How Booty Bands & Barbells Hit $5.5M in 2020 Revenue and 50,000 Lifetime Customers (Interview with CEO Jay Crew)

Introduction and Brand Overview

Nathan Latka

00:00Hey, folks. My guest today is Jay Crew. He is bootybands and barbells. One of the founders and established female fitness brand. They're complete home gym educational content fitness app and their best tasting protein help women create long term results. Their goal is to end the toxic weight loss loop for over a million customers by 2025. Jay, you're ready to take the top?

Jay Crew

00:20>> Let's do it. All right. And you are one of the co founders, right? I am. Danita Young is the other co founder. She's the face of the female fitness brand. I'm the guy behind it.

Nathan Latka

00:29And I'm going, why is this guy leading a female fitness brand? Doesn't make sense here.

Jay Crew

00:34>> Right. Yeah.

Nathan Latka

00:35Alright. So what's the what did it start off as? Was it an e commerce play to start or was it a protein powder or something else or that they had an app or what?

How the Business Started and Product Evolution

Jay Crew

00:42>> Yeah, great question. Yeah, we're the original bootybands. We own the trademark bootybands. We started off just the product, resistance bands, bootybands, made it a little bit different and better. And then from there, we really fell in love with our customers, not the product, and started making other products and barbells, dumbbells, protein, digital products, a fitness app, and it kind of all formed into a complete home gym from there.

First Dollar of Sales and Funding History

Nathan Latka

01:06So what year did get your first dollar of sales?

Jay Crew

01:09>> 2017, four years ago.

Nathan Latka

01:12And bootstrapped today or have you raised?

Jay Crew

01:14>> Bootstrapped it. Until 2019, we had a $100,000 in debt equity capital injected into it. Other than that, we bootstrapped the whole thing.

Nathan Latka

01:22There is a 100 k in debt in 2019, otherwise boot strap. I love that. And then give me a sense, like if you're comfortable, what's revenue today and we'll break up all the different products.

Revenue Breakdown and Steel Cost Pressure

Jay Crew

01:31>> Yeah. So last year was 5,500,000. Our run rate should be about six this year. We had to slow back the reins on scaling. We're planning to double our revenue. But I'm sure, as you know, anybody else listening to this, commodities have just skyrocketed lumber, steel. We were starting off in steel, which is their biggest selling product. 83% of our revenues are barbells and dumbbells. Steel went from $0.30 a pound to a dollar 40 in under a

01:54>> year. So our real main focus is figure out how to lower these cost of goods, get our gross margins better and get these prices down.

Nathan Latka

02:01Sorry. What did it go up? It went up to $1.40 from what?

Jay Crew

02:05>> 30¢. Woah. Fine. Yeah.

Nathan Latka

02:09Okay. So 83% of your revenue, your 6,000,000 comes from barbell sales. Where is the other 17?

Jay Crew

02:15>> The other 17 is resistance bands. So those are the actual booty bands, long bands, our fitness app and our protein.

Nathan Latka

02:22How much does the fitness app make?

Fitness App Metrics and Growth

Jay Crew

02:24>> Fitness app right now, we just started in November and it's growing about 6% month over month and we're doing we have about 800 active paid subscribers right now, so about 15,000 a month.

Nathan Latka

02:35Interesting. 800 paid. And what are they paying for? Is it courses or what?

Jay Crew

02:40>> Yeah. It's a fitness app, so it's just kind of like a content for specifically how to use the products and get into the community. Have essentially a personal trainer at their fingertips.

Cumulative Customer Count Since 2017

Nathan Latka

02:51And when you look at your 6,000,000 revenue this year, how many individual customers will pay at least $1, whether it's across the fitness app, bootybands, the barbell or protein?

Jay Crew

02:59>> How many individual customers? Yeah. That's a good question. We have 50,000 now.

03:07>> I won't know. I don't know the exact number of customers by the end of the run race. It's a good question.

Nathan Latka

03:11That means 50,000. Does that mean everyone since 2017 is paid you

Jay Crew

03:14>> at least a dollar? Yes. Okay. Our CLV to CAC ratio is 3.4 to one right now.

Customer Acquisition and CAC

Nathan Latka

03:23So customer lifetime value to CAC ratio 3.4. So tell me where you are spending dollars to get new customers.

Jay Crew

03:31>> Yeah, most all of our customer acquisition, paid customer acquisition is Facebook, Google Ads, and influencer marketing.

Nathan Latka

03:39And so what will you spend on a Facebook ad to get one new paid customer?

Jay Crew

03:43>> Our CPA in a Facebook ad right now is about hovering over a little bit of $100 and Google's under 75. So our blended CAC ratio with kind of all of our paid traffic channels is sorry, it's 120 and then 80. So our blended CAC ratio is about it's close to about, I think last I looked about a $100. Yeah. Yeah. Yeah.

Average Order Value and Margins

Nathan Latka

04:07Now, you know, CAC to LTV ratio can be fine, but, like, what's more interesting to me at least, money velocity, how pay that period, how quickly to get the money back. So what is your average cart if you spend a $120 to get a sale from Facebook? Do make that back pretty quick?

