He Turned $500 Into $10M

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He Turned $500 Into $10M

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Apr 9, 2023

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In this episode I went into Karthik Shanadi's New York City apartment to get his story and strategies for building a $10M clothing empire. He's an absolute hustler and has built 4 ecommerce companies in the apparel industry, and he shares his advice on marketing, growing an online apparel company, and how to start a business today. Hope you guys enjoy!

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This is Karthik

He turned 500 into 10 million by building four different e commerce companies

What's even crazier is that he built these companies with no funding and he had a full time

job

I'd go in at 8am and I'd get off around 5 36 and then I'd be working till midnight and

do it all over again

This guy is a hustler one of the hardest working people I've ever met

We were actually starting a bunch of other businesses so we had a promotions company

a discount card storage company and then we had this apparel business

In this episode he invited me into his New York City apartment to show me exactly how

he's made millions

He also told me the secret to why his newest company has become one of the biggest brands

in college sports

And it's got something to do with changes to the NCAA

Karthik also told me how he's made millions in sales without spending a dime on ads

Get into these marketplaces right

That's free marketing

You guys are going to love this interview

It's a masterclass of what it takes to build a 10 million online business

I'm Pat Walls and this is Starter Story

Alright Karthik you're running multiple businesses right now

Can you give us a breakdown of everything that you've built

Yeah so we actually started off doing custom fraternity and sorority merchandise

Custom is the key word right

At the end of the day we went after one niche market which was serving fraternities sororities

sororities on campus but we were doing custom stuff for their events which then led into doing

custom stuff for the colleges and departments on campus

We went ahead and got essentially 300 college licenses to do all that merchandise for the

campus organizations departments on campus

And then naturally as we started growing out our sales team we started getting ancillary

business to do custom merchandise for businesses

So then we launched Threadly which is our custom apparel business for businesses you

know fundraisers nonprofits

then in the last year with us kind of building out these other businesses we built

tech along the way to kind of manage these different brands and all the back end processes

And us being in the licensed space for so long we actually saw an opportunity when

the name image likeness Supreme Court ruling came out where student athletes can monetize

monetize on their name image and likeness

So with that we actually got into making merchandise co branded with the college and

the athlete which is the brand is Athletes Thread

And so really focused on custom branded merchandise and licensed merchandise is the two buckets

that I would put it in as far as what we do as a whole

But it is kind of nested within four brands

So you've got Greek House for fraternities and sororities College Thread for all the

departments and organizations Threadly for corporate companies and then now Athletes

Thread for athletes and colleges

So essentially you know different niches within the apparel industry

And these are all websites where people can buy merchandise like Shopify websites or

Exactly

So one is custom right

You would come to us and say hey we want this custom design or product made we would

design it and produce it for you on a kind of like a bulk basis or bulk order basis

So that's a little bit less on the direct to consumer side

It's more business to business

But then yes for Athletes Thread you're coming on and you're buying one item for that

athlete in college and just through Shopify

Tell us a little bit about your life before Athletes Thread and your businesses that you're

What's the journey that brought you to building this business

Yeah

So one of my fraternity brothers and I we just saw a need to fill the market with just

a better vendor on the custom apparel side

And this was back in 2013 when you know technology was really kind of coming to the

forefront of every business

We really rode that train hard and we started building out an order management platform

as well as a customer portal

But as we were figuring out this business Luke and I my co founder we were actually

starting a bunch of other businesses

So we had a promotions company where we threw concerts

We had a discount card that we would sell to student organizations to raise money

And then we had this apparel business and you know Luke also started a storage company

a storage and retrieval company for college students

So we had multiple tries at entrepreneurship in college

But this one it happened you know the first year we did 50 000 second year we did 100 000

And this was us kind of working on it part time in between school doing all the stuff

that a student would do

And then also our other businesses we were trying to stand up and get running as well

And then upon graduation I actually got a full time job at Amazon

You had a full time job and you were working on this on the side

Yeah I mean it was you know what was crazy about Amazon was I had to work from Wednesday

night to Sunday morning

So I'd come in Wednesday night at literally 11 p m and I would get off between 11 a m

to 12 p m go home sleep and then I'd wake up in the evening start working on Greek

