Anyone can spot an opportunity. Anyone can identify a need. What matters is seizing an opportunity to meet a need. (As Steve Jobs said, that's what separates people who achieve from those who only dream.)
And that's what Jeff Lin and Dan Weinberg did when they launched FanChest, the Brooklyn-based startup that creates curated sports team gift boxes filled with exclusive, officially-licensed products that aren't available in stores or online.
For example, one Rangers chest included a coozie sweater for drinks, a cap, a t-shirt, a plush Henrik Lundqvist doll, a drawstring backpack, and other swag. A Memorabilia FanChest includes a signed puck from players like Zuccarello, Shattenkirk, or Lundqvist. And now there's a Baby FanChest, a "box of pure cuteness."
But they don't just curate NHL chests. Chests are also available for NFL, NBA, MLB, and a number of college teams. (And they're surprisingly cool; I've seen a Steelers FanChest, and $59 seems like a bargain.)
I talked with Dan about the idea for FanChest, how he and Jeff started the company, and about landing NFL quarterback Drew Brees as an investor.
Every entrepreneur superhero has an origin story. What's yours?
(Laughs.) I've worked in sports my entire career, with sports agencies, with NBC Sports... and I was the 6th employee at Tough Mudder. I worked on licensing, merchandising, and global sponsorships.
At the time we had 500k participants a year doing our events, but we only engaged them for 2 to 6 hours on a Saturday or Sunday. One of my goals was to provide more value to the event sponsors and engage with our participants beyond just an event day.
That's where the idea came from -- from that premise of building engagement.
So Jeff, a successful Wall Street guy, a great operator, we started researching the market and saw the curated box trend start to explode, but there was nothing in licensed sports merchandise, a $15 billion dollar industry. There was everything from beauty to pets, but nothing in sports.
So we dug into it, created a simple website, bootstrapped a box for one NHL team... and found a huge gap in the gifting space. Females were looking for convenience and for curation for the men in their lives and for themselves. We had one team in the NHL and just kind of scaled it.
You started with the New York Rangers. Why that team?
We started with the Rangers because it was important for us to be able to talk to fans outside of Madison Square Garden: Did they see the value, does this business make sense.... we wanted to talk to people in person, so we walked around for hours just doing market research.
Plus the hockey market is incredible. Hockey fans are very passionate, the demographic has the highest income level per fan... it was a great place to launch.
I certainly see the value in direct market research... but I'm too shy to walk up to New Yorkers and ask for their opinions.
When you're starting a business, shyness is a disadvantage. (Laughs.)
It was actually pretty easy. We just walked around with a prototype chest and asked high level questions. We asked what people thought about the chest, about the products, whether they would buy it as a gift... and most people were more than willing to engage in that kind of conversation.
Sports fans are passionate, so when you present fans with products that are authentic, with products they like, and you ask them about their favorite products... starting those conversations wasn't difficult at all.
Speaking of products: Licensing is a huge issue for companies in the sports apparel, collectibles, etc space.
All of our products are officially licensed. But we don't manufacture them. We work with licensees and we curate, package, and deliver.
The fulfillment aspect of the business is an interesting story. When we started the business we were definitely bootstrapping, so we packed boxes ourselves. As we grew we decided not to take that on permanently; it took too much space, and we also weren't that efficient at it. (Laughs.)
Our customer satisfaction scores are extremely high, so that was a smart decision.
So what do you keep in-house?
Everything but operations: Marketing, merchandise, creative, it's all done in Brooklyn. We execute everything internally. One of the hardest parts with any startup is finding great people and building a great team. We're in Dumbo (a neighborhood in Brooklyn), and there are plenty of talented, ambitious people here.
We're up 300% this year from last year, and we plan to keep growing... and that means growing the right way, not just in terms of skills but also in terms of culture.
On the people side, Drew Brees is an investor.
One of our investors has a close relationship with Drew's team and introduced Fanchest to them. They loved it, and fortunately Drew liked us. (Laughs.)
We couldn't be more excited to have them involved. Drew brings a broad perspective to this: As a professional athlete, as a fan, as a businessperson...
The same is true for our advisory board. They've been there, done that. If you're starting a company, a great advisory board is invaluable. You can't know everything, but if you surround yourself with the right people, together you can come pretty close.
Since you're not subscription-based, that means your costs, including customer acquisition costs, need to be low enough that you can continue to grow.
That's why we started with determining our price point. Early on we had a $29 version, a $79 version... and our research showed in the gifting market the sweet spot was $59.
Then backing into it to get the margins right took some time. We did a lot of testing and concluded that we weren't going to be a subscription-based company, and knowing that meant we had to be sure we could be profitable on each chest sold. And we've been able to do that.
The next step is to get customers to come back over the lifetime of their experience. Since we work with over 100 cool brands, we can re-curate our chests every three months.
As for customer acquisition costs, one of the reasons our costs are so low is because we work with fan groups, influencers, etc. Our acquisition costs this year are lower than last year, which is a great sign.
Ultimately we're very data- and margin-driven. It's critical that we're profitable on that first purchase. So is building our repeat rate rate; that's a real focus for us as well. But it all starts with making sure we're profitable on each purchase.
Where do you go next?
We're working with Learfield Licensing Partners; they represent over 150 colleges in terms of their licensing decisions. We've done some tests and had great results, so college will be a big area of focus for us in Q1 and Q2 of 2018.
Baby Chests are also a huge area of opportunity; we sold out our initial runs very quickly. And we'll continue to expand our memorabilia chests that offer signed products.
Our goal is to be 1-800-FLOWERS of the men's gifting space. 80 percent of our customers are female, and 75 percent of purchases are mobile. So we're definitely on our way.