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How to Start a Manufacturing Business | Featuring Tecovas

by Pablo Fuentes | Last Updated February 17, 2017
How To Start Manufacturing Business

Let's face it, when we think about startups, we think about social network giants like Facebook and Twitter or on-demand companies like Lyft or Eat24.

We don't think about the manufacturing business. 

However, companies like Warby Parker, Bonobos, and today's podcast guest Tecovas is starting to change that perception.

They are all part of the "hardware renaissance".

It's no longer about the cloud, it's about physical products. 

These companies are disrupting the manufacturing industry by leveraging technology to manufacture top notch products for fair prices that they sell direct to consumers, circumventing distributors and stores.

In today's episode of Small Business War Stories, learn more about how Tecovas in Austin, Texas is changing the way high quality cowboy boots are produced and sold.

Listen to the podcast:

Show Notes

A summary of our interview with Paul Hedrick from Tecovas is below.

You can use the links below to jump to your interests.


What inspired you to start a boot company, and how did this all get started?

Paul Hedrick: At my last job, I was working at a consumer private equity firm. Essentially, my job there was to help run and operate our consumer businesses. These were fashion companies, CPG (consumer packaged goods), actually a candy company is what I spent the most time on oddly enough. After working there, I wanted to build my own thing. I wanted to be my own boss.

I thought about the path to being your own boss, either working for someone else for a while and taking over the company. I got a little impatient and thought about the easier path to get to be your own boss, and I had a desire to create something from scratch and build something and see a physical product to market.

What are some of the pros and cons of making a physical product?

Paul Hedrick: One of the big pros of having a physical product is that it's just really cool to hold something. It also makes the business simpler at the end of the day. We make a boot, and we sell it. That is, at the end of the day, the whole business. It's nice it's that simple. The problem is you get a lot of the kind of old school problems when you're in an old school manufacturing world.

You can get delays if there's a product defect that ever happens, and luckily we haven't had anything major happen, but it's really hard to correct those. You can't just send an update out to your users and fix a bug right away. You might have inventory out there. You might have people that are complaining. You always have to make sure that your product is really safe. It's a boot at the end of the day, and our product can't really be that dangerous, but there are some people's products where that is not the case.

You make all cowboy, western style boots, right?

Paul Hedrick: Yeah. We are aspiring to be the best western boot brand on the market. We also aspire to be the best value boot brand. We're charging a lot less for our boots than most of our competitors will charge for similar quality boots due to our business model, but really our goal is to be the best.

A lot of boot companies sell through networks of distributors and stores, and you have a show room here in Austin, but your business is direct to consumer. Can you maybe tell me a little bit more about what that means and why did you make that choice?

Paul Hedrick: Of course. Yeah. We are actually the only national direct consumer cowboy boot brand. We were really inspired by a lot of other brands in other categories who've done this business model. Warby Parker, Bonobos, Tuft and Needle. A lot of these companies have made big impact on their categories, so that was the inspiration. That was the main reason went after it, but the real value is the value that you can provide for the customer. The day that you decide that you don't want to sell to retail, and that is a decision we made on day one, you end up getting all this price flexibility. You don't have to leave room. I mean, if you go out to a store, if you go to a boot store in Austin, a boot store really anywhere in the country, you're paying for a boot half the price of which is a margin that's going to that retailer.

The way the industry works is the brand will make the boots. They'll pretty much double of the markup of the cost of boot to sell as a wholesale price to the retailer, then they'll double that price again. It's kind of four, five times the cost that it took to make the boot. We literally just cut out that second step, charge that wholesale price straight to customers.

We decided to go right to the high end, to compete with the boots people are selling from $500-1,000 dollars because that's where we felt the most value would be for the customer.

How do the large boot brands that shall remain unnamed perceive you?

Paul Hedrick: We've been trying to stay under the radar at least from the staying out of their way and such. The reality is no one's ever comparing our boots side by side unless they've got two Internet windows open. We're never on shelf with them. That parts a little interesting. We sometimes wonder how we're really being perceived by our competition, but we're not too worried about it right now.

Ideally that they just let us grow. Ideally they let us do our thing, and they don't respond at all. Yeah. I mean, to the consumer we certainly want to be viewed as a real alternative to the more expensive brands. We really have I think done that. We've converted a lot of customers from some of those high-end brands that have been around for a long time and charge a lot of money for their boots.

What's something that most people don't know about the boot business?

Paul Hedrick: Yeah. Well, one thing that I certainly didn't know was how big the industry was. That's actually what opened my eyes. We had been looking in investing at a boot business at my last job, so I had a bit of an inside look in the industry and way bigger than I thought. It's a multi billion dollar US industry. That's one thing.

