How and when did the business get started?
That's a great question. It's a really long question and so I'll tell you some key elements. When I was a kid I worked at Neiman Marcus. It was my first job I really liked and I got really into men's suits. And so that was kind of always in my D.N.A. - I love men's suits. When I graduated college in 2008, I was a finance major and I couldn't get a job anywhere because it was like the height of the great recession. I ended up just kind of traveling the world and day trading and again I kind of got reconnected with suits because I was based in Asia and I saw how cheaply you get suits made for. And so all this kind of went into when I went to business school my entire focus for business school was starting a custom suit company.
How Menguin got started really is me and Kurt and this guy named Michael working on the custom suit company idea. And it was a school project, so kind of a fantastic school project right? Well, one weekend Kurt had a really bad experience when he rented a tux for a wedding. It took him like a combined ten hours to rent the tux. He came in on Monday and we were doing our standing weekly meeting about this company that we're working on the business plan for. And he's like 'I just had the worst experience of my life.' We were in Bloomington which is about an hour and twenty minutes to the Joseph A. Banks in Indianapolis, which is where he had to drive back and forth three times to get the suit. He went to the wedding and he hadn't tried on the tux before the wedding and when he put it on, he looked like an idiot and you know, the bride yelled at him; it was very unpleasant you know, he didn't look good for the pictures.Then when he went back to return it the Sunday after the wedding they were closed. He still had everything in his car and had to drive back to Indianapolis again Monday to return it. We were just kind of like 'wow, how is it so bad?'
From there, we did a bunch of research. We got some academics to gather some sentimental research for the industry, we were really by the book about that, and we found out it had an 84% negative sentiment and like 9% neutral and the rest was positive. So no one likes that industry basically, except for like 7% of people. So it's pretty wild. And so that gave us the feel to start something. When we looked at Men's Warehouse and a few other big companies 10-K's, we saw they were making 80%+ gross margins. So this was a consumer business that had a software-like gross margins and that was really exciting for us. And so that's kind of when Menguin was born. We were able to solve a problem and hopefully make money in a competitive environment where the incumbents weren't very incentivized to come after us because they're making so much money.
What are a few struggles that the business had in the beginning and how did you overcome this?
What's really hard for any entrepreneur is managing risk. For us, all of us were leaving business school with spectacular job offers and we all wanted to do Menguin. So to manage that risk, we didn't feel it was necessary to go all-in. I got a lot of flak for that from people like Mark Cuban, for example, and that was one of our hardest challenges early on was managing a 9-to-5 where you're supposed to be high output and then, you know, being an entrepreneur at night where it's also extremely high output. That was really hard to manage. That was the biggest challenge and I'm glad that we overcame that one by just grinding it out every day. I'd come home from work, I'd run, and then I'd start my next work day - and I did it every day. In 2014 we did like $40,000 in revenue, so not that much money. That's when we all decided to go full time. I remember Bogdan and I would wake up in the morning and see we got an order over night and I would be like 'oh man, making money in our sleep.' And it would be like nothing. And so it's kind of funny but anyway we decided that year that we had at least some product-market-fit and that we would regret it later if we didn't go all in and so that's when we all quit our jobs. I just had my first daughter and so it was really stressful to leave this really great job at Delta that was paying me absurdly well to go and and move in with my parents with my wife and child, which is pretty insane to think about now. But that's that's what we had to do.
Who helped you the most in the beginning?
I would have to say that it was Bogdan and I think we helped each other. Looking back, we pushed each other a lot and we kept each other honest. I wish it was some fantastic, celebrity entrepreneur. Scott Dorsey was really helpful early on. He helped me frame a lot of things and helped me as a leader. But really, it's internally as partners we had to get the fires going and we worked each other pretty hard. That's the most meaningful relationship inside the company.
Why did you pick Fayetteville to grow your business?
Fayetteville wasn't even on our radar. We were located in Atlanta trying to raise money and talking to Silicon Valley Bank a lot. They were like, 'have you met this guy John James?' We're like 'No, who's that?' Turns out, it was this guy in Arkansas who made a bunch of money selling cowboy boots on the Internet and we thought well, that's a niche and that's interesting. We love to go against the current, so we got on the phone with him and then came to visit. We came here to learn from John, but what kept us here was that the community was so welcoming. It was just unbelievable almost; the level of love we got for just giving Fayetteville a shot. There's a lot of other great reasons why too. It's an awesome place to live. It's beautiful. The air is clean. It's safe. A lot of things that Atlanta isn't, where we were coming from. Also, the cost of living is very low. We can hire people here and they can have meaningful lives for less. I was just in San Francisco this morning and if you make $100,000 there you are barely getting by. Here, you can basically pay three people $100,000 and they're all going to live fairly comfortably. It's pretty wild.
What makes Fayetteville a business-friendly city?
It's really a city that's been built on business and the entire region has been built on business. You have the biggest revenue company in the world down the street and so I just feel like that sets off an environment that's fairly business friendly. But the actual reason why it works so well for us and for a lot of the other entrepreneurs here is that it's a community. We care for each other, we look out for each other, and we're all-in to help each other. We want Fayetteville to be better. If the startups here that are pretty successful right now were in more mature markets like New York, San Fran, and San Jose, we'd all be stealing employees from each other. We don't do that here. We're all in groups together where we're trying to get more talent here but we don't try to take talent from each other. The dynamic that's starting to develop here could really bring this region to special heights. It's people collaborating together with the community mission in mind.
What is it about the people who live in Fayetteville that make it a unique place to do business?
I feel like people are more kind in the South in general and in the Midwest too. I love New York and I love L.A. and I love San Francisco, but it's a certain type of person that really thrives in that environment. I think a lot of people here thrive in that environment too, but here it's not really as adversarial. People are really nice to each other and it feels to me like America should feel, if that makes sense. That's why I like it so much. I just feel like people are nice. I've been all over and honestly, I've never had closer neighbors. My whole street all talks to each other and it's almost weird; I first moved here and I felt like I'm in a sitcom or something like that. People are warm and I think that's what it is, people are down to earth. I guess it feels like America should.
What makes the business successful and why does it work?
Menguin is totally built on relationships. I've tried to figure this out because I've watched companies succeed and fail and I'm always curious what makes this one different than the next. We really try to make our customers happy and it gets harder and harder every year because there's more people it's more coordinated, but that's number one. We really invest in relationships with the community, with our investors, with everyone. That's how we got this deal with Target. Bogdan went and started making friends at Target and next thing you know we have one of the biggest retailers in the world as a partner. You see the companies that invest in relationships with employees, investors, customers, vendors, and partners end up creating value.
What would you tell someone who is on the fence about starting a business in Fayetteville?
Just do it. Most businesses fail because people don't do anything and they don't give themselves a chance to succeed.
What does the future of your business look like?
If everything goes according to plan, we want to develop the best wedding consumer brands. When we launched Menguin we didn't even know we were in the wedding industry. We were just trying to be like a male version of Rent the Runway, but it was very clear very quickly that we were in the wedding industry; 90% of our customers are brides. When we started looking into the wedding industry and doing a lot of bridal shows, we've seen it's an industry that's never been consolidated. It's a place where we can use technology, brand, and service to build really great companies like we've done with Menguin. The long term recipe is for us to attack more wedding verticals. That's how we get to be a multibillion dollar company. Now a lot could happen between now and then, but that's the dream.
How will Fayetteville help you reach your business goals? (To be a multi-billion dollar brand)
I hope the community will continue to support us. One of the things that I really want to do is partner with other great companies here and do coordinated recruitment efforts. Menguin is trying to recruit talent here. Can we build a billion dollar company here? I mean it's been proven that a few companies have. It certainly would be awesome if we can pull it off because the costs here are low and I think people will be happier here than they would be in New York or San Francisco, at least people that are over 25 or 26 and that have kids and stuff. What's missing in this community is there's a lot of great people, but there's not a lot of great developers so we need recruitment to bring them here.
At the end of the day, what keeps you motivated to keep going?
I'm very competitive. I think that this has to be intrinsic. If you're motivated by money, or just having a big company, or I don't know something like that, it doesn't work unless you maybe get lucky. The thing that I've noticed is people who do the best are the ones who are doing it for intrinsic purposes. For me, I just want to win. Every day I try to make Menguin a little better. I go to the office every day like it's war. We don't ever pat ourselves on the back. The Target thing was sort of a champagne moment, but we didn't really celebrate it at all. We're always trying to move on to the next thing and it's not because we're not satisfied with ourselves or we think we're unsuccessful or anything like that. It's just because the journey is worth so much more to us than the destination and that's what has helped us significantly.