SaaS Interviews with CEOs, Startups, Founders
EP 348: 11,500 Paying Him To Manage One-Piece Wardrobe with Blake Smith
07 Jul 2016
Chapter 1: What is the main topic discussed in this episode?
This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per top. Five and six million. He is hell-bent on global domination. We just broke our 100,000-unit soul mark.
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Chapter 2: How did Blake Smith and his team test different business models?
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To get your free month, go to nathanlatka.com forward slash FreshBooks and enter the top in the How Did You Hear About Us section. Top Tribe, this is episode 348. Tune in bright and early tomorrow morning to hear how Pavan and why he's so, so, so smart. So why did he quit for a startup? He breaks down why. Top Chive, good morning. Our guest today is Blake Smith and he's the CEO of Cladwell.
Cladwell helps people look great with fewer quality items of clothing. Blake, are you ready to take us to the top? Let's do this. All right. What is Cladwell? Explain to me what Cladwell is and how do you guys make money?
absolutely yeah cladwell helps you do more with fewer items of clothing and so in the fashion industry we're kind of a sole actor in a way in that our focus is actually that you buy fewer items of clothing and when you do buy that you buy quality and so what we sell is we actually sell a tool that helps you one get dressed every single day from the items that you already have in your wardrobe
And two is make sure that wardrobe is comprised of the smallest number possible of high quality items. So we're actually helping you shop less, which is kind of strange in the fashion industry.
Well, and I really like, I mean, when I go to your website and I kind of look at it, you do a really interesting thing, which I want to jump into the numbers on, but you have kind of the general option at the top, but then you have like this. Kind of this neat, very easy to read quiz that kind of goes down the page and says things. It's always best to be overrated.
Do you agree or strongly disagree? And then you do the money. You have like a question about how much do you spend on a clothing budget and then like how often, you know, are you leisurely or going out or smart or suiting up? Do people fill this out? I mean, do people actually get through this whole thing?
Yes. Actually, the more questions we added up to that point, the more people actually filled it out, which that was really interesting.
That's really interesting.
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Chapter 3: What is Cladwell and how does it help users with their wardrobe?
So like a weighted average might be around $6.
Yeah.
So is it fair to say I can just do the math, $11,500 times $6 to get your MRR? Yes. Is that about right? Okay. Great. And what would that come out to? Our MRR? Somewhere between $60,000 and $80,000 per month? Yep. Awesome. And are you bootstrapped?
No. We've raised $1.8 million over the course of two and a half years. Welcome to the Midwest of entrepreneurship. That's really good. Yeah, the Midwest is literally in tranches of a half million or 300,000 at a time, unfortunately. We actually just moved out to Mountain View, California.
And so we're trying to kind of enter into a new stage where we're trying to raise in larger tranches rather than kind of stringing it along.
Walk me through the decision you made. Are you the sole founder?
Uh, no, I started actually with three other founders. So I have one, one founder remaining. Uh, my good friend, Chris Merchick is the head of the fashion side of the business. That was not my expertise.
And what's the story there? You know, my first company, I started with, you know, three and ended with one. Uh, what happened there? Did it, were people just not focused? So they left or what?
Yeah, I'd say with one of my co-founders, my closest co-founder, Tim Brunk, who's still actually a close friend and he served on the board, we just realized that we both were made to lead companies and you can't really have two head leaders in a company. So I think we kind of realized like, Hey, I didn't sign up to work for you. You didn't sign up to work for me.
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Chapter 4: How has Cladwell's customer base evolved since its launch?
2015, we went from, gosh, I mean, the month, the year before. I'd say in 2014, we actually, we made like 10 or 15 grand. Okay. And then in 2014, we made over 100 grand. In 2015. In 2015, we made over 100 grand.
Okay. And what would make you really happy if you hit the number in 2016?
We're planning to hit a million this year.
Oh, great. Great. Great. Great. Okay. So a lot of this, I want to go back to the, the going from a hundred thousand to a million is obviously impressive. You have paid ads behind it. So I'm curious how, where are you spending the money? How are you acquiring those customers?
