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Ep. 77 - Finding Success By Going In the Third Door with Your Best Friends with Dan Demsky

Dan Demsky is the Co-founder of Unbound Merino. Unbound Merino sources nature's ultimate performance fiber, Australian Merino wool, to create apparel that can be worn for weeks or even months, without ever needing to be washed. 

Dan started this company alongside his two best friends, with the goal of minimizing the burdens of travel, so that you can maximize the experience of your trip. 

Dan had previously founded a digital media agency, and another clothing business prior to Unbound, so we see how those experiences shaped his decisions. 

Unbound Merino has been doubling revenue year over year and is set to do $4M+ in its 3rd year in business. 

In This Conversation We Discuss:

  • [0:38] Sponsor: Gorgias gorgias.link/honest
  • [1:33] Chase and Dan talking about great business books
  • [4:55] Reading about business makes you better at business
  • [6:30] Unbound Merino and their core product
  • [7:41] Dan’s story before Unbound Merino
  • [9:37] Using crowdfunding to test product-market fit
  • [10:54] Sponsor: Klaviyo klaviyo.com
  • [11:42] Crowdfunding campaigns are a great foundation for businesses
  • [13:21] What happens after a successful crowdfunding campaign?
  • [17:16] The importance of focusing on fewer things
  • [18:46] Sponsor: Postscript postscript.io/install
  • [19:16] What it’s like to run a business with your best friends
  • [21:56] Having tough conversations but working things out in the end is key
  • [22:56] Unbound Merino’s current and future focus
  • [26:11] Chase recommending Grin.co for affiliate marketing
  • [27:38] Dan is one of the best example of making it by “getting in the Third Door”

Resources:

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 Transcript:

Dan Demsky  

The name of the game is acquiring new customers and servicing your current customers and hoping that they come back [by] having a good product.

 

Chase Clymer  

Welcome to Honest Ecommerce, where we're dedicated to cutting through the BS and finding actionable advice for online store owners. 

 

I'm your host Chase Clymer, and I believe running an online business does not have to be complicated or a guessing game. 

 

If you're struggling with scaling your sales, Electric Eye is here to help. To apply to work with us visit electriceye.io/connect to learn more. Now let's get on with the show.

 

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Chase Clymer  

Welcome back to Honest Ecommerce. We had some internet issues before. But we're gonna make it work right, Dan? 

 

Dan Demsky  

Yes, we are. We'll try our best. 

 

Chase Clymer  

Alright. People don't know who you are. So let me try that again. (laughs) So, Dan Demsky is the co-founder of Unbound Merino. They are a direct-to-consumer Ecommerce brand. I'll let him explain the product and all that. 

 

But what you guys missed on the ruined recording was this discussion about the "third door" from a book that Dan is reading right now. So this came up because I just want to let everyone know that Dan and his team built a great business. 

 

They scaled to $4 million+ in under 3 years. Or around 3 years. But what it comes down to is there was no secret sauce. So that brought up this concept of the "third door".

 

Dan Demsky  

Yeah. I was only bringing it up because I just started this audiobook called The Third Door yesterday. And the premise is, in starting a business, there's three ways in which it could happen. They call it the "third door". They said that there are 3 doors in. 

 

So the first door would be where 99% of people are, there's a line up around the block to get in there. And it's going by the book and like starting a business with a traditional business plan and getting your education and all that. 

 

And it's the hardest way to get in but some people do. But it's just going by the book. And the second door is your billionaire [door] and you have all the access in the world. And the thing isf easy. 

 

And you're getting in with the VIP treatment and it's like, not anyone can get in that door. But the people who do, it's the easy way. But the real wave where most people that start great companies have gone into that place of success is the third door. 

 

And to get into the third door, you'd have to go down the laneway, bang on the back of the kitchen door to let the chef let you in, and then sneak your way through the kitchen. And it's all about that grit, about grinding your way in. 

 

And he interviews in this book, Bill Gates and all these extraordinary entrepreneurs. And the whole premise is that, a lot of people, they don't go in that traditional way, not because they have that access. 

 

Bill Gates didn't start as a billionaire. And he didn't do it in the traditional way. He created a whole new industry. And he completely redefined everything about the computer industry himself, but he did it in his own way. 

