Club de Gorras was an ecommerce company. It was May 2015 when 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 gonna be different.
The original idea was to sell caps online. I had to sell my iPhone 6 and used that money to buy 100 snapbacks on China. Unintentionally I followed the Lean Startup Methodology and my first version was an MVP. It was a single-page HTML-only catalog, for each hat model we displayed: SKU, price, image and a how-to order button.
So if you were interested in getting any hat, you should contact us via email, Facebook or Instagram telling us all the SKU numbers from the caps you wanted. The good part? When I launched the website I didn’t have the products yet. So, for each email or contact I get, I ask for the full name, email address and phone number, and put that information into a spreadsheet.
All the company was a super simple site, written in HTML using Git, updated manually via SSH. For the inventory control and finance of the company, I used a spreadsheet with two tabs.
I didn’t expect too much from it, my initial investment was super low, around $500 USD. And guess what? I sold the 100 hats in 2 weeks, so I had to wait for 10 more days to get the package from China to my house. I remember having a waiting list just in case some people don’t want the product or returned it.
Club de Gorras sell its first product on a Monday on August 3, 2015. I didn’t have bags or boxes for the first 100 hats, so I have 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 too. 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 having the inventory on my hands, tell me if I need to ship my products he was working in Correo Argentino, the national post office from Argentina, and offers me to open an account for SMEs. The shipping cost was very cheap at that time. So thanks to that I start offering free shipping on ALL my products. It was a fantastic tactic to gain early customers.
Oh boy! It was October 2015 and I was working like a slave doing a lot of stuff all by my self in my 1 bedroom apartment. Shipping packages and answering a lot of messages from 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 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 my system (single HTML site + spreadsheet) was not going to help me serve a lot of customers in a short time, since much of the work I had to do manually, mostly to input data in spreadsheets. Also, I knew that a better custom system with the expertise I had will work much better for the company (me) and will free me up from repetitive tasks.
I decided to write a custom system for the company. It was like a single-person hackathon. I spend around 36 hours without sleep writing the new system from October 31 and November 1st. It was a fully-functional e-commerce system with cart, categories, tags, multiple-photos, integrated with MercadoPago to process the payment directly on the site (before of this I had to send a payment request to each customer manually to their email).
It was super simple to navigate the website. It has an admin panel where I could see all the orders, status, incoming payments, declined payments, orders that need to ship. Also, it has an SMS + email notification system, so the customers got a notification in each step of the cycle, doing that reduce the number of request asking for a shipping number.
The new system and the new website were up and running. It helps me a lot and allow me to sell more. Until this point, I used the photos that my China provider send to me. Normally was only 1 picture with 3 angles of the product in decent quality. But it was time to give more value to our web visitors, so I hired a freelancer photographer to start producing our own photos for all the products.
A photographer was the first hire. Between October and December, we tried with three different photographers. Until we hired a great girl that was able to deliver the photos on time.
So it was the end of December, after having lots of sales for Cyber Monday, Black Friday and Chrismas, the company had a lot of cash and I decided to open a store.
January is the hottest month on the North Hemisphere. Normally in Argentina, everybody leaves the big cities for that time to go for a vacation. That was NOT my case for that year. I just founded a great location for our store after view a few other properties. It was time to build our first store.
I didn’t have an idea about building stuff or anything related to construction, but again, it was the need and my interest that allows me to learn fast.
Six months ago I didn’t have an idea about packaging, shipping, finance, providers, and a lot of stuff. Building a physical store was a very big challenge on 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 build my store.
The only thing I had to outsource was to install the wooden floor I wanted for the store. I and my friends did the rest: assemble false walls, paint, make furniture, install doors and security cameras, assemble storage shelves, etc.
It was a full month of poor sleeping and long shifts. Really great time. I loved it!
29 February was the great opening day. Before the opening, I had to hire two new persons to take care of the customers who wanted to go to the store.
After a month and start seeing great results in sales I decided to hire a person to answer all our social media messages and requests. Finally, I had 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 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 start selling more fashion products only for man.
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 for only caps at that time. That was one of my first big mistakes.
We invested a ton of cash (another mistake, instead of getting financed with suppliers) in that new inventory. We spend a lot of time taking photos of everything and we have to build more shelves and displays to display all new merchandise in the store. It was a really big investment, we spend around 80% of our cash in that.
Sadly we didn’t sell as faster as we use to sell the caps. It hasn’t a really big negative impact on the company, because early or later we sell the new stuff. But means a lot because we had to sell with big discount in internal sales events online and in-store. And that means less profit margin for the company.
Another big problem was the site I wrote almost one year ago has a few limitations because when I coded it I never had in mind selling different products than caps. As you 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 real thing is that I had too many ideas to implement, but I didn’t have the time. I tried to hire a developer to join the company and help me write great code and add cool features to the products, but it was really really hard. Normally I try to hire better people than myself, all the developers I interviewed sucks. And the good ones asked for too much because they knew they can work for a remote company for a salary in USD. So I was having a hard time to find a good developer.
One idea that I strongly believe was to actually copy-cat Amazon Fulfillment program and adapt it to our company. That was going to allow us to have much more inventory without worrying for buying it since we were going to provide services to the clothing brands, take care of the products, sell it and pay to the owner.
I believed in order to grow the company I was going to need help. That is why I proposed to my friend and team-mate in my Microsoft Imagine Cup adventure to join the company as a partner. He had rented a store with his brother to sell cellphones. He was and 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 with 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 against the time because we want to transform that store to match the style and design of our brand. And late in that month, we were to have a Cyber Monday and Black Friday event, so we wanted to finish it before that.
Working on our own day and night we finished it on time. I already had the expertise in building and re-factory my first store, so this was a little bit easy in the planning, but hard in the doing, because it requires human effort.
During that time Pato was working on a brand new version for our system that matches 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 a great Black Friday, Cyber Monday and Chrismas sales, we had plenty of cash again. We had a clear path and vision for the future, we were working on the new version for the system for the past three months and was time to release it.
On mid-January we release our new website with our internal system, it has a lot of new features, better search, better filters, it was much more dynamic and faster, we release it with 100s of new arrives. It was a big success for us.
We were on 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. One guy entered first and ask for a lot of questions, five minutes later another one entered too. The first one after asking some many questions, he pulled out a gun and traced it with the intention of shooting in the head of our employee and friend Renzo.
They were really professional doing that apparently. They tied Renzo’s hands and feet 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 brings some handbags with him, so they start storing clothes and caps in their bags, directly from the deposit to the bags.
We thought they have a car or vehicle outside the store waiting for them, Renzo remembers to saw them go outside and come back with new bags to keep robbing stuff.
After 45 minutes they left telling Renzo if he tried to look for their car or try to move in the next 10 minutes they will kill him. After leaving they remove and stole the DVR with the disk too. So in a matter of minutes, we lost years of hard-working. At least they don’t kill Renzo.
I wasn’t hard for me to accept we got robbed but it was impossible to see the consequences that this event would bring to the company and my personal life. For my business was everything, it was a really important part of my life, I was super happy for own that and I had a lot of dreams about the future of the company.
And I knew I have to do whatever it takes to do in order to keep Club de Gorras alive, so I made a terrible mistake. I use our good credit score to request a checkbook to the bank, then I buy almost 60% of the inventory we use to have (we lost almost 90% of inventory). So I emit check for different providers to 30 / 60 / 90 and 120 days, I strongly believe we would be able to cover all the debt in that period of 4 months. We did it for the first 30 days.
The actual problem starts 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. It was enough? Of course, it wasn’t!
It affects my health, I was having 100s of lost calls from the providers, I made a mistake to never answer the phone in that period of time. So I was having a lot of stress. I seem impossible to pay for all the money I own to others. And to make the situation even worst, our country, Argentina was facing a big devaluation process in the economy, to give you an idea on April of that year 1 USD equals to 20 ARS and on May it was 1 USD equals to 25 ARS, by September 2018, 1 USD equals 40 ARS. Our currency lost 100% of value in less than 5 months. I had a nervous cough for around 3 months.
In 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 on 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 days 60, 90 and 120. But on the other side, I was working a few hours on 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 to the providers, a new way to generate money, so 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 an idea to offer a similar service like Fulfillment by Amazon but much simpler and a much minor scale.
That’s how Club de Gorras Boost born. We start offering services for man clothing brands, in a few words what we offer was: store your inventory in our warehouse, take pictures of your products, upload your products to our website with our photos and our descriptions, taking care of shipping and customer support, promote your products in social network and with paid ads, sell your products to our customers, give all the information about who bought your stuff and pay you monthly for your sales.
So you, as a brand, need to define the price of your products, how many do you want 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 reach ~60 customers, and we had +3000 new products on our platform without writing a check or paying for that inventory. The best part? We help 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 we had 100% devaluation that year? That means being around 60% of what we achieved in the same month last year.
We have a great Black Friday, Cyber Monday and Chrismas sales that year, great in a number of items sold, but not really great in revenue. Our margin was not the same as if we bought the inventory.
I usually find myself very thoughtful during December. I taught we were doing a lot of effort to get a really small piece profit. 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, people stop wasting money on stuff that is not a necessity good.
We were fighting against the monthly revenue we got from the company to reach breakeven. I was not living or taking any money from 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 hard. After almost one year of really hard efforts to keep the company alive, pivoting the business model, injecting money from our pockets and taking lots of risks. It was really hard to fire the remaining employees, telling them that we can’t keep the company alive and knowing it was a really hard time to find a new job.
We decide to shut down our website on March 1st, 2019, and closing the doors of the store on the same day. We started a process to return all the products to our fulfillment customers and pay 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 worst than on March. 1 USD equals to 60 ARS, the currency lost 35% of its value at that time. Argentina has an unclear economic, political and social scenario for the next 6 months due to the change of power (or not) on the government.
The situation is pretty much this: a) we keep the president that make all this chaos or b) the previous president come back to the power (his family has been on the presidency for 12 years in a row, some people blame them for all the crisis we have in our country right now).
How about me? I am doing really great! I moved to Playa del Carmen, Mexico to a paradisical location, I live close to the ocean. I am really focused on my role at Royal Legal Solutions. Have been visiting the company in Austin, Texas for the first time a few weeks ago and it was a really great experience.