How I Started A $1M/Month Business Selling Custom Socks
Hello! Who are you and what business did you start?
Hi, Dane Jensen here, my business partner Noah and I run Sock Club. Our flagship product is socks of course. We started Sock Club as a monthly subscription where we would deliver a pair of unique socks to our customers every month. As we’ve grown we’ve developed a manufacturing supply chain here in the United States. Having the ability to make our own socks made it possible to enter the new market of custom socks. Now making custom socks is 90% of our business and the subscription 10%. Last year we did $12M+ in revenue and we plan to do more than that this year.
What's your backstory and how did you come up with the idea?
I was living in Austin, TX running and biking around being a twenty-something-year-old working as a web developer. At the time when I started Sock Club, I had a few failed startups under my belt. I built Camm Security Inc., a cloud camera company, and GitHire, a software developer recruiting service, with co-founder Rhett Creighton. So, I had acquired some software development skills and some sense of what’s important in starting a company.
I built the website for Sock Club over a weekend in kind of a flash of inspiration.
Birchbox had been a big subscription success and I thought that socks were an item I wouldn’t mind receiving monthly and having more of. After I built the website,I kind of forgot about it for six months.
When I checked back in, people had found the site and tried to sign up. The page after you signed up just said something like “we aren’t shipping socks yet but we’ll let you know when we start”. From my previous experience of starting companies and trying to get customers, I knew this was rare.
If you have an idea the market wants, you will have lots of competition. Competition is a constant, even for a niche idea.
So, when my friend Noah mentioned he would be interested in starting a company with me, I told him I had this idea that we could run as a side project. He was working at a finance company in Austin and I was still working as a web developer, so we didn’t quit our day jobs, but we would work on Sock Club on nights and weekends. Sock Club grew gradually and now we’re 30+ professionals in Austin designing and selling and manufacturing socks.
Take us through the process of designing, prototyping, and manufacturing your first product.
My business partner Noah Lee could definitely talk about this in more detail than I can. When we first started we would buy wholesale from other sock brands but we quickly got to the scale where we needed to manufacture our own socks. North Carolina, where Noah is from, has a rich textile history, and having this connection was a huge advantage. Noah pounded the North Carolina hills and built our supply chain.
Manufacturing quality socks is a long process. Here's a simplified view of what happens. Cotton grown in the southeastern United States is shipped to our spinning facilities which spin raw cotton into yarn. Our yarn is sent to our dyehouse which dyes our 40+ unique colors. Our dyed yarn is sent to our knitters which uses modern Italian knitting machines to knit the yarn into a sock. The knit sock is sent to our fulfillment center to be boarded (washed in very hot water, etc.) and packaged and then shipped to the customer.
Describe the process of launching the business.
Launching Sock Club has been a super gradual process. I feel like we are still launching Sock Club. Jeff Bezos has a great saying: “it’s always day one.” You have to be as hungry and competitive for an opportunity as you were on day one. I try to think about that every time a new opportunity comes across my desk. If this was day one, would I jump at this opportunity?
Noah and I have also become experts at convex optimization (a stolen term from Nassim Taleb), which basically means making improvements that can only help your business and definitely don't have any negative impact. When we launched Custom Socks by Sock Club (the custom arm of our business which is 90% of revenue now), we didn’t give up on the Sock Club subscription. We made an effort to make sure it took a little of our time as possible so we could focus on custom.
In running a business that makes a physical product, you learn why MBAs exist.
Sock Club was completely bootstrapped and has always been profitable (excluding the cost of our time). We did everything we could ourselves. We packed socks for shipments. I designed, wrote the copy and built our website:
We did our own product photoshoots and product photography. Noah handled our finances and taxes and built our supply chain. Often we did stuff ourselves that we weren’t good at. It could have been easy to find someone better to do it for a reasonable price, but we learned so much by doing everything ourselves it was definitely worth it.
Since launch, what has worked to attract and retain customers?
We don’t do the best job with the analytics of our traffic so I can’t give you hard facts about where our traffic comes from but I think the marketing channels that have been best for us our SEO, Google ads, Facebook ads, email newsletters, radio ads and trade shows (not necessarily in that order). Most of the acquisition comes from the free channels of SEO, past customer reordering and word of mouth. When starting out to gain distribution (aka customers/market share) you really need to pound the pavement and do things that don’t scale. On the internet site, to get customers and SEO distribution I used my favorite free tactic a lot which is posting good content to content aggregators like Hacker News, Product Hunt, and Reddit. It takes some work to make something that those communities will like but if you do you get a big return on the content. To learn more about this I think priceonomics.com made the best resource on content marketing -> The Content Marketing Handbook. We also pounded the pavement in the person going to tradeshows and getting on reps in on perfecting our sales pitch. It worked perfectly for us because our product is made for tradeshows.