 

And that's really, I think, the way that... To start a great business, most people have to find that third door. They have to jump over that fence and claw their way in. And I'm only bringing it up because I just started this book. 

 

And I think it's a really, really good analogy. You have to find that third door. You have to do things your own way and figure it out on your own in a way that hasn't been done before. And that applies to, I think, most people who [want] start a successful business

 

Chase Clymer  

Yeah, that book sounds great. I'm definitely gonna check it out. It reminds me of 2 other books that I read last year. One was Small Giants, which is an amazing read. It's a deep dive into some very successful businesses that chose to get to a certain point and stop.

 

Dan Demsky  

I love that book so much and I could talk more about that after. But that book was... We needed money at one point. And had I not read that book, I maybe would have gone and tried to find some outside investor [and] some capital, and I probably would have had a partner breathing down my neck right now. 

 

But I read that book and it completely changed my brain about how I want to build this company. I would recommend that to anyone who's starting their own business

 

Chase Clymer  

Alright. Last last book recommendation. Probably not. We'll probably have more. But how about Good To Great?

 

Dan Demsky  

Yeah, that's the greatest. Yeah. You and I, we should be friends because we think the same, maybe. We read the same stuff. Because these are like foundational books for me.

 

Chase Clymer  

Yeah, no. It's great. It sounds so dumb. And I will be so honest on this podcast right now. Reading business books, 100%, helps level up your game. It's the easiest way to just cut out some work.

 

Dan Demsky  

100%. I have a friend who's a really big mentor of mine. And a few years ago, his business has always been... Since I've known him, his business has always been bigger. But he was like a real entrepreneur, writing a bigger company than mine. 

 

But over the years, I've seen him turn from an entrepreneur to a real CEO.  Closer to 100 employees now. And I've seen his transformation where it was not just this entrepreneurial grit he had. But really running a tight operation with really, really good management under him... 

 

And I said, "How did you do this? I've seen you evolve so fast, that it's so impressive." And he simply just said, "Just read." That's it. And I was out of my reading game. And that motivated me to really get back in. 

 

Because these books are written by people who have explored certain things and it's just like access to what their learnings are. And I think it's one of the most important things you have to do to keep growing is that you can't just read and not execute. You have to be executing and doing things your own way. But man, the importance of reading is substantial.

 

Chase Clymer  

Absolutely. So now that we're done talking about the awesome power of library cards (laughs), let's get into talking about your business, this awesome business that you've built here. 

 

So quickly, I guess, let people know what is the product? Give us a quick crash course in the background of Unbound Merino. 

 

Dan Demsky  

So we make... Basically, our core product is our t-shirt. We think we make the world's best t-shirt. We make simple clothing that has extraordinary performance. 

 

So our clothing is made with merino wool. It's nature’s miracle fabric, it's antibacterial, it's odor resistant. You can wear our t-shirt of ours many days in a row and it will never smell. We've positioned this towards travelers to help them pack less, so that they can experience more. 

 

So, instead of... If you're going away for a few weeks, instead of packing 14-15 t-shirts, pack 3. And if you can't get to a laundry machine, it's okay because you could re-wear the shirt. So we [recommend] this for carry-on travel, for overseas traveling. They love our stuff because it helps minimize their packing. 

 

But people buy our t-shirts because it's just the highest performing t-shirt that you can have. Sometimes they're environmentalists. They don't want to run their laundry machine too much. 

 

Sometimes they just like [that] it's temperature regulating. It's just like, imagine the most incredible performance fabric/stylish basics. So we created that brand.

 

Chase Clymer  

Awesome. And so when you guys were starting, this wasn't your first business. But was this your first Ecommerce business?

 

Dan Demsky  

Right before, I created a sock brand. And I'm proud of this brand. I liked what we created. They were socks designed by street artists. And we found really cool street artists in our city here in Toronto. 

 

We commissioned them to design a sock for us, and then we had a royalty deal for them. They make money for every sock that would sell with their design. And the problem with that business is we started it when socks were... 

 

They're starting to become really popular in a lot of cities. And especially like in New York and LA, funky socks will become the big deal. And that's the worst time to start a business because that's already popular. You've missed the boat. 

