Wisconsin Public Television University Place Entrepreneurship in Society  Troy Vosseller The Student Entrepreneur: Founding Sconnie Nation  March 21, 2012 UP700   cc >> Jeanan Yasiri Moe: Good afternoon, everybody. This is Entrepreneurship in Society. It is a course that's offered through the University of Wisconsin School of Human Ecology. I'm Jeanan Yasiri Moe. We, of course, want to start by thanking our partners in this course, the Office of Corporate Relations, the College of Engineering Media Services for their technical support and for providing us with space, and we also want to thank our financial partners, the Ewing Marion Kauffman Foundation for financing this course over the many semesters that we've been able to provide it. They are a foundation based out of Kansas City, Missouri. We also like to thank our media partners in this course, Wisconsin Public Television and their University Place crew for taping today's lecture. I'm very pleased to introduce a special guest to this class today. His name is Troy Vosseller. He is a 2006 graduate of UW-Madison, and while he was an undergraduate here he started Sconnie Nation, a t-shirt company which he continues to own and operate. 

Troy's company focuses on producing apparel that targets people who herald from Wisconsin, people who live here, people who go to school here, but in some way identify with Sconnie. And I know that Troy is going to share more with us about what that means, that identity means in his talk. After earning his undergraduate degree, Troy went on to earn his MBA in entrepreneurial management and a law degree, both here from the UW. And in addition to running Sconnie Nation, Troy currently works as a supervising attorney with the UW Law School's Law and Entrepreneurship Clinic. That's a program providing free legal services to start-up businesses and entrepreneurs. Please join me in welcoming Troy Vosseller to tell his story of how, as a student, he started Sconnie Nation. [APPLAUSE] >> Troy Vosseller: Thank you. All right, thank you for having me today. It's a pleasure to come here and speak, and I can remember very fondly sitting in your shoes, whether you're an underclassman, a upperclassman, maybe some of you own your businesses here or are thinking about owning your own business or your going into maybe the corporate world and taking a job otherwise. Hopefully there's tidbits here for all of you to be able to appreciate and learn from, again, whether you're becoming an entrepreneur yourself or thinking about it or even with a traditional job, the concept is very much a live of intrapreneurship, so being able to think entrepreneurial within an existing corporate structure is also very important. 

For today's presentation, I think we'll kind of divide the history of Sconnie Nation, the company, into three kind of distinct parts. So we'll start with the founding of the company, the ideation phase, how myself and my partner came up with the idea and how we ultimately made the leap into starting a company. Next, we'll move into kind of how we grew the company and scaled it while we were still students here at UW, and we'll talk about some partnerships that we made during that time. And then we'll reflect a little bit on where we currently are as a company and some of the new things we are looking to do in the very near future that you guys will get a sneak peak of. So to begin with, as a background I'm originally from Brown Deer, Wisconsin, which is just north of Milwaukee. I came to school here in the fall of 2003 as a freshman. Lived in Kronshage Residence Hall, specifically in the Turner House, and met a guy who lived on my floor named Ben Fiechtner. Now, Ben and I never knew each other before. We had no friends in common, nothing like that, but we quickly became friends just by virtue of living on the same floor and quickly realized that we both had this entrepreneurial bug, this entrepreneurial spirit, and we wanted to start a company together. So we made just an informal pact that we would constantly brainstorm different ideas and try to put a company together for a few reasons. 

One, to make a little bit of money on the side, but perhaps more importantly to go through the process, the entrepreneurial process, and learn from it. So even if that company that we were starting wasn't ultimately successful, we would still have a fantastic learning experience that we could hopefully parlay into future experiences and future endeavors. So Ben and I would constantly brainstorm different ideas. At the time, on a monthly basis, there was an insert in the Badger Herald, I think it was called Young Money, and it was kind of this entrepreneurial college magazine. And it would talk about different businesses being started across the country by college students. And we would always thumb through the pages of that magazine and think of different companies that we could potentially start. So that kind of got the ball rolling in terms of what we wanted to do together. So, to be quite frank, our ideas ranged all over the map. So everything from an online dating service just for UW students, and this is before Facebook and a lot of other online platforms that facilitate that now, all the way to the other end of the spectrum which was to fill up gasoline containers with gas off campus and bring those back to campus to fill up people's mopeds so that if you had a moped you didn't have to drive off-campus. But needless to say, we weren't too passionate about smelling like gasoline all day or anything like that, so we just kept constantly going back to the drawing board until one night, it was the spring of our freshman year, so the spring of 2004, when we decided why don't we start a t-shirt company. 

