How HatLaunch Leveraged Clearco’s Non-Dilutive Funding and Scales to $10M

===

[00:00:00] Robert Hamm: We're spending two, 3,000 a day on ads, like. In 30 days, you know, it's a hundred grand that you can float instantly 30 days by offsetting it onto a capital partner. Like Clearco. And in where we were growing and where we still are and growing a hundred grand, that's like, it's huge, but we can take that and use that to grow the business.

[00:00:23] Robert Hamm: And like, that's literally what I've done every single time we get in these growth phases where we bring in the work through advertising and then we through effective advertising, you know, across the years of running ads, two X is not good, but better than nothing. We get three or four Xs is what we're comfortable with.

[00:00:39] Mhm.

[00:00:44] Andrew Curtis: So first off, I really liked his discussion of, Clearco as a source of non-dilutive capital, right? So he's not giving up part of his business. Not giving up equity ownership in order to, fund marketing spend for HatLaunch, which is great, right? Our job is to find companies like Robert and Tyler's that are healthy and growing well. And that need fuel for growth. And so we love to be that kind of capital.

[00:01:14] Kunle Campbell: So on this episode of the 2X eCommerce podcast, we dive into the dynamic world of capital management and growth strategies with insights from the innovative team at HatLaunch and Clearco.

[00:01:24] This is the 2X eCommerce podcast hosted by Kunle Campbell.

[00:01:31] Kunle Campbell: Welcome to this week's episode of the 2X eCommerce podcast. I'm your host Kunle Campbell and today we have an exciting discussion lined up for you. We'll be exploring the intricacies of scaling a business through effective capital management and strategic marketing. Joining us are Andrew Curtis, who is the CEO of Clearco and Robert Hamm and Tyler Smith from HatLaunch. Robert is the founder and Tyler is the CFO and credit controller of HatLaunch.

[00:02:00] Kunle Campbell: They'll share their invaluable experience on leveraging capital for growth, automating processes, and diversifying revenue streams to build a resilient business. So whether you're just starting or looking to scale your operations, this episode is packed with actionable insights. You just don't want to miss related to.

[00:02:21] Kunle Campbell: Finance access and short term finance to an even long term finance towards scaling up your eCommerce brand. Before I let you go, make sure you follow the 2X eCommerce podcast on your preferred platform to stay updated on future episodes and help us bring more interested guests on the show. Now let's get into the conversation.

[00:02:44] Mhm.

[00:02:47] Kunle Campbell: Oh, this episode is a big one. We have three guests. We have Andrew Curtis from Clearco, Robert Hamm from HatLaunch, as well as Tyler Smith from HatLaunch. I just want to welcome you gentlemen to the

[00:03:04] Robert Hamm: Thanks for having us excited.

[00:03:06] Tyler Smith: Thank you.

[00:03:07] Kunle Campbell: Fantastic. Now, one of the reasons I wanted to record this episode was to get the full scoop of the HatLaunch story, Robert, I watched a YouTube video about your journey with, HatLaunch. And I have to say it was very interesting. Emotive. And there's a quote I think is from Marc Andreessen who says you only ever experience two emotions in business, euphoria and terror. And I think that very much aligns with your story thus far. So I'm going to give it to you to essentially share your story with the audience. Thank you.

[00:03:46] Robert Hamm: Started 2018 me in my basement. I started life as a software engineer, so I'm a programmer at heart and you'll see on my shirt, it says delegate, automate, innovate. Those are the three things that I live by. [00:04:00] Delegate is getting help.

[00:04:01] Robert Hamm: That was the first step I had to do to really start growing my business. But then to be able to scale it, how we have over the past years, you have to automate things and anytime there's a task or something that needs to happen from a person that you've delegated to need to automate the task as much as possible so that a few amount of resources are needed to actually get that task done and then innovate.

[00:04:23] Robert Hamm: That's where I'm in an industry that doesn't use much technology and we are literally writing every single thing, every process that our business goes through for. Checking inventory, getting an order through production, the artwork management, customer service, the actual front end website where people order the products, that's all custom coded in house by us, by me.

[00:04:43] Robert Hamm: And now I have a small team of developers with me too, but that's how I built the business. But with that comes needing capital and you can't scale to 45 employees [00:05:00] and now a 60,000 square foot warehouse that we're renovating and moving into now without having access to capital.

[00:05:07] Robert Hamm: And that has almost been probably one of the hardest and most frustrating parts about this journey is finding the capital, securing it and utilizing it for growth. And that's it's been in the trenches since day one constantly looking, finding it. When I first started the business.

[00:05:31] Robert Hamm: We were using PayPal as our pay, our credit card payment processor, and PayPal actually had a working capital program where based upon your monthly revenues, they would extend new capital that would get repaid in a daily remittance. And we've utilized that for the first 2 years, and at the height of that, we're actually taking almost 200,000 and repaying that in 3 months.

[00:05:56] Robert Hamm: And the fees there were anywhere from seven to ten [00:06:00] percent. But we were basically, we could get a chunk of capital that we could then use to buy equipment, inventory, hire staff, or actually expand physically our operations and our buildings. So that's, that was our first go at getting a kind of a revolving line of capital that we could rely on.

[00:06:21] Robert Hamm: That kind of went into shambles when we switched payment processors. Which, funny enough, it was a payment processor that PayPal owns and promised us wouldn't cause this issue, but it did. But it was a bandaid we ripped off and now we're no longer using PayPal working capital and we have a great local bank here that's helping us with a little bit of capital as well.

[00:06:41] Robert Hamm: But to kind of offset that, but at that same time that we're utilizing PayPal Clearco came along and your product back then was a very similar daily remittance. It was an ad spend typically like a card almost that you'd put the spend on and you get pre-approved for a certain amount. [00:07:00] And we were doing that and we had PayPal working capital and Clearco going at the same time firing on both cylinders.

[00:07:07] Robert Hamm: And it was great. Like, cause you know, when we're spending two, 3,000 a day on ads, like. In 30 days, you know, it's a hundred grand that you can float instantly 30 days by putting it on, you know, offsetting it onto a capital partner like Clearco. And in where we were growing and where we still are and growing a hundred grand, that's like, it's huge, but we can take that and use that to grow the business.

