Building Brands that Attract Capital: DTC Fundraising in 2025

Building Brands that Attract Capital: DTC Fundraising in 2025 Speaker 1: Stories that haven't been told. Chubbies was kind of like a direct foil to the Abercrombie & Fitch at that time. They were known for, and nothing wrong with cargo shirts, blah, blah, blah. Like that was like our enemy. So we'd send out a Friday email to kick off the weekend called The Weekender. One that we sent was like an open letter to the CEO of Abercrombie at the time telling him to It was like a plea to the public to come together and have them stop making cargo shorts and talking about how horrible they were and how there should be an investor vote at the next shareholder meeting to cease all production of cargo shorts because they're a blight on humanity and they represent all this lack of conflict. It ended up being something that was just like, was this stupid? Like, are we going to get sued? Speaker 2: Welcome back to another episode of Chew on This. Today's a special episode brought to you by Klaviyo and we have Preston who's a co-founder of Chubbies and Marathon. He's actually been on our podcast and has shared incredible insights before, so we have to bring him back. We're going to be talking about some really, really interesting pieces around what it took to build Chubbies, both from raising capital and fundraising, but also some of the more interesting questions around retention and programming around what it took to build Chubbies on that side of it, too. Preston, a few people who may not know you on our pod, which is probably rare, but for them, maybe give a little bit of a quick intro and background. Speaker 1: Yeah, hell yeah. And Ron and Ash, thank you guys for having me. I mean, I think this will be a fun conversation. Yeah, Preston Rutherford co-founded a brand called Chubbies many moons ago, back in 2011. Different world, different time. And very fortunate to have had an exit at the end of 2021. The brand was acquired. Throughout the whole process, it was effectively hell on wheels the whole time, just not knowing if we were going to die every single day and just classic running a business. The business is now part of a public company and so kind of went through a lot of that stuff with the fundraising, with exits, with IPO, and now working on something called Marathon, which basically just takes what we learned at Chubbies relating to primarily kind of like how to measure Brand building or just other ways to run performance to kind of like fight against this like performance plateau that we certainly ran into and that I know a lot of other brands run into. So trying to demystify the whole brand thing, kind of turn it more into performance. So kind of went from building a consumer brand, getting jaded on consumer, thinking it was the dumbest thing ever, thinking that The grass was totally greener on the SaaS side and learning. It's the same shit, you know what I mean? So having a bunch of fun. Excited to chat with you guys today. Speaker 2: Before we dive in, a quick word about today's sponsor, Klaviyo. In 2025, retention isn't optional. It's a growth engine for any brand that's serious about scale. That's why at Obvi, we use Klaviyo for all of our email and SMS marketing needs and to know what our customers are talking about. We're not just using Klaviyo to blast everyone the same promo code, but to make sure our message actually reaches the right people at the right time based on real customer behavior. Klaviyo combines real-time customer insights with AI to help us design smarter flows, create dynamic segments, and personalize every touchpoint based on what our customers are actually doing. It saves us time and helps us drive way more repeat business. Want to know more about your customer than ever before? Go to klaviyo.com slash chew on this to learn how. Now, let's get back to the episode. President, I think it'd be great to know, you know, especially maybe towards the kind of the early stages of Chubbies, when you look at the environment of when you built, you know, starting in 2011 and then running Chubbies up over the years versus like you look at today's environment, right? What are some of the stark differences in starting a brand today versus 2011? You know, I think fundamentally, There's still a lot of the same things happening. But then there are things that are, you know, exceptionally different. Now that you kind of get to have a viewpoint, even with Marathon, right, you get to have a really great bird's eye viewpoint. I'd love to understand kind of what are some of those things that stick out for you. Speaker 1: Yeah, great question. And first thing, I'm one of four founders. And then, you know, it's all about the team, team, team. So, and I'm by far the dumbest of all four founders. And I'm just the one who tends to talk a little bit more on the internet. So I should definitely put all that out there. And that it was like, not me at all. And then as it relates to the question more specifically, yeah, I mean, I think echoing your point, there are things that never change, right? I mean, part of it is, like, maybe Like fundamental truths, like you got to stand out in some form, you know, got to rise above the noise. So like doing what everyone else does, that's a recipe for disaster. Margin erosion, if there ever was margin. Like consistent iteration, right? I mean, I think the cool thing with digital and e-comm is that we can learn really, really fast. And so then what becomes really important is feedback loops and being open to being crappy at whatever it is for a long time. And then I think obviously it's It's have an epic product, but that's like the assumption, right? The assumption is you deliver on the product, that there's a differentiating factor here where you're bringing net new value to the market that is easily understandable. And then obviously on the brand side, right? What does that mean though? Like, what does brand mean? I like to liken it as the idea that like, when I go from out of market to in market, there's like a very clear like, I'm going to Abia. I'm going to Chubbies. I'm going to whatever. And it's like a very kind of