True Classics, launched in 2019, is the fastest-growing online direct consumer brand ever – it has been profitable from day one – 

• With a startup capital of $3000, 
• now $150 million in revenue,
• now a business valuation of around $700 million,
• Year one – $15 million revenue, 
• Year two – $90 million revenue, 
• Year three – $150 million in revenue

Startups in the online retail space have a standard toolkit approach for verifying if they have market fit. 

Test and see: growth or not. Do they have the right products, pricing, distribution and strategic narrative? 

The test-and-see goes something like this, 

• Find a product(s), 
• Build a landing page(s)
• Create a range of advertisements and social media posts -using video, fixed and animation, 
• Create some User Generated content, some animation, 
• Spend money on paid advertising to drive initial traffic today that is around the $10,000 to $20,000 mark, 
• Focus on the data analytics – Cost Per Acquisition, which messaging resonates, what audiences are getting the best results and so on,  
• If there is product market fit – it’s profitably working, you scale up. If not, you cut your losses and 

 

True Classic – an online, USA-based business, men’s clothing brand, did just this. Ben is the founder and now President of True Classic. 

He launched a few years ago with a $3000 budget – today, revenue is $150 million. 

 

From day one – True Classic was profitable. 

Within a few months, their revenue was around $50,000 a month. Around this time, they knew True Classic would be a significant business – quickly. 

 

How did True Classic grow so fast and profitably, and can these insights be applied to those businesses that follow?

Product

• The first product was a classic t-shirt that had to meet the minimum requirements of looking fantastic on a guy – a best-fitting shirt that’s super comfortable.
• Meets an accessible price point – lower than the market, 
• The business’s Purpose – make everybody look good and feel good. 

Get ready stage

Ben was part of the Facebook Disruptors Program (Top Gun School for Facebook) – first. Each cohort has about 80-90 people who get to learn everything from Facebook about how to grow a business fast. 

It is a very analytical approach – he learnt more about 

 

• RoAS – Return on Advertising Spend, 
• PRoAS, Profitable Return on Advertising Spend, 
• The contribution margin from each sales channel,
• The financial payback period for net new customers, 
• How much to spend on paid search for it to be statistically relevant for decision-making,  
• Ensure data always informs your decision-making,
• Be aware that many data analytics tools are not accurate and how to deal with these issues,  

 

Ben makes an interesting comment about paid advertising and Meta – about 330 million businesses worldwide, and only 10 million use paid to advertise. 

Marketing Insights from True Classic 

The cumulative expenditure on advertising now exceeds $100M. 

• True Classic has acquired over 2.5 million unique customer emails and almost as many phone contact details. Communicating with and getting repeat revenue for almost zero cost (mobile SMS and email) provides an enormous PROas return.
• Meta – Facebook and Instagram alone are about half their marketing budgets – in some months, the share moves to 80%. 

Product adjacencies 

As business took off like a rocket, True Classics spread its product mix into new adjacent markets.

Their belief was – what we did for guys with shirts could be done with 

• jeans, 
• activewear, 
• chinos,
• jackets 

Ben looks at profit per new customer as his key performance indicator – Ben says he takes into that equation every direct cost. Including

• contribution margin – which includes the expected return on the cost of the goods sold, 
•  the cost how of how many customer tickets are going to generate,
• how much will advertising cost,

He wants a single net-net cost per item. Why?

Ben is willing to 

1) break even on the first customer on their first order to enter their true Classic Community,

2) he is even willing to lose a couple of dollars based on the idea that you understand your cohorts well enough that these people will become profitable later,

His daily question is – how much can I invest right now to invest into gaining a new customer?

The quest is to keep finding new ways to scale the business higher and higher through 

• breakthroughs in creative advertising, 
• breakthroughs with technology, 
• breakthroughs with improving landing page performances – right pitch and headline hooks, 

The insights and conversation about True Classic will continue. 

 

Regards

David