Editor's Note: This article is part of a series profiling companies that started up for less than $10,000.

 

Company: Life Is Good
Initial investment: $200
How he spent it: Blank shirts, screenprinting, peddlers' permits; eventually, $4,600 on a used van and a computer
2014 revenue: $100 million-plus

 

--As told to Leigh Buchanan

I'll say this for doing things the hard way: It bakes heart into your business. Today a smart entrepreneur with a website can start making in six months what we were making after six years. We would have used that technology if we'd had it. Instead, we spent years building a company with employees we met at pickup basketball games; customers we joked with in the streets while keeping one eye peeled for the beat cop; and advice from retailers up and down the East Coast whom we dropped in on. It may not have been the most effective process. Definitely it wasn't the most efficient. But a lot of our company's values came out of that early need to do things cheap and in person.

Jacobs Gallery was the precursor to Life Is Good. My brother John and I launched it in 1989 when I was 24 and he was 21, with $200 borrowed from another brother, Allan. John and I loved art and designing, and selling T-shirts seemed like a good first step toward making a living from it. One thing we learned early is that people will often do you a favor if you're nice and not afraid to ask. A local screenprinting shop agreed to wait 60 days for payment on blank shirts and printing if we paid the per-dozen rate of $7 per shirt instead of the per-500 rate of $5. So essentially our supplier financed us. Later, when Jacobs Gallery became Life Is Good and we started selling wholesale, we leased a mobile storage container for $30 a month to use as a warehouse. We asked if we could leave it in the screen printer's parking lot and run an electric cord out of their building so we could string lights and work at night. They said OK.

In the early days, we were as direct to consumer as you can get. We set up on street corners with a card table. A Massachusetts hawkers and peddlers permit, good for one year, set us back $25; one for the city of Boston was $15. Those permits were no good in the best locations, like Harvard Square and Faneuil Hall, but we'd sell there anyway, one of us working the table while the other looked out for the cops. And we got friendly with the local brick-and-mortar retailers, so they didn't complain.

We met every single customer face-to-face. We asked as many as possible which colors and designs they liked or didn't, and we filled notebook after notebook with the answers. Today, for not much money, you can survey a lot more people with an online tool. Would that far more extensive data have been better than what we learned chatting with customers? Part of me thinks yes. Part of me thinks no. There was zero space between our brand and our customers: If we were out selling on Tuesday, and 10 people said they liked a style, we'd be printing more on Wednesday. Now everyone is trying to get as close to that old model as possible.

When we decided to expand to colleges, we bought a college guide and plotted routes that let us hit schools with similar student bodies. Our van cost just $2,200 at auction, thanks to another brother, Ed, who had a car dealer's license. We tore out the back seats to make room for sleeping and inventory, and sold them for $160. Those road trips doubled as research. We stopped at lots of stores en route to see how things were arranged and to find out what sold well. Again, it was way less efficient than reading about best practices online. But traveling from town to town, John and I talked through the secrets of products and merchandising that these mom-and-pop storekeepers were teaching us. Lessons learned that way last longest.

Jacobs Gallery barely broke even, and by 1994 John and I were supplementing our income with substitute-teaching jobs, working on designs in school art departments after hours. We were down to $78 when John came up with our mascot, Jake, who embodies optimism, and then we hit on the slogan "Life Is Good." Those shirts sold so well in the streets that we decided to try wholesale, which took off. We turned our apartment into an office, selling off almost all our furniture and using that money to buy secondhand desks and a table. Our first employee was Kerrie Gross, who lived upstairs and is now a partner. We drilled a hole in the ceiling and ran a wire between our apartments so we could make do with one phone line.

Our first major purchase besides the van was a Macintosh computer that we bought for around $2,400 in 1995. Kerrie wanted it to run the business; she also thought John and I could use it for design. We said no way--artists who use computers are phony. But we tried it and have never looked back. If we were starting the business today, we'd absolutely invest in good design software.

Another thing I'd do if we were starting today: spend a few thousand dollars to find one very compelling, true story that illustrates the power of optimism and then make a video about it. And I'd invite people to share their own stories. Technology can help you meet people, too. But you've got to use it in a way that gives them the chance to inspire you.

Life Is Good CEO Bert Jacobs: Grow a Community of 5 Million People
From the February 2015 issue of Inc. magazine