So Ben and I had both used the word Sconnie up until that point as a way to refer to people from Wisconsin, like myself, or anything Wisconsin-esque. So really synonymous with Cheesehead. Now, to be very clear, we did not coin the word, we did not come up with the word, we didn't create the word, and we never claim to have done that. The word had been around, and people had been using it. We weren't the first to say it. We had heard it. That's where we got it, and that's where it became part of our vocabulary. But we really liked the word and what it stood for and our interpretation of the word, again, similar to Cheesehead in a way of gently poking fun at Wisconsin stereotypes like beer, brats, and cheese. And so we decided that we were going to brand that word. So even though we didn't coin the word, we didn't create it, we weren't the first to say it, we were the first to actually create a brand around it and create kind of a marketing message and a product line representative of that word, which we later trademarked. 

So with that, we decided why don't we just put Sconnie on a t-shirt. And so Ben and I both had experience in high school student council and clubs like that ordering t-shirts for different events. So we had familiarity working with screen printers and t-shirt companies, and so we got in touch with a screen printer by the name of Underground Printing who we still continue to partner with until today. So this is also a story of kind of long-time business partnership. So we went to Underground Printing. Ben and I each threw in $300 of our own money. So we started with $600, and we printed 100 shirts. So half of them were just a red shirt with Sconnie written in white print across the chest. The other half was a gray ringer t-shirt and it had the United States logo and said Sconnie Nation and had the state of Wisconsin filled in in red. So we started with $600, we ordered 100 shirts, we got those shirts the spring of 2004 of our freshman year, and we stared just selling them out of our dorm room. 

We ended up selling out of the entire batch in about a week, and I think we had a promotion about one for $12 or two for $20, and most people went for two. So we went through them pretty quickly, and at that point Ben and I sat back and said I think we're on to something. We had this idea, we put a little bit of money into it, and we had some very early success in terms of selling it. So one thing that I think is really key in the entrepreneurial process is having that early customer validation because I think too often companies put in too much time and money on creating a product or being in stealth mode, you might have heard, and ultimately when they launch there's not the uptake that they think or customers actually want different things, different functions, different designs than the founders, the entrepreneurs behind it actually thought. So I think getting out there with something in more of a beta mode, so for us it was just let's just throw this idea out there and see if it sticks, and luckily it did stick for us. Now, that's not to say we didn't keep improving and listening to our customers, which is something we still do today, but ultimately we had that very early customer validation which I think was very important to the overall process. So we sold out of our first batch, and at that point Ben and I said I think we're on to something. Even though the majority of our customers were people we knew, friends of ours, friends of friends, people who lived in the dorm, but we still made the decision to move forward with that venture. And so we talked to as many different people as we could, whether it was family members that were entrepreneurs, university professors, and other resources on campus and within the Madison community related to entrepreneurship. Frankly, and the thing I'll touch on in the next segment, there wasn't nearly as much in terms of classes. 

There were no classes like this for undergrads in entrepreneurship at that time. There were no support services geared directly toward undergraduate entrepreneurship. In fact, the majority of the campus initiatives related to entrepreneurship at the time were really externally facing, and they're looking at taking existing big business and seeing how they could leverage technologies that come out of the university, and they really weren't thinking about internal ideas that could come from undergraduates and start lifestyle small businesses, if you will. So at that point we formalized the business, we registered as an LLC, we trademarked the word Sconnie in the state of Wisconsin and later at the federal level, and then we made a pact really to constantly reinvest all the profits that we made back into the company. So for every batch we sold we would just put that money right back into the company, and that allowed us to order larger and larger batches. It allowed us to expand our product selection or our product mix so we could offer girls styles, sweatshirts, hats, you name it. So it was really a bootstrap, organic growth process. With that, we're also seeing economies of scale kick in because for our initial batch of just 100 shirts, let's say we were paying $6 a shirt at the time, if we were able to double the order quantity, let's say we were able to order shirts at just $5 a shirt. So our margin per shirt was increasing, and that, again, allowed us to put more money back into the company to retain as profits and to fuel really our growth. For the most part, we're selling shirts in person. 

So we're meeting people on campus. People might contact us and we'll meet them at the library, the Union. They'll come to our dorm room. We'll sell them the shirts there. Someone else will pick it up for them. We're also starting to launch our initial website. So one thing I'll touch on is I think college is a fantastic time to start a company because, for one, you have just such a unique, diverse group of people around you and that's diversity in background but really it's also diversity in ideas and diversity in skills. So, for me alone, I found my business partner, who is complementary to me in terms of my skills, on my dorm floor. Another guy from our dorm floor became the web designer for our very first website. So that's something, again, that as a result of being in this close-knit college environment we were able to find the people and resources that we needed. 