House then go into Amazon do it all over again

And in Salesforce same cycle but I had a little bit of a more normal schedule

I'd go in at you know 8 a m and I'd get off around 5 36 and then I'd be working till

midnight and do it all over again

And then weekends you know typically got maybe one weekend day off Saturday

yeah it was pretty much six days on and one day off kind of deal for a good two two and

and a half years

What gave you the motivation to do all that for so long

Yeah so my family's an immigrant you know have really humble beginnings since we moved

here

You know we immigrated to from India to here

I was born in Bangalore when I was seven years old

So I think one we've you know I've always seen my parents work hard and I think

always hard work has always been instilled in me

But two you know my parents give up everything from a family perspective to move my brother

and I over here

And now my sister is here as well

But you know we just you know we're very fortunate to have the opportunity to live

in a country where the opportunities you know you can go out and get it

And so you know I think just wanting to make my parents proud would be like number

two and just like really I think that supersedes almost everything

But three you know I think ultimately you know every time I go back to India or you know we

you know we have employees all over the world I just like realize how fortunate I am and

we are to live in a country like the US to be able to build startups without barriers

So yeah you know I think it's just it's just what I've always known

You know I have entrepreneurship all throughout my family

We have you know over 24 restaurants in India

So it's it runs all throughout our family as well

So I'd say it's a combination of all that

And I'm just very fortunate that I get to do this every day

All right So you started Greek House in your dorm room or your college basement with

five hundred bucks What did that look like at the time

Yeah So we were basically at our fraternity house

And so we would literally meet in the common areas and and basically get a sales plan

going And you know a lot of what we did to start our business was just savvy college

kids And this is before we had Instagram and different ways to reach the different

folks there We would just go out start texting our friends and in different sororities

and fraternities try and figure out who's making the decision to buy T shirts and just

were out there hustling and kind of working through our networks meeting people on

campus going to different you know the student organization meetings going and

pitching to them there on hey you should use us to buy your shirts

And that was kind of our edge was we were these young hustlers that could go out and

just you know we were we were sharp

We really liked sales really just going out and pitching people

And you know we probably sucked at sales in the beginning

But you know over time you get better and better

Your pitch gets refined

But you know putting yourself out there and just going for it it's the best thing you

can do as a college student

So I always tell students to just go for it

If you're in college you know there's no reason you can't be starting a side hustle or

a business while you're in school

I know building a licensing business can be complicated

Are there any really scary moments while building this business or any big obstacles that

you had to get through to get where you are today

Yeah actually when I first went full time with the business in 2016 you know moved

all my stuff down to Los Angeles where my two other business partners were

One of my co founders was there

You know we're three months in and things are going great

You know sales are picking up

We're seeing a lot of growth working a lot of hours but having a lot of fun working in

our living room at this one middle desk in a really small apartment in L A just really

working and grinding away

But you know about a month about four months in in April we get a notice from one of

the licensing organizations saying hey you're not paying royalties

And we're finding out that there's all these sales that you're basically not reporting

on And we're like what are you talking about

And so we started looking into it and ended up finding out oh wait licensing is a whole

thing We have to get approved

We have to pay royalties

And so we basically got audited

And long long story short we had a 40 000 bill four months into it which you know

know at the time you know we were doing just under a million in sales

And that was really scary

Right That's like four percent of our costs

And we didn't even have 40 000 in the bank to roll with

And so you know we went back to the licensing agency and said hey you know we want to

be in this industry for the long term

You know we will make it right

Give us some time to make these payments

We'll give you one lump sum now and the rest over the course of you know 12 14 months

And so it was a very valuable lesson

But you know at the time you know I thought I was going to have to go back to work full

time working in corporate America

I know you probably have a million SKUs

How do you ship out all this take orders and and manage this whole operation

Yeah so we've we've built out a supply chain

So we don't manufacture anything in house but we work with amazing print and production

production partners all throughout the U S

And so that's been accumulation of just us building relationships over the last 10 years

But in most industries right on a distributor level like us it's easy to find

manufacturers It's hard to find good manufacturers or great manufacturing partners

And so these are relationships we've had to develop over the years

But in managing that right one is we've built out a vendor portal so that they can

manage all their orders effectively

So in some cases you know we've come into that shop that we work with the printer

production partner and said hey you know we want to work with you

These are our prices but we are also going to provide you tech so that when you

service our account it takes one tenth the time to service us as than it does for your

other customers because we're going to keep everything so organized and so clean for

you so that you know you don't have to to to manage 100 other aspects of the admin

side of the workload

And so that's what's really kind of led us to having great partners is being able

build out systems and processes for them that makes their job easy so that there's no

question when an order comes through on what needs to be printed who it needs to go to

We give that to them in an organized fashion and we've helped automate and streamline

streamline their workforce on the production line

Let's talk about competition in the e commerce space

Anyone can start a Shopify store

And I know that 90 percent of Shopify stores fail

So how do you differentiate yourself as a brand and how do you look at competition

One from a like just a company and landscape perspective what's great about being in the

licensed industry right

There is a lot of hurdles to get to where we are

First and foremost you need to have licenses for the colleges and then you need to get

get rights for from each athlete

So that hurdle alone 99 99 percent of companies will not get through that hurdle

hurdle So that really slims down the vendors and the competition in the first place

