Born in Colombia, raised in Mexico, and college-educated in the United States, Mike Abadi comes from 4 generations of textile industry experts.
Abadi began his career as a New York investment banker, before realizing his passion was in entrepreneurship.
Various ventures led to his first major success as co-founder of tailored suits brand Arden Reed (now Hive & Colony), before launching D2C bedding brand Sunday Citizen alongside his wife of 6 years, with whom he has 3 children.
Since its creation in 2019, Sunday Citizen has grown rapidly to serve several home categories, with multiple collections and 3,000+ 5-star reviews; in 2021, company sales grew by 400%. Abadi speaks English, Spanish, and basic Chinese.
4 years spent living in China and 10+ years working with Chinese providers has earned him an in-depth understanding of factory processes and product sourcing.
In This Conversation We Discuss:
- [00:00] Intro
- [01:11] From investment banking to entrepreneurship
- [02:20] Mike’s experience in his first ventures
- [05:22] Why did Mike not give up?
- [07:27] The value in unsuccessful ventures
- [08:13] Where the idea of Sunday Citizen came from
- [12:24] Sunday Citizen’s go-to-market strategy
- [15:23] Expectations for marketing ad spend
- [17:11] Sponsor: Electric Eye electriceye.io
- [17:32] Sponsor: Mesa apps.shopify.com/mesa
- [18:15] Sponsor: Gorgias gorgias.grsm.io/honest
- [19:42] Sponsor: Rewind rewind.com/honestecommerce
- [20:12] Sponsor: Klaviyo klaviyo.com/honest
- [21:00] The relationship dynamics between C-Suite spouses
- [22:48] How Mike got lucky to leave China before the pandemic
- [23:27] Sunday Citizen expanding their product line up
- [25:10] Sunday Citizen products are more than just decorative
- [26:08] 2 problems that Sunday Citizen faced
- [27:10] iOS 14.5 leveled the playing field
- [28:01] Building a “true brand” through connections
- [29:05] Where to find Sunday Citizen
- Subscribe to Honest Ecommerce on Youtube
- Developing the world's softest home products sundaycitizen.co
- Connect with Mike linkedin.com/in/mikeabadi
- Scale your business with electriceye.io
- Download Mesa at the Shopify App Store apps.shopify.com/mesa
- Level up your customer support gorgias.grsm.io/honest
- Respond to any of Rewind’s welcome emails and mention HONEST ECOMMERCE to get 1 month free rewind.io/honest
- Get started with a free account at klaviyo.com/honest
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With IOS 14.5, I think that something that's really changing the Ecommerce game where it's not about pumping money into ads anymore.
Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game.
On this podcast, we interview founders and experts who are putting in the work and creating real results.
I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.
Let's get on with the show.
Hey everybody, welcome back to another episode of Honest Ecommerce. I'm your host Chase Clymer.
Good. Okay, thank you for having me.
Yeah, this is gonna be a fun one. You've got a pretty unique story here. So I'm interested to dive in. So take me back. You worked as an investment banker for some time?
When did you decide to turn down or quit --which some would say is a pretty decent job-- to just go hustle and be an entrepreneur?
Yeah. So for me, I saw banking as a great experience. It was something where I knew I would learn a lot during those years.
But pretty much I knew --before even going in-- that it was a temporary thing. I almost think of it as an MBA, where it was going there to learn.
But I always knew that my passion was on entrepreneurship, starting something of my own and that's why I went into banking with a different mentality.
It wasn't necessarily going there to build a career, but going there to learn as much as I can. And that's what I did. And I was there for a couple years.
And when an opportunity presented itself, I jumped in and started to pursue it.
Absolutely. And after you left banking, you had a few ventures, it seems. You want to give us a kind of a quick synopsis of what your first venture was like?
Yeah. So I... The world of entrepreneurship is very choppy. And Sunday Citizen was definitely not my first. And there was...
There's a lot of stories in the graveyard, a lot of ideas that I tried, and they didn't really work. My first business was selling renewable energy products for your home, everything from solar water heaters to solar panels, LED light bulbs... It was... We had a lot of a...
It's like when this whole eco-revolution was starting, and we thought that we wanted to help people update their.... Upgrade their homes through ecological products.
So that was my first day project right out of banking and it didn't work. We tried it for a couple years. It didn't work. I also tried selling electric motorcycles. Again, it didn't really work out. And there were a lot of misses.
And then I had my first hit sort of with a company called Hive & Colony, which does tailor made suits.
So, when I was in banking, I saw that there was this huge need for suits. And I had made my suits when I was studying abroad in Hong Kong with a local tailor that made my suits.
So I started to see that there was an opportunity to go after that banking market that I had been part of and offer this very unique product with a very high value proposition.
And we started with a concept that was called the "Tailor Truck" where we got an old FedEx truck, we retrofitted it, put a 3D scanner inside the truck, had some fabrics, a coffee bar, making it a nice experience.
And what we would do is that we would park outside of the investment banks. And when the bankers would go out for lunch and everything, they would come into our truck, get scanned, choose their fabrics, and 4 later, we would ship out their suits.
So that was a very interesting business. And that was the first business that finally started to show some success.
Absolutely. And so what I want to really highlight here is, you tried a lot of things and you had a lot of fails. Why didn't you just give up after the first one?
Yeah. Look, to tell you the truth, I was still... Once you go into entrepreneurship, it's difficult to go back into the corporate world.
For me, it was easy to go from corporate to entrepreneurship. But, you know, I dread the day of having to go back to corporate if I ever have to. And to tell you that was lucky, because in all of these ventures that I started, it all took me... All of them took me to China.
I had a lot of work being done in China, I was constantly traveling to China. I even lived there for a couple of years. And I became sort of like a China expert. And I even set up a little office that was doing all the sourcing of products for me.
And I would get people --unrelated to whatever business I was pursuing during those years-- that they would call me and say, "Hey Mike, since you have this experience with China, would you help me find x in China? Would you help me find this other product in China?"
And I was like, "Yeah, sure, why not? For me, it's easy. I'm already here. I already have my office."
And I started doing these like little side projects, which gave me that income that I needed to really survive all this time. It allowed me to have some income that took up a very small amount of my time.
And I was able to dedicate the rest of the time to all of these other projects that were not necessarily giving me a salary or an income. But I was able to do it because of this other side hustle that I had.
So I would say that that's what really allowed me to continue all these years as an entrepreneur until I finally hit what worked.
Yeah. So one last question about that phase in your life, which was... With all of those startups and some of them didn't work out, I'm assuming that there were lessons learned with all of them. And all of that is useful now.
Oh. For sure. For sure. The amount of lessons that you take out are invaluable. And it's... Everything starts to build on that. And the next project you launch, you'll do a better job than the last one.
Absolutely, I wish I had the fact. But there's like a startup thing. It's like founders that have done it before...
The more that they fail, the more likely they are to succeed, which is like a really funny way to think about it.
Right. Yeah. Because you'll learn what not to do.
Absolutely. So when did... Where did the idea for Sunday Citizen come from? People are always...
There's a lot of listeners out there, they want to be entrepreneurs. And ideating or coming up with something is something that I feel a lot of people struggle with.
Yeah, so my relationship with the whole business started... Like I mentioned, I had all these like sourcing clients that were asking to find products in China. So one of them was a hotel owner.
He owned several boutique... Very high-end boutique hotels here in Miami and North Carolina, and he's a guy who's very, very fabric-centric. Very focused on the softness of things right.
And with a lot of attention to detail. And he came to me with the problem which was that for his hotels, he was not able to find a blanket that was both machine washable [and] hotel-use friendly, but at the same time, that had that softness.
Everything that he found soft to his liking was too delicate. It had to be dry cleaned or whatever. So he came to me with this project, and that's when I... My family has always been in textiles.
My great grandfather was in textiles. I'm a fourth generation in the textile business. So I I had a lot of expertise in that field.
And we helped them develop this blanket for his hotels. It was strictly for his hotels at first. And the blankets were a huge success. This blanket is actually still being sold on our website. It's called the Casablanca Throw.
And it was our first product for these hotels And guests would come into the hotel. And when they will check out they will say, "Oh, I love the blanket, where can I buy it?" And they were like, "Well, we can sell it to you."
So we started to sell it in the lobbies of the hotels and we... It was almost like a 3 year beta, where we were constantly getting feedback on the product, making improvements, getting more feedback, making improvements, to the point where we had a really, really nice product.
Super soft, breathable, machine-washable... Everything you want in a blanket. So we... I mentioned that I had the suit business.
The business was doing well, but I had some problems with my business partner and he sort of forced me out of that business.
So I was looking for a new project. And that's when we approached this hotel owner. His name is Michael, and we said "Hey, let's partner together..."
Actually, it was me and my wife because my wife is my CMO. Her background is also in branding and marketing.
So we approached him and said, "Hey, let's get this... We have a great product. Now, let's take it nationwide." So his background before the hotels had been on... He had a very big brand that he sold to Black & Decker.