 

So while I think we created a really cool brand, we were never really able to get it fully off the ground. And I was running a video production agency on the side. That was my main business. 

 

So this was a side project. I couldn't get off the ground. So I love that business. But I was already looking for the next thing as I was struggling to find ways to get people to buy these socks. 

 

So Unbound Merino, it was an idea that came to me. I didn't have the capacity to do it. I felt like I didn't because we didn't have the money to do it. We didn't have the time to do it. I was running 2 other companies. 

 

But for a number of reasons, I just felt like this idea just made sense. It was the right time, it was the right product. I believed we needed to bring this to market because I didn't feel it existed. 

 

So we did a crowdfunding campaign as a way to not just get the funds to start the company, but to validate if this was a good idea. To [determine if] we have product-market fit? A year and a half on the side of running 2 other companies, my 2 business partners, and I would meet up every Friday night at 8pm. 

 

And we'd work well into the night until we were too tired or we had too much whiskey. And after a year and a half, we put together this crowdfunding campaign, let it go into the world. And the crowdfunding campaign was very successful. And we were off to the races. That's how we started the company.

 

Chase Clymer  

That's awesome. And did you do that through traditional crowdfunding websites like Kickstarter or something? 

 

Dan Demsky  

We did the Indiegogo

 

Chase Clymer  

Gotcha. I mean, they all roughly do the same things. There are quirks to any of them. I just want to know if you use an existing platform or did it yourself. I'm seeing some people launch crowdfunding things through Shopify.

 

Dan Demsky  

No. We did it through Indiegogo and it was the right decision for us because we were able to cut a deal with them that if we were able to raise 30% of our funding goal within the first 48 hours, they would feature us in their marketing newsletter, which is a very, very powerful email blast. It has a lot of people who read that and buy from it. 

 

So we pushed for that. We got that newsletter and it was huge for us. And you know, we went from having 0 customers and 0 people on our mailing list --when we started this campaign-- and we ended the campaign with our first 2000 customers. 

 

And that was enough for us to just get the word-of-mouth momentum rolling into our Shopify store, get repeat customers, and that was the basis of our customer list that we were able to do Facebook ads with. So without Indiegogo, I don't think we could have started this company and I'm a huge, huge proponent of crowdfunding. 

 

Chase Clymer  

Awesome.

 

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Chase Clymer  

That's a great way to start, especially when you're trying to validate the idea. I like that perspective. Like "Let's see if what we got here is working." And obviously it did.

 

Dan Demsky  

Yeah. And you know what, it forces you to consider all the things that you need to start your business. Like you can go and start writing a business plan. And I've never written a business plan in my life. But what is a business plan? 

 

So, this is what our brand is going to be and this is the [what] the customer is going to be.... You're doing all this stuff. But when you create a crowdfunding campaign, you have to get your product prototypes, you have to build the brand, you have to come up with all your brand messaging and brand imagery. It's basically a business plan and a pitch all at once. 

 

We jokingly call it a "millennial infomercial." Because you're piecing the whole thing together, and you're trying to sell the video not to the traditional TV audience, but [to the] people who clicked around on crowdfunding campaigns. 

 

And by the end of this crowdfunding campaign --aside from the fact that we came up with a brand name, all the brand messaging and brand assets-- we also found our suppliers, built supplier relationships, got prototypes, found a way into the market, and we executed it. And then at the end of it, the product-market fit was validated because we had 2000 customers that bought our product.

 

So it's like a business plan that actually builds in your attempt at getting into the market with it. So I don't even know how I could start this business without having done crowdfunding, considered we didn't have the capital. 

 

We didn't have the money. Didn't have the energy or time. Everything was pinned against us. I think starting this company, all the odds were not in our favor. Crowdfunding allowed us to have the platform. I'm forever grateful to Indiegogo for supporting that and the opportunity.

 

Chase Clymer  

And so what does it look like after a successful crowdfunding campaign? Obviously, you got to fulfill the orders and all that stuff. 

 

But I would imagine the first year after crowdfunding and starting this first business... What are some of the bigger hurdles that people need to think about? And maybe it's not even on the radar. Things that happened during that growth period that you guys had to... Challenges you have to overcome.

 

Dan Demsky  

It's a weird time because when we finished that crowdfunding campaign, we thought... Well, part of us wanted to pat ourselves on the back like, "Wow, we did it." We tried raising $30,000 and I think we ended up at $380,000. 

 

So we felt like we blew our funding goal out of the water and everything seemed so great. But we didn't really have a business. We just had an opportunity to start a business. We didn't have a business until we had a website, because we were just going for Ecommerce. 

 

A website that was up and running, and people were going to our website, and they were continuing to buy our product. Until we were there, it wasn't a business. So we had this moment of uncertainty of like, "Okay. Well, should we be excited yet? Do we really have anything yet?" And I left my other company. 

 

And I like both of the companies, because I believe that we had something and I was gonna go all in on this. So I was the first person to go full-time into this company. And we just started piecing together a Shopify website. Now, what's really cool about the whole crowdfunding thing is --like I said before-- you create all of the brand assets, and the design assets, and the brand messaging. 

 

So we just broke it all out of our Indiegogo campaign and we pieced it into a Shopify template. With very, very minimal development, we sort of hobbled together this website. And, to our surprise --I remember this very clearly-- we met up at a Starbucks, before my other partners had to go to their other jobs as they weren't full time at the time. 

 

And we were just going to update a couple photos on the website, throwing a little bit of coffee. And we didn't even announce our website yet. There was no launch. We didn't have a launch plan yet. We're just working on it. And we went to the Shopify back-end. Now the store was up on Shopify. 

 

It was live, but not fully developed and not launched yet. And there were about a dozen orders just sitting there. And we were just blown away. I couldn't believe it. I'm like "How did these people even find this website?" 

 

And they found us because we've already started shipping or crowdfunding and there was that word-of-mouth. So that's when I realized "I think we now have a business." But we couldn't rely just on word-of-mouth. 

 

We said, "We had to figure out what is the next thing before we relied on Indiegogo and their email list and their trending campaign for a bit, and the fact that we're driving ads to our Indiegogo campaign?" "What is it that we're going to do now that's going to continue to bring new customers or potential customers into our store?" 

 

So we went down the path of Facebook ads, and we went deep into Facebook ads. We got good at that. That worked out unbelievably for us. But it's always about figuring out what is your strategy for acquiring a new customer. 

 

For us, the first one was Facebook ads. And on the side, we're tinkering with SEO. But what we do is we focus one at a time. And we did Facebook ads for about a year. It was our core focus with a little bit of SEO. Now we're getting into affiliates

 

Google Ads came next. It's just... The name of the game is acquiring new customers, and servicing your current customers, and hoping that they come back [by] having a good product. 

 

So it's just a constant grind to find what you are, what you do, and to show them that this could benefit them or that they like it.

 

Chase Clymer  

I like how you mentioned that you need to pick a channel and focus on it. I see this happen all the time, when someone wants to grow their business and they are trying to do too much at once. 

 

If everything's important, nothing is important and it usually just ends up with failure. So I'm glad that from a founders perspective that you're sharing that same strategy.

 

Dan Demsky  

Yeah. And I think we got that from the Indiegogo thing. It was so simple when we're creating this Indiegogo campaign because all we had to do was make that campaign work. We didn't have to think about Facebook ads. 

 

There was nothing that mattered except "Let's make this campaign as good as it possibly can be." But then when the business started, it's like "Okay, well, there's a lot more that needs [to be addressed]. What about our email? What about our Instagram account?" You start to spread your attention. 

 

And if you spread your attention too much, you're not gonna do anything that great. So we tend to always try to focus on things. Really that's just like I heard like Steve Jobs at some speech he did or some interview, but that's like Apple's approach. 

 

They don't focus on a million things. When the iPod was the thing they were focusing on, it was the iPod. When the Apple Watch was the thing they are focusing on, that's what they're focusing on. 

 

So for us, it's like "What are the few things we can focus on?" I spent a lot of time there. And that's what we do. That's what we do to this day. And it just works for us. And I think it's just that. A healthy way to think in a healthy way to work.

 

Chase Clymer  

Absolutely.

 

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Chase Clymer  

So, I want to pivot a bit here because I think this is a topic we haven't really covered much. Partners and running a business with your best friends. I feel like that's gonna be a good topic of conversation here.