Another guy who lived on our dorm floor eventually became the store manager of our store on State Street and continues to be in that role. So the story is very much rooted in the college experience and the relationships that were made as a result of being a college student. So we launched our first website that had rudimentary e-commerce capabilities. So now people could order the shirts online, which was fantastic because up until this point you had to, essentially, live in Madison or know someone in Madison to pick up that shirt for you. Now people from all over who may have heard of the brand could go online to, originally it was SconnieNation.com, later we shortened that to just Sconnie.com, now those people could order online and get their shirts delivered to them anywhere in the country. So I'll pull up a picture, there's a cool website called the Wayback Machine which allows you to, it takes snapshots of websites from long ago. So, unfortunately, there's not pictures anymore, but you can see kind of how basic the site was, and it was really basic in terms of what people could order on the site. Ultimately, later, through multiple iterations, that became our main site here where people now order online, etc. So now we're selling online and we're finding a lot of traction with that. We're finding that people really get the brand and they know what our brand message is and what we're all about. 

So, at this point, we're now living in apartments, and Ben and I each have inventory, literally boxes of inventory, in our apartments. And we're fulfilling orders on campus in person, and we're also fulfilling online orders. So first it started on a weekly basis, we let online orders build up throughout the week, and then we'd go pull those orders, package them, hand-write the envelope, take them to the post office, ship them out. Eventually, that became twice a week, and then it became three times a week, and then it became every other day, and then it became every day. That really got to a point where we couldn't sacrifice any more of our time to meet the demand of the business. And so that forced us to think about different ways that we could scale this business that took that manual labor aspect of it off of our shoulders. So, at that point, we looked into third party retailers and selling wholesale. So we had this idea that we could just sell our most popular shirts to a store on State Street and have them carry it. Now, granted, we wouldn't be able to make as much money per shirt, so our margin would go down because we were selling it wholesale, but we would be able to drop off a huge number of shirts all at once, and then the store could take care of selling those. So, for us, our first go of it was with the store called The Den which was an independent novelty kind of convenience store on State Street located where Fat Sandwich Company currently is. 

So they occupied that spot. We knew that they carried stuff similar to this in terms of t-shirts and things like that. So Ben and I literally walked in with a handful of shirts in our arms. Luckily, the store manager was there. He had power to buy on behalf of the owner, buy inventory. And we literally walked out with cash. And we said, wow, that was pretty easy. So now we were kind of on cloud nine, and we're thinking let's keep trying our luck here. So we took that luck, we went to the bookstore and we got in touch with their buyer, and their buyer liked the idea and appreciated the fact that we were college students and didn't look at that as kind of a bad thing but really looked at it as a good thing saying I've seen your stuff get out in the marketplace and I think that you guys have a good knowledge of the customer base, so the target customer, the demographic. So she took a shot at it. 

And so we left that meeting with a purchase order for a case of shirts, 144. And so we were felling pretty good. Eventually, throughout the history of that time period, we ended up selling wholesale to The Den, UW Bookstore, Bucky's Locker Room, Insignia, Name of the Game, and a couple others in other areas of the state. And that was a very successful model for us because, for one, it allowed Ben and I to be able to direct people in Madison who didn't want to order online just to have it shipped somewhere else in Madison or the surrounding area. So now we could direct them to a store. They could see the shirt, hold it, try it on, everything like that. So that was fantastic for us. It was also great in terms of legitimacy of our brand and our business. So up until this point we were just two college freshman, later sophomores, meeting people on campus at random places, at random times, selling t-shirts. Now we're actually a t-shirt that was in the store window at the UW Bookstore or was a t-shirt at Bucky's Locker Room that was next to other very formidable brands, if you will. 

And so people really bought into it and saw it as not just this hobby or this project of two college students, but a true business and a true brand. So, for us, that was absolutely fantastic. I mentioned the online sales, those were really picking up throughout this period, and right now we're talking like 2005-2006. And it was a very manual process. We would have to write out envelopes, go to the post office, and for two full-time students, frankly, it became difficult because it meant us having to skip class or take short-cuts on our homework or studying for exams, and it also meant we had to miss out on different social opportunities. So during the early part of our company we would street vend. We had a street vending license outside of Camp Randall for football Saturdays, but the city has really strict rules about where you can set up and when you have to be set up by and when you have to take down by and all these things, so that meant that for the most part on Friday night before home football games we would have to get things in order and ready to prepare for the game. We'd have to get up really early on Saturday, way before any of our friends I can guarantee you, load the truck, take the stuff over to Camp Randall area, unload it, take the truck back, and then sell all during the game and after the game. After the game we have to close up, pack stuff up, and then kind of return home. So, for us, we had make sacrifices in terms of skipping out on social opportunities. 