And the way he had grown that business was by going to wholesale, trade shows, and everything. And when we started to look into how to sell these blankets, that was the first instinct. "Let's go through the wholesale market, the channel, going to trade shows, etc."
But I had already received a lot of experience with my suit business on the digital marketing side. And my wife also had a lot of experience with website design and everything.
So we sort of pushed on saying, "Let's take this as a digitally-native brand, going direct-to-consumers through our website." And that's when Sunday Citizen as a website was born.
So we started... Our first website sale took place in the summer of 2019. And at first it was only blankets, that was our first day collection lunch.
Absolutely. So I know that people are going to be mad if I don't ask this. How did you find those first sales online? Obviously, you figured out...
You're like, "We're on to something here with everyone giving you that awesome feedback from the boutique hotels.”
But how did you take that and how did you launch a brand online? And how did you get those first sales? That's the most important [thing]. What was that go-to-market strategy?
Yeah. So I mean, as you mentioned before, one of the lessons I had learned from my previous business is you can have a great idea, but you have to have enough marketing for it.
Everyone has great ideas.
Right. Exactly. It all boils down to marketing and having a marketing budget that can really last.
So I went into it, knowing that we had to sustain several months of bleeding, of not making money, but being consistent with our marketing spend and knowing that eventually we would get to a profitable level.
So we came in with that conviction of saying "We're going to give it X number of months knowing that we're not going to be making money. We're going to have very high customer acquisition costs but eventually we'll get to where we need to end."
So we started... At the beginning, we were paying ridiculous amounts. We started basically mainly through... So our store is on Shopify. And all our marketing was being directed mainly to Facebook, Instagram, and Google.
At the beginning, our customer acquisition costs were extremely high, but we started to see a very good trend.
Even though we were being very unprofitable at the customer acquisition level, we started to see that the return rate was very good [for our] customers, which is not necessarily that obvious for a company that sells blankets. It's not how many blankets can you buy?
But we were seeing that people would buy our blankets and very soon --like literally a few days after receiving that first order-- they would like it so much that they would place another order.
And we started to see that there was this very good loyalty to the product. A lot of people were referring their friends to us.
And so even though we were still unprofitable at a CAC basis, we started to see all the right trends and behavior in our customers to give us that conviction to basically push hard ahead with marketing to the point where our customer acquisition cost kept going lower, lower, lower month over month, and eventually we were running a profit.
So that's... Once we got to that level, that's when we really started to push on our advertising.
Yeah. And this was 3 years ago...
...which for those that aren't following along with the way that customer acquisition costs are going, the pandemic just skyrocketed customer acquisition costs.
So the next question, you don't have to give me the exact numbers but could you share a range of what you're budgeting for these [marketing] spends monthly, just so people can understand how expensive it is to build a brand that way?
Yeah. When we first started, we were committing at least... I believe it was about $10,000 a month of just consistently trying different strategies, but committing to that amount of ad spend.
Once the pandemic, I mean, once we started to see that positive return on investment on our ad spend, that's when we really started to ramp it up. But we did have that...
...commitment for a while until we got there. No,
Oh absolutely. I tell people all the time, startups, that "You can build a brand still with paid marketing, but it's expensive, and you have to commit."
And I'm very thankful that you shared that honest truth there. It didn't work for the first couple of months.
It's an iterative approach.
I would say it took 6 to 7 months until we got to the point where our LTV/CAC ratio made sense.
Yeah. You got to get the flywheel started, which is...
It takes a lot, especially when you're going from ground zero. There's no organic traffic to really help you out.
Right. So yeah. But again, it took all those lessons learned from other businesses for me to go into this knowing and we knew what the budget was beforehand. And, you know, we went down with all that conviction.
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So you mentioned earlier that your co-founder and CMO is your wife.
I feel like that's gonna be an interesting dynamic. Do you have anything to share there?
Yeah. Yeah. It's better than it sounds, actually. It actually works (laughs). It's got its challenges because all of a sudden, we'll find ourselves still talking over business during dinner time.
And we have to say... It becomes like this constant work environment where we have to... We had to learn how to separate that and say, "Okay. We disconnect from work and our family time begins."
But at the same time, it was also... We're all... We're both on the same page. So for example, when the business started, we were developing so many products...
And we were not going to a factory and saying, "Hey, show me your products and I'll choose some colors, and I'll place an order." We were co-developing products.
So we were engineering products from the ground up, from the yarn all the way to the finished product. So, this was very, very intensive...
It forced us to be very, very hands on with the factories, and I had to be spending a lot of time in China for this. So my wife, she's on board, she understood what the business needed.
She agreed to actually move the family to China. We moved there to Shanghai with our two toddlers at the time. We had 2...
A newborn. Actually, she was 3 months old and a toddler in China, which not a lot of wives will agree to. It's definitely a challenge.
But yeah, we were all on board to make this business work and to do what it takes. So we moved to China. We moved to Shanghai.
And we were there basically until January of 2020, pretty much right before the pandemic. We got lucky because it was Chinese New Year.
So we left China before COVID started because of Chinese New Year, we went on vacation. We just took 2 luggages with us. We left everything in the apartment.
And boom, that's when COVID hit. And we haven't been able to go back to China since then.
We left everything in the apartment. Yeah.
Well, luckily, you've got connections there that can help keep things going.
Yeah, we have to send somebody to pack our things and FedEx them. (laughs)
So you guys have had a wild ride. You're doing very well now. Is there anything that happened, a mistake or something that I want to tell everyone else to avoid [to] any of our listeners?
Or maybe vice versa there's like a huge win that you're like "We did this and it worked out really well for us."
Yeah, so I think for us, [we're] focused on the wins. We're good at our marketing, but we really think that our strongest.... Our strength is product.
Our focus [is] on product, product development, [and] product quality. For us, it really is product first. So we were able to develop a lot of products very quickly which allowed us to go...
Like I mentioned before, we launched only with blankets. And then we thought to ourselves, "Okay, this idea of soft, easy, easy care, cozy experience that we have in a blanket, let's bring this experience to your whole bed, to your home."
We launched the loungewear collection and our marketing tagline was "Made to stay in." And this was, --I'm telling you-- 3 months before the pandemic (laughs).
All of a sudden we had this great collection of products that as people started to stay more [at] home [and] invest more in their homes, that's when our products really...
It really resonated and we'd like to think that a product is not so much a decorative piece for your bed, it's something that makes you feel better. It's a product that makes it feel... It's almost like...
Babies have their security blankies, they don't use it for warmth, they use it to feel better about themselves and that's what we found with our products. It was almost like a blankie for adults where they...
During the hard years that were 2020 - 2021, people were stressed. People were anxious. Not sleeping well. They really found almost this cocoon of softness in our product that just made them feel better.
So we were very lucky that we managed to develop this whole range of products before the pandemic, before I had to leave China and then...
But then, yeah. And then the real problem was something... I guess it's not just us, but it's something that as we started to grow, we started to grow very quickly, our inventory was not able to catch up. And this was not necessarily because of the logistics problems.
We had like 2 currents going against us. One was the fact that we were growing so quickly. So all our sales projections were constantly being over surpassed.
So we found ourselves without inventory. And then the second hurdle was what every other company is facing, which is logistical delays... Nightmares on every front.
So we had to face those two challenges simultaneously which was difficult. But luckily, we had a great team in China, people that... A team that I had built myself. And we were able to respond, I would say, relatively well.
Absolutely. Now, is there anything I forgot to ask you about that you think would resonate with our audience?
Yeah, I think that... I think there's a lot of new challenges that have come up with iOS 14.5. I think that's something that's really changing the Ecommerce game where it's not about just pumping money into ads anymore.
And yeah, look, I think that it sort of emphasizes the importance of focusing on a great product, and taking care of your customers.
Yes, getting new customers is important, but taking care of your existing client can give you a very big competitive advantage in this dynamic.
Absolutely, I think that's the advantages of building a true brand over just trying to make some quick money.
Yeah. And for us, it was actually... When we first started, we actually started selling on through our website and Amazon at the same time.
And we quickly realized that with Amazon, we were having to spend almost the same amount of money to acquire customers, but they were not really our customers.
They're Amazon's. So we got to a point where we're saying, "Why are we spending money on getting Amazon customers?"
And that's when we decided to really shift everything into our own websites. We stopped selling on Amazon.
And that's what allowed us to really build that connection with the customers. So we have all these touch points. We know what they want.
We're able to offer new products when we launch them. It's a whole relationship you built with them.
And our customers, thankfully, are very loyal to us. So that's how we've adapted to this new dynamic.
Absolutely. All this talk about these amazing products, Where do people go if you pique their curiosity?
Yeah, we'll make sure to link to in the show notes. Mike, thank you so much for coming on today.
Perfect, Chase. Thank you.
Alright. I can't thank our guests enough for coming on the show and sharing their knowledge and journey with us.
We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes.