An Interview with Marley Marotta, Co-Founder, Spirithoods
How did you come up with such an innovative and profitable product idea?
In 2010, Alex Mendeluk and I were making animal hoods to wear at Burning Man, and for fun we would wear them around. Alex was a little more outgoing than I was back in those days, and he would wear them out and around in Los Angeles. People freaked out about the hoods. We realized by the reaction from people on the streets that it was something that people really wanted. We weren’t thinking about creating a business yet: we were just wearing them for fun.
As I said, we were already searching for something to build into a business, and the hoods seemed as good as anything to do. It’s unique, it’s never been done before, and it’s not going to have any competitors (well, at least for the first year and a half).
We did start a pretty unique trend. Eventually, people did come into our space: they created knock offs and began competing really aggressively. In a way, it was flattering that we started this thing that was so cool, everyone wanted to get a piece of it.
How did you make the transition from cool product to start up business?
The transition was really interesting, and it was really fast, actually. There was this idea that we could either take some time, hibernate with the idea, get our stuff together, and really understand fully what we were doing before we did it. Instead, we took a different route. We were just like, “Let’s go.” We basically decided to go full tilt, as hard as we can, as fast as we can, and figure out everything on the fly.
When we started having those reactions on the street, we basically sat down with a bottle of tequila and talked about what this business would be for about 6 – 8 hours and wrote a basic business outline.
Then, the next week after that, one of our business partners (my brother) went to Guatemala. While he was gone, Alex and I started getting prototypes together. We found a seamstress, made our prototypes, shot them, and put together a basic line of 10 hoods, and applied for a fashion trade show called “Magic” in Las Vegas. It’s the fashion industry’s biggest trade show.
The trade show folks were like, “Yeah, I guess we still have an opening, but we’re going to need X, Y, and Z from you.” And we’re like, “What is X, Y, and Z?” We had never put together a line sheet in our lives! We put together all of this stuff last minute and got in there and we didn’t even have production handled. We only had prototypes.
The Magic show was a wild success. Everybody loved it. Still to this day, it’s the best trade show we’ve ever done, and it produced the highest sales. From there, we had orders, so we had to fulfill them. We went back to LA and just figured it out. We found a local manufacturer. It wasn’t easy, but when you have orders you have to fulfill, you make it happen.
Does SpiritHoods still manufacture in LA?
Yes, it’s really important to us. We love to manufacture in Los Angeles and keep the jobs in America. It is a high cost, but it’s totally worth it to have the quality that we have and that our customers expect from us. You can go out and spot a knock off immediately—they’re not as fluffy, they’re not as soft, and they don’t last as long. These people are trying to do what we are doing, and they just don’t quite hit the mark. You can instantly tell it’s a knock off. We’re definitely going to maintain that really high quality, and I know that manufacturing in LA is part of that.
How did PR fit into your growth strategy?
Due to the nature of our product, it had a coolness factor that has always been one of the things that stands out. Because of that, it kinda got pulled into the music scene culture, so a lot of musicians were wearing the product. A lot of actresses were wearing the product. Bruno Mars, Snoop Dogg, Keisha, the Kardashians, Justin Bieber. This was stuff we weren’t even paying for. It was just word of mouth.
People were taking notice, especially within the LA Scene. People know who we are, more so in the LA scene than anywhere else. I think that worked down here to our advantage to get our product on the right people for free. It immensely added to our growth. Within that market, that free natural marketing was the best we ever had. I mean, Vanessa Hudgens gave Conan O’Brien a grey wolf SpiritHood on air! No one gave her a hood to go on Conan. Next thing we know, we get 20,000 people to our website the next day. We’re just amazed by that.
When did the business start to really take off?
We had a pretty explosive growth in our second year, where we grew almost 500% and jumped from $1MM to $4.5MM. We thought the next year was going to keep growing, and we were going to continue to knock it out of the park.
We hit the point where we definitely thought we should take on a whole bunch of employees. I don’t know if it was the best choice. We planned for another 200% – 400% growth, and had it kept going, we would have been prepared for that. But sales actually declined a little bit with all the competitors that were entering the market with cheap knockoffs. Not to mention we were having all kinds of scaling problems from ecommerce (which is why we actually switched to Symphony Commerce), to sales team problems. It was a perfect little storm.
We weathered it well, but if I had to do it over again, I definitely would have kept it a little more lean. Just because you have money, doesn’t mean you need to spend it. But it was definitely a good lesson to learn.
There’s a lot of different ways that we can continue to grow the company. When you have an item like ours, it’s going to get sucked up into pop culture and you have a little wave, and then you come out on the other side, and it evens out. You can stack all those different revenue streams back up, and start to re-build it, and find different things like the sports market, or open up new territories, to find new revenue streams. We had a very interesting curve there.