[00:07:36] Robert Hamm: And like, that's literally what I've done every single time we get in these growth phases where we bring in the work through advertising and then we through effective advertising, you know, across the years of running ads, two X is not good, but better than nothing. But we get three or four Xs is what we're comfortable with.

[00:07:53] Robert Hamm: And at that rate, we know our margins and we know we're profitable at a three or four X ROAS or what we spend. [00:08:00] And it's almost a dial that you can turn and bring more business in. Hard part for us is once we bring that business in, We have to afford actually physically growing the operation because we do everything in house.

[00:08:11] Robert Hamm: So finding the people, finding the equipment, finding the space, and then through COVID. Finding the sorry, I curse. I don't want this to be G 13. It'll be cheap. I get emotional. It's very trying times, but through COVID getting hats, that was almost impossible. And you guys were also doing inventory financing too at the time.

[00:08:35] Robert Hamm: So we were able to also utilize some of the capital for inventory financing. Although most of it went towards advertising spending. But yeah, just being remaining scrappy. We're still scrapping today. We're still, and that's why we're back in the, we'll be hostile with their go, we can take our ad spend and float it out.

[00:08:53] Robert Hamm: And yeah, granted we do end up spending a little bit more on it, but you know, six, seven, 8% [00:09:00] is way cheaper than giving an investor a portion of my business when we go from. One to 2 million to 4 million to 8 million to hopefully 10 plus million this year. Hopefully more than that, but I don't really want to double the business again right now with everything going on.

[00:09:14] Robert Hamm: But, you know, there's, it's and you look at through that lens and that's how I always have to look at it. It's like, is spending 8 percent more on ads worth not giving away 10, 20, 30 percent of our business and the resounding result that is, Yes. I will do it all day, every day. And I don't want to give up my business.

[00:09:35] Robert Hamm: I don't want to answer to anyone else. I want us to do this ourselves. I want to remain customer funded. I think it makes us a stronger business. We have to be scrappy. We have to execute. We have to use our capital in a do or die fashion and not waste it. And that's like, I can get on a tangent about what I think about venture capital and where a lot of the money goes and how much waste there is.

[00:09:55] Robert Hamm: And how funny it is when a hundred million dollar company goes out of business. That's not [00:10:00] funny. And it's not funny when businesses go out of business. When you have that much money and you can't execute it, it's like, Oh my gosh, guys, what are you doing? But that we can save that for a different podcast.

[00:10:13] Robert Hamm: We have to execute pinpoint with how we execute our funding because we have to we can't afford not to, and having a partner that really understands and has locked step with us and what we do and understands. How we're different than anyone else.

[00:10:29] Robert Hamm: If another hat company came to you guys for capital, you need to know why HatLaunch is what, who we are, because we're not just sending hats out the door. We're more a tech company than we are a custom hat. And that's we approach every single part of this business with tech first.

[00:10:49] Robert Hamm: And we're still at the ground level with where this needs to be and where it's going and having a partner to rely on capital so that you can [00:11:00] fund and execute that growth is extremely important. And it helps me sleep at night. And then about a year ago, I brought in my buddy Tyler here who has financial experience to be like, all right, buddy, here you go help me get some capital.

[00:11:16] Robert Hamm: So I have to stop thinking about it and let me do the code. And right now a construction project and get this thing running so I can focus on the stuff that I'm really good at. And yeah, it's thank God he's here. Thanks Tyler.

[00:11:33] Tyler Smith: Anytime. I'm glad I can shift that that grief off your plate there. And you can focus on what you do best and whatnot. So I don't know if we talked about the Lamborghini yet on the recording. I think that was pre recording, but just kind of show like

[00:11:47] Robert Hamm: Oh yeah. Yeah. And

[00:11:49] Tyler Smith: how we're very different. Robert likes to drive nice cars, Lamborghinis.

[00:11:53] Tyler Smith: Teslas, I've got a nice 2015 Chevy Malibu out in the parking lot right

[00:11:57] Robert Hamm: Tyler,

[00:11:57] Tyler Smith: [00:12:00] mindset

[00:12:00] Robert Hamm: he texted me last night. He's like, you know what? I should be ordering my clothes from our distributors. I can get a shirt for like four bucks.

[00:12:09] Tyler Smith: I'm

[00:12:10] Robert Hamm: I think I just bought my first 200 pair of pants the other day from Nordstrom. I don't shop at Nordstrom, but I did it. I used a gift card from our American express account, but yeah, it's No, The differences

[00:12:25] Tyler Smith: I'll get a nice 80 pair of jeans But if I can get a blank t shirt for two bucks versus paying 20 bucks at a retailer, then yeah, I'll do the same thing

[00:12:34] Robert Hamm: You want your finance guy to be frugal

[00:12:36] Tyler Smith: Right. Right. Everyone on a level, you know on a swivel, off the swivel and whatnot. So, yeah.

[00:12:46] Kunle Campbell: Exactly, that's my point. Exactly. You want him to be frugal as possible. And no, just going, thanks. Thanks Rob. That was, really interesting detailed and it just gives us a really good [00:13:00] way precursor to, to essentially always finding a bit of leverage. This is a time leverage.

[00:13:06] Kunle Campbell: Yeah. You spend, you know, 100 K plus on, on ads and you don't get to to, to essentially paid back till it's about 30 days which buffers and you're paying, you know, six, seven, 8%. And you're essentially getting the required ROAS. From the money. So your money is actually working for you, which makes sense.

[00:13:30] Kunle Campbell: And I also love your concept around delegate automate and innovate, which sort of connects us to Tyler because you've delegated finance to him. He's probably automating and innovating now in, in that respect. So Tyler onto you, what did you. What did you inherit, you know, from Robert and how are you further sort of making it more efficient finance,

[00:13:58] Tyler Smith: Well, having [00:14:00] solid accounting reports and whatnot, so we have monthly P&Ls, balance sheet, cash flows, accounts payable, schedules, like all the things that you'd like to see, like in a robust finance department. Like that's something that I am trying to automate and integrate into this year because I think it definitely paints a picture as far as how we're performing from a financial standpoint and and then how that goes hand in hand with our operations, with our advertising, all those things.

