What's the best way to build a successful B2B business when you're first starting out and have no track record? Start with small companies and easy "wins" and then work your way up to the big leagues, right? Jeremy Parker and Josh Orbach, co-founders of Swag.com decided to take the opposite approach, and they've proved that you can win faster by ignoring conventional wisdom and starting at the top--even when you don't have any contacts or relationships to help you get in the door.
Swag.com began with a simple observation: Times had changed but the $400 billion promotional products industry hadn't evolved at all. The branded items companies gave away at trade shows and to employees were very inexpensive, poor quality, and likely to be discarded rapidly. The founders had a hunch that today's younger buyers would prefer higher quality swag, even if they had to pay a bit more for it. They also observed that no one owned the domain name swag.com, so they quickly grabbed it.
Parker did some market research to confirm that their hunch was correct. "I went on LinkedIn and I cold-emailed hundreds of office managers, some of whom were willing to talk on the phone with me," he says. The founders had decided to focus their efforts on selling to office managers initially as these would be the quickest and easiest sales to make (trade show giveaways might need the approval of a marketing team, for example).
"There were three main things they told us," Parker says. "First, quality was most important. Second, ease of use--no one wants to talk to have to talk to anyone over the phone or have emails back and forth to place an order. Third was they wanted to buy from a company that they knew would take care of their brand."
Convinced they were on the right track, Parker and Orbach went on to build a website that completely streamlines the ordering process. "You find the swag, you upload your logo, and the system detects how many colors there are in your logo," Parker says.
Next, they went looking for products that would meet their quality standards. "Ninety-five percent of manufacturers didn't make the cut," Parker says. (They sell apparel from brands like Under Armour and Patagonia; some of their notebooks come from Moleskine.)
Just one thing missing.
Now all they needed was customers. So Orbach and Parker filled a bag with some of their best items and headed to New York. First stop: Facebook, where they knew no one and didn't have an appointment. (The multiple scandals and criticisms plaguing Facebook these days hadn't happened yet.) "We just felt like we needed to land Facebook," Parker says. (The multiple scandals and criticisms plaguing Facebook these days hadn't happened yet.) So they spent the day hanging around the lobby, striking up conversations with arriving and departing Facebook employees and showing them their samples. Eventually, someone brought them upstairs to the office and introduced them to the office manager. The Swag.com founders wound up talking with the officer manager for 45 minutes, showing off their products. "They weren't necessarily looking, but they bought about 150 t-shirts for $1,500," Parker says.
The next day, the founders went on to WeWork and again found their way to an office manager. (Parker says they would have pitched WeWork next anyhow if Facebook hadn't bought.) "When they asked us what other companies we had made swag for, we told them Facebook," Parker says. "They probably assumed if we had Facebook as a customer we must have hundreds of others." They probably also assumed that Swag.com had more than a single $1,500 order from Facebook.
WeWork bought 4,000 t-shirts. Parker and Orbach then went on to Bravo TV, repeated their strategy and made another sale. "Within the first month, we had six blue-chip companies to show off," Parker says. "We didn't care about how much money we were making, we only cared about the social proof. Having a row of logos on our site, showing whom we have worked with in the past will give customers confidence that if we can take great care of the Facebooks of the world, clearly we can do a great job for them."
With their track record now established, Swag.com is now focusing its marketing on smaller companies, Parker says. "Our sweet spot is 25 to 1,000 employees. Most bigger companies have a different process. They want you to become a preferred vendor. Everything is bid out among preferred vendors, so it's a race to the bottom and margin suffers."
In that regard, the sale to WeWork was especially valuable. Swag.com wound up partnering with the company, offering its products to WeWork's customers, and Parker says its products are the most popular in WeWork's "Office and Needs" section, beating out companies like UPS and Vistaprint. They also got a call from a WeWork customer who had one of their t-shirts and saw Swag.com printed on the label. Parker says Swag.com has brought in $2 million since it launched, and that sales have grown 400 percent in the past four months. It now has 12 employees.
What's Parker's advice to other entrepreneurs? "For us it made sense, but it wouldn't for every business, to go straight to the top," he says. "You have to have something to differentiate yourself. We knew it was the quality but no one would ever see those positives unless they trusted us."
Whatever your path is to standing out in the crowded marketplace, he says, "Just do it. Go and make it happen. If things don't work out, it's not the biggest deal. No one will do you a favor unless you put yourself in the position to make things happen."