That was another one of those things. After our first year, we had originally applied for a spot on Shark Tank. But back in those days, you had to sign a contract that basically took 3% or 5% of your company for the company’s life just for the opportunity to appear on the show. I think that because of the runaway success that we had as a company and as a loud, boisterous, expressive brand, Shark Tank wanted us on the show because we would be “good TV.” We have a product that people find interesting, and if nothing else, it’s a good conversation starter and it’s good entertainment. They invited us to come and tape, but the high fee wasn’t worth it to us, and we backed out of it.
Skip three years later to 2013, and now Shark Tank doesn’t take a percentage of your company when you appear on the show. We wanted some mentors, we wanted some people in the industry, and we thought that Mark Cuban and Daymond John could possibly be good fits for our brand.
We called Shark Tank last minute. I think we were the last ones to apply for the taping of that season. We managed to get all of our stuff in within a week, and I was actually in Santorini [Greece] filling out the paper work. We got back and barely had two weeks to prep all the information, memorize all the facts that we needed, and get on the show. And it was a really good experience. I think it was nice to hear the advice. And it was good to challenge ourselves to go out there and seek some advice on national TV. It’s not something you can do every day.
We wanted to see a partnership. But if it wasn’t going to be a good partnership, we wanted to make sure we had good TV, so they would want to air it. We went above and beyond: we had a choreographed dance. We tried to really make it entertaining.
When you tape, they don’t give you any promises that you will appear on the show. You’re taping with a number of people, and after they tape the show, they decide whether it is “good TV.” There are a lot of people they tape, but they don’t actually air all of the contestants. Originally, the crew told us that if our segment aired, it would probably be in February. So when we got the call in December, right before Christmas, it was perfect timing for us. It was like a having a second Black Friday.
(Editor’s note: you can read more about the Shark Tank results in the SpiritHoods Case Study).
Can you describe what it means to be a socially conscious brand?
Giving back to the community is part of our core values as a company. We exist to encourage people to be authentic, give back, and to be free.
Over the lifetime of the company, we took some pretty big losses. Still, we have donated about $150,000 to our nonprofit partners to date. Not to mention, we give away tons of product for charity auctions, and we also work with different nonprofits to try to be in a state of giving and collaboration as much as possible.
For example, we had the Ronan Thompson collaboration, which is to fight childhood cancer. It’s not donating back to endangered animals, but it is something that is very dear to us. It’s something that we’re very passionate about, and someone we had a personal relationship with. We made a hood for Ronan Thompson, who is a young boy that died at a young age from cancer. His mom called him “a spicy monkey,” so we made a hood called the Spicy Monkey. 100% of the profit from those sales went to the Ronan Thompson foundation to fight childhood cancer. And I think the total for that was about $20,000, which we were very proud of.
What’s the biggest challenge for the company to bust out and have another 500% growth year?
I think it is going to come down to marketing. We’re trying to think smarter with our resources. Originally, we thought if we got a ton more resources then we could make it happen faster. Now, with all of the experience we have under our belts over the last few years, we’re more confident in knowing what we need to do.
The better we leverage our product innovation into marketing, then that product innovation is going to pay off. We have a number of very strategic alliances and collaborations with major companies lined up that fit well with SpiritHoods brand. We’re very, very, very excited about them. These are companies that are experienced and well positioned in the market and already smashing it out of the park. We can learn a lot from them. And we’re also really excited to co-brand and do some amazing innovative new stuff with them, which is a big part of our marketing planning going into next season.
What’s next for SpiritHoods?
We’re really focusing on product innovation right now within our line. We feel that that’s the best place. We’ve tried to innovate before. We’ve brought in new things, but we’ve learned that we don’t want to get too far outside of what we do. So the next greatest thing that we’re doing this year is that we’re coming out with a jacket line that is going to be 4 or 5 styles and it’s all faux fur jackets with ears.
We’re hoping that’s going to be big. We’ve got a lot of new business development partners we’re working with to get us in the right places, and open up a new little trend of faux fur jackets. There’s a not a lot of faux fur jackets out, and we really feel like that’s a big place for us to open up and expand our market and get some new users. Grow the tribe.
What was your biggest lesson as an entrepreneur?
Be more present in the moment. Not to take what’s happening for granted. I think that we have a unique story in that it almost happened too easily. Everything was aligning for us. We had an idea, and the stars aligned and it fell in our lap in a way.
Not that we didn’t work hard – we were working really hard. But it happened so quickly. And I think learning to savor that, and not let that go to your head. Continue to operate from the standpoint of a lean start up, and don’t just think that your resources are only going one direction – up.
“Be more tentative in your decisions, even though you have great success,” is definitely a lesson that I will take with me. I don’t regret it because of the lessons that I learned. We lost a lot of money, and it was a very expensive education. But on the other hand, I feel we are much better businessmen and entrepreneurs going into any other business that we choose to do in the future. So it was a lesson well learned.
What does being successful mean to you?
Being happy and making those around you happy is the ultimate success in my world. Learning how to create spaces where you and the people around you can thrive is something that is so important. It’s a journey but it’s so rewarding when you push through and start to glimpse the other side. So success to me is happiness. Absolutely.