[00:14:31] Tyler Smith: I think it's a key, crucial thing to have a very sound financial picture painted for Robert for our other leadership group here as far as how we're performing as a business. So, you know, that's something that I like to give myself a lot of credit for is that is something that I have brought into here and helps answer a lot of questions for Robert as far as what should we, you know, what should we allocate our resources to, what should we allocate capital to and all those things and whatnot.

[00:14:58] Tyler Smith: So [00:15:00] From the right at the get go. I mean, first thing was bringing on board like a, an actual bookkeeping system. So Robert had something that he had a custom built because he likes to custom build everything into its website. And it was great. Cause it told Robert like, Hey, I was the least profitable this month.

[00:15:16] Tyler Smith: Like it didn't, I don't think it had everything built into there, but it got enough answered for him to know that he was doing things. He was on the right path, but from like a true, like, you know, gap compliance, all those things that we'd need to give to our bankers, our accountants for tax preparation, all that stuff.

[00:15:34] Tyler Smith: It didn't really fit the or didn't really meet that threshold really. So that's something that I have cleaned up a little bit. So, but I mean, he's a software guy, he did what made sense for him. And, you know, when you are building a business and doing everything, you're scrapping everything together, you're going to make do with what you have kind of thing, and so.

[00:15:51] Tyler Smith: And you know, that's why he brought me on it to make sure that everything is financially sound and whatnot. So, so that's what I would say was step one was getting [00:16:00] everything really buttoned up nice and neat, making sure that our vendors are paid on time. Making sure that we have a good cash forecast.

[00:16:09] Tyler Smith: So that's something that given that we are a hundred percent customer funded. I have to be really on the dial as far as what our cash outlook looks like. And that's something that is great by utilizing Clearco is that I can finance these invoices. And I know on a weekly basis, what's going to be allocated from our cash towards those invoices, towards those payments.

[00:16:32] Tyler Smith: And yeah, it's great. Like when we were using PayPal working capital is that you just got this big chunk of money thrown at you, and then you have a few months to pay it off. And then you have some few hundred thousand dollars that you can allocate towards down payment on equipment, hiring new staff, buying up on inventory, all that stuff.

[00:16:48] Tyler Smith: But if you don't have a proper working capital runway and if something just comes up and you have to allocate all that cash right at once, that can really make things look really dicey, really shaky, really [00:17:00] quickly. So by utilizing Clearco, we're essentially like just kind of doing everything in tranches.

[00:17:05] Tyler Smith: Every, every tranche is just a little bit allocated bit by bit where we're not taking a big overwhelming amount of some money to spread this all out and making sure that we're doing that efficiently as possible. So,

[00:17:20] Kunle Campbell: Thank you for clarifying. The tranches in 90-day

[00:17:24] Tyler Smith: In the past, it's been about four months cycles. That's where we'll get the best rate with Clearco. However, just by doing like some, you know, very basic math. we can stretch out those tranches over five month payment periods. And essentially every time that we max out our credit limit with Clearco, an invoice falls off.

[00:17:47] Tyler Smith: It then replenishes that amount and we can kind of keep the cycle going and going. Whereas we don't have to worry about having to cough up a bunch of cash towards paying those big invoices for Facebook, Google for our ad spending. [00:18:00] So it makes it much more manageable for managing cashflow and hiring staff and upping inventory and all that stuff.

[00:18:06] Kunle Campbell: It makes sense. Makes sense. And you're using it almost exclusively for advertising

[00:18:10] Tyler Smith: Correct. Yep. Yep. Yep.

[00:18:13] Kunle Campbell: Okay. And Facebook, Google are those your primary advertising platforms or do you

[00:18:19] Robert Hamm: We Facebook and Google are two big hitters, but we run ads on Bing, run ads on TikTok, we run ads on we have we're not right now, but connected TV platforms. So we could see them on internet TV. But we haven't seen much success there yet, but we're, you know, we're then we're about ready to start advertising on billboards, you know, just to see what happens, you know, because there's a whole other world of advertising out there that's existed forever that we, I don't know it, but I only know online advertising and marketing, but there's a hundred billion dollar businesses that don't even run ads on Facebook or Google, you know, and we're going to start dabbling in that too.

[00:18:59] Robert Hamm: So if you guys want [00:19:00] to finance some billboards for us, we'll send you the invoice, but no, there's it's such a.

[00:19:07] Robert Hamm: A huge world out there and branding and it's fascinating. Like as much as I love programming in that, I also love art. I love design and I love marketing. So if you watch any of our videos, our advertisements that we've done, they're always quirky and dumb and funny.

[00:19:24] Robert Hamm: And that's me. And at this point, Andrew at Monster Agency, who actually handles our ad buying in some of the creatives. If we come together and we think of these, I have funny ideas for these commercials when we do them, and I think they're hilarious. So I recommend that you guys check them out.

[00:19:42] Robert Hamm: Hopefully you haven't seen them already, but they're on our website. But yeah, like the marketing space in general, it's like, yeah, I want to throw up every time I think about how much money I've given to Facebook, but my business wouldn't be an almost 10 million [00:20:00] annual revenue business if it wasn't for.

[00:20:02] Robert Hamm: That platform to give people eyeballs onto our products. And, I can't even imagine where we'd be without online advertising. And it's you know, blessed that it's there because I don't, my life would be like right now without it. I mean, I'd be fine. I'm software engineer. I had a good job before I did all this crap, but it's u I've got my mom, I've got Tyler, I've got my I got a couple other friends that work for me.

[00:20:28] Robert Hamm: I've got 45 employees that now make great money. I think, you know, we don't pay a minimum wage, we pay people well. A lot of great salaries come out of this place and it's become so much more than just a way for me to buy a green Lamborghini. It's it is truly something. And we have 35,000 small business owners across America that wear our products, that love our products and talk about us.