 

Dan Demsky  

Yeah. You'll hear all the time, business and friendship don't mix. I disagree. I think business and friendship mix beautifully. And you do have to keep them separate. But ultimately, my business partners have been my best friends since childhood. 

 

And people say, "Oh. Well, that could ruin your friendship." Well, if that's going to ruin your friendship, if a business is going to ruin your friendship, a great question is are you really friends? My business partners and I could just rip each other apart. Be very candid with each other. And we know it's all out of love. 

 

And we all want each other to just do our best. And we all want the best for each other because we're truly best friends. If we were in business together, we're still best friends. In fact, one of my business partners... My first business is a video production agency. And I ran that for 9 years. And he worked... We hired him. 

 

He worked for us and we fired him because it wasn't a good fit in that company. And when he had to go look for another job, we're talking about a severance package, because he's my best friend, I said, "Go find a job and we'll just pay you until you do it. Just don't be a slacker. Go get yourself a job." 

 

And he went, he found himself a job. And he worked there all the way until he became a business partner in my next business. But he's awesome in this business and he's the right person. He was the wrong person for that other business as an employee, but he's the right person as my business partner. 

 

That just goes to show that business and friendship could mix there, but they're 2 totally separate things. I love working with my best friends. It's the greatest gift I could ever have. Because every day, I go on Zoom calls. We do a Zoom call every morning even before Coronavirus. 

 

We were always doing a daily morning Zoom call. A daily huddle. We go out for beers together. We could talk about the company. It's like the line between what's having fun and what's working is very blurry because we work together and it's awesome. 

 

So I really think as long as you're truly friends with these people, if you truly have their best interests at heart, --we challenge each other to be better-- there's just nothing better than getting to business with your friends. And that's my opinion. That's my experience. 

 

Yeah. Even my previous business... You know what, so I have three best friends. [In] my other business, my other partner is my other best friend. He's not a partner in this new business, but we're still best friends. So that's just the way... I think that's the way I work.

 

Chase Clymer  

Yeah. I am on your side of it, as well. I think it is very easy to build a business with a friend, but you need to come into it... A business partnership is a marriage and you need to think of it like that. And you need to have tough conversations immediately. 

 

You do not want to wait. Because it will just build something up that's gonna make it bigger than it needs to be. You need to be able to be candid with each other and have really tough conversations or it's not gonna work out if you bottle things up.

 

Dan Demsky  

It's like... Again you're making something that doesn't need to be big [or] much bigger. And I think that's something that we do really well. And we had tough conversations. We've had a couple conversations where I was surprised at how angry one of my business partners has gotten. 

 

But we cooled off and the next day we came back and resolved things. Communication is key. It is a marriage. You're 100% right. And if you do it right, it's just the most fun thing in the world.

 

Chase Clymer  

Absolutely. Being an entrepreneur is super fun and then having people that you enjoy next to you for the ride just makes it that much better. Alrighty. So let's pivot a bit now to what's going on now. 

 

You guys are fully established. You guys are doing some awesome numbers. What are you guys doing to help grow like you said earlier? It's all about finding new customers. That's the only way to grow your business. So what are you guys doing these days to bring new people into the funnel?

 

Dan Demsky  

Well, we've really, really gotten good. Our SEO is great. We've got good in the Facebook ads. So that's cool. It feels like watering the plants now. We have done nothing with influencers or affiliates up until we're just starting that right now. 

 

So, it has almost no impact in our business at this point, but we see it as a big opportunity because we were... Our brand has been positioned as a travel brand and ever since the world changed when Coronavirus came to the picture, we're pivoting quite a bit with our messaging and trying to have a more holistic approach to what our brand is. 

 

But we're also looking at this as a time where... Since the travel industry has been hit so hard to travel influencers, it's maybe a really good time to approach them. Maybe in a previous era --pre-COVID-- it would be very hard to talk to some of these people. We're finding [that] they're very receptive and very open to having conversations about potential collaborations, affiliate relationships. 

 

So we're looking at this as an opportunity to connect with influencers that maybe are a little out of reach before. So this is something we're focusing on right now. 

 

And, in a few months from now or maybe in a year from now, this might have been one of the greatest opportunities ever that I'm just raving about, or it could be a big flop. bBut this is where our focus is shifting, and we're spending a lot of energy there. 

 

But the main thing that we really focus on is not acquiring new customers. It's creating great products and catering to the relationships we have with our current customers. So we've built up a pretty big email list. And our customers are really loyal. And we sell in over 100 countries now. 

 

So, we hobbled together some clothing designs not knowing how to make clothing when we first started the campaign. So now the most important focus for us is product development. When we first started our Indiegogo campaign, we hobbled together clothing designs, not really knowing how to do it well. 

 

Now we work with world-class product developers to not only tweak and improve our current products, but to bring new products into the fold. Because catering to our current customer base is more important than acquiring new customers because they come back, they're very loyal to us. 

 

They're the source of word of mouth, which is the best marketing that we have. And ultimately, the product will speak for itself. So product development and product quality is more important than acquiring a new customer by a mile. 

 

So we focus on that and we're focusing on affiliates and that is the narrow, laser focus that we have, at least for the next quarter or 2 quarters.

 

Chase Clymer  

Awesome. That's amazing.

 

Dan Demsky  

But except product development is not a 1 quarter/2 quarter thing. That's a forever thing.

 

Chase Clymer  

Oh (laughs) Absolutely. I think you always have to be innovating your products to keep your business going. I am going to be having my friend Myran on the show in a couple weeks and he is actually going to be sharing... They built their business actually pretty successfully through the just through affiliate marketing. 

 

So he's going to do a deep dive into that and I believe the platform that he uses for that --that he really enjoys-- is called Grin.co. It's not cheap. 

 

Dan Demsky  

[Can you say it] again?

 

Chase Clymer  

Grin, G-R-I-N.C-O like a smile.

 

Dan Demsky  

Mm-hmm.

 

Chase Clymer  

It's not the cheapest but he says it actually works. It's well-vetted influencers. And it's super interesting... I guess it's a... It's not really a SaaS. It's almost a service as a subscription. But their platform is really cool and it allows you to actually look for the influencers in your space, and see if their numbers are legit, and... It does a lot of cool things. 

 

So I'm gonna have him on and he's gonna [give a] deep dive into how they did it with that platform. So that's gonna be a super cool one. So I wish I had that for you now. So now I'm just... 

 

Dan Demsky  

Ah, I can't wait to listen to that. I just wrote the website down and I'm gonna check it out. But yeah, that's right. We're right at the beginning of that journey. 

 

So, maybe in a year from now, I'd be a good podcast guest for that. But right now, I have no idea what the landscape is. So even just getting that  website is huge for me.

 

Chase Clymer  

Absolutely. Well, with that being said, is there anything that I forgot to ask you about today that you think it'd be worthwhile to share with our listeners?

 

Dan Demsky  

Um, no. If people are just starting out... I like where we started with that third door thing. When we got into this, we didn't know how to make clothing. I had no experience in making this kind of clothing. I haven't had a successful Ecommerce business. I had no money, no time, no energy. I was just like... 

 

I promise you if this didn't work --This was where my thinking was-- If this business didn't work, I didn't even know what I would do after because I didn't want to go to my other business. I was so... It was just... I was done with it. And I don't even know how to write a resume. 

 

I was gonna go to Shopify and just ask them if they'd hire me. I was almost down for the count. But if you really do grind, if you do find that third door... 

 

I think I'm a good example of how little you could have and you could still make it happen if you just do the work and you just focus and you put your energy and heart and you believe that you can. 

 

So if there's anything I'd want anyone to take, it will be that and that's about it. Aside from that, I really, really appreciate you having me here. And it was great to chat with you.

 

Chase Clymer  

Awesome. Dan, thank you so much for coming on the show.

 

Dan Demsky  

Yeah, take care of man. Thank you.

 

Chase Clymer  

I cannot thank our guests enough for coming on the show and sharing their journey and knowledge with us today. We've got a lot to think about and potentially add to our businesses. Links and more information will be available in the show notes as well. 

 

If anything in this podcast resonated with you and your business, feel free to reach out and learn more at electriceye.io/connect. Also, make sure you subscribe and leave an amazing review. Thank you!