So whether it was going to football games or being able to party with our friends before games, things that I think a lot of college students take for granted in that today people can quickly say you have this company and now we have people and employees that cover those different aspects of the company, but when we were growing, that was all stuff that really fell on our shoulders. And so, as an entrepreneur, I think oftentimes you find yourself wearing many different hats. Whether it's the hustler, the salesperson, or the logistics operations person, the sales and marketing person, the promotions person, the legal person, the accounting person, the tax person, you're really all these things, and it's a matter of budgeting your time really appropriately to accomplish those. So kind of at the peak of us handling the online sales ourselves, we had moved out to a storage unit on the east side of Madison to store all of our inventory. But, like I mentioned, it was becoming too difficult for us. So we went to Underground Printing, who, for the most part since our very first batch of shirts up until today, has been the only screen printer that we've worked with, and we've had a great working relationship with that company. So we approached them and said you guys have expertise in terms of when to order more shirts, kind of that idea of just-in-time production from an operation standpoint. You guys have expertise in order fulfillment, which is the packing, pulling, and shipping of orders, because they had UPS, DHL, FedEx come into their loading dock every day. They had labeling capabilities, they had staff in place to handle all those things because they were already doing it. So we approached them and said can you guys handle our online orders? Can you be our order fulfillment contractor, essentially? They jumped at the idea. 

We eventually negotiated a contract with them which essentially said that they would continue to be our exclusive printer for Sconnie Nation, they would maintain all of our inventory so Ben and I would not have to worry about our inventory, they would handle that for us, and they would ship orders out on our behalf. They would handle exchanges, returns, customer service, anything like that. That was one of the biggest turning points of the company because now rather than worrying on all the kind of manual labor things, aspects of the business, Ben and I could really focus on what, to us, was our core competency, which was the branding, the marketing, the promotion and product development for Sconnie. So that was a great move for us. Granted, we gave up a little bit of profit by doing that. So in order to have Underground Printing handle that, they're not going to do it for free, we had to cut them a little bit more of the profits to enable them to do that. That means we took a slightly smaller margin, but overall it really paid off because the amount of volume that we were able to increase through our efforts paid that in dividends through. So now we're at a point where a lot of stuff is kind of being taken off our shoulders, and we're able to focus on what we really want to do. And so Ben and I, at this point, saw a new business opportunity, and that opportunity was custom screen printing. So Ben and I both were involved in a lot of different student organizations on campus and off-campus, and we were constantly being asked to buy a t-shirt for this or that, and we were seeing the prices being charged for those and we knew what the actual costs were because we had been working in that industry. 

So we thought that there was room in the market to be, essentially, a middle man for custom screen printing. So with that we, again, approached Underground Printing, who did not have a presence in Madison, and we said you guys know how well we're doing on the retail side of things, what would you think of us being you face or your sales agents here in Madison to go out and solicit custom screen printing orders, and I'm talking orders for, you come with a design for a student organization, a fraternity, a sorority, a local charity, a local business, an intramural sports team, a club, you name it. So they liked the idea. We entered into an agreement with them where we got wholesale printing prices. We already had wholesale garment relationships with the big manufacturers like Gildan, Fruit of the Loom, Adidas, American Apparel, all those players. So we eventually created a sales force of commission-based sales employees, again all college students, and they each had a different area of campus assigned to them. So they would go out, we didn't have any storefront or anything at this time, they would go out, they would solicit orders mostly through referrals, and they would meet with the individual placing the order, they'd collect all the order information, so product style, the sizes, number of sizes, the color, the artwork, so whether is was just an abstract idea for artwork or if they actually had artwork digital files. They would collect all that information. The salesperson, who was our employee, they'd collect all that information, send it off to Underground Printing. Underground Printing had an art department, they'd create the artwork proof. 

They'd email that to the customer. The customer would approve it or make any changes. Once the artwork was approved, Underground Printing would ship that order directly to the customer, and then Underground Printing would invoice Sconnie Nation, Sconnie Nation would invoice the customer. So to the