[00:20:53] Robert Hamm: And I get, it's such a, so humbling to see a customer and [00:21:00] especially, you know, I'm trying to do the YouTube thing to help other entrepreneurs out there,

[00:21:04] Robert Hamm: I'm just trying to be raw and upfront and offer this advice for free and to see a customer comment, think even on a LinkedIn about the Clearco article. Someone said, not only am I excited that I got to buy hats for my business here, I also bought hats for my kids' business, and I can give him the gift of Robert's YouTube videos.

[00:21:24] Robert Hamm: Showing him the journey of starting this business and like, God, reading that, man, it just like, it takes me back and it's so much, it's so much bigger than just the business and like it, so many things have happened where, and especially in the capital space, it's like you get down to that, especially when you're at the end of that, especially like Tyler said earlier, you get that big sum of money, but at that, that 90, 120 day mark, it's like, You are on pins and needles and razor blades waiting for that next readout to come in because you're growing and you're spending [00:22:00] all of your money to grow and it, those, God, that's the lowest you get like smart.

[00:22:06] Robert Hamm: And that's where it's so great to have Tyler to help share that load because with everything else that I have going on, when the finances get that tight, it's, it is a lot because you know, my family relies on it and 45 other people's families rely on this business. Pumping through. Right. And, uh, it's hard, but it's all worth it for what we built and where we're going and what we continue to build.

[00:22:28] Robert Hamm: It's what keeps me going. And yeah, I don't really know what the original question was, but that was my answer.

[00:22:35] Kunle Campbell: I think talked

[00:22:36] Robert Hamm: Yeah. Yeah. Marketing. Yeah. Yeah. So marketing's great.

[00:22:39] Kunle Campbell: of that stuff. Yeah. Great.

[00:22:41] Kunle Campbell: that's clear. Really clear. Thank you. Thank you. Thank you. I'm going to come back with the synergy between marketing and finance, we haven't heard from Andrew Curtis, CEO of Clearco and you with what you've heard, you know, Robert's story and Tyler's, you know, day to day, [00:23:00] howhat are the macro trends you're seeing from Clearco's perspective on how predominantly small businesses, eCommerce businesses you know, utilizing capital now in 2024.

[00:23:16] Andrew Curtis: Yeah, well, I think Robert and Tyler's comments touch on a bunch of things. Some were kind of broad themes and then very specific themes around how they use our capital in particular. So I'll start high level and in answering it. I'll cover your your question about trends that we're seeing.

[00:23:34] Andrew Curtis: So first off, I really liked his discussion of, you know, Clearco cause a source of non-dilutive capital, right? So he's not giving up part of his business. Not giving up equity ownership in order to, you know, fund marketing spend for HatLaunch, which is great, right? Our job is to find companies like Robert and Tyler's that are healthy and growing well. [00:24:00] And that need fuel for growth. And so we love to be that kind of capital. These guys I think their business is a little bit different than some of the businesses we fund in that they have a fair amount of capital intensive uses. And so they are buying equipment. And that equipment's expensive.

[00:24:22] Andrew Curtis: And so they look at Clearco as a source of capital for a very specific need. And that's, that specific need is marketing spend. And of course, a lot of our customers use our capital for marketing spend. I think year to date, four out of every 10 that we've advanced to customers has been used, you know, to pay Meta and Google. And so it's a very common way to use our capital. And I love the way Robert described it at the outset as kind of a knob or a dial that he can turn up or down, depending on his specific needs, because these guys know when they spend dollars,[00:25:00]

[00:25:02] Andrew Curtis: They're going to get, you know, whatever is called three to five times revenue for every dollar of ad spend. And so it's critical to their business. But then again, a lot of things are critical to their business. They need capital to buy equipment. They need capital for shipping and freight and fulfillment.

[00:25:19] Andrew Curtis: And so it's a complicated puzzle they're trying to figure out. And we love the idea of being able to solve a piece of that. And the piece of that is, is ad spend. And we also know by virtue of our analysis of their business, that they're good at it. Right? So they know if I dedicate a dollar to ad spend, it's going to generate X dollars of revenue is going to generate Y dollars of gross margin.

[00:25:41] Andrew Curtis: And you heard Tyler talking earlier about the, you know, the things he's been building in. to HatLaunch since he's gotten there. That's all the, like, we love seeing that kind of organization and discipline when founders are growing their businesses. So as far as kind of what we're seeing more broadly, what I would say is, you know, the [00:26:00] days of easy access to credit and days of cheap money are way behind us.

[00:26:05] Andrew Curtis: And so we all know that we're living in a higher interest rate environment, and the Federal Reserve Bank in the States has tightened rates quite a bit. And so that creates pressure on all businesses, but it creates a lot of pressure for small businesses that are trying to fuel growth. So we, you know, we love to be able to provide capital so that founders like Robert don't have to give up.

[00:26:31] Andrew Curtis: Equity or ownership in their business and, you know, in a more challenging. Rates environment. And so that's something that we see our founders are stretched in terms of finding capital and they like at the worst case, like they may be kind of constrained or limited in their discretionary marketing spend.

[00:26:52] Andrew Curtis: And they may be, you know, they may be doing other things like stretching their payables always in an effort to find a way to, you know, pay [00:27:00] their bills and fuel growth. And so the way we think about our product is. To Tyler's point, it's very discreet, right? You're using it for a discreet purpose.

[00:27:10] Andrew Curtis: And when you, we fund an invoice that invoices they pay us back over four or five or six months, Tyler was mentioning. And they know they know exactly what they're using the capital for. And so I think that what we found with our customers is. Yeah, there is the old model, which Robert was talking about vis a vis our old product, the old Clearco product, as well as PayPal, where you just get a slug of capital and you kind of use it as you see fit across a bunch of different purposes.

[00:27:39] Andrew Curtis: The invoice funding product at Clearco is very specific. You have an invoice for Meta? You upload the invoice, we pay Meta directly. And then you pay us back over four or five or six months. So we think it's a great way for a customer, for customers to be able to plan better and to be able to manage their cashflow better.