The second area that we've really been focusing on is building a true brand

So you know we went from doing custom merchandise to now doing our own brand with

athletes thread

Right And how we've been differentiating from building a brand

I mean one is amazing customer service and turnaround time

Right When we ship product out you know that is the first kind of like way that we

differentiate is making sure that each customer when they reach out to us they're

getting a response in less than four hours time

They are also you know products are not shipping out in the two to three business

days We guarantee we harp on our vendors to really get those out and making sure that

we meet our SLAs

And so that's the first area where our brand is really strong is good product and good

product delivery

The next area I would say is that we've been doing a lot of things around our brand

So we're doing neck labels we're doing custom packaging

So really starting to build a brand there

And then the third is from a social media perspective

Right We have a fairly young team who love sports

So we're really trying to lean into that

And so really put out really engaging and cool content that not just the students vibe

with but the athletes vibe with and also the sports teams the individual teams

Right They all vibe with

Marketing is the hardest thing to do as a business

It's easy to start a business hard to grow it

What is your marketing strategy look like and what's all the ways that you get sales and

reach customers

Yeah So when we first started we went deep into a few different channels

We originally started with outbound email marketing which is one to one emails cold

outreaches And then that turned into outbound sales

So we're going much more of a direct response route

And that's what really worked for us

It was cost effective scalable

We're able to find a lot of emails and contacts online

The second approach that's really worked for us is building out an affiliate or an

ambassador program

What's great about those kinds of programs is that you're not just spreading your word

about the product You're finding advocates that are selling your brand on your behalf

Whether they're posting content they're sending it to their friends or posting their

discount codes What's great about that is if you do send them free product yes that's

some initial investment up front but they can also give you content on the back end

so that you're able to reuse it repurpose it and start building your brand further

And then it's kind of like you know kill two birds with one stone

They're also going out and promoting it

So you get content and you get promotion of your product

And then third right is paid marketing

You know we love paid search because when somebody is searching for Google for a

Bryce Young t shirt right they are really looking for that specific item

So there's there's very high level of intent

intent People are looking for these items whereas social media you're trying to just get

more products in front of them based on interest or based on different demographics

And so we found that paid search on Google has been highly effective

And then lastly get into these marketplaces

That's free marketing meaning if you can get your product on Etsy get it on Etsy

If you can get it on Google Shopping get it on Google Shopping

These marketplaces go a long way because I've found that a lot of people now they

just go to they click on shopping when they Google something and they're looking for

products to purchase They're literally clicking on that shopping tab so that it

aggregates all the sites that Google might be connected to on the shopping site

Hi Karthik what would you say are the most important skills to building a business

business like yours Yeah so I think first being remote right communication is so key

That's the speed of communication the quality of communication the clarity

I think communication is just a huge undertaking and there's different forms

communication right Written verbal even recording videos and sharing it with your

team creating that kind of asynchronous harmony within the company where you don't

have to meet to figure out these issues right I think is what has really led us to

be successful on the internal side

And then externally right how you're communicating with customers and clients

That's really really key So I'd say communication is very top there

Written verbal and just even yet recording videos I would say is its own form

Then number two is like the ability to learn anything or teach yourself something

Right There's so many resources online

You know everything is a Google search away from you learning it on your own

And oftentimes you know I think even I see it in our employees where they'll get

stuck on a problem and they'll come to me and I don't know the answer to the problem

What do I do I go to Google and I search it

Right So trying to get in that mindset where there is always an answer out there for

your problems And then third I think surrounding yourself with either a good

co founder and or advisor right or mentors that have done it before and have been in

your position Right

But also they can be very blunt with you and very critique it

So I don't know if it's necessary as much of a skill or as a tactic

Right Is getting and hiring good people around you whether it be advisors co founders

employees I think really getting that skill down is really really important

And just kind of getting getting it getting a good team under under you or behind you

is really really important

What advice would you have for someone who's just starting a Shopify or e commerce or

anything in the retail and merchandising space

Yeah So I think the first is like just get started

I think like a lot of people overthink how and when or what to do to get started

whether it's writing up a business plan and strategy

Right And I'm not saying go write a 50 page business plan but develop parts of a

business plan and then start implementing some of that right away

You're going to learn more on the job than you will just kind of reading stuff and

articles online And then lastly I'd say humility

Right And just making sure like you don't know everything and kind of having that

learning mindset and that just really wanting to engulf yourself in the industry or

market and learning from the ground up

I think that's a really key aspect of entrepreneurship is just having that

intellectual or that genuine curiosity I think is really key to success as an

entrepreneur

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