesale partner, one or two or three, in the beginning. We simply didn’t turn it on until recently because we didn’t have enough inventory to open the channel. We were operating around 30% out of inventory from the day we launched, up until two and a half months ago.
NYLP: What changed?
Ryan: We raised some money this year.
NYLP: A little bit of money, right?
Ryan: Actually, quite a little amount compared to some of our peers, but it’s the right amount for us.
NYLP: How much was it?
Ryan: It was reported at $10 million.
NYLP: It was reported at $10 million.
NYLP: Okay. You’re going to continue to report it at $10 million.
Ryan: It’s $10 million, that’s public. We will operate the business profitably with that capital. That’s been our plan all along. We’re not in the business of seeing who can raise the most money. We’re in the business of building a great footwear brand. I think that’s a different strategy.
NYLP: What does it mean, since you were born as an online brand, it was part of your deck when you started, to have a physical presence? Do you think that online brands need to have a physical presence?
Ryan: I think it’s helpful and I think it’s proven to work. Like I said, we’ve always said we’d do it, we’re just late. The people have done it well. It’s been a creative to their business, to have physical stores even though they started as a digitally native brand.
NYLP: It’s very interesting to me because it seems like it’s an evolution of retail. These new brands are born online, then they expand to physical retail, traditional retail, which they look to displace from the get-go. What exactly does that mean to you?
Ryan: Yeah. I think that all good brands of the future, will look just like this because most of the traditional wholesale market is in trouble. There’s going to be a huge correction there, which is not controversial at this point, we all know it. To start a brand in an environment like that is almost impossible if those incumbent retailers are shutting down doors and taking less risk on new brands, how would a new brand enter the market? It’s impossible to do that. There’s a host of other challenges that come with it, including bad brand representation where the retailer doesn’t have the right sales team and they’re not positioning it right.
That challenge has always existed so becoming a digital native brand, getting into the market, having the relationship with your customer and then, when you get your feet settled-
NYLP: No pun.
Ryan: No pun intended. Then you can pick and choose who you might work with and that’s how we did it.
NYLP: You do think that a lot of people will continue to do that?
Ryan: I don’t know if there’s any other way. I really don’t. I’m not sure how you start a brand today, and go directly into wholesale and not have a better than 50% e-com business for your top line revenue. I just don’t know how you would do it. I don’t think that’s ever going to change moving forward.
NYLP: One of the things that’s happened since we last spoke in March 2016 is that you’ve had some pretty big celebrities wear some of your shoes. We talked about that a little bit. I’m thinking of one in particular.
Ryan: I’m not sure which one you’re talking about so I’m going to struggle trying to find it.
NYLP: When I tell you, you’re going to be like, “I can’t believe I didn’t think of this one immediately.”
Ryan: We’ve been fortunate. Again, I think when you’re building a great product at a great price, it doesn’t matter how much money you have, I think you’re going to attract customers. Yeah. We’ve had a ton of celebrities this year. I don’t know if you’re talking about Ryan Seacrest but he’s …
NYLP: I was thinking Barack Obama.
Ryan: Oh, Barack Obama’s pretty good too. Yes. Barack.
NYLP: He’s a little bit bigger than Ryan Seacrest, if that’s possible.
Ryan: You know, I’m not sure he is. No, he’s definitely, he’s bigger. Yeah. That was great. As soon as he left office, there was a few articles written around Barack’s sneaker game and they mentioned us and Nike and that’s pretty good company to be in for a three-year-old brand, at that time. The number one and the young player, which Nike was back in 1973 as well.
NYLP: How did you hook that up with Barack?
Ryan: You don’t hook it up with Barack. It doesn’t really work that way. Yeah.
NYLP: He had a custom shoe right?
Ryan: Yes. We did make a custom shoe.
NYLP: You hooked that up. You did hook that up. Okay.
Ryan: They told us we could make a shoe. They sent us the artwork for the presidential seal. They couldn’t guarantee that he’d get it but he did. That’s how it happened.
NYLP: His team reached out to you to say …
Ryan: Yes. They sent us some pictures.
NYLP: Saying Barack is a fan of Greats?
NYLP: That must have been pretty awesome.
Ryan: It’s pretty awesome.
NYLP: Organic. Better than Seacrest?