Jay Crew

04:21>> Yeah. So I mean, it's in direct to consumer. So we get it as far as receivables, you get paid right away. But our average order value right now is $268.

Nathan Latka

04:31Okay. Got it. So that begs the question. If you can spend an average of a $100 on a Facebook ad or Google ad to get a new customer that pays you $268 immediately, I guess you do have hard costs there. We mentioned the steel costs earlier. So on a $268 checkout, how much are you gonna make profit on that?

Jay Crew

04:46>> A profit on well, know what our overall month over month and year profit is, if that's your question. Sure. So right yeah. So right now, our net our gross margins are about 56% and our net margins are two.

Nathan Latka

05:03Okay, interesting. And I imagine those gross and net have come down significantly because of the increase of price of steel.

Jay Crew

05:08>> Yeah, I mean, that's what it is now. It's just because everything's made in The USA, which we're super proud about, but it's come down to the point where we're going to have to get these products made overseas, which we already have quotes and samples on. And we go from 56% gross margins to 78% gross margins and a 2% gross margin to a 12 net margin to a 12 overnight just from lowering our cost of goods. So

Debt Financing vs. Giving Up Equity

Jay Crew

05:30>> a lot of people are like, why don't you just debt finance this? That's that's an easy way. Right? Rather than giving up so much equity, which the cost of capital on on raising as opposed to debt is significantly higher.

Nathan Latka

05:42Yeah. Who do you ClearBank or someone like that?

Jay Crew

05:45>> ClearBank, just on debt financing there. You know, we don't have a lot of collateral, like large assets on the balance sheet or anything like that to get the 2,200,000 raise that we're going for. So some of it will be debt, but not all of it.

Raising $2.2M — No Closed Term Sheets

Nathan Latka

05:57You're raising 2,200,000 right now?

Jay Crew

05:59>> Yeah.

Nathan Latka

06:00At what valuation do you think?

Jay Crew

06:02>> Pre is 10 and post money is 12.2.

Nathan Latka

06:06Pre is 10. Interesting. And do you have term sheet already or you're still you're still hunting for the right partner?

Jay Crew

06:11>> No closed term sheets. Term sheets are out there. I would say we have data rooms, talked about it. I would say due diligence is pretty I'd say they're doing due diligence. I guess everyone's definition of that's a little different.

Nathan Latka

06:25But yeah. And why raise right now? I mean, why do you need more capital to grow? Why can't you keep self funding?

Why Raise Now and Use of Capital

Jay Crew

06:32>> It's just it's really expensive to buy. Like right now, thankfully, we're in made in The USA. If we're in China trying to get product, we'd have to buy a ton in advance and then wait months and months and months for it to get here. The great thing is, is it's kind of like buy on demand. So we buy a week in advance, two weeks in advance. And that's awesome. But we really want to lower these costs

06:53>> of goods. We want to increase these margins. We want to build $100,000,000 company and be one of the biggest female fitness brands on the planet and expand and move our product line from just these one off barbells and to 60% of our revenue being consumables, other protein powders, protein flavors, protein bars, really focus on the app where it's monthly recurring revenue subscription products.

Customer Demographics and Funnel Strategy

Nathan Latka

07:16Let me ask you, when I look at a lot of your guys'landing pages, the top of your funnel is usually the lower margin product. It's the physical asset versus the digital subscription, which margins are much better on. Why not flip the funnel? Like, why don't you put the digital stuff at the top of the funnel and upsell barbells later?

Jay Crew

07:33>> Yeah, it's a good question. So, one, of course, the average order value is really great. Our barbells are a huge hit. The conversion rates are great on Amazon and direct to consumer on our website. There's nothing like it. Like I said, we're the first female fitness home gym. The majority of our customers, 85 to 90% of our customers are women who wouldn't be caught dead in the gym in the first place that we gave them a

07:55>> solution that they never had. And we're really proud of that. And so the fitness app, there's a lot of apps out right out there. Right. So cost to acquire customer we've tried on a fitness app is is much more expensive and tougher. And a lot of people, our customers are typically not going out there looking for apps. And like we're really, really good at creating content. So the content that we create, that is our paid content

08:17>> and stuff like that, it's really catching and really speaks to the pain points of our customers who want a home gym solution. So that's kind of the direction why we went there.

Nathan Latka

08:26Interesting. Can I take that average order value $268 divided into your revenue this year, 6,000,000? That would mean about 22,000 customers are checking out once for $268. Does that sound about right or no?

Jay Crew

08:39>> If you did the math right, that's probably right. Yeah. So Cool. That's super cool. What else can you like, are

Nathan Latka

08:45there opportunities to upsell other things? What's, been the most effective upsell for you and and and and how do you determine whether you upsell someone else's product versus building it internally?