like clear pull. And then I think it manifests, right, in just being able to build this. And I think it ties to, I think, what we're also going to be talking about over time in the conversation, like equity value. Like, how do you value these assets? Of like, I've got this asset that I've created out in the world that generates inbound interest, right, where people are seeking me out, whether it be in an e-com context by performing like a branded organic search, coming direct to my site, like we've seared ourselves into their memory at the brand level. Or just like going into Walmart and just being like, where's the Obvi stuff? I want to buy it. I want it. Or why don't you carry Obvi? Or whatever that might be. For Chubbies, right? Like Dick's Sporting Goods. People walking in and just like seeking us out. That's what we want to build so that we are receiving buyers rather than going out and grabbing, going out and selling, right? And I think those are some of the fundamentals that I think never change. Some of the things that have changed, right? I mean, it's just way more expensive to do the status quo stuff, right? I mean, 2011, what is that, 14 years ago? So I don't know what the kegger on CPMs from 2011 was, but I mean, I think Triple O has put out a report, right? 26% increase on meta CPMs year over year. I mean, you compound that out, right? It's ugly. And so it's just hard to do the thing that is like the classic, you know, direct response performance marketing aim to do that, like that purchase conversion and that. So that's just becoming difficult. Like there's more headwinds To just be able to get your content in front of more and more people and and then if we're in a place where we're in this like creative iterative cycle, so I'm talking obviously about paid stuff and we're in this place where we're like chasing what performance looks like, you know, it can be difficult especially in tougher macro times that we're just in like right now and It can be tough to do that first thing I talked about, which is to stand out, because it's scary to do the thing that's different from what everyone else is doing, rather than following the playbooks of whatever you see on an ads library or in any of these other tools where you're just looking at what everyone else is doing. So that's difficult. It's a lot of difficulty going on. The other thing, obviously, I mean, I don't even want to talk about tariffs. It's obviously a crazy thing, right? That's a very different sort of situation. And then coming out of COVID, right? It's just very hard to forecast. And just to kind of like know what the future is going to look like. So it's very difficult to kind of think about growth right now. It's like, are we stabilizing? Are we pushing? If we're pushing, how are we pushing? How much do we want to give up on margin? Do I even know how to forecast my margin? If like my cogs could double, you know, like then I don't even have a business. So those are some of the things that I think are crazy. One of the other things though, cause I know Klaviyo is on this and I think we were like one of their first customers, honestly, like way, way back in the day when we churned for MailChimp, oddly enough, that Email is still so important. As you just think about that as a channel that I think... Has so much continued potential to be this massively valuable asset that I tend to think right now is undervalued or just doesn't get enough like Thought minutes of like the total amount of thought minutes we have on our on our salary base that are just going to like crushing email and I think it doesn't get enough love. And I think one of the things we learned is just that own channel, man, there's like such resilient value. And I think for chubbies, a lot of when you talk to people, a lot of what they say is like, I love your emails, I would forward your emails, like, they were so funny. And that was like, 10, 20% of the emails that we sent out were like content for content's sake sort of thing, but just being able to do that and own that channel and build that channel, build that community, there's something special there that continues to be special. I would be remiss if I didn't mention that as being something that was like, man, if you're going to spend more time on something today, that would be like on a very, very short list of things. Speaker 2: That's great. Speaker 3: A lot to unpack there. Speaker 2: Yeah, that was awesome. Speaker 3: I think one thing that you constantly preach, and even on Twitter, which I always look forward to these long tweets around how every single marketer is constantly going after that bottom 5%, right? The 5% of people that are actually in market. And your whole take on this was, well, we need to build moments for the brand constantly so that when you are in market for The product that a brand is selling, you instantly think about them, right? I'm very curious what your take is on if brands today are like, oh, well, we want to do that, right? We want to do this. We want to not move away, but diversify and get in front of as many people as possible. From your lens and how you see things trending, how can brands actually start Thinking about brand marketing and where can they go to actually generate this awareness, right? I know you guys have had insane moments, right? We have, you know, Sean from DudeWipes, like their whole thing is just content, right? Liquid death content, right? And these are the brands that are nine-figure brands. I'm very curious if you were sitting in a room with, you know, an operator that just started a brand, where would you urge them to start? Speaker 1: Yep. I'd start by being cautious with the use of the word brand to start, right? Because it's got this association that I have that I think every one of us have, which is just like fluffy, immeasurable, unknown, payout, nice to have, only done if you've raised a hundred million or if you're already a billion dollar brand. So I start there and I try to bring it back to, let's just talk about fundamentals of business growth, right? If I want to be twice as big, I got to reach twice as many people. And that's obvious. But then when you