Ryan: I don’t know. I like it. I think it’s great. It’s like one of those things that you’re going to tell forever and ever and ever as a story but, Ryan Seacrest has been, every day, he’s wearing Greats on the show. He doesn’t wear Greats every day, on the show but every time he does, which is frequent, multiple times a week, we’re getting great content out of it, it’s super validating, he’s got amazing style, he’s showing you how to wear it with a suit almost every day. You can’t buy that. That’s real, organic, a guy on TV in homes of millions of Americans every day and that’s pretty valuable.
NYLP: Also, we talked about you going from e-commerce to traditional retail but, the environment is also a little bit more competitive for you guys. Seems like other people have moved in. I don’t know if they were around when you started but, Allbirds and some other online shoe brands, how’s that been for you now that you’re competing with a whole different set?
Ryan: Yeah. There’s definitely copycats that are trying to do what we’re doing. I think we still offer a better, more stylish shoe. Our brand has more equity in the market. We actually have a better price than all of our Italian-made competitors. Allbirds, we don’t actually consider a competitor at all. They’ve done incredibly well. They’ve grown really fast but they’re kind of a novelty.
I’ve been around this industry long enough to recognize novelty and that looks novelty to me. I wish them all the best. I hope that they continue to grow and sell lots of wool things for your feet. I’m just not sure that’s going to happen. We don’t consider them a competitor at all.
NYLP: I want to play this quote back for you, in terms of what you said on the last podcast.
Ryan: Oh no. Who would you say your competitors are?
NYLP: Everybody from Nike to Sperry. Basically anybody that sells footwear to men or millennial men and soon to be women, is a competitor. Everybody’s got their position, they stand for something, this and that but, you’re paying money to put something on your feet so if you sell those, you’re a competitor.
Ryan: Okay. In that regard, sure. They sell things for your feet. Categorically, so are slippers, but we don’t consider slippers a competitor. Allbirds is like a slipper. To me, it’s a weird thing. I’m fascinated that they’ve been able to create the awareness and momentum around the product. Yeah. If we’re looking back at my quote, yes. If we’re thinking about a true sneaker brand, they’re not in that category.
NYLP: Why do you think that they’re a novelty?
Ryan: I think they’re a novelty because it’s a hyper trend. This is where pattern recognition comes into play. When a thing goes that fast in such a short amount of time, it’s generally going to fall equally as fast. If you were doing this podcast with me, seven months ago, you probably would have walked in with Ted and Fidget Spinners and now you can’t find one anywhere.
NYLP: I never had a Fidget Spinner, for the record.
Ryan: You get my point.
NYLP: Right. Yeah.
Ryan: You would walk into this office and Fidget Spinners were flying around the world. They’re gone. Trends today, I believe, it’s a trend. Trends today are dangerous, and they’re fast and they come in and they come out faster than anybody can plan for. That’s why I think it’s a novelty. I don’t think it’s a sustainable business. I don’t think the product is going to be in the closet of every man in the next three years.
NYLP: You’ve had an incredible amount of growth, back to you, what’s been the biggest challenge in terms of the growth that you’ve had?
Ryan: Growth is hard. You’re building a business. You’re hiring a team. You’re topping revenue goals month over month.
NYLP: You’ve grown double since we last spoke to you in head count.
Ryan: Double in head count.
Ryan: More than double in revenue.
NYLP: What’s the number in revenue?
Ryan: Can’t tell you.
NYLP: Three X?
Ryan: Not quite.
Ryan: Not quite but, the year’s not over so by the end of the year, it very well might be. It’s hard. It’s just a lot of hard work. It’s one thing to plan, you got to build your plan, then you got to realize, this plan is probably going to change 10 times this year and priorities are going to change and who we’re hiring as a priority is going to change. That’s the nature of a startup.
NYLP: The hardest thing has been changing your plan? What’s been the hardest thing?
Ryan: The hardest thing has been hiring great people.
NYLP: It seems like you have some great people.
Ryan: We do, but you set a plan to hire …
NYLP: Even though we’re in your office right now and they’re right outside the door and they may be listening to this once it airs …
Ryan: I don’t think they can hear us well right now and these guys are working on some final stuff for holiday.
NYLP: It’s late at night, we should say that too.
Ryan: Yeah. It’s dark out and it’s a Tuesday and we’re drinking, what I think, is pretty good rye. I don’t know. I’m not a rye expert.
NYLP: You have someone who is.
Ryan: It tastes really good. Yes. Hiring. We do have great people but it takes time to find them and your business is growing whether you have that talent slot filled or not. The question always comes up, do we hire good enough or do we wait to hire the person who we know is really an A player, even if it takes another seven weeks? That’s just hard man. It’s hard to do in a dynamic market. It’s easy to do in a vacuum but we’re not living in a vacuum.
NYLP: What have you been doing? Have you been doing the putting off or you’ve been A team where you’ve had a mix?
Ryan: No. We hire A team but it’s painful sometimes because that means that when you have an open role, everybody else is having to fill in in some capacity, for that vacancy. I think we’re still young enough and small enough to operate that way, but at some point in the very near future, we’re not going to be able to do that and we may start … saying no to sacrifice talent sounds horrible but that might be the reality. You just start filling bodies into the slots, if you start growing at a velocity that you just need to fill.
NYLP: How are you finding your A team?
Ryan: Yeah. Through our networks and our investors. That’s not unique. I think that’s how every company does it, even a search firm in the past. We’ve hired one key executive role and a president and COO and that was through a search room. We tried to do it ourselves for a while and then realized, this is not a good use of time because it was so distracting from just operating the business that you can’t sacrifice that either. It’s really tough the find the balance and time management of operating the business, hiring for the business, building footwear. It was a lot.
NYLP: You’re three and a half years in. You have a good track record. Where do you see this going now that you’ve been doing this for three and a half years? What’s your ultimate goal? You have some experience, you’ve raised some money, you’ve been around the block a little bit, where do you really see this going?
Ryan: Plan hasn’t changed.
NYLP: Plan has not changed.
NYLP: World domination. Was that the plan?
Ryan: World domination, best footwear brand in the world. That part hasn’t changed. I think the horizon, like I said, we thought we’d open stores earlier this year, we decided not to so we’re late on that. We’ll get to that in 2018. You have to be nimble enough to make these changes along the way. The direction of what we’re building and how we’re building it, that has not changed. Are we going to build sneakers, T-shirts, hats and sweatshirts? Maybe. Are we going to leave the footwear category next year? No. Category expansion is on the horizon, the question is still, when? It was always on the horizon.
It was never, “Should we do it,” it was, “When will we do it?” That question has not been answered yet. We did add women’s. That was a big, when we met we didn’t do women’s. We knew we could do women’s and we had to wait until women kind of demanded us to do women’s and that was the trigger of why we started to do women’s. Directionally, it’s the same thing. We want to build a great brand. We want to globalize the brand so that’ll be a big 24 months, when do we go to Europe and Asia? The general plan’s the same.
NYLP: What sort of categories are you thinking about?
Ryan: What we think about and what we’re going to do are two different things. I think there is a high likelihood that we could do casual, athleisure and the accessories of that lifestyle very well. We likely will. It’s just when?
NYLP: People who listened to you before, know where to find you. For people who haven’t listened-
NYLP: Greats.com. Go there right now.
Ryan: Go there now. Buy some shoes.
NYLP: Stop by your showroom.
Ryan: Yeah. Come by the studio. We’re right here in Williamsburg. You can set an appointment Tuesday to Thursday or just drop in Friday, Saturday, Sunday.
NYLP: Do you want to say the address or do you want people to Google it?
Ryan: You can Google it but yeah, I can say the address. We’re at 101 North 10 St. and that’s between Berry and Wythe. I sound like I’m promoting a club. I’m like, “Come by the studio, 101 North 10th St.”
NYLP: You can walk out with a pair of shoes, which you can’t do on the internet.
Ryan: You can definitely walk out with a pair of Greats. That’s the thing that’s really good about physical. You can come in, lock in your size like, “I’m going to try this on. I’m going to see how this fits. I’m going to go home and buy it.” If that’s what you want to do, great but you won’t be guessing, “Does it fit? How does it fit?” That’s what the physical store does really, really well.
NYLP: If you don’t have it in stock, you can just order it online.
Ryan: Yep. You’ll be able to try something else on in the same style, to get your size right. That’s the convenience of the studio.
NYLP: I love my Greats. If you have Greats, you’ll love them too. Ryan Babenzien, thank you for coming back onto the New York Launch Pod and sharing your time with us.
Ryan: Thank you very much for having me.
NYLP: If you want to learn more about the New York Launch Pod, you can follow us on social media. @NYLaunchPod or visit NYLaunchPod.com for transcripts of every episode, including this one. If you leave a review on iTunes, it is greatly appreciated and does help other people discover the show.SHARE THIS: