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Teespring Says It's Minting New Millionaires Selling Its T-Shirts, Raises $35M

162 points by sethbannon 12y ago

calcsam 12y ago
Congrats Teespring!
_almosnow 12y ago
Honest question. If your business is doing good, why would you want to raise money?
- dangrossman 12y ago
  To grow faster than your current cash flow allows.
- pcharles 12y ago
  As an example, a business can scale a lot faster with a $1M cash infusion than it can with just $50K in the bank.
- exhaze 12y ago
  When you're doing well is often the best time to raise money, as you can get more favorable terms.
- hbhakhra 12y ago
  As others said - grow faster than your current cash allows. You don't want to have scale just to support your current customers but be able to scale to support your future customers. One example that was mentioned in the article was building a factory. Obviously that requires a huge chunk of capitol but will allow the business to grow to fill the market that they have confirmed to exist. edit: typo
- deleted 12y ago
  [deleted]
- anigbrowl 12y ago
  Economics. Suppose you have a factory and a growing order book but you're running at or near full capacity; if you get any substantial increase in the number of orders, it's going to take longer and longer to fulfill them, and customers might start to go your competitors if they feel the quality of your service has dropped. This is a diseconomy of scale - you've run out of room to grow and the more business you get the lower your margins. The obvious solution would be to set up another factory. Suppose for simplicity that this costs $25 million and allows a doubling of capacity. suppose further that TeeSpring is making a profit of $100,000 a week (a completely imaginary figure - I know nothing about their finances). Because it's near full capacity that weekly net isn't going to increase much. But saving up the money to purchase the factory outright would take 4-5 years - an organic growth strategy - is plenty of time for competitors to move against you and pull away customers. So you have a couple of options. You could go into debt, either by getting a loan or issuing a bond that pays interest (effectively the same thing). Now some of your income goes on interest payments, but they're tax-deductible and after you've paid off the debt you'll still have the second factory. As long as the increased income resulting from the investment is greater than the cost of borrowing the capital then going into debt can be perfectly sensible - the same reason it makes good sense for governments to splurge on necessary infrastructure during periods of low interest rates, just like we're not doing now due to politics :-/ Another option is to issue equity, ie sell shares in the company to raise the money. For large firms this may not be any more attractive than debt, because shareholders will expect a dividend of some sort. For growing firms it makes a ton of sense because early investors are not so much interested in dividends as in the possibility for the shares to appreciate in value - who wouldn't have liked to invest $1 million in Google or any other large company back in the early days? This is ideal for a firm like Teespring that has a very simple and straightforward business model - manufacturing a basic consumer product like this is great from an investor's POV because it's so easy to analyze.
  - _almosnow 12y ago
    Thank you very much for that splendid explanation :) !
  - hanspeide 12y ago
    If only all internet comments were as good as this. Kudos!
- spatulon 12y ago
  My favourite analogy is that a successful business is like a machine that takes money and then, one hour later, spits out 1.2 times whatever amount you put in. You could start by feeding the machine $1, waiting an hour, then feeding the $1.20 back in, and so on. But you'll get richer far quicker if you persuade somebody to lend you $1M and directly dump that in to the machine.
  - coldtea 12y ago
    I don't think that's a good analogy or in any way illuminating the mechanics of the situation.
dangrossman 12y ago
It's surprising to me the degree to which Teespring has become part of the affiliate marketing community. The same group of people that normally spend all their time pushing "get rich quick" schemes, MLM programs, dating site ads on social networks and fake news articles about diet pills have really embraced t-shirts for some reason. There's a whole ecosystem of products around Teespring marketing businesses -- landing page builders, ebooks, video courses, mentorship and coaching, case studies, mastermind groups, etc. There's a hundred variations of "How I made $6,123 with Teespring and Facebook ads" posts out there, usually in connection with some other product. I wonder how they made inroads with that community, and whether those marketers ever create trouble for Teespring.
- dsugarman 12y ago
  a lot of the get rich quick and work from home schemes are illegal in one way or another, pyramid schemes, black market underground parcel shipping networks, etc. seems to me like teespring has a much better business model which can help people make money making something people want.
- wooyi 12y ago
  You become popular enough, you will attract all kinds of people to your platform/service. Including ones you may not want to be associated with. But this is great news for Teespring. Congrats to the team.
  - deleted 12y ago
    [deleted]
    - markovbling 12y ago
      It's simplicity - CafePress's website is complete chaos whereas TeeSpring is dead simple. Rudimentary comparison: there are 422 <a> tags on CafePress's home page and only 47 on TeeSpring's Further, once you're on a TeeSpring product's page, it's the only product there (focused call to action to buy that one product being marketed) compared to CafePress where the product page has a bunch of other "similar" and "recommended" products diluting focus. May be counter-intuitive but adding more options seems to be to CafePress' detriment.
jhonovich 12y ago
"At least ten, the company says, have become millionaires from the work." Does this mean they sold a million dollars plus worth of shirts OR that, after all expenses, they netted a million? The phrase millionaire implies the latter but that is a far higher bar to cross.
- joshuasortino 12y ago
  The latter. We have paid out, after expenses, millions to at least ten sellers on Teespring.
  - Retric 12y ago
    That still excludes any of their external marketing costs.
    - rosser 12y ago
      It also may not include any taxes owed. That's just as orthogonal to how much Teespring has paid out, which is the entirety of their claim.
      - smackfu 12y ago
        Right. That's why they should just say "paid out a million" (a statement of income) rather than "became millionaires" (a statement of net worth.)
  - hanspeide 12y ago
    Would be interesting to know who these sellers are. Are you allowed to disclose it?
jedberg 12y ago
If you want to build a huge business, building a platform where other people can make money using it is a great way to do that. eBay, AirBnB, Uber/Lyft/etc, Teespring. Even Google, with their adwords product (and reddit with it's self serve ads). There's lots of great businesses where people pay you for a service, but if you can create one where people make money when you do, they are heavily invested in your success.
- ______1 12y ago
  https://redditmade.com/ https://redditmade.com/ seems to be going with this idea as well.
- askinakhan 12y ago
  Yeh absolutely. It's another extension of the sharing economy. These kind of business models change societal habits and as generations shed, the sharing model will become more prominent (It's even been predicted by Gartner; not that this should be taken as gospel). Think about the amount of income you could make from renting your flat (AirBnB), Being a driver on Uber, Selling your skills on Udemy and now selling your fanbase personalised t-shirts on TeeSpring. Indeed it's similar to sites like Zazzle but adds a twist by combining the concept with Kickstarter. We are making entrepreneurs out of ordinary people, it's fking awesome.
  - innguest 12y ago
    > We are making entrepreneurs out of ordinary people, it's fking awesome. Or, people are naturally entrepreneurs stifled by regulation and AirBnB, Uber, Udemy and TeeSpring are simply allowing the people's natural entrepreneur spirit to shine through by shifting the compliance burden away from them.
    - deleted 12y ago
      [deleted]
    - unclebucknasty 12y ago
      >>We are making entrepreneurs out of ordinary people, it's fking awesome. >people are naturally entrepreneurs stifled by regulation and AirBnB, Uber, Udemy and TeeSpring... Not really. Renting out your house to someone is not entrepreneurial. Neither is driving people around in your car or teaching people. Further, I know of no regulation that prevents people from teaching for money. As far as Teespring "designers", those people are not entrepreneurs either. They are simply affiliates who market for Teespring and who also happen to give over whatever creative ability they have to Teespring with the hope of being paid for it. In all of these cases, the people being touted as "entrepreneurs" are no different from employees working as independent contractors, and in some cases it's worse. The only entrepreneurs here are the companies that built the platforms and convinced people to give over their time and resources to generate revenue for their business. One can make value judgments about whether it's good or bad for the people who participate, but to say that they are creating entrepreneurs is literally saddening.
taude 12y ago
How's this different than something like Big Cartel (http://bigcartel.com/ http://bigcartel.com/)? Not asking about business stuff specifically, but the usability or whatever-it-is that this newer stuff does that the older online t-shirt printing businesses don't? I don't really understand their story about starting because they couldn't find someone to make their t-shirts...
- michaelbuckbee 12y ago
  It's about who is taking the risk, with BigCartel you shell out money upfront to buy shirts + print (guessing how many to get in each size, how big an order you need, etc.) then try to sell them. TeeSpring is kind of like a Kickstarter, you setup a picture of what the T-shirt would look like when printed and then no money changes hands until you hit your "funding level" of a certain number of shirts, and there's no excess inventory because they only print exactly the right number for the sizes that people ordered. It's a really interesting model.
  - taude 12y ago
    Thanks.
  - pbhjpbhj 12y ago
    >TeeSpring is kind of like a Kickstarter // TeeSpring is almost exactly like CafePress or Spreadshirt or Zazzle or Threadless or ... isn't it? Aren't Reddit just moving in to this space (perhaps white-labelling one of these services?). Fair play to them if they broke in to this market (which seems pretty crammed) and took a relatively large slice of the pie.
twic 12y ago
T-shirt millionaires, eh? Reminds me a bit of the Team Fortress 2 item designers who are making a living out of it: http://www.kritzkast.com/mym-day-1-of-3 http://www.kritzkast.com/mym-day-1-of-3
mrmch 12y ago
Congrats to Teespring, this is huge :) Awesome to see a customer growing like this.
mathattack 12y ago
I have to believe this is a bigger play than just T-shirts. If they're in the "create your own retail company" business, they're either in comp with Amazon, or an acquisition target of them. Either way, it's an interesting position. When you look at their board, you see visionaries, not operators.