think about it, like how much more did you have to spend this year over last year to reach twice as many people? And you project that out and it's like, that's a hard problem to solve actually with like my cash position, having to buy inventory, all that good stuff. So that being one thing. And then the other thing is just like, Generation of demand. So I used to have the assumption that everything I was doing on meta ads, like everything was sales campaign, purchase conversion objective, blah, blah, blah. I was like, that'll do both the demand generation, right, to do the thing like hitting the 95% of people who are out of market. And it'll do the demand capture, right? It's just like clearly I want to drive purchases, so I'll choose the purchase conversion objective, right? And why would I choose any other? That'd be stupid. What I didn't understand as much of was exactly what I was asking the ad platform to do. At the time, I don't remember, we were on just seven-day click, no view, whatever. I'm asking to find people who only click on an ad and buy in seven days. I didn't acknowledge, I didn't understand, I just didn't have the understanding of the negative externalities of what I was asking the platform to do, meaning I mean, I don't click on ads. You know what I mean? I just kind of look at my own behavior and I'm like, I don't do the thing that I'm asking the thing to do. And so clearly, I'm missing a bunch of people who are even in market, right? Much less out of market. And so when I started to have those realizations, and then you start to There has to be a problem to solve, I guess, is the second thing, right? I mean, if you're up and to the right and you're growing 1,000% a year, whatever you're doing is working, especially if you're growing on a big base. But even if you're newer, it's not a problem to solve. But then when we get to that, whatever, performance plateau, or you start to sort of like spend more to get less, that kind of thing, or you just start to be like, ah, man, the only way I can hit my growth numbers is if I add an additional promo or whatever it might be, then it's sort of like, okay, that's a great time to just like take a step back and just do the classic, like, what got me here won't get me there kind of thing. And so that's the preamble to, I guess, the specific answer, which would try to be I don't want to talk about like brand versus performance as I want to talk about like just balance and demand gen, right? I mean, I've got this well of people that I'm just doing a pretty good job at converting. Everyone's really good at converting that existing well of demand. But am I just popping more people in? And I can do, you know, everyone's doing maybe like a little bit of like top funnel or whatever it might be. But like the truth of it is, and Chewie's got to this place, took us a while to sort of like understand it and deal with the fear of the transition. But getting to like a, and I'm going to say numbers that are that are wrong, but they'll just like illustrate the broader point, but getting to like a 50-50 of like brand to performance. Seems crazy and, you know, click grow as an on a blended basis or whatever looked bad, but, you know, the business got better, right? We were generating more branded organic search, you know, more of our revenue started to come from Inbound, right? Brand organic search, direct, right? Where, you know, last click paid just kind of started to dwindle and dwindle, even though we're spending a lot more, right? So I want those sorts of things to fundamentally happen, right? Because I want to build a valuable asset that isn't as reliant on an external third party that I can't necessarily control. So as I think about like how to do it, first is like, I got to make the decision that I'm down to change my behavior. But I also want to ladder it up to like first principles where I got to reach more people. People have no fucking idea whether my ad is a purchase conversion ad or like a page likes engagement campaign or some, you know, reach whatever. They just want to see something that gets them to remember. You know what I mean? And the difficult part, though, is that we've built this muscle that is really good at generating creative, that makes a rational appeal, product offer, urgency, whatever it might be, that is just good at capturing that demand. So oftentimes there's a process, at least we had to go through this, of There's this different creative workflow that is, how do I get people to remember? How do I get people to want to freaking share one of my ads? Not that none of our DR stuff does that. Sometimes we've got these unicorn pieces of creative that just do it all. Those are things that you hold on to and they end up generating tons and tons of cash for us over a long period of time. But that's a little bit of how I might approach it. It's just like, do we have a problem to solve? Let's ladder this thing up to the fundamentals of growth. We don't have to talk semantics of like, is this brand, is this performance? Because at the end of the day, I don't know, I'm just making up numbers broadly, but the last 30% of our spend anyways isn't driving any incremental growth. We're not always on top of the level of incrementality of every dollar that we're spending. We run the tests at moments in time and we get reads, etc., etc., etc. But the idea is that at the end of the day, one of the things I learned is every one of us, if we're not in this balance of brand performance, we could be growing faster. Even if we're growing fast, we could be growing faster. That's one of the things I learned firsthand because I was like, I don't know how big a tiny shorts business could be. Chubby isn't just tiny shorts right now, but it was like, what's the natural ceiling on this business? When we were starting to do this, you know what I mean? And we were just like, maybe we reached it. Maybe that's just how big a men's tiny shorts business can get. The reality is that we just weren't doing the fundamental truth. We weren't reaching more people and we weren't getting them to remember us because we were so focused on myopically hitting this daily efficiency number that