[00:27:58] Andrew Curtis: Cause they know [00:28:00] exactly like, okay, I can rely on Clearco to fund that invoice. And as soon as that invoice is funded, I know exactly how I'm going to pay them back. Over the next four or five or six months, and that makes Tyler's job, I assume, easier because he can better better, you know, plan for cash management.

[00:28:18] Kunle Campbell: Thank you. Thank you. Thank you, Andrew. for clarifying, you said four out of, you know, every $10 spent on advertising at the moment. Does the remaining six, $6 yeah, so a lot of our customers use dollars to fund inventory purchases. So that's something that, you know, Robert and Tyler do less or not at all with us. They use us for a very specific purpose, which is ad spend, but a lot of our customers, they need to buy inventory. They need to buy raw materials.

[00:28:49] Andrew Curtis: They need to buy finished goods, whatever the case may be. So in the same way that Robert and Tyler might upload an invoice for Google or Meta. Other companies are uploading [00:29:00] invoices for, you know overseas supplier, X, Y, Z, so that they can have product built or raw materials sent to them. And then the last, the other category that's very large is just kind of shipping and handling and fulfillment.

[00:29:14] Andrew Curtis: So that represents the bulk of our, you know, of our use or the way our customers use our capital.

[00:29:22] Kunle Campbell: makes sense. It makes a lot of sense. And then Rob is your, is your AdWords and Meta, you know, set to to, to essentially

[00:29:28] Robert Hamm: Yeah. Yeah. I think about.

[00:29:31] Kunle Campbell: Essentially you

[00:29:32] Robert Hamm: Two years in, we got monthly invoicing access through Meta and Google. So, yeah, they're all monthly invoiced at this point.

[00:29:42] Kunle Campbell: Okay. Makes sense. Makes sense. Now, this question is to. Everyone in the past, actually to Rob and Andrew I'd ask Andrew to answer this one, which is at what points for listeners, this podcast, they [00:30:00] operate as themselves. Some have begun their journeys, some are pretty advanced in their journey.

[00:30:06] Kunle Campbell: At what point do you start to think, okay I need to plug in invoice financing into my financial stack in, in, in order to fuel growth, this is to Andrew. And then I would just repurpose that to, to Robert afterwards.

[00:30:22] Andrew Curtis: Yeah. Well, I mean, to be frank, I think most of our customers need it as early as possible. For us to be like, for us to make an advance to a company, they have to have been in business for a certain period of time. We need to see a certain level of revenues. We ask them to connect their revenue platform accounts so we can actually see very granular detail on their revenues.

[00:30:45] Andrew Curtis: Then that enables us to provide them the best capacity or offer and be able to give them the largest number that we can advance to them. I think as far as using the invoice funding product for [00:31:00] discrete needs. I don't like I think you should and can do that early as early as possible because everyone has invoice invoices to pay everyone has inventory to fund everyone has ad spend to fund so The thing I think what I encourage our customers to consider is the value of the Clearco product in that Sense of its discreetness, right? So I need to pay a very specific. I need to pay for something very specific. I can use a Clearco advance where I can use Clearco capital I can match that capital to that specific invoice or that specific funding need. And I know that Clearco is there to fund future such in inventory invoices or ad spend invoices. So I think it's something that comes early and I think it's something that any founder that's growing a business and looking for fuel for growth can take advantage of.

[00:31:53] Kunle Campbell: Okay. Thank you. Thank you. That's really good. Rob, at what points would you suggest, because, you know, [00:32:00] you guys are very unique in the sense that you're, you had a fantastic product, you're marketing the product, you're getting three, four XROAS, you know, there's

[00:32:10] Robert Hamm: I think, you know, before, before you go start getting capital and doing that route, I would think there's a problem with a lot of businesses that don't actually know the numbers. So for one, I want to make sure my business is actually profitable. At where we are with our current ads and spending on ads, and you could easily go light money on fire with ads, and I would hate to have the safety net of knowing it's going to be paid for and not be profitable in my ad spend.

[00:32:39] Robert Hamm: So I want my ad spend to be painful to start so that I have to execute and make it profitable as fast and efficiently as possible. Whereas if you have a safety net where that safety net will eventually get you in a hole that you can't get out of because you're funding unprofitable ad spend. So that's my, my, my only, you know, like caveat to taking in [00:33:00] invoice financing.

[00:33:08] Robert Hamm: But one other awesome thing about Clearco is in our case, there's no UCC filings against the business. So there's no so we have a really great local bank partnership that they want first liens on the business to, to do all these things for us, to buy us this equipment. And, you know, anytime we go and find capital, it can't be, there can't be a lien on a business and for listeners that don't know what a UCC filing is, it's basically just a lien against your business and you know,

[00:33:41] Kunle Campbell: It's like a charge, a business charge. We call it a charge on your

[00:33:44] Robert Hamm: You basically them owning part of your business is what it means. And for Clearco to not require that, that is one of the number one things we ask anyone when it comes to getting capital. It's the first question, UCC filings. And if it's yes, like I can't do it.

[00:33:59] Robert Hamm: I [00:34:00] don't want to do it. You know, I, right. And Yeah, I think it's, I think that's a great point in the same way that we don't take ownership. And we're not asking for equity from Robert. We're also not putting liens on his business and we're not asking for personal guarantees. Now, what that really means for us is we have to

[00:34:19] Robert Hamm: And

[00:34:19] Andrew Curtis: to be

[00:34:20] Robert Hamm: That

[00:34:20] Andrew Curtis: thoughtful

[00:34:21] Robert Hamm: back

[00:34:21] Andrew Curtis: who we provide.

[00:34:22] Robert Hamm: You guys aren't even going to fund an invoice. If you see the ROAS is 0. 5, 0. 3 ROAS, and all their financials are going down the toilet. Right. So, but that's

[00:34:35] Andrew Curtis: Yeah, that's exactly, I think that's exactly, it's exactly right. Right. Like I, I think we like, we have built a very special mousetrap here that enables us to figure out exactly who's going to make the best use of our capital. And because we're not asking for equity and because we don't have liens on Robert's business, we have to be really confident that he's good at what he does.

