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In this session of "Articles," we have the pleasure of interviewing Jonathan Peters, the visionary CEO and founder of Amberjack. Amberjack is a renowned brand that specializes in crafting casual and comfortable dress shoes for men. With an unwavering commitment to quality and style, Jonathan has successfully carved a niche for his brand in the footwear industry. Join us as we delve into the story behind Amberjack and explore Jonathan's passion for providing men with fashionable yet comfortable footwear options.
Chris: Hey, Jonathan! How's it going?
Jonathan: Hi, Chris! I'm doing well, thanks. How about you?
Chris: I'm pretty good, thanks. First of all, congratulations on your store. I absolutely love your shoes. They have a classy, Italian design that I really appreciate.
Jonathan: Thank you, I'm glad you like them.
Chris: Jonathan, I want to express my gratitude for taking the time to speak with us today. We are the editors of a newsletter called "Articles." We have around 10,000 subscribers who are direct-to-consumer (DTC) e-commerce brand owners, and our goal is to provide them with strategy insights, historical perspectives, and motivational articles. That's a brief overview of our newsletter. We have prepared a few questions for you. Would you be okay with that?
Jonathan: Yeah, absolutely. I appreciate you considering me for this opportunity.
Chris: Great! To start off, could you share the story behind your brand? Tell us about its history, mission, and the values that you bring to the market.
Jonathan: Sure. I worked in consulting for several years. As a consumer myself, I noticed that men's dress shoes were often either boring or uncomfortable. I wanted to create casual and comfortable dress shoes that were also stylish and exciting. When I was consulting, I found the available options to be either attractive but painful to wear, or comfortable but lacking in style. I wondered why there wasn't a cool and comfortable brand out there that combined athleticism and modern design. That's how Amberjack came to be. From a business standpoint, we aimed to offer a higher quality alternative to what brands like Cole Haan were doing. We wanted to position ourselves at a higher price point and deliver superior quality, style, and material science. While my co-founder is the former CEO of Cole Haan, I handle the day-to-day operations of the company. That's the genesis of Amberjack, and my consulting experience with prominent brands influenced our approach.
I remember one of the most striking statistics during our customer research. We asked guys about their favorite dress shoe brands and how likely they would be to recommend them, similar to a Net Promoter Score. Surprisingly, the feedback we received showed a negative Net Promoter Score for their favorite brand, irrespective of the specific brand itself. This was quite remarkable considering that typically people are passionate and excited about their shoes, clothing, or accessories. Particularly among younger guys, we noticed a lack of interest and enthusiasm towards brands in this space, even before the onset of COVID.
At that point, we realized the potential of focusing on more casual dress shoes. This concept has been further validated in the post-COVID era, where people still desire a stylish pair of shoes for their wardrobe, but the opportunity for self-expression has increased even in professional settings. This aligns well with our value proposition.
Chris: By the way, in which year did you officially launch your brand?
Jonathan: We launched in 2021.
Chris: Did you encounter any challenges when starting your brand? If so, how did you overcome them?
Jonathan: Absolutely, there were several challenges. Firstly, we spent about a year developing shoes in Korea, but at the end of that year, we realized the shoes were not up to our standards, and we had to start over. It was a painful experience as we had invested a significant amount of money and formed a partnership. The aftermath of that decision was quite messy.
Additionally, this was around the time when COVID started to impact the world. So, after spending a year on development, we found ourselves in a situation where COVID was becoming more prevalent and it became clear that it wouldn't just disappear in a few weeks. Logically, it made sense to consider postponing the launch of a dress shoe company during such uncertain times. However, against all odds, we made the decision to proceed.
We launched with a friends and family approach because we believed in getting our product into people's hands regardless of the circumstances. Our belief was that people would eventually return to a more social lifestyle, whether it meant going to work, attending meetings, or enjoying dinners out. I never thought there was an existential risk to the category; I simply believed it would undergo significant changes. And indeed, it has. We conducted our official marketing launch in May 2021, around two years ago.
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Chris: As an entrepreneur, what were the marketing channels that you initially prioritized, and how did you evolve your strategy over time to achieve significant revenue growth?