we needed to hit that was based on clicks and buys. We were adhering to this number that really fit into a This relatively low sophistication spreadsheet sort of methodology. And so then we had to evolve, not that we couldn't measure, but we just had to evolve so that we were doing like these fundamental things rather than like some of the more like surface level or myopic sort of like metrics of like, you know, revenue and click growth that I had been so obsessed with for such a long period of time. That's how I might sort of broadly touch on a few different approaches that it relates to the transition. Speaker 2: I think you touched on so many great points, but I think the biggest piece in a lot of what you're saying is I think having to take different stages of your company and where you are and just kind of reassessing what can come next. I think some of us sometimes, especially when it comes to projecting out or like, you know, forecasting out what's supposed to be, it's almost like you box yourself in. Like, I mean, even just looking at our forecast model, you're like, okay, X amount of revenue is going to come from this channel and then We're in totality we're going to hit this and you know you need guide points but sometimes you actually start to just focus on manifesting what you've put onto a forecast which in itself like doesn't allow you to think about some of these other expansion points. So I really really like that perspective especially how much depth you guys built Chubbies with so thank you for sharing that. On the note of sharing, you guys have shared a lot of stories publicly about building Chubbies. What's one wild story that you haven't shared? Speaker 1: Okay, so stories that haven't been told that are fun from the Chubbies past. I'll mention two. So one was So again, you have to put yourself back into like 2012 2013 and at the time Chubbies was was kind of like a direct I foiled to the Abercrombie & Fitch at that time. Now it's cool, right? Whatever. It was the top performing stock in the 2023 or something like that. Not back then. It was like, I think we remember like the shirtless dudes and they'd spray you and they'd be like standing there at the entrance looking all like six packy and very much like you're not cool enough to shop here and that's why you want to shop here kind of thing. And you know, the bad music and the blah, blah, and looking super like serious and off into the distance. So, and then they, they made, you know, they were known for, and nothing wrong with cargo shorts, blah, blah, blah. But like, that was like our enemy from like a product perspective, right? We had to have an enemy from a brand perspective, something to be different from and the opposite of. So it was long, long cargo shorts. So that's the, that's the setup for one fun thing that we did was And this is speaking to emails like every Friday, kicked off the weekend because Chubbies was all about like the Friday at five feeling, right? That moment when you like take off your, you know, your top button, take off the tie, rip off the pants or whatever, throw on your shorts and the time is yours kind of thing. So really trying to orient around that freedom and that agency that you have at that time when the weekend starts. So we'd send out a Friday email to kick off the weekend called the Weekend Report. One that we sent was like an open letter to the CEO of Abercrombie at the time, that guy Mike Jeffries, you probably heard, yeah. Yeah, so at the time we didn't know how weird but it was his open letter basically telling him to and it was like a plea to the public to to come together and have them stop making cargo shorts and talking about how horrible they were and how you know there should be a like an investor vote at the next shareholder meeting to cease all production of cargo shorts because they're blight on humanity and they represent all of this lack of confidence blah blah blah blah blah. And it ended up being something that it was just like, was this stupid? Like, are we going to get sued? Are we going to, but it was just like, this is so fun and funny and ridiculous. Obviously we're joking. And obviously we're a company that's doing, I don't know. Like nothing, we're nothing. And it was kind of fun because it was just one of those things, right, where you do something and so many of your friends, they text you, they call you, they're like, that was crazy, that was awesome, that was wild. And this didn't happen a ton, sort of like completely organically, but, you know, it started to get picked up, right, where people were like, oh, this tiny, this small men's shorts brand calls out Abercrombie and Fitch. Which was funny because like a year later, they effectively made Chubbies. Like they took our pattern and they made the exact product. So that then became a follow-up where we could then like talk a whole bunch of shit about it. And that fueled content for a long period of time and it was just a great like rallying cry for our audience. So that story, the whole sort of like Abercrombie thing was kind of like a fun little experience. Maybe the second one, and I don't think I've, maybe I talked about it once, so if I have, sorry. But you know, we made some bad inventory buys from time to time, right? Because you're launching product twice a week. And so we had all of, we had like six or seven products that just were dogs, you know, like the idea was cool, but they didn't sell at all. So I think one of the most fun emails that we ever sent was our worst sellers email, where basically it was just this email to our audience being like, Yeah, they didn't sell. But here are all of the reasons that you actually should think about, make an honest determination of buying these products. And one of the products just looked like a picnic table, checkered color kind of thing. And we're like, I mean, picnics and it looks like mustard. So if you're eating mustard, right, it's just going to blend right in. You don't even have to worry about it. Another one of the cool benefits of these products is the exclusivity of them because nobody has them. So just like coming up with all these dumb fun reasons as to like why the worst sellers, A, why they were the worst seller. Like we're just acknowledging like these were, these sucked, you know, and, and then just making like these funny ploys of, about like why you should buy them being completely not serious. So then I don't think it certainly didn't convert and drive revenue in the short term, but it was one of those things where people talked about it. You know, they told us like, that was awesome. And I don't know what we had to do with that inventory. Maybe we sent it off to like TJ Maxx or something like that. I have no idea. But I think that was one, one of those moments as you were talking about, like moments that, that kind of stuck in people's minds. That was something that people forwarded to other people. And so I don't know if I've told either of those stories, but oddly enough, they tie to email. But both sent via Klaviyo, so thank you very much for the deliverability and for the segmentation. But a couple of stories. Speaker 2: That's amazing. Speaker 3: I love that. Speaker 2: When we moved Obvi to Klaviyo earlier this year, we weren't just switching platforms. We needed a better overall system to manage email, SMS, and real-time customer insights to create long-lasting customer relationships. All under one roof. Since making the change, we've rebuilt our abandoned cart flows, created dynamic segments that tell us who's ready to buy again, and used predictive data to time our offers more effectively. The impact has been higher repeat purchase rates, Better retention metrics and even more control over how we grow our customer value. Retention isn't set it and forget it tactics anymore that used to work. It's a system that needs the right tools and infrastructure. For us and for a lot of top brands out there, we know that's Klaviyo. If you want to turn retention into a growth engine, go to klaviyo.com slash Chew on This to learn more. Now, let's get back to the episode. Speaker 3: I mean, you guys talk about, like, obviously these moments for your customers or even potential customers, but what you're really doing is building a Chubbies community, right? People who actively look forward to these, you know, the weekender emails that will share them, you know, talk about them, et cetera, et cetera. I'm curious how you guys were able to Maintain the community, like in a physical aspect of did you have, you know, maybe a group that you were kind of pushing people to? Was it just, you know what, join this newsletter and that's the community? But I think brands today are always thinking about how they can actively be in touch with their consumer, right? For us, we have a Facebook group. Brands are starting Discord channels, Slack channels, et cetera, et cetera. So I'm very curious because you guys are kind of the pioneers of cultivating a community. Why do you think that's important and how do you think brands should be handling that now? Speaker 1: For sure. Yeah, I mean, I think to the point of like why it's important, I mean, I think we can all, but a couple of maybe the less obvious things like it's a representation that you have something that is worth joining. You know, like as a human, why would you join this thing? For us, it was very much like You were both running to something and shunning something. So like the thing you were running to is like this idea of like welcoming fun and this idea of levity and not taking oneself too seriously and being able to just sort of like live that, I don't know, Saturday barbecue life with the unbuttoned shirt, the shorts and just having a good time and Trying to make each other laugh, right? I mean, I think a lot of what built the initial community because there was like an ambassador group and then there was this like a customer group on Facebook, like which is kind of like all that really existed in 2011, 2012, 2013. But at the beginning, it was just like people trying to just one-up each other with UGC. It was just like, here's this crazy fucking thing I did this weekend kind of thing. And some of it was like, shit, don't do that. But a lot of it was just awesome, epic pictures of people living their version of the best possible weekend. And Chubbies were prominently featured, which was obviously awesome, right? Because it creates this content flywheel and then it just, it's amazing, amazing. But we would try to, like, I think a lot, one of the first things that was really fun about being a part of the community What we did was that we did our darndest to like examples of weekender emails. One of them was just like chubster of the week, right? So like you'd get this UGC in, do like top 10, and then we'd spend time trying to write funny backstories of what led to this photo and who this person was and make them feel like superheroes, you know, make them feel like The coolest, most awesome person ever. And we'd tag them, you know, and they felt great about it. Like it made them feel special. Because they were, I mean, they're awesome people. And they were, they were taking what was in our heads and bringing it to life in a way that, you know, we could imagine at least the beginning, but then beyond that over time. So I think that was like one thing where it was just like, why, why would I, why would I want to do this? And then as it relates to like, other reasons to join or things that they were kind of like shunning, it was very much like this is a group of people who, you know, aren't aren't They're just not, they're not like the serious. So like a funny thing that happens and a thing that we were kind of also like rebelling against was, again, like we graduated college in 2008. Horrible fucking economy. You know, we were supposedly smart kids who went to Stanford, had hard times finding jobs. You know, it's like this stress of like, and it doesn't even apply to just 2008. It's like every person coming out of college is like, who am I? Like, how am I going to validate myself? Like, how am I going to make money? How am I going to show that I'm Whatever. And not that we were telling people like go out and just sit on your ass all day, but we're telling people like I think a part of what was always like a subtext was like, your job isn't who you are kind of thing. Like there's this whole other part of your life that is like your relationships, your, the fun things that you think about doing out in the real world, blah, blah, blah, blah, blah. So I think this kind of was a community that was like people like me who like to make each other laugh, talk shit to each other, but also like not negative. But also just like people who are like, we're just here to have a good time, and just enjoy this gift of life kind of thing. So I think those were kind of some of the things that brought people together. But like tactically, yeah, I mean, I think it was like, in a lot of it, it was like the email list, right? Like you wanted to be a part of that thing. So you could get, I mean, early days, we would just sell out. So it's kind of like a drops business of sorts. So like you wanted to get on the email list, so you could get access to the product, because that's the only way that we would tell you about it. And then you wanted the funny emails. And then over time, like we tried to make the sales emails, you know, as good as possible, try to develop relationships with people like funny sender names, and people would kind of know us and Tom wrote it, Preston wrote it. And then over time, a bunch of other people wrote amazing emails. So there was that. And then it was just like, we would continue to do things even on the socials, like where Today is different from where it was back then, not that it's bad at all, it's just different. Things that you wouldn't normally do coming from a corporate business account. It was just supposed to look and feel much more like Ash's personal account, Preston's personal account, just like this group of friends who would just put stuff out into the world that was just like the best post from your buddies, the best thing that your friend sent you on the group text thread, So just all these things that were kind of like counterintuitive, where it's like less of, we're a corporation trying to sell things to faceless customers and more just like, this is just, this is just kind of like a movement that is really important to us, even though on the surface, it just seems like a bunch of idiots going out and, you know, drinking beer and throwing Frisbees and doing barbecues or whatever, but it just kind of represented this, this fun place where you could kind of like be yourself and have fun and not be judged. Speaker 2: I know one of the big pieces to Chubby's large exit was obviously you guys had components of fundraising throughout the journey. If you had to look at brands today, What's one piece of advice or some level of maybe even things you've noticed that brands maybe aren't thinking about when it comes to fundraising in today's environment, looking at raising capital? I know some people talk about don't do it unless you absolutely need to or think about debt first or this or that. I don't know if it's general advice or just maybe just some things to look out for or maybe lessons you guys learned, some things you can share on that journey because I think most people just always look at the ending exit and they're like, wow, you hit that number, but there's parts and layers to that. So maybe you can give some color there. Speaker 1: Did you guys raise for any of your businesses? Speaker 2: We did. We do the friends and family. Speaker 1: Okay, cool. So yeah, we did just what we did and then I'll get into like stuff that I learned. So we did friends and family to get started just to like be able to buy inventory because we were doing pre-sales. And pre-sales can go wrong if you miss delivery dates and we did that a couple times. And when you have super seasonal product like we do, like 4th of July American flag shorts and you miss that, you're not in a good place. So we raised the money. And so the first one was like, I don't know, like we raised like 600K from 60 of our friends and family. Like it was so operationally heavy and then K1s every year were a complete mess. And it was just like, from an accounting perspective, it was a mess. But that's how we got started. And then maybe, I don't know, I don't know how much we ended up raising, but like maybe three or four different, maybe more transactions of varying types, right? Some were just pure equity, some were convertibles, and we did use debt. So, we really did it all. It took out of fund the business from positions of strength and positions of weakness, which is also a very kind of important piece of context. But we raised from wealthy individuals, we raised from strategics, we raised from sort of like classic down-the-fairway VCs with LPs. So, again, all types of accessing the capital market. A couple of lessons. I mean, I think the first thing, I mean, to your point, one of the things you mentioned was, you know, never do it unless you absolutely have to. Some people, I think there's truth to that. I wouldn't necessarily go so far as to say that, but what I would caution is something that I didn't really recognize, which is like, it might seem like a win to go out and raise from people because you're like validation. But the other thing is like, you're giving up optionality. If you raise from people, And you're not like super straightforward that like you might not like you might return capital or you might do distributions. The expectation is that they're going to get this massive 100x or 10x or whatever from one liquidity event. And that just completely changes the way you think about growth, the way you think about economics, the way you think about goals, right? So that's what we signed on for, where even when the business, you know, started to become profitable and generate a lot of cash, And whether or not this is actually true, I don't know. I don't remember like the word for word of the investment docs, but it just didn't, like we had VC with LPs. And so to be like, we're just going to, you know, pari passu, generate or distribute whatever percentage of EBITDA this, like it just wasn't an option, right? So we had to sign up for that binary high, high risk situation that Most of the time doesn't happen. Like most of the time you don't get that big exit. Most of the time you don't sell at the top of the market. Like we were just blessed, failed multiple times on the way to that. So limiting optionality, right? You just kind of like have to go in a different direction where you can't like have a cash flow in business that just puts money in your pocket every month, blah, blah, blah, blah, blah. I mean, you can buy out investors, blah, blah, blah. There are all these different options, but it's complexity. But on the plus side, we were very blessed that people that we brought on board, and not that we had our pick of, you know, name every VCs. I don't want it to, I'm being clear there, but the ones that ended up self-selecting for us were people we had known for a long, long time, most. And wanted what was best for us as people. I think first, clearly, like they knew us that we were people of integrity that we knew they had LPs that they had to deliver returns, blah, blah, blah. But we never had that crazy situation where like the board member comes in and is like, you have to do this or you're out kind of thing. Because the reality is, right? I mean, people say this, right? But it's so true that like, you're married to these people, you legitimately are married to these people. And That means you guys are in it. So pick wisely, I guess is what I would say. Try to architect your business in such a way where you never have to raise. We weren't able to adhere to that, but you always obviously want to be raising from a position of strength, but I would generally maybe like say the thing that is you always want your customers to fund your business kind of thing and have that be, and again, I can't speak to it by having done it, but so I guess from the other side, I'm just kind of like, well, yeah, that's like the point of business in a lot of ways unless you're like this High capex open AI or whatever like that being like the most intense example of needing to raise a shit ton of capital before you actually start generating profits. Like for a consumer brand, there is an argument to be made that like, and maybe, I don't know, if I were to do it again, maybe I would do like a friends and family thing because I also want accountability. That's one of the things I like about raising a little bit from people I respect and people who I do not want to let down. Like I don't want to let myself down and I don't want to let my customers down, but There's a little bit of that too, where it's just like, you're my friend, and I'm gonna work my ass off for you and for you and for you. And yet, strategically, like maybe you'll provide some intros, maybe you'll provide some guidance, maybe this person over here has been through something I'm looking at, or I might go through and so they could provide advice. And so because they put in a little bit of money, they're that much more incentivized to help me out. So I think from that perspective, like that's kind of like why we raised a little bit of money for It's awesome to have people in our corner and then to just have that layer of accountability to where it's just like, man, I'm in a freaking... Die before I fail for you kind of thing. So pros and cons. Speaker 2: Thank you for that. Super, super great insights and super helpful too. I think what we'll do to wrap up the episode is we have a few really quick rapid-fire questions. These are like fun questions that kind of come in from also the audience that watches and So the goal is to get your quickest and the fastest response on some of these and really curious to hear your response. So me and Ash will kind of fire off these and if you're ready to go. You wanna start? Speaker 3: Yeah, let's do it. What was the wildest customer interaction or DM Chubby's ever got? Speaker 1: The one I think is maybe, you know, podcast appropriate is this one actually that I got last year. So I've been out of the business for a long time. And so it was random. I get this text to my personal phone. This guy who, one of the things we used to do just for a quick backstory is like first order, second order, third order, fourth order, they each had different like surprise box inserts, if you will, with the general idea being I want to get you to that fourth order. And so have it be a surprise, have it be constantly changing. If people post and say, The unboxing, right? Then people can comment and say, oh, I wanted to get that. Well, how'd you get that? Oh, it was my third order. That whole thing. So I don't remember which order it was. Maybe the third or whatever. We would do like these cool leather coasters with the Chubby's logo embossed. You know, it's like a cool coaster for your coffee table. This guy texts me. He's like, I have these coasters and I've had them on my coffee table for the last seven years and my great Dane just ate them. Can I get some more? And I was like, that is the craziest story I have ever heard. In fact, he had those on your comp table for the last seven years. Speaker 2: Wow. Speaker 1: Cause like he was in college when he bought them and now he was doing some, you know, like he's an adult. And the fact that he still had that thing, that inbox insert and I was like, hey, can I guess? And I was like, first, dude, I've been out of the day-to-day for a long time. I don't know if we have any of these coasters anymore. We certainly do not. But he was like, oh, man, that was the coolest. That was amazing. Preston, thank you so much for sending me the product in your handwritten note. It wasn't handwritten. The first one was handwritten, and then we just made thousands and thousands of copies of it, but it had my personal cell phone number on it. The second one is one that was maybe a little bit more well-known-ish that maybe we talked about before, but it was on the day of my wedding. I shouldn't have my phone in my pocket, but this customer texts me. He's like, ah, you know, I had this problem with my order. I was wondering if you could help me out. And I was like, dude, I'm right about to walk down the aisle. But can I can I text you back when when I'm done tomorrow or whatever, maybe the day after? And he's like, oh, shit. Yeah, yeah, absolutely. I can't believe this is your actual phone number. And then she got back to me. But that was another one of the funny, funny little moments. And I guess it's representative of like be ridiculously like surprisingly close to your customer. It doesn't scale. But I think the thing that is surprising is that the signaling value of doing something like that is so surprising to people. So those are a couple. Speaker 2: It's amazing. Have you ever been completely broke while building Chubbies? Speaker 1: Uh, well, you know, when we started it, I, I was making like, I mean, I was three, four years of out of college, so I was making enough to pay rent, blah, blah, blah. But that then was the seat capital, you know, or at least my part of the seat capital and to live in San Francisco. So, you know, we were living in an apartment in San Francisco with like five people and I was like, okay, well, no more money. I got to move out of my room and rent it out to someone else. So I moved into Tom's bedroom and didn't have a bed because I didn't want to buy. So slept on a beanbag pillow for about a year in his room and So maybe that was like the most broke, but yeah, I mean, we legitimately, like all of the gratitude to our now wives who had actual jobs during this whole time, because we paid ourselves effectively nothing for like a Bay Area, San Francisco type salary for most all of the journey, you know, because it was just like, Okay, I can get an additional appetizer at Red Lobster or I can, whatever, fund this inventory. I was like, well, clearly I want to fund the inventory because I want to build a business. Speaker 2: That's awesome. Speaker 1: At least that was the thought and so pretty much broke the whole time had it not been for our wives being like legitimate human individuals who were the breadwinners. Speaker 2: That's so cool. Speaker 3: Love that. If Chubbies was a human, what would be its biggest red flag? Speaker 1: What do you mean by that? Speaker 3: So a red flag meaning like just like this characteristics where it's like, oh, I don't know about that. Speaker 1: Oh, interesting. I don't know. I mean, I'm biased, but I would say no red flags because it is like this wonderful, nice, engaging person. Speaker 2: That's the right answer, by the way. Speaker 1: And has great quads and doesn't care about how they look, but they're also like strikingly good looking with masculine feet. I'm just kidding. Like from a red flag perspective, I mean, I don't know. I guess I'll say pass on that because I'm very biased. Speaker 2: That is the right answer. Have you ever cried over your business? Speaker 1: Oh, yeah. Oh, for sure. Dude, there were some times. I guess, sad tears and happy tears. So, sad tears and having to let people go. A lot of people, like when we, because we, I talk about this, like midlife crisis that we had and there were multiple midlife crises, but these times where it's like, fuck, have we failed? You know, have we let all these people, are we going to go out of business? Because there were times when it was just like everything was going wrong and the models didn't work and blah, blah, blah, blah. So being responsible for people's salary and letting them down by not Being able to pay them really hard, whether it be to have to separate or even to, because we had to do this multiple times, had to just ask people to not take their paycheck for a month, a couple months, right? Would pay them, make them whole, but you just kind of feel like, oh man, I'm a failure for doing this kind of thing. So certainly had tears from that. I also think about like the some of the obviously the happy times too, but talking to the team, you know, after the acquisition and just feeling such gratitude, you know, that I've been on this journey freaking hard, a lot of failures, a lot of wins, but the thing that I think gets me most excited is just the way that this team, this group of people could take your business, not your business, but this movement, as I've kind of mentioned, this brand to places you just couldn't have even imagined. You know, it's just like so astounding, the power of that. So yeah, sad tears, happy tears. I'm a crier though, so. Speaker 3: Got one more for you. What would 2011 Preston roast 2025 Preston for? Speaker 1: Going to bed super early. Speaker 3: I love that. Speaker 2: That sleep score is important. Speaker 1: I put my kids to bed and I mean, and it's light here until, I don't know, like 9 or 9.20 now. And I'm going to bed before it's dark. And I'm like, dude, this is... But you gotta get your rest, man. Speaker 3: You gotta get your rest. Speaker 2: You do. I love that. Speaker 3: Awesome. Preston, well, this has been amazing as usual. So thank you for hopping back on the podcast for another go. Before we let you go, we'd love one last final takeaway for the audience to kind of chew on. One piece of advice you want business owners to implement in their business right away. Speaker 1: Yeah, I think the thing is the thing I guess I'm like on fire about now, which is just like, there are ways to find more balance in this business. And it's not just this like eroding the cost to acquire customers just like continues to go up and up inexorably over time. There are ways to just like, grow differently if we measure differently. And if we view success differently, and I guess I just like my goal with the Twitter post and LinkedIn post and with obviously with what we're building a marathon is to just help with that, you know, because I just there's there's it's possible to just like find balance and grow more sustainably if we can just kind of change some of those things. And I'm just like obsessed with like, I'm a religious zealot on that kind of thing because I just know it's there. It's scary to get there. And so I just want to do whatever I can to help with that. And so if there's one thing you can do today, it's just like, put Click ROAS into context and start looking more at like growth and branded organic search volume and like try to get your revenue from branded organic search volume to grow faster than your overall revenue. Start tracking that every day. Speaker 2: Love that. Chew on that. 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