Second thing is that I learned pretty quickly looking into it was that pretty much all high-end boots these days in the last 20 years are made in not only one town in the world, but in one street in one town in León, Guanajuato, Mexico. So the first thing I did when I quit my old job is I bought a ticket to León and scheduled some cold meetings with manufactures.

Going to Mexico must have been interesting. How did they receive you when you made it there?

Paul Hedrick: Yeah. There was at least one warm intro, so that was fine. It was easy to get my feet in there. Frankly, one thing that I sort of regret not doing is asking for more help. I really thought that I could just figure it all out on my own and kind of a gringo going down there. I mean, I speak Spanish, so it made things a lot easier, but most of them were receptive.

Generally, they're pretty receptive to American business owners. They've seen a lot of American brands that do really well. Of course, I had to pitch in a little bit on a dream since we didn't exist yet as a brand, but really they're great people. They're all family owned factories. They really know their business.

What's the difference between the way you made your first boot and the way you make new boots today? What's going to change in your manufacturing going forward?

Paul Hedrick: Yeah. Great question. Our philosophy with our product is very simple. We're always going to be improving. If I ever find out about a way that boots can be improved or some construction method or some material that we're not using that's better, we're going to look into it. We're going to actually decide if it's better not only for us, but more importantly for our customers.

I would say at the beginning we've always done our best to find the best materials, the best construction methods, but along the way, a year and a half of full production mode, felt sign to customers, we've certainly found specific ways. They end up being small things, but when you add them all up.

What's one thing that maybe you did in the very beginning that you no longer do?

Paul Hedrick: I'll give you one good example. At the beginning, I really wanted it all. I wanted our boots to be the most comfortable boot in the market. I wanted them to be the best constructive boot in the market. The longest-lasting boot in the market. One thing we learned is that there's always going to be a little bit of a balance between things. For instance, there's a heel cap you can use. It's made of rubber. There are grades to how comfortable versus durable that is.

We've learned that first we went for more of a comfort, then we realized that people were willing to sacrifice a little more comfort in the heel cap specifically for it to last longer and not have to replace it. That's one thing we changed. The material that we use for the leather, it's really supple. We have a very strong reputation of being the most comfortable boots in the market right out of the box, but we also realized that you could actually make the boots a little bit more durable. This is the difference between it lasting for years versus a decade. That kind of thing. It's always going to be good, but by adding a little bit of a lining that takes out some of that kind of glove like feel. It's all about balance for us.

You started with calfskin boots and recently added a new line of ostrich boots. How does adding products affect your production, your inventory, your logistics, and your brand?

Paul Hedrick: Yeah. I'll start with brand. It's been our goal to have a really curated line. One of the things we do about our business is we don't offer personalization. We don't offer a lot of toe or heel of shaft options like a lot of people are used to.

The reason we do that is because we just wouldn't be able to offer the same value we did if we were doing one off here there. Footwear is actually tough because there are many sizes, which adds to SKU (stock keeping unit) complexity. The number of units that we have to keep on hand is kind of crazy. Any way we can simplify that is better. That being said, we really want to cement ourselves as a high-end boot brand.

If you're a boot brand and you want to be high end, the way that people like to expand is through exotic leathers. People who are boot people like to expand their line up not really through colors, but ... I mean, they do that, too, but through leathers and having cool leathers. The big thing for us that was a nice deciding factor was that exotic leathers happen to be really expensive in other boot brands, so it gave us even bigger opportunity to show just how much of a gap those brands are really charging when they're upselling the whole sale retail market.

Have you had any funny or interesting stories? You have to run across a whole bunch of interesting things that happen around boots. Does anything come to mind?

Paul Hedrick: Yeah. I wish there were more funny times. I would say usually when things go well is when nothing funny is going on, but there have certainly been some things I found really interesting. A lot of people think it's really cool that you're running a boot company. We've had some interesting opportunities that pop up along the way.

We got invited to sell boots at Willie Nelson's ranch last year, which was a really good time. They actually ended up running a little bit of a festival sort of thing during South by Southwest here in Austin in March every year. Just chance happenings have been really fortuitous for our brand so far. I ran into a guy at a co-working space who thought we were cool, and they wanted a boot company to come in and sell boots at this festival. It happened to be on Willie Nelson's personal property, which was really cool.

It's called Luck, Texas. There's actually an old western movie set on his property where this festival takes place.

We were talking about music earlier. Your favorite record of all time happens to be up on my wall. It's Townes Van Zandt's Live at the Old Quarter, which is a really soulful performance. We were talking about how a lot of musicians love your boots, and you working with the music community. Tell me a little bit more about that.

Paul Hedrick: I would say this is a personal advantage of mine from starting a company is that I love Texas country music. I love Americana Texas folk music. Songwriters like Townes Van Zandt are some of my favorite people out there. It was a really cool advantage to be able to have license to talk to some of these people and just say, "Hey. I own a boot company. Maybe we could work something out here."