Jonathan: Initially, we raised some capital, but it wasn't a substantial amount. We started with a bootstrap approach since we didn't have a large sum of money to invest. Our initial focus was on affiliate marketing, which I believe still offers significant profitability potential. However, it can be challenging to scale. I'm referring to publisher affiliates, not influencer affiliates. It was a starting point for us because I couldn't afford to hire professionals for Facebook or Google advertising, so I was experimenting on my own. Unfortunately, the results were not significant, and I was essentially wasting money by spending only $20 per day.
So, we shifted our focus to affiliate marketing, which allowed us to pursue a purely manual approach without any financial risk if it didn't yield immediate results. This marketing channel proved to be highly profitable. As we gained momentum and generated more revenue, we gradually expanded into Google advertising. The combination of organic affiliate marketing and paid search results worked effectively in tandem. With these two channels alone, we were able to reach close to six figures in monthly revenue, translating to nearly seven figures annually.
Over time, we started exploring Facebook advertising, but it took a bit longer to figure out and optimize. Eventually, Facebook became a significant part of our marketing spending. If we had to allocate an additional dollar for advertising, Facebook remained the best prospecting channel, offering the highest return on investment incrementally.
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Chris: Understood. However, at that time, it wasn't clear that Facebook was the best channel for you. We've received feedback from many of our subscribers who are facing difficulties tracking the Facebook iOS 14 updates. Have you experienced similar challenges?
Jonathan: I'm not entirely sure. Our philosophy is based on considering the overall health of our marketing efforts, which we gauge through marketing efficiency ratios (MER). It's a metric we rely on to determine how much we can push versus maintaining break-even profitability, which has been our goal. We've never aimed to always be first-order profitable or to burn through cash. We believe that approach is ultimately a losing game, and this has proven true for some time now.
The market efficiency ratio, as a percentage of sales, has become increasingly apparent as our key focus. As we allocate our spending, we haven't ventured into a highly complex channel distribution yet. I believe that if you're generating less than $20 million a year, your marketing channel distribution shouldn't be more complicated than what we currently have, which is fairly simple, comprising just a few channels. There are economies of scale to be gained within these channels, so I think it's a mistake to diversify too early. However, becoming overly reliant on a single channel is also challenging. Within this framework, affiliate marketing is easily trackable, while Google is what it is, though they have started separating branded versus non-branded and shopping categories, making attribution more complex. Nonetheless, we have found that with a certain level of spend, there's a baseline that can be set without requiring external management. Google's setup is quite straightforward these days, fully automated, where you set your desired parameters and let it run. While you can try to extract more value, there are limits to how much you can optimize. Ultimately, Facebook remains our primary tool. While there are third-party platforms available, I'm not convinced that platforms like NorthBeam or TripleWhale can optimize Facebook ads better than Facebook's own ad platform. Facebook has its own metrics for allocating CPMs and spending, so working with in-platform metrics to optimize Facebook ads has been our approach. We've encountered challenges when using third-party platforms, even though we've worked with knowledgeable individuals who rely on them. Perhaps we're missing something, but we haven't seen the value they provide for such a simple channel setup.
Chris: That makes sense. After all, Facebook's revenue largely depends on advertisers' satisfaction. If advertisers are not happy, they won't return.
Jonathan: Exactly. I've observed people optimizing one ad set over another based on data from platforms like NorthBeam, which conflicts with Facebook's own data. I struggle with that because Facebook's ad platform optimizes based on its own metrics, which influence CPMs and effective CPCs. Therefore, we prefer to work with in-platform metrics for optimizing Facebook and consider it our primary channel.
Chris: That's understandable. One more question. What do you find most fulfilling about your job? What aspects of running your business do you enjoy the most and what keeps you motivated every day?
Jonathan: Being an entrepreneur has its pros and cons, so I want to acknowledge that it's not all smooth sailing. However, the positives are truly rewarding, especially when things are going well. It's a stark contrast to more traditional jobs in larger corporations. The ambiguity and the constant need to solve problems and figure things out every day are exhilarating. The scope of challenges is infinite, and if you enjoy that aspect of continuous problem-solving and tackling various tasks, it can be exciting. Unlike having a fixed role in a larger company, everyone on our small team is required to handle multiple responsibilities. With just ten people, we all wear different hats.
Chris: That's true. There are two paths: pursuing an MBA or building your own business and scaling it. Looks like you chose the latter. In your opinion, what was the riskiest move you made when starting the business? What was the most daring decision you took at the beginning?
Jonathan: Well, aside from starting the business itself, which is undoubtedly the biggest risk, everything else seems relatively less significant. However, I invested a significant amount of my own money into starting this business. I didn't pay myself for two years, and it was quite a financial burden. In hindsight, I wouldn't recommend doing it the same way, even if you have savings. But yeah, around two years into the business, before we even launched, I was essentially broke, relying on hourly consultations to make ends meet. It was a stressful period. Taking that risk and going through that experience is what stands out to me.
Chris: We have two more questions for you. Can you share any exciting upcoming projects or plans for your company or brand? What are your goals for this year and the next five years?
Jonathan: We have a really exciting project in the works, set to launch later this year, involving a collaboration with a prominent celebrity, a football player. Although the deal isn't finalized yet, we're in the process of finalizing it, and we're thrilled about the product and the partnership. It's been quite a challenge to develop, but it will be a remarkable addition to our brand. As for our goals, since we are still a relatively new brand, expanding our product line and enhancing the quality of our existing products are the foundation of our business. That's where we invest most of our time and effort. On the marketing side, our objective is to diversify into an omnichannel approach, which has always been our goal. For those starting in the consumer space, I believe starting with a direct-to-consumer model is great for learning and gaining insights. However, in most cases, transitioning to an omnichannel strategy makes sense. So, we're exploring platforms like Amazon, third-party marketplaces, and wholesale distribution.
Chris: Lastly, I understand that your journey as an entrepreneur has had its challenges. What advice would you give to others who are starting their own businesses?
Jonathan: Well, the quickest advice would be not to do it. But in all seriousness, the more comprehensive advice I would give is that while I'm happy with the decisions and progress we've made in our business, there are some important realities to consider. It takes a significant amount of time and effort to build a successful business. It's a process of laying each brick, one by one. You may hear stories of companies reaching $100 million in just a couple of years, but those are like winning the lottery. It's highly unlikely to happen for most entrepreneurs. You need to be comfortable with the idea of a long-term commitment.
Starting out, I may not have fully grasped this concept, or perhaps I heard it but didn't give it enough consideration. You need to think about a ten-year horizon, envisioning yourself building and growing the company over that timeframe. Are you genuinely comfortable with that? Many younger individuals have a shorter-term mindset, expecting to build a business for a few years and then sell it for a significant profit. However, especially in the consumer space, it's crucial to think long-term.
You have to be prepared for years of sacrifices, stress, and hard work. If you can genuinely accept and embrace that reality, the journey will be much more enjoyable. On the other hand, if you're constantly fixated on getting rich in a few years, it can become a painful experience because that's unlikely to happen.
Chris: Thank you, Jonathan, for sharing your insights.
Jonathan: Thank you, Chris, for inviting me.
Final Thoughts
Jonathan Peters, CEO of Amberjack, Jonathan Peters, has made a significant impact on the men's dress shoe industry by revolutionizing comfort and style.
Recognizing the lack of fashionable yet comfortable options in the market, Jonathan founded Amberjack with the mission to provide casual and comfortable dress shoes that exude style and excitement. Despite facing challenges such as a partnership setback and the impact of the COVID-19 pandemic, Jonathan and his team persevered and launched Amberjack in 2021.
To achieve revenue success, Amberjack initially adopted a bootstrap approach, focusing on affiliate marketing and gradually expanding into Google advertising. They later incorporated Facebook advertising, which became their primary prospecting channel. By closely monitoring marketing efficiency ratios and implementing a straightforward and efficient channel distribution strategy, they achieved significant revenue growth.
Looking ahead, Amberjack has exciting plans, including a collaboration with a prominent celebrity football player and expanding its product line. They aim to diversify into an omnichannel approach, exploring platforms like Amazon, third-party marketplaces, and wholesale distribution.