[00:34:56] Andrew Curtis: And he is, of course, but good at what he does means if he spends a dollar [00:35:00] in marketing and he's, he sends a dollar to Meta, then it's going to, you know, return 3 to 5 of revenue. So that's our job. And the way for Clearco to be in the best position to help all these founders in the world is to make sure that we're sustainable and sustainable means we send dollars out, meaning we advance capital to businesses like Robert's and HatLaunch.

[00:35:19] Robert Hamm: And that's, and kind of, it goes back to my comment earlier about venture capital. Like. You can get a ton of money thrown at you at the very beginning, but if you haven't gone through painfully executing smaller subsets of capital and being profitable in that you're just going to have a hard time really becoming profitable.

[00:35:39] Robert Hamm: And that's like, when you find a partner like Clearco, yeah, get in with them at the ground levels with great numbers, but know that it's going to take time to build up. You're not going to get a $200,000 extension, you're going to start at the ground level and they're going to grow with you. And that's like, what we've learned is like, you can't just go to a bank and ask for [00:36:00] $500,000 'cause you promised them that you're going to, you know, make it back.

[00:36:02] Robert Hamm: It's like, no here's what I did with 5,000. Here's what I did with 10,000, here's 50,000, here's a hundred thousand. And we can show that every time we've taken capital. We have taken it in, you know, sometimes doubled the business because of it. And you just, it takes it's painful. It takes time, but that's business and nothing in business.

[00:36:25] Robert Hamm: If you're doing it right and doing it correctly is going to be. You know, like that, you know, nothing worth doing is easy and there's no such thing as overnight success and overnight riches, and regardless of what the other guys on YouTube might be telling you, but yeah, that's, it's You just, you need to know your numbers and the second that you know, those numbers and you know, and you have that dial, like, like we said, I know I have a dial on marketing once you feel that you're at that spot, that is really.

[00:36:57] Robert Hamm: That's like the, you know, you can keep up with [00:37:00] work. That's another thing too, is you don't want to go spend, I can go double our ad spend tomorrow and double the business coming in, but then the businesses would come crashing down with terrible reviews because we'd never deliver the end product. And that's another problem that people get in is they get too much business that they can't possibly deliver on.

[00:37:15] Robert Hamm: So that's another thing I get, go spend all this money and finance it and show great returns on it. But at three months out and you haven't delivered those things and those chargebacks come flooding in and no longer process credit card payments, your business is done. So it's a

[00:37:34] Kunle Campbell: Yeah.

[00:37:36] Robert Hamm: orchestration, song and dance of Just riding the waves and that is, you know, I'm not an expert yet.

[00:37:44] Robert Hamm: I'm getting better every single day at this. Literally done this myself from the ground up now with help, which is extremely important is getting help. And also a great, a partner with capital lending. And it's, [00:38:00] you know, I feel like we're really stepping into like the next phase of, you know, we can rely on Clearco for our advertising spend.

[00:38:07] Robert Hamm: We know that locked up and we have our local bank where we can do our net 30 and payroll capital there. And then, you know, heck, maybe, I mean, Clearco, you guys started doing some inventory financing for us too. So and really just, you know, and that's why every time I approach anyone to get capital or, you know, I want to, I'm as transparent and open about our business as possible.

[00:38:36] Robert Hamm: One thing with our business being custom built, we aren't as easy to tie into. We don't have a Shopify that we can use to go plop into Clearco's website, which would make the process so much easier if it was, but we're custom built. So we can't do that. So we have to do some manual. Sending of documents to show our financials and our orders coming in and out.

[00:38:56] Robert Hamm: But a lot of people eCommerce-wise [00:39:00] are using Shopify, using WooCommerce, all platforms that just easily tie into places like Clearco. But if you're like me, you're on a custom platform, it's even harder to find that financing because a lot of the places out there are completely automated. And they don't want to do the painstaking, send in the manual documents.

[00:39:15] Robert Hamm: Let us go hand in hand, lockstep with you and look at this to make sure that you're a fit for us. And that, and thanks to Clearco for even doing that with us, because we aren't your typical eCommerce business that's running on a platform that others use, you know, we're custom built. So,

[00:39:31] Andrew Curtis: Yep.

[00:39:31] Kunle Campbell: Yeah. I didn't realize that, that you know, Clearco also offered, you know just custom integrations is quite good to know question for you again, Rob, I'm going to push it to Tyler right after that, how do you deal with platform volatility? So with Meta, you know, acting up and it's more stabilized since like the pandemic times, you know, post-pandemic is a lot more.

[00:40:01] Kunle Campbell: We had someone who came on the podcast literally last week and he's managed to scale his business from 14 million to, I think his run rate this year is 40, 40 M and most of it is attributed to Facebook, you know, and so he's like. There's not much volatility, but I'd like

[00:40:20] Robert Hamm: A

[00:40:20] Kunle Campbell: your

[00:40:20] Robert Hamm: Lot of crying. Therapy. No. The start of this year was brutal, man. We, oh God, Facebook was brutal. And it's, there's never a clear answer. That's what sucks. Is you never have a clear, you have metrics. You can look at your metrics, you can look at your all the metrics, right? And you can tweak and test.

[00:40:45] Robert Hamm: And sometimes it's just like, it's just not happening. And I think it's, some of it can be attributed to the economy and how it's going and the rates that we're talking about. But then you'll have three months of just like, Oh my gosh, this is terrible. [00:41:00] It's like for the first time ever, we might spend less on, we might actually stop spending money.

[00:41:05] Robert Hamm: No, cause we were at that time. Thankfully we have 35,000 customers that, you know, it's kind of funny. We spent five years without ever sending an email to anyone. So we started doing like email marketing for once, five years. Like any person I tell that to like, dude, you are an idiot. Like, and now I know why, because we were doing more repeat business than we were coming in from the ad spend.

[00:41:29] Robert Hamm: So think, you know, we have that leg to stand on now, but. No it gets tough sometimes, but you know, we are still two, two and a half X returns, even through the bad times. So when I look at it that way, it's just like, you just got to tighten the belt and push through the hard times. But like it was three months of junk and then boom, it just doesn't get your three, four X and you're like, Oh gosh.

[00:41:52] Robert Hamm: Okay. Too much work coming in. Now what do we do? So it is it's volatile-ish. I mean, we're still [00:42:00] profitable even in the bad times. But those good the healthy good times is, and Andrew, who, who actually helps us with our ads is like. When it's good, you need to make sure you're eating. You need to make sure you're taking in what you can, but like, to my point earlier, you can't take in more than you can produce the toy with what we do.

[00:42:20] Robert Hamm: Right. You know, we're not just drop-shipping stuff and relying on someone else to do this. Right. We have physical people in a building, physically creating products, custom products. It's like, we're probably doing one of the hardest businesses there is with the custom side of it. You know, actually dealing with the customer hand in hand, it's 1200 customers.

[00:42:38] Robert Hamm: At any given point in time in our system that could be talking to us, emailing us, approving artwork, all of them. Right. Where someone that's drop shipping product from a factory, it's like, they're just gobbling it all in and then sending the product out. I should probably look into doing that. That sounds like a pretty good business model.

[00:42:59] Robert Hamm: [00:43:00] But yeah, it's

[00:43:03] Robert Hamm: Yeah, it's crazy. It's a battle. You have to have your finger up. On the pulse of how the business is doing in the ad spend realm. And it can't just be complacent with, especially if you have a third party running your stuff, you need to be involved too.

[00:43:21] Robert Hamm: You need to be a part of it. You need to be making sure things are happening and executing and that your numbers are where they need to be. And like having Tyler looking at the numbers all day, every day. You know, had a pretty good understanding of where we needed to be, but now we're even, we, you know, even better, like what we can do if this happens, you know, if we get a three and a half percent ROAS next month at this revenue, we have this amount of money that, you know, we can do this with, where I didn't have the time to sit down and actually calculate that unless I had to.

[00:43:53] Robert Hamm: The only time I did financials outside of just the typical, make sure we're profitable was when I had to submit them [00:44:00] to get capital. So I would sit down on the weekend and do all of my financials for the past like quarter, which, you know, I'd stay up all night, you know, freaking literally all night putting financials together so I could submit them to get capital and having Tyler now to do that daily for me is better.

[00:44:18] Robert Hamm: So,

[00:44:23] Kunle Campbell: Which, which brings me to my next question directed to Tyler, which is. How do you synergize, with advertising spend, you know, on, on monthly cycles it's we speak about like cross functional growth here in this podcast, but I want to get into the detail as to how marketing makes your job in finance, you know, easy or easier and how you in turn make, you know, advertising easier, more predictable.

[00:44:55] Kunle Campbell: What's that synergy like in at

[00:44:58] Tyler Smith: Ad spending is always like kind [00:45:00] of a sore point for me. Cause like Robert says, we put so much, we allocate so much of our budget towards ad spending. I always bug him. He's like, Oh, here goes Tyler again. Trying to like figure out ways to cut down the ad spending. And usually that's usually during times when like those ROAS is it's terrible.

[00:45:16] Tyler Smith: Like when we're in those sub threes, it's like, all right, like, I feel like we are burning money at this point kind of thing. Like we got, and that's something like I'm trying to kind of morph our business into, it's not just being so much eCommerce business, but how can we mold this into other ventures where we're not so dependent upon our ROAS on what a profitable month is going to look like.

[00:45:36] Tyler Smith: So I hope I'm answering your question by like kind of going down this. Going down this path. So like right now we're looking to touch into other ventures on how we can continue to grow this thing without having to be so dependent upon how the eCommerce side looks at things. So, I mean, we have nearly a hundred heads of embroidery on our house now.

[00:45:54] Tyler Smith: And what we can do is be subsidized as a decorator from other [00:46:00] retailers throughout the country where they can get their products blank or blank products over from overseas and China and Bangladesh and Vietnam and all that stuff. And they can bring them here and we can decorate them where they don't have to eat such a high quantity of that product of that specific design overseas because their minimums are in the thousands of pieces where they have to have that same logo, that same artwork, that same size, that same color on that specific blank to.

[00:46:29] Tyler Smith: For the overseas manufacturer to fulfill that order for them. So they can get that blank piece of apparel, bring it over here. We can custom decorate for them in the few hundred quantities instead of a few thousand. So trying to mold this into more, we're more of a manufacturer, but also an eCommerce front to it as well, where we can diversify our revenue streams.

[00:46:49] Tyler Smith: And by doing this, we do have to be very flexible with our. With how we receive payments. So something that Clearco has really helped us [00:47:00] and Robert kind of touched on too, is that they don't have a lean towards the business. So we have a great relationship with our local bank. They have first lien on everything.

[00:47:08] Tyler Smith: We have a line of credit set up with them that I am trying not to touch because of knowing that we're starting to venture down to this path of partnering with bigger businesses who do work on a terms kind of schedule of paying their invoices where. We can do the bulk of the work for them and know that we're not going to receive that payment up front and being able to withstand the flow, the cash flow until we do receive those payments.

[00:47:36] Tyler Smith: So it's because of utilizing Clearco that we can be so flexible and have that line of credit, you know, that safety net of that line of credit as well to utilize for this next phase of growth for us is by, you know, bringing on bigger customers like this, where we are, we're doing these larger scale projects for them and taking these larger invoices from them.

[00:47:57] Andrew Curtis: It's also like, I [00:48:00] was just going to say, that's all kind of music to our ears because it shows a lot of thoughtfulness and it shows diversification. And this is something we see it in different forms, but we like seeing it because it means people are being thoughtful, creative. And they understand the risks of exposures is just a single part of the business.

[00:48:22] Andrew Curtis: So we see, I think we see that mostly around our eComs developing wholesale revenues. So maybe they're developing relationships with large retailers, the targets and Walmarts of the world, and that's helping them, you know, improve scale. And diversity. Now, of course, to Tyler's point, need capital to do that, right?