Life in business is all about having fun, too. Yeah. We've limited our actual involvement with the music industry up to this point, but we're really excited about moving forward and gifting artists that we think are really cool. Our big thing is we don't want to dive into the traditional sponsorship world. We're a new brand. We're trying to do things a little differently. One thing we want to do is we definitely want cool people wearing our boots.

If you were someone who embodies that Tecovas style, you're classic, you're cool, you're Texan or what have you. Actually the majority of our sales are outside of Texas. We're happy to give you boots. We have worked with simple artists so far that are wearing our boots. Mostly on an unofficial basis, making sure they have a pair if they want them or need them. I think my favorite two artists that are still alive ... Rest in peace, Townes, would be probably Robert Earl Keen and Lyle Lovett. Problem with Lyle Lovett is he's a great guy, super nice guy, but he's got the best custom boot connection in the world. We would love for him to just have a pair in his closet. I don't even care if he ever wore them, but I'd be honored.

How do you want to grow in the next ten years, and what do you want people ten years from now to think when they hear the name Tecovas? And how will that affect your production, your manufacturing, and your brand and your product line?

Paul Hedrick: Yeah. Good question. I can talk about the kind of soft brand related perception things first. Like I said, we really want to be considered the best boot brand out there, but more importantly we want to be the one that, we want to be the brand out there that's democratized high-end boots so to speak. We've made them affordable for people that don't want to pay. They don't want to spend a week's pay on a pair of boots.

I think we can do that by offering consistent quality and really focusing on, like I said, simplifying our line up. Always being high end without getting too complicated. Ten years from now, I don't think it's out of the question for us to reach that goal of being what's considered the best boot brand out there. Really the best boot brand that has the consumer in mind. We're all about consumer experience, customer value, and we're not going to be relying on some hundred, 150 year old heritage. We know that's the advantage of the other brands. They're always going to have that.

For us, we're the people who are saying, "Hey. We have the fresh perspective. We're going to reinvent classic category. We're going to actually bring stuff back to the basics. We want our style to be stylish 20, 30 years ago, as well as today, as well as 20, 30 years from now." We're trying to be a little bit trend neutral. We're actually ... There's some style trends out there that we're not actually adhering to right now even though there's a lot of noise and a lot of customer feedback asking us to. We're politely declining.

How is Tecovas becoming part of the community and related to that, where do you see Austin going in the next ten years?

Paul Hedrick: Yeah. Well, I love Austin. I grew up in elsewhere in Texas. I'm a born and raised Texan. I chose Austin to start the company because I thought it would be the best fit for me personally and the best fit for the business, and one thing I loved about Austin is that in spite of all the growth in the last ten years, I don't think Austin has yet lost that vibe of really supporting local businesses, local brands.

I really think a huge part of what's driven our business in our first year has been just the fact that we're here. That's actually, coming back to the show room, that's one of the reasons we started the show room. I think being an online focused brand, we make our boots in León Mexico and have a distribution center in Illinois. We felt like we didn't have as much as an Austin connection as we wanted to. We actually went and got this house over in East Austin to have a stronger connection to the community. It's been awesome. We've been able to really connect with people physically here in town. They can really see that we're here, and we're ready to grow with this town. I think if Austin is all about being cool, music, being from Texas, but being a little different from the rest of Texas.

If you're going to start a technology-enabled, new age, thinking-about-things-differently cowboy boot brand, what better city than Austin? Yeah. I think it's going to keep growing, and I hope it keeps that same local supporting vibe which I think it will. There are so many cool concepts here that aren't elsewhere that are really homegrown here. We want to be one of those brands. We're always going to have business everywhere, but it's my goal to always keep Austin as our number one market.

Is there anything else that you want our audience to know about Tecovas? Where can people find you and is there anything that we haven't covered so far that you want to share?

Paul Hedrick: You can definitely find us at our website at tecovasboots.com. We're on social media on Instagram, Twitter, and Facebook. Email us anytime. We pride ourselves in having excellent customer service, customer experience. We're there to help.

Final Thoughts

The barriers to entry with starting a manufacturing business are coming down. It's getting cheaper to prototype products and the Internet provides an alternative means of distribution from traditional brick and mortar store locations.

Companies like Tecovas are using this model to sell an amazing high quality product for a fraction of the big brands.

They are part of a growing new type of startup focused on creating physical products and disrupting the traditional manufacturing industry.

If you have any question or comments about manufacturing or selling direct to consumers or about this episode of Small Business War Stories, please leave a comment below.

Topics: small business war stories, podcast

Pablo Fuentes

Written by Pablo Fuentes

Pablo Fuentes is the CEO of Proven. He is a graduate of the Stanford Graduate School of Business and UCLA. He is a Brazilian Jiu-Jitsu practitioner and a blues guitar player and builder.

 

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