Chapter 5: What revenue model does Cladwell use for its customers?
Yeah, it's pretty straightforward. We go to places that people are looking for advice, and then we tell them that we have a personalized tool that's going to free them. Interesting. People are very reluctantly going and looking for advice for fashion, and the world they have to go to is bloggers, YouTube, Pinterest, Google. It's all high-intensity workplaces.
And so we just advertise at those places and say, hey, what if instead of doing all this work, Uh, you just came to us and we'll just, you can outsource it to us and we're going to actually make it. You look great. Cause that's what people actually want. They don't, they're not going for funsies. They're going because they want to look good.
And that's our purpose is we just help people look good.
And what is your, do they stay once they get in? Are they staying? I mean, what's your monthly churn?
Yeah, monthly churn is 5% of our users are leaving monthly. So that's not great. It's not horrible though. But it's our number one priority right now. It's I'd say our worst number.
Yeah, it's not horrible though. I've had to talk to some SaaS companies that have raised a lot of money where they're cranking like 8, 9, 10% churn. You really want to be down obviously under like 1%. Yeah.
Or negative churn even.
Oh, sorry. I'm talking about gross churn, not net churn. But yeah, gross churn, you want to be like sub one net churn. If you can get negative, that's epic. Are you guys, are you the only way to get negative?
We don't even have the possibility to do that.
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Chapter 6: What challenges did Blake face with customer acquisition costs?
I know you're not doing it right now, but when you do raise a Series A, what would make you really happy in terms of valuation?
Um, yeah, I look confused actually right now on what series a is because like the next round of funding would be series a in Cincinnati, but I'm pretty sure out here, the next round of funding would be considered seed out here.
So, yeah, I think, I mean, I think maybe the way to think about it is you raised 1.8 on notes, your first price around, what would you love to get valuation wise when you, whenever you do your first price round?
Um,
Uh, yeah, I'd say, uh, yeah, as we've modeled it, it's probably, it's around 10 million.
Uh, and what, what do you have to get revenue to you think to hit, to, to be able to convince investors to pay a $10 million valuation?
Yeah. As I've seen it, I think it's that million dollar ARR number.
Okay. Yep. So that'd be 88 grand per month ish.
Yeah. Yeah. I think that that's like, that's the right. I think that when you're in that, like for us right now, call that seven 50 mark. I feel like there are a lot of companies that get stuck right there. And so I think we have to prove that we, one can get us to a certain level. And then two is that we can deploy serious money monthly from marketing standpoint.
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Chapter 7: What lessons did Blake learn about partnerships and co-founders?
yes this is lame google calendar i manage everything from google calendar okay number four uh yes or no you're building this empire actually like before i ask this how old are you i'm 31 okay 31 and what's your situation are you married single you have kids married with three kids wow okay so here's the question yes or no are you getting eight hours of sleep every night big no how many how many do you get uh i get like six and what's your wife do i'm just curious
Uh, she stays at home and she's a political activist.
Oh, very cool. Very cool. Okay. Well, that's great. Last question here. Take us back 11 years. Like what do you wish your 20 year old self knew?
Uh, that I think I'd say that it was okay to follow my curiosity, that that actually was a good thing to follow.
Awesome. Well, top tribe, there you have it from Blake at Gladwell. It is okay to follow your curiosity. They started two years ago, making just a grand in their first year. They've now scaled to over 11,000 customers looking to revolutionize the clothing industry in a weird way. Buy less clothes. They raised $1.8 million, doing over 60 grand per month in recurring revenue.
Blake, thank you for taking us to the top.
Thanks a lot, man.
Top Tribe, if you enjoyed this episode, go back and listen to Alex from yesterday. Alex shares how SocialRank hit 50K in MRR in under two years. Top Tribe, I love giving away free money. I feel like Oprah giving away cars, and I have something special for you today. How many of you have heard our super sharp guests talk about success they've had with Facebook and Google Ads?
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