Also, I think understanding when you need to sell harder than normal is important. Our business is super seasonal because, for the most part, we sell gifts so we run email campaigns, radio ads and lots of promotions around the holidays like Father’s Day, Valentine’s Day and Christmas.
My advice for marketing would be to do all the free stuff you can, and Google and Facebook are the main avenues to buy customers.
How are you doing today and what does the future look like?
Sock Club has been profitable from day one. Most of our distribution is from Google and tradeshows. For our custom socks sales, we use the Hubspot CRM with a lot of custom modifications to fit our industry.
Our operations department is constantly changing the software to keep up with our growth. Operations at Sock Club has the super difficult job of managing our supply chain and making it easy for our sales and design team to enter orders and know the status of their order. When we started custom, we were only doing a few orders a week and could keep track of everything through Trello. From Trello, we grew to try Airtable and then built a custom app in Zoho. The next step for operations is custom software built off the popular open-source application Odoo.
Right now, Sock Club is focused on being number one in custom socks. When people see a custom sock or want to order one, we want them to think of Sock Club first. After we win custom socks, we want to see if we can bring the processes we use to design and manufacture socks to another product.
The internet is such an echo chamber the pressure to cargo cult and do the things that you think successful startups do instead of doing the things your customers want.
Through starting the business, have you learned anything particularly helpful or advantageous?
I’ve learned so much by starting a business. I believe business is the best way to put theory into practice. Business, unlike anything else, will weed out the ideas that don’t fit reality. I think Warren Buffett or maybe it was Patrick Collision talked about business being applied epistemology and that’s how I think about it now.
Here’s a subset of the things I’ve learned from Sock Club that might be useful to your readers:
- If you have an idea the market wants, you will have lots of competition. Competition is a constant, even for a niche idea like a sock subscription. I could probably list 20 sock subscription companies off the top of my head. I know this idea is widespread, but it’s one thing to hear, and another to feel it when your competition starts eating up some of your market shares.
- This is like a corollary of the above point but if you don’t strike on an opportunity someone else will. I’ve seen lots of my ideas and opportunity better executed by other businesses. Business is mostly execution, not mostly ideas.
- I used to think business was all products. Seeing the success of internet companies like Google and Instagram building product with only a few engineers that can reach billions of people, I thought that product was everything in business. But in running a business that makes a physical product, you learn the other side and why MBAs exist. Business is also very much about managing people. Managing people is hard. I believe everyone has self-interest, so you have to figure out how to align personal goals with the goals of the business.
What platform/tools do you use for your business?
- Ruby on rails
- Excel
- Mac OSX
- Oh my ZSH
- Github
- Hubspot
- Shopify
- Workflowy
- Pushbullet
- Slack
- Calendly
- Indeed
- Zoho
- Odoo
- Zapier
What have been the most influential books, podcasts, or other resources?
Shoe Dog - if you want to go far, focus on building a team.
Everything Ycombinator puts out - That community just has a very rational approach to business and cuts through the BS and figures out how to build something people want.
Derek Sivers blog - Importance of customer service and execution.
Creativity Inc - We went through a tough period last Fall/Winter of exponential growth that we weren’t necessarily prepared for. I got this book for all of the Sock Club employees as a Christmas gift. It includes great advice about scaling a business and investing in your employees.
Advice for other entrepreneurs who want to get started or are just starting out?
I think the internet is such an echo chamber the pressure to cargo cult and do the things that you think successful startups do instead of doing the things your customers want is a mistake everyone makes from time to time. You have to think from first principles and listen to your customers, which is easier said than done.
Speed is so important. And the trick to being fast is focusing so hard on a few things that you don’t do much at all. Everyone talks about focus, but no one talks about the other side that being fast means not doing too much. I learned this trick that being fast is about not doing much from Hacker News.
I remember someone posted a blog to Hacker News about how they spent a year trying to make a faster grep (one of the most important Unix commands) and he/she just couldn’t do it. In the comments the creator of grep commented that the trick to making a fast program was to make the pro not do much at all. That kind of stuck with me. I think the same idea can be applied to business. It’s related to the idea that Steve Jobs talks about where good design is about saying no to a million good ideas to get to a great idea.
Are you looking to hire for certain positions right now?
We’re always looking for great people. We’re in Austin so if you’re around come see us. Right now we’re looking for Web/Software Developers, Designers, and Account Managers.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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