162 points by sethbannon 12y ago

calcsam 12y ago

Congrats Teespring!

_almosnow 12y ago

Honest question. If your business is doing good, why would you want to raise money?

dangrossman 12y ago
To grow faster than your current cash flow allows.
pcharles 12y ago
As an example, a business can scale a lot faster with a $1M cash infusion than it can with just $50K in the bank.
exhaze 12y ago
When you're doing well is often the best time to raise money, as you can get more favorable terms.
hbhakhra 12y ago
As others said - grow faster than your current cash allows. You don't want to have scale just to support your current customers but be able to scale to support your future customers. One example that was mentioned in the article was building a factory. Obviously that requires a huge chunk of capitol but will allow the business to grow to fill the market that they have confirmed to exist. edit: typo
deleted 12y ago
[deleted]
anigbrowl 12y ago
Economics. Suppose you have a factory and a growing order book but you're running at or near full capacity; if you get any substantial increase in the number of orders, it's going to take longer and longer to fulfill them, and customers might start to go your competitors if they feel the quality of your service has dropped. This is a diseconomy of scale - you've run out of room to grow and the more business you get the lower your margins. The obvious solution would be to set up another factory. Suppose for simplicity that this costs $25 million and allows a doubling of capacity. suppose further that TeeSpring is making a profit of $100,000 a week (a completely imaginary figure - I know nothing about their finances). Because it's near full capacity that weekly net isn't going to increase much. But saving up the money to purchase the factory outright would take 4-5 years - an organic growth strategy - is plenty of time for competitors to move against you and pull away customers. So you have a couple of options. You could go into debt, either by getting a loan or issuing a bond that pays interest (effectively the same thing). Now some of your income goes on interest payments, but they're tax-deductible and after you've paid off the debt you'll still have the second factory. As long as the increased income resulting from the investment is greater than the cost of borrowing the capital then going into debt can be perfectly sensible - the same reason it makes good sense for governments to splurge on necessary infrastructure during periods of low interest rates, just like we're not doing now due to politics :-/ Another option is to issue equity, ie sell shares in the company to raise the money. For large firms this may not be any more attractive than debt, because shareholders will expect a dividend of some sort. For growing firms it makes a ton of sense because early investors are not so much interested in dividends as in the possibility for the shares to appreciate in value - who wouldn't have liked to invest $1 million in Google or any other large company back in the early days? This is ideal for a firm like Teespring that has a very simple and straightforward business model - manufacturing a basic consumer product like this is great from an investor's POV because it's so easy to analyze.
- _almosnow 12y ago
  Thank you very much for that splendid explanation :) !
- hanspeide 12y ago
  If only all internet comments were as good as this. Kudos!
spatulon 12y ago
My favourite analogy is that a successful business is like a machine that takes money and then, one hour later, spits out 1.2 times whatever amount you put in. You could start by feeding the machine $1, waiting an hour, then feeding the $1.20 back in, and so on. But you'll get richer far quicker if you persuade somebody to lend you $1M and directly dump that in to the machine.
- coldtea 12y ago
  I don't think that's a good analogy or in any way illuminating the mechanics of the situation.

dangrossman 12y ago

It's surprising to me the degree to which Teespring has become part of the affiliate marketing community. The same group of people that normally spend all their time pushing "get rich quick" schemes, MLM programs, dating site ads on social networks and fake news articles about diet pills have really embraced t-shirts for some reason. There's a whole ecosystem of products around Teespring marketing businesses -- landing page builders, ebooks, video courses, mentorship and coaching, case studies, mastermind groups, etc. There's a hundred variations of "How I made $6,123 with Teespring and Facebook ads" posts out there, usually in connection with some other product. I wonder how they made inroads with that community, and whether those marketers ever create trouble for Teespring.

dsugarman 12y ago
a lot of the get rich quick and work from home schemes are illegal in one way or another, pyramid schemes, black market underground parcel shipping networks, etc. seems to me like teespring has a much better business model which can help people make money making something people want.
wooyi 12y ago
You become popular enough, you will attract all kinds of people to your platform/service. Including ones you may not want to be associated with. But this is great news for Teespring. Congrats to the team.
- deleted 12y ago
  [deleted]
  - markovbling 12y ago
    It's simplicity - CafePress's website is complete chaos whereas TeeSpring is dead simple. Rudimentary comparison: there are 422 <a> tags on CafePress's home page and only 47 on TeeSpring's Further, once you're on a TeeSpring product's page, it's the only product there (focused call to action to buy that one product being marketed) compared to CafePress where the product page has a bunch of other "similar" and "recommended" products diluting focus. May be counter-intuitive but adding more options seems to be to CafePress' detriment.

