Club de Gorras was an ecommerce company. It was May 2015, I was 19 and decided to start a new journey. I used to start a lot of side projects and quit so quickly. But this time it was going to be different.
The original idea was to sell caps online. I sold my iPhone 6 so that I could afford to buy 100 snapbacks from China. Unintentionally, I followed the Lean Startup Methodology and my first version was an MVP. It consisted of a single-page HTML-only catalog. On the page we displayed the SKU, price, and image for each model as well as a how-to order button.
When a customer was interested in oredering a hat, they contacted us via email, Facebook or Instagram, telling us all the SKU numbers of the caps they wanted. The best part? When I launched the website, I didn’t have the products yet. So, for each email or contact I that I recieved, I asked for their full name, email address and phone number, and put that information into a spreadsheet.
The whole company was based on a really simple site written in HTML, using Git and updated manually via SSH. For inventory control and company finance, I used a spreadsheet with two tabs.
I didn’t expect too much from it as my initial investment was really low, around $500 USD. And guess what? I sold the 100 hats in 2 week! Which meant that I had to wait 10 more days to get the package from China to my house. I remember having a waiting list just in case some people didn’t want the product or returned it.
Club de Gorras sold its first product on Monday, August 3, 2015. I didn’t have bags or boxes for the first 100 hats, so I had to borrow some white plastic bags from my brother’s store. Then I bought some white-label paper bags and boxes. I made a custom stamp with the logo of the company and had to manually stamp each bag/box.
I didn’t have a printer, so I had to write each shipping sheet manually. In fact, I didn’t have any experience shipping anything at that time. It was by chance that one of our first customers (this was before I had the inventory delivered to me) told me if that I need to ship my products, he was working for Correo Argentino, the national post office of Argentina. He offered to open an account for SMEs for me. The shipping costs were very cheap at that time. So thanks to that, I started to offer free shipping on ALL my products. It was a fantastic tactic that gained early customers.
Oh boy! It was October 2015 and I was working like a slave doing a lot of things by my self from my 1 bedroom apartment. I was shipping packages and answering a lot of messages on social media in the morning. Serving customers who came to our “office” (my apartment) to pick up their hat. Dealing with customs to get my packages delivered faster (it was a really slow process at that time in Argentina to import products from China). Attending university in the afternoon.
Cyber Monday was coming and I knew that my system (single HTML site + spreadsheet) was not going to help me deal with a lot of customers in a short time, I had to do a lot of the work manually, which was mostly imputing data into spreadsheets. Also, I knew that I could use all of my expertise to create a better custom system that would work much better for the company (me) which would free me from repetitive tasks.
I decided to write a custom system for the company. It was like a single-person hackathon. I spent around 36 hours without sleep writing the new system from October 31 to November 1st. It was a fully-functional e-commerce system with a cart, categories, tags, multiple-photos, integrated with MercadoPago to process the payment directly on the site (before this, I had to send a payment request to each customer manually to their email).
The website was really simple to navigate. It had an admin panel where I could see all the orders, status, incoming payments, declined payments, and orders that needed to be shipped. Also, it had an SMS + email notification system, so the customers received a notification during each step of the cycle. Doing that reduced the number of requests asking for a shipping number.
The new system and the new website were up and running. It helped me a lot and allowed me to sell more. However, I was still using the photos that my Chinese provider sent me. Normally, it was just 1 picture with 3 angles of the product in decent quality. But it was time to offer more value to our web visitors, so I hired a freelancer photographer to start producing our own photos of all the products.
A photographer was the first person I hired. Between October and December, we tried three different photographers. Eventually, we hired a fantastic women who was able to deliver the photos on time.
At the end of December, and after having lots of sales from Cyber Monday, Black Friday and Christmas, the company had a lot of cash and I decided to open a store.
January is the hottest month in the North Hemisphere. Normally, in Argentina, everybody leaves the big cities during that month to go on vacation. That was NOT my case that year. I had just found a great location for our store after viewing a few other properties. It was time to build our first store.
I didn’t have any idea about buildings or anything related to construction, but then again, it was the need and my interest that allowed me to learn fast.
Six months previously, I didn’t have any idea about packaging, shipping, finance, providers, or a lot of things. Building a physical store was a very big challenge tn a physical level. As I told you I was delivering the packages in the mornings, meeting with customers during the afternoon, and in between, I was helping to build my store.
The only thing that I had to outsource was the installation of the wooden floor that I wanted for the store. My friends and I did the rest: assemble false walls, paint, build furniture, install doors and security cameras, assemble storage shelves, etc.
It was a month full of little sleep and long shifts. But, it was a really great time. I loved it!
29 February was the great opening day. Before the opening, I had to hire two new people to take care of the in-store customers.
After a month of starting to see great sales results, I decided to hire someone to answer all our social media messages and requests. Finally, I had some free time to hang out with friends and go out as any 21 years old guy.
I decided to go for a vacation in April-May 2016 and visit Spain, France, Italy, and Holland. It was a great euro-trip for a month. Guess what happened with the company and the sales? You’re wrong! The company kept growing and everything went well!
It was time to expand. A few weeks after the company turned 1 year old, I decided to start selling more products. Not only hats. So we added: t-shirts, hoodies, shoes, pants, shorts, swimsuits, bracelets, watches, backpacks and more. We started selling more fashion products only for men.
Club de Gorras means “caps club” in English. So why you should buy a t-shirt in a cap store? Well, for me at that time the name was not limited to just caps at that time. That was one of my first big mistakes.
We invested a ton of cash (another mistake, instead of getting finance wtih suppliers) in that new inventory. We spent a lot of time taking photos of everything. We also had to build more shelves and displays to display all the new merchandise in the store. It was a very big investment, we spent around 80% of our cash on that.
Sadly, we didn’t sell the caps as fast as we used to. It didn’t have such a big negative impact on the company, because sooner or later we would sell the new product. But it meant that we had to sell with big discount an internal sale events online and in-store. This meant that we had a smaller profit margin for the company.
Another big problem was the site that I wrote almost a year before had a few limitations, because when I coded it I never had it in mind to sell different products other than caps. As you probably know, caps normally are ONE SIZE FITS ALL. But for clothing is completely different, you have different colors in the same model, different sizes and it’s more complex to handle the inventory, believe it or not.
So I had to write a big patch to adapt the software to the new requirements, and it was… okay. The reality is that I had too many ideas to implement, but didn’t have the time. I tried to hire a developer to join the company and help me write good code and add cool features to the products, but it was really, really tough. I normally try to hire people who are better than myself. However, I didn’t find what I was looking for during the interviews. The best ones asked for too much because they knew they could work for a remote company for a salary paid in USD. So I was having a hard time to find a good developer.
One idea that I strongly believed in was to actually copy the Amazon Fulfillment program and adapt it to our company. That was going to allow us to have much more inventory without worrying about buying it, since we were going to provide services to the clothing brands, take care of the products, sell them and pay the owner.
I believed in order to grow the company that I was going to need help. That is why I proposed that my friend and team-mate in my Microsoft Imagine Cup adventure join the company as a partner. He had rented a store with his brother to sell cellphones. He was and still is the best programmer that I know.
So they decided to close the cellphone store in order to open a second store for our company. Pato Perez and his brother, Joaquin Perez joined the company in October 2017.
Now I have a CTO and a store manager. It was a really great time for the company. We had so much energy and ambition for the future. But we started to run out of time because we wanted to transform that store to match the style and design of our brand. Also, later that month, we had to have a Cyber Monday and Black Friday event, so we wanted to finish it before that.
Working on our own, night and day night,we managed to finish it on time. I already had the expertise in building and re-factoring my first store, so this was a little easier to plan. But hard in the carrying it out, because it required a lot of human effort.
During that time, Pato was working on a brand new version of our system that matched all our needs. A project built from the scratch using NodeJS, AngularJS, MySQL, MongoDB and hosted on Amazon Web Services. This was going to be a new era for the company. We really felt that!
We had great Black Friday, Cyber Monday and Christmas sales. We had plenty of cash again. We had a clear path and vision for the future, we had been working on the new version of the system for the past three months and was time to release it.
In mid-January, we released our new website with our internal system. It had a lot of new features, better search, better filters, it was much more dynamic and faster. We released it with 100s of new visitors. It was a big success for us.
We were riding the crest of the wave. But something terrible happened to us.
On February 3, 2018, we were robbed. It was around 4 pm on a Saturday afternoon, very hot outside, nobody in the streets. The perfect scenario for this kind of crime.
We had our store and warehouse in the same building. First, a guy entered and was asking a lot of questions, then, five minutes later, another one entered too. After asking many questions, the first one pulled out a gun and aimed at our employee and friend Renzo with the intention of shooting him in the head.
Apparently, they were professionals. They tied Renzo’s hands and feet together tightly and asked many times, where we kept the money. We didn’t have any money in the store. Also, the second guy who entered the store brought some bags with him. They started to fill their bags with caps directly from the deposit.
We thought that they must’ve had a car or vehicle outside the store waiting for them, Renzo told me that he remembers seeing them go outside and come back with new bags to keep steal more things.
After 45 minutes, they left telling Renzo that if he tried to look for their car or even move in the next 10 minutes that they will kill him. After leaving, they removed and stole the DVR complete with its disk. So in a matter of minutes, we had lost years of hard-work. At least they didn’t shoot Renzo.
It wasn’t hard for me to accept that we had been robbed, but it was impossible to see the consequences that this event would bring to the company and to my personal life. For my business, it was everything! It was also a really important part of my life. I was really happy at that time, owning the company and still had a lot of dreams for it.
I also knew that I had to do whatever it took in order to keep Club de Gorras alive. Because of this, I made a terrible mistake. I used our good credit score to request a checkbook from the bank, then I bought almost 60% of the inventory we use to have back (we lost almost 90% of inventory). So I wrote checks to different providers of 30 / 60 / 90 and 120 days. I strongly believed that we would be able to cover all the debt in a period of 4 months. We were able to do it for the first 30 days.
The actual problem started in the second month, April. What do you do when you have a financial problem in a company? That’s right, reduce expenses! So we decided to close one store and fire two employees. Was it enough? Of course, it wasn’t!
It affected my health, I was receiving 100s of lost calls from the providers. I made the mistake of never answering the phone during that period of time. I had a lot of stress. It seemed impossible to pay back all the money I owed to others. Also, to make the situation even worse, our country, Argentina, was facing a big dip in its economy. To give you an idea, during April of that year, 1 USD was equal to 20 ARS, in May, 1 USD equaled 25 ARS and by September 2018, 1 USD equaled 40 ARS. Our currency lost 100% of its value in less than 5 months. I had a nervous cough for around 3 months.
At that point, when we were closing the store, I decided to start looking for a new way to generate money to pay the company debt. And that is when I start working with Royal Legal Solutions. Thanks to that company, I was able to start paying my debt month by month and stop using money from the company for my living expenses.
We failed to pay the checks for the days 60, 90 and 120. But on the other side, I was working a few hours for a new company, so I was able to pay off a little amount each month.
It was July, and we had a plan to pay all our debt back to our suppliers with a new way to generate money. Therefore, it was time to think about how to grow our business one more time.
At that point, we had big online communities and a lot of traffic to our website, so I had the idea to offer a similar service like Fulfillment by Amazon but much simpler and on a much smaller scale.
That’s how Club de Gorras Boost was born. We start offering services for men’s clothing brands. Basically, what we offered was: to store their inventory in our warehouse, take pictures of their products, upload their products to our website with our own photos and descriptions, take care of shipping and customer support, promote their products on social networks including using paid ads, sell their products to our customers, give all the information about who bought their stuff and pay them monthly for their sales.
So the brands, needed to define the price of their products, the quantity that they wanted to send to us and from that, we took care of all the rest. Plain and simple, at no cost for the brand. Just pay for each successful transition, no monthly fee or storage fee.
Adding a new B2B channel was really great for us. From August to December we reached ~60 customers, and we had +3000 new products on our platform without writing a check or paying for that inventory. The best part? We helped our B2B customers sell more and gain move visibility on social media. It was really great!
It was December 2018, and we had 3x times more inventory than in February of that year (before theft), but we didn’t see 3x more sales in the same period of time. In local currency, we were around 20% more, but remember the economy had 100% devaluation that year. That meant being at around 60% of what we achieved in the same month last year.
We had great Black Friday, Cyber Monday and Christmas sales that year. It was great in the number of items that we sold. But not so great in revenue. Our margin was not the same as if we would have bought the inventory.
I usually find myself very thoughtful during December. I thought we were making a lot of effort and only receiving a bit profit back. This was because of the economic conditions in Argentina, a lot of devaluation lots of SMEs closing due to this problem, people losing their jobs, less money in circulation, and people stopped spending money on not essential goods.
We were fighting against with the company’s monthly revenue just to to breakeven. I had not been not living from or taking any money out of the company since May 2018. We had a great team, great service, our customers loved us, but the external conditions were really bad.
“Saber decir adiós es crecer” says one of my favorites songs, in English: “growing up means learning to say goodbye”. So it was time to start closing the company.
It was a hard decision. After almost one year of really hard effort to keep the company alive, pivoting the business model, injecting money out of our own pockets and taking lots of risks. It was really tough to fire the remaining employees, telling them that we can’t keep the company alive and knowing that it would be a really hard time to find new jobs.
We decide to shut down our website on March 1st, 2019 and close the doors of the store on the same day. We started the process of returning all the products to our fulfillment customers and paying the final settlement.
I wrote a goodbye note that is on the website right now: www.clubdegorras.com. We dissolved the company and discharged everything related to it.
In a few days, it’s going to be 6 months from the shutdown. Do I regret my decision? Not at all!
Right now (August 28, 2019), the situation in Argentina is worse than in March. 1 USD equals 60 ARS. Th currency has lost 35% of its value at this time. Argentina has an unclear economic, political and social future for the next 6 months due to the change of power (or not) in the government.
The situation is pretty much this: a) to keep the president that began all of this chaos or b) to bring the previous president back to the power (his family has been had the presidency for 12 years in a row. Some people blame them for the crisis that we have in our country right now).
How about me? I am doing really great! I moved to Playa del Carmen, Mexico to a paradisaical location. I live close to the ocean. I am really focused on my role at Royal Legal Solutions. I also been visited the company in Austin, Texas for the first time a few weeks ago and it was a really great experience!