Upsell and Cross-Sell Approach

Jay Crew

08:55>> Yeah. I mean, we're doing a lot of complimentary products. If you buy this, we have a complimentary product that goes here. We're really focused on the complete home gym and getting people like everything that we have so that they kind of self identify with the brand. And all of our products are in their house. Like we have our barbells and dumbbells in the corner of their house and we have our protein in their cabinet and soon

09:17>> to be female fitness supplements in their cap, you know, by their bedside and their fitness app on their phone. And so our upsells kind of complement each other depending on what they buy. And so we do a pretty good job at the upsells and cross sells there. And the other question was regards to other people's products, you're saying? Yeah. Partner versus build. Yeah. Think just being the brand, we've just kind of focused on what we're good

09:42>> at and our products. We haven't really ever explored like a really intense JV collaboration or anything like that. Mhmm.

Cap Table and Equity Split

Nathan Latka

09:50How what's the capital effect today? How much do you own?

Jay Crew

09:53>> Danita and I own 50%.

Nathan Latka

09:55And where's the rest?

Jay Crew

09:56>> And the rest was, another part of that came in for a 100 for the 100,000 that, at the time, we only were doing $300,000 in revenue that year and injected the 100,000, and he owns the other 50%.

Nathan Latka

10:09What year was that? Were you doing 100 can sales?

Jay Crew

10:12>> 2018.

Nathan Latka

10:15Okay. Got it. Got it. And that's different than the 100 k debt that you raised.

Jay Crew

10:18>> That was it. Yeah.

Nathan Latka

10:21Wait. That that 100 k was the debt and he got 50% equity?

Jay Crew

10:25>> No. Sorry. Did I say that was the equity that we raised, the 100,000. Yeah. There was no debt with the 100,000.

Nathan Latka

10:30Raised debt right now.

Jay Crew

10:32>> No. No. Sorry. That's that's what I if if that's what I said. That's not what I that's not what I meant. No. Misunderstood.

Nathan Latka

10:38Got it. So you effectively had a pre seed round in 2018 where you raised a $100,000 when you're doing $300,000 a year and you sold 50% of the business when you did that. Correct. Man, that's a big slug.

Jay Crew

10:50>> It was. It was a big slug. But I'm actually really I'm really proud of it because it actually took us to a new area in the country, allowed us to make barbells and dumbbells and everything here. And that investor, as it's like an angel investor, investor, is willing to dilute his percentage to bring in other investors in here to really get this company to where we want to go. So it was a it was a choice

11:17>> that we had to make. And at the time there was the protein collaboration, essentially the protein that we got was because of him. So I think without him, we wouldn't have had the protein.

Nathan Latka

11:27So fifty fifty split right now. How many are on the team?

Team Size and Structure

Jay Crew

11:31>> The team full time employees, six and contractors, five.

Nathan Latka

11:36Interesting. Any engineers full time to manage the app or no? No. Got it. Very cool. Any other big costs I'm missing besides steel?

Jay Crew

11:48>> No. That's the biggest cost.

Nathan Latka

11:50Yeah, very cool.

Famous Five Rapid Fire

Nathan Latka

11:51All right, let's wrap up here with

11:52the famous five man. Number one, favorite book.

Jay Crew

11:55>> Favorite book, Good to Great.

Nathan Latka

11:57Number two, is there a CEO you're following or studying?

Jay Crew

12:02>> Yes. Ezra Firestone is always a pretty interesting one for me, and then I would say,

12:11>> mean Dalio, I do not know. You got me on that one. I cannot think of anybody particular.

Nathan Latka

12:16Hey, for calling Ezra. Hey, I'm asking you, loves that space.

12:20>> Number three,

12:20what's your favorite online tool for building a platform?

Jay Crew

12:23>> For building a business overall?

Nathan Latka

12:25No, no. The one you use the most to build bootyband.

Jay Crew

12:28>> Shopify, you mean?

Nathan Latka

12:30Okay. That's and that's it. Yeah. Shopify.

12:32>> Yeah. Cool. Do you have to

12:33give them 30% revenue?

12:35>> Give Shopify 30?

Jay Crew

12:37They take 30% cut? No. They don't. No cut there. Okay. No. How many hours of sleep do

Nathan Latka

12:44>> you get every night? Seven.

12:46Good. And then married, single, kids?

Jay Crew

12:50>> Danita and I are partnerships, single, I guess you could say no kids. Our business is our kid. It cries and throws up on us every day and it's slowly growing up.

Nathan Latka

13:00Jay, how old are you?

Jay Crew

13:02>> How old am I? 38. Last question. Something you

13:06wish you knew when you were 20.

13:08>> That I wish I did.

Nathan Latka

13:09Something you wish you knew.

Jay Crew

13:11>> I wish I knew.

13:15>> Probably

13:18>> better cash flow management.

Nathan Latka

13:21Guys, there you have it. Bootybands launches an ecommerce product. The last 5,500,000 in sales. This year doing 6,000,000. I think that's growing really fast. Well, 800, females paying $15 a month for their fitness application. Team of 22 people, they basically bootstrapped today. They did give up 50% of the business back in 2018 for $100,000, but they're now raising 2,200,000 on a 10,000,000 pre. We'll see if they can get it done. Over 50,000 folks have purchased at

13:43least one product through the platform since founding in 2017. They want to be the biggest women's fitness brand in the world. Jay, thank you for taking us to this off.

Jay Crew

13:51>> Yeah. Thanks so much. Appreciate it.

Nathan Latka

13:55One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers. They try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM

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