Startup stories are often too reductive — an entrepreneur dreams up an idea, snags some co-founders, raises a bit of money and presto: success and riches.
It’s nearly never true. Even breakout successes like Slack that may feel straightforward have complicated stories. Amongst the most valuable startups there are hidden crises and disappointing quarters. Some famous startups even had to execute a hard pivot after their original idea flopped. Slack was originally a gaming company, Twitter was a podcasting platform and YouTube wanted to be a dating service.
But not all startups that struggle and eventually make it have to completely toss out their original idea. Some just need to shake up operations before seeing the sort of success they’d hoped for.
Social e-commerce and fulfillment platform Teespring is one such company.
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From a 2017-era round of layoffs and restructuring, the company is on an impressive, profitable growth curve today.
I was part of the reporting team that covered the company’s earlier struggles, which came after it raised more than $50 million in venture capital. So when Teespring wanted to discuss the numbers behind its recent growth, I was more than curious.
This morning, let’s look at how one startup found its groove a few years after we’d figured it was a done deal.
A comeback
Rewinding the clock, Teespring’s 2017 was a difficult period. The company had sharply cut staff as sales declined, cost reductions that helped push the startup from regular deficits into profitability.
At the time, reporting indicated that Teespring’s revenue fell off after it lost some power sellers and investments in goods other than T-shirts failed to materially improve its financial results. After the layoffs, Teespring raised $5 million at a diminished valuation to get back on its feet.
Today it’s interesting to see how much of the firm’s comeback can be found in those notes. Cutting costs and reaching profitability helped put Teespring on a stable financial footing, and more recent additions to its product line helped drive revenue, according to an interview with CEO Chris Lamontagne.
In his telling of the story, 2017 was a reset for the company that stripped it back to its basics.
Teespring focused on its core thesis of creating and selling products online, working to make the process as simple as possible, Lamontagne said. The company then set out to collect more creators to its platform. Teespring handles the creation and fulfillment of those orders, so individuals without e-commerce experience can scale up a merchandising business.
But a focus on creators was just part of its way back. Teespring also locked in partnerships with platforms like YouTube — TechCrunch covered that particular deal here — Instagram and Twitch. The services are places where creators hold a lot of sway, making them fertile ground to sell products.
Back in 2017, Teespring appeared to run into some risk with Facebook after the social service made changes, but today, its multiplatform strategy is a source of strength. By working with YouTube, Twitch and Instagram to bring its goods inside of their services, Teespring went to where audiences were, powered by creators who wanted to monetize their following.
The company’s earlier decision to sell goods beyond T-shirts has since proved lucrative, with Teespring offering a wider set of goods and even some custom items.
According to Teespring, it has seen “four quarters of compounding growth,” including 97% growth in Q2 2020, compared to the year-ago period. The pandemic has done nothing to slow the firm, with “average revenue per successful creator has grown by 31% since lockdown.”
And it has managed to diversify its userbase, with the number of “successful selling creators,” individuals who have sold a product through Teespring, up 213% since 2018. Finally, efforts to shake up its product mix have paid dividends, with the company reporting that “bespoke and nonapparel products have driven $49 [million] in sales since launching and are currently growing 109%” on a year-over-year basis.
Teespring thinks of itself as a software company that provides a vertically integrated e-commerce platform, Lamontagne told TechCrunch. So it’s not a marketplace, but a creator-serving platform, something that must cut down on customer acquisition costs.
Uphill
Don’t read the above and assume Teespring had a simple path; Lamontagne said it was anything but. According to the executive, the road back was filled with constant pressure and required enduring consistent hits. The company went through everything a company could go through, said Lamontagne.
Still, clear product vision, incrementally expanded distribution and knowledge of who one’s customer really is can make for a comeback.
If Teespring manages a major exit — or, if we are lucky, an IPO — it will show that startups don’t have to be perfect from the go. Sometimes you just have to refuse to give up and keep on refusing until you win.
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