jhonovich 12y ago

"At least ten, the company says, have become millionaires from the work." Does this mean they sold a million dollars plus worth of shirts OR that, after all expenses, they netted a million? The phrase millionaire implies the latter but that is a far higher bar to cross.

joshuasortino 12y ago
The latter. We have paid out, after expenses, millions to at least ten sellers on Teespring.
- Retric 12y ago
  That still excludes any of their external marketing costs.
  - rosser 12y ago
    It also may not include any taxes owed. That's just as orthogonal to how much Teespring has paid out, which is the entirety of their claim.
    - smackfu 12y ago
      Right. That's why they should just say "paid out a million" (a statement of income) rather than "became millionaires" (a statement of net worth.)
- hanspeide 12y ago
  Would be interesting to know who these sellers are. Are you allowed to disclose it?

jedberg 12y ago

If you want to build a huge business, building a platform where other people can make money using it is a great way to do that. eBay, AirBnB, Uber/Lyft/etc, Teespring. Even Google, with their adwords product (and reddit with it's self serve ads). There's lots of great businesses where people pay you for a service, but if you can create one where people make money when you do, they are heavily invested in your success.

______1 12y ago
https://redditmade.com/ https://redditmade.com/ seems to be going with this idea as well.
askinakhan 12y ago
Yeh absolutely. It's another extension of the sharing economy. These kind of business models change societal habits and as generations shed, the sharing model will become more prominent (It's even been predicted by Gartner; not that this should be taken as gospel). Think about the amount of income you could make from renting your flat (AirBnB), Being a driver on Uber, Selling your skills on Udemy and now selling your fanbase personalised t-shirts on TeeSpring. Indeed it's similar to sites like Zazzle but adds a twist by combining the concept with Kickstarter. We are making entrepreneurs out of ordinary people, it's fking awesome.
- innguest 12y ago
  > We are making entrepreneurs out of ordinary people, it's fking awesome. Or, people are naturally entrepreneurs stifled by regulation and AirBnB, Uber, Udemy and TeeSpring are simply allowing the people's natural entrepreneur spirit to shine through by shifting the compliance burden away from them.
  - deleted 12y ago
    [deleted]
  - unclebucknasty 12y ago
    >>We are making entrepreneurs out of ordinary people, it's fking awesome. >people are naturally entrepreneurs stifled by regulation and AirBnB, Uber, Udemy and TeeSpring... Not really. Renting out your house to someone is not entrepreneurial. Neither is driving people around in your car or teaching people. Further, I know of no regulation that prevents people from teaching for money. As far as Teespring "designers", those people are not entrepreneurs either. They are simply affiliates who market for Teespring and who also happen to give over whatever creative ability they have to Teespring with the hope of being paid for it. In all of these cases, the people being touted as "entrepreneurs" are no different from employees working as independent contractors, and in some cases it's worse. The only entrepreneurs here are the companies that built the platforms and convinced people to give over their time and resources to generate revenue for their business. One can make value judgments about whether it's good or bad for the people who participate, but to say that they are creating entrepreneurs is literally saddening.

taude 12y ago

How's this different than something like Big Cartel (http://bigcartel.com/ http://bigcartel.com/)? Not asking about business stuff specifically, but the usability or whatever-it-is that this newer stuff does that the older online t-shirt printing businesses don't? I don't really understand their story about starting because they couldn't find someone to make their t-shirts...

michaelbuckbee 12y ago
It's about who is taking the risk, with BigCartel you shell out money upfront to buy shirts + print (guessing how many to get in each size, how big an order you need, etc.) then try to sell them. TeeSpring is kind of like a Kickstarter, you setup a picture of what the T-shirt would look like when printed and then no money changes hands until you hit your "funding level" of a certain number of shirts, and there's no excess inventory because they only print exactly the right number for the sizes that people ordered. It's a really interesting model.
- taude 12y ago
  Thanks.
- pbhjpbhj 12y ago
  >TeeSpring is kind of like a Kickstarter // TeeSpring is almost exactly like CafePress or Spreadshirt or Zazzle or Threadless or ... isn't it? Aren't Reddit just moving in to this space (perhaps white-labelling one of these services?). Fair play to them if they broke in to this market (which seems pretty crammed) and took a relatively large slice of the pie.

twic 12y ago

T-shirt millionaires, eh? Reminds me a bit of the Team Fortress 2 item designers who are making a living out of it: http://www.kritzkast.com/mym-day-1-of-3 http://www.kritzkast.com/mym-day-1-of-3

mrmch 12y ago

Congrats to Teespring, this is huge :) Awesome to see a customer growing like this.

mathattack 12y ago

I have to believe this is a bigger play than just T-shirts. If they're in the "create your own retail company" business, they're either in comp with Amazon, or an acquisition target of them. Either way, it's an interesting position. When you look at their board, you see visionaries, not operators.