[00:48:42] Andrew Curtis: So, and we love being the source of that capital in, in whatever fashion because any business that's trying to diversify in that way, they're going to have a working capital drag up front, and it's going to require capital. And again, it's the same old story. They don't want to give up their business.

[00:48:58] Andrew Curtis: They don't want to give up ownership of their business. [00:49:00] So if we can be a partner, to a business that I think you've heard it again and again today. These guys are very disciplined smart guys and they have their eye on the ball. Like we love customers like that and we love to support them when they're trying to do different things to diversify and

[00:49:16] Robert Hamm: Definitely.

[00:49:17] Andrew Curtis: Their

[00:49:17] Robert Hamm: And I look at it, know, Tyler his comment about, you know, let's pull back on ads. It's like, I want, I have to see new business coming in. Like, yeah, getting like 200,000 of repeat business a month. That's a great number, but I have to see new people coming in for me to sleep well at night.

[00:49:37] Robert Hamm: I have to know the business is growing because the business, if I'm not getting new customers, my business is not growing and that I have to. So that's where ads will always be there, but we have to diversify. And like, even from the marketing front, getting into the more traditional terms of marketing, like I, we got to dabble in it.

[00:49:56] Robert Hamm: We've got to spend some money and see what happens. And, but we [00:50:00] also have to venture off into these other legs of business for, if Facebook goes down tomorrow for two days. You know, that's a lot of revenue in just two days. It's missing. So you have to have these safety nets and these other legs of the bar stool that your business can thrive on.

[00:50:19] Robert Hamm: We need to know that we can, if Facebook and Google go down for a week, can sustain, you know, and right now, I don't, Andrew, don't mute me real quick. If Facebook ain't go down, I don't know, for a week, but no, but hurt really badly. And we got great repeat business right now, so we're healthy, but no it's a, we have to diversify keep revenues coming in any way we can.

[00:50:46] Robert Hamm: And with what we do, we've created basically a machine that we can feed other, there could be another eCommerce business selling hats that just feeds us the orders. Cause I've built the machine to feed and [00:51:00] how we choose to feed the machine. Can be through ads, which I love. I love the, to kind of answer your question about the, I'll. How does it feel knowing we're spending money on the marketing and getting the return of the business? It's like, I love that because it's quantifiable and, you know, in the end, those, most of those people are coming back and you're going to make that. Yeah, we spent 33 percent of our revenue on ads, but. It's exponentially growing the pile of repeat customers that are then going out and talking about us and opening up doors and connections to feed the business through other aspects too. Like the amount of times we've had a customer approach us about like, Oh, well, you should start doing fulfillment for this, or you should start doing, you know, with four hats for this company.

[00:51:50] Robert Hamm: And that has opened doors where it's different than what we're currently doing through our just normal, see the ad, click it, order hats type thing. And opening us [00:52:00] some very unique relationships that we have. And some really cool stuff that we're currently working on with some partners with us that we're, it's going to take a lot of equipment to scale out, but you know, we're working on the building now to do that.

[00:52:14] Robert Hamm: But it's you get to a point where you run the ads and you get to the 10 million in revenue and it's like, yeah, we can get to 20 million in revenue on ads, but can we keep the ad spend where it's at and ROAS without spending more on it. And that's really what we're trying to do right now, because the more we can grow without touching the dial on ad spend, you know, that 33 percent revenue that's going towards ads that converts directly to profit and I can finally make some money.

[00:52:51] Kunle Campbell: Yeah. I think the quantum leap there is the B2B relationships, you know and getting those really big accounts [00:53:00] and letting that sort of leverage and come back into ads, so the ads actually get more marketing efficiency ratio. Off the back of all the other advertising you're doing offline and relationships you're building

[00:53:09] Robert Hamm: brand relationships.

[00:53:12] Kunle Campbell: As Andrew said, exactly as Andrew said, that gap that working capital need at the start, which you need to sort of fuel to invest, but you need to get the right talent in place to really lead that B2B and ensure that you get somebody who's done it before. Essentially get the ball running and you're onto something really big. I also like the point that you're looking at it as a platform. You're looking a HatLaunch as a platform, because if it's a platform, I know there's a jewelry platform print on demand platform that essentially has an army of affiliates.

[00:53:48] Kunle Campbell: Most of them are running Meta ads, bringing in business to them. And they're just essentially a fact, you know, manufacturing units, you know, at the same time. They're still in their D2C but it's all working really well. Gent, it's been an absolute pleasure having everybody,

[00:54:04] Kunle Campbell: Just wrapping up now for people who want to learn more about your business HatLaunch, it's hatlaunch.com. You do custom caps, fitted hats and snapbacks. I'd also link to your fantastic YouTube channel. And then, for Clearco, it's clear.co invoice financing for the entire North America, Shopify, merchants, eCommerce you can just find out more on clear.co. I'll link to to both resources in the show notes, gentlemen. It's been an absolute pleasure. I didn't know how this was going to go, but somehow it feels like we rehearsed this several times before coming on live, but

[00:54:42] Robert Hamm: Great. Thanks for having us.

[00:54:44] Mhm.

[00:54:47] Kunle Campbell: Thank you for tuning into this episode of the 2X eCommerce podcast. We hope you found our conversation with Robert Hamm and Tyler Smith from HatLaunch and Andrew Curtis from Clearco.

[00:54:55] Kunle Campbell: Call insightful and inspiring their journey of scaling HatLaunch to a $10 million a year revenue business with non-dilutive capital highlights, the power of strategic planning. Automation and innovative financing. If you enjoy this episode, please subscribe to the 2X eCommerce podcast on your preferred platform. Your support helps us bring more incredible guests. And valuable content to you.

[00:55:22] Kunle Campbell: Don't forget to leave a review and share this episode with fellow entrepreneurs who could benefit from their insights. Until next time. Please keep pushing the boundaries on growing your eCommerce business. Thank you for listening.

[00:55:35] Mhm.