Meet Kelly Watters, co-founder and president of Western Rise, who transformed a personal challenge into an innovative apparel empire. Faced with the daily inconvenience of switching between various outfits for different activities, Kelly, alongside her partner who comes from a rich textile background, envisioned a brand that would redefine versatility in clothing. Together, they created a line of apparel uniquely suited for both adventurous outdoor activities and the demands of urban life. Western Rise stands as a testament to their shared vision: a brand offering clothing as dynamic and adaptable as the lives of the people wearing it. Under Kelly's guidance, Western Rise has emerged as a go-to brand for travelers and adventurers who prioritize ease, adaptability, and style in their wardrobe choices.
Kelly Watters: Sure. I’m Kelly Waters, co-founder and Chief Merchandising Officer of Western Rise, where I also serve as the president. My journey with the company has been diverse, having previously held the role of CEO. Western Rise started in 2018, born from a personal need. My co-founder, coming from a background as a third-generation textile developer, and I were living an active Colorado lifestyle. Our busy lives involved frequent travel for work, often with high-end clients.
We faced a recurring challenge: finding versatile apparel suitable for both outdoor activities and professional environments, especially for efficient one-bag travel that's essential for international journeys. This led us to create Western Rise, focusing on stylish, classic menswear with a performance edge to fit a variety of settings. Our goal was to design clothing versatile enough for finance meetings in London, weekends in Paris, or even surfing in Portugal, all while fitting into a single bag.
The core idea behind our brand is to provide gear that enables more flexibility and efficiency in your travels.
Kelly Watters: Getting our first hundred customers was an interesting journey. Western Rise began as a side project while we were both engaged in full-time jobs. Will was in R&D at a major B2B company, and I was involved in education and operational management at a local nonprofit. We spent our evenings, from 5:00 PM to midnight, developing Western Rise and bootstrapped our way to the first million in revenue.
Our key strategy for attracting the first hundred customers involved extensive organic outreach on social media. This was a time before Facebook’s acquisition of Instagram, so the social media landscape was quite different, almost like the early days' Wild West. We worked with around 15 influencers, which helped us grow a significant following, about 20,000, on social media before we even launched our first product. This organic growth was crucial in securing our initial customer base. From there, we continued with organic efforts and gradually introduced paid advertising, later expanding our reach into other marketing channels.
Kelly Watters: Adapting our marketing strategies over the years has been all about understanding and optimizing each segment of our marketing funnel. We begin at the top of the funnel by focusing on acquiring new customer brand awareness. Then, we move to the middle of the funnel, where the emphasis shifts to educating customers about our brand and processes. The bottom of the funnel is crucial for conversion, and beyond that, we focus on retaining our customers and encouraging repeat purchases. Our strategy has been effective, as evidenced by our strong repeat purchase rate, with about 40% of our customers returning within the first 90 days.
At the top of the funnel, we continue to leverage platforms like Meta and Google, and collaborate with influencers and YouTube. We also engage in creating brand-centric content and collaborations. As we move to the middle of the funnel, our approach includes developing engaging landing pages and providing ongoing education to deepen the connection with our audience. For example, our email publication 'The Diversion', which we send out every Thursday, is not product-focused but instead centers on travel, culture, food, and music, drawing people into our community.
The marketing landscape is ever-evolving, as seen with updates like iOS 14, so staying both proactive and reactive is key. The cost per acquisition varies throughout the year, being higher in November and lower in August. Therefore, we strategically focus on growing our email list in Q2 and Q3, preparing to intensify our bottom-of-the-funnel activities in Q4. This aligns with our observation that about 80% of our customers discover us within 48 hours before making a purchase. We invest in long-term brand awareness, understanding that it often takes multiple touchpoints before people engage with a brand. Interestingly, we’ve found that our conversion rate is much quicker for over half of our customers.
Kelly Watters: While we still focus heavily on direct-to-consumer sales, about 98% of our business, we are actively branching out into wholesale. Currently, our products are featured on prominent platforms like Nordstrom and backcountry.com. Additionally, we're in the process of introducing our line to several other major retailers in the upcoming year. Another key area of expansion is our regional presence, particularly in menswear stores located in the Midwest and the South. This regional growth is an integral part of our strategy for the next couple of years.
But our channel exploration doesn't stop there. We're also tapping into unique marketing opportunities, such as conducting special promotions in private Facebook groups and various travel groups. Our team is always on the lookout for new and promising channels. Whenever we identify a potential new avenue, we assess if it aligns with our unit economics. Ultimately, our aim is to meet our customers wherever they are, ensuring that Western Rise is accessible in the spaces they frequent.
Kelly Watters: That's right. Western Rise has grown into a nine-figure business. Our path to the first million in top-line revenue was all about bootstrapping with a focus on efficient marketing and brand awareness. We relied heavily on organic growth strategies, especially since we started with limited capital. Will and I continued our full-time jobs while we were building the company, investing a significant portion of our salaries into inventory and marketing. We even used my father-in-law’s garage for warehousing and worked from our dining room table.
I remember a particular Black Friday, waking up at 4:00 AM to check our website, then rushing to pack and ship about 220 orders, each with a handwritten note, before heading back to our regular jobs on Monday.
Our journey to the first million was greatly supported by organic outreach. In 2017, we participated in an accelerator program that connected us with experienced advisors and mentors. Their insights in financial planning and marketing strategies were instrumental in helping us grow from half a million to a million dollars.
Scaling from one million to five million involved leveraging platforms like Meta and paid advertising, which was a significant turning point for us. Of course, navigating the challenges of the Covid-19 pandemic was also a part of our journey.
Our most substantial growth occurred in the last 36 months, shifting from an eight-figure to a nine-figure business. This growth was driven by identifying and focusing on our hero products in 2017 and 2018, ensuring we had ample stock to meet demand.
We also fine-tuned our marketing strategy to focus on micro-targeting. Rather than trying to appeal to everyone in a $48 billion market, we’ve found success in being more specific and focused. That's why our core target is the one-bag travel customer. Being specific in our approach has made our value propositions clearer and our operations more efficient.
Kelly Watters: Definitely. Inventory management has been a significant focus for us, and it's a primary reason why about 80% of our product line consists of core products. We shy away from a heavy reliance on seasonal items. When introducing new products, we ensure it's something that aligns well with our customers' preferences and has lasting appeal.
We've navigated through various challenges, such as the Covid-19 pandemic and logistical issues like the strikes at the port of LA. We've also experienced the need to change our warehouses multiple times and navigate different funding rounds.
A pivotal learning for us, particularly as we reached the 5 million revenue mark, was the importance of 'open-to-buy' in our inventory strategy. This involves forecasting sales and determining the necessary investment in inventory to achieve these sales targets. We operate with a flex budget, having both a conservative estimate and an upper limit, but we usually purchase for the mid-range. This allows us flexibility with our core products, enabling us to respond swiftly if demand spikes or new opportunities arise.
Understanding open-to-buy figures is essential, alongside a deep knowledge of your product styles and their impact on revenue and customer acquisition. It's about knowing which products are key for attracting customers and which ones are crucial for your financial health. This insight is particularly valuable for businesses in the sub-$5 million range, providing clarity on where to invest for the most significant growth potential.
Kelly Watters: We've pursued both paths at Western Rise. Initially, we bootstrapped our way to the first million dollars, which laid a strong foundation for our operations. During this phase, we focused on maintaining a lean approach, which often led to more efficient decision-making, particularly in team management and marketing.
As the company evolved, we decided to raise a funding round in 2018 and then another in 2022. I firmly believe in the strategic timing of seeking equity investment. It's most effective when you've established a solid product-market fit, built a strong team, and developed clear, scalable marketing strategies. Opting for equity investment at this juncture is beneficial, as it allows for investment in areas poised for exponential growth, yielding significant returns. From an investor's perspective, they typically look for a substantial return, often around seven to ten times their initial investment within a five-year timeframe.
Demonstrating the potential for these returns is vital when seeking investment. Bootstrapping in the early stages of a business is crucial as it establishes a robust base, preparing the company to successfully embrace and utilize external funding for further growth.
Kelly Watters: Sure. Last year, 2023, was an exceptional year for us at Western Rise. We had initially planned to raise a funding round, but our robust growth made it unnecessary. We achieved over 100% growth in the first half and ended the year with a significant 60% increase compared to the previous year. This not only marked substantial progress for us but also improved our operational margins by over 100%, enhancing our overall efficiency.
Our team, compact yet highly effective with twelve members, with only five outside of Customer Experience (CX), has been phenomenal. Looking ahead to 2024, we're filled with excitement for what’s in store. We're launching some exciting new styles, a result of our intense focus on restructuring our supply chain over the last two years. Besides this, our expansion plans include moving into wholesale and establishing brick-and-mortar locations, enabling us to extend our physical presence and directly engage with more customers. We're already strategically planning for 2025, with several significant developments on the horizon, some of which we expect to roll out in the next few months.
A notable change for us is the shift from being fully remote to setting up a physical office space. This move will mark a new chapter for Western Rise, bringing our team together in one location for the first time, an exciting evolution from our long-standing remote work model.
Kelly Watters: If I were to give two key pieces of advice, it would be, first, to really know your numbers. The importance of having a capable finance team for financial projections cannot be overstated. It's a crucial aspect we should have focused on earlier at Western Rise, and I strongly believe it's something that can't be emphasized enough for new entrepreneurs.
Secondly, don't go through this journey alone. Being a founder can often feel solitary, but there are many experienced founders out there who are more than willing to offer support and guidance. It’s important to find advisors and mentors in your field, people you can turn to for advice and guidance when things get challenging or when you're facing uncertainty. You don't have to reinvent the wheel; having a network of people who understand your situation can be incredibly valuable, especially on tough days.
In essence, thoroughly understanding your finances and building a network of advisors are my main recommendations for anyone starting their own brand.
Chris Choi: That’s excellent advice, Kelly. Thanks so much. That's all I have for today.
Kelly Watters: Alright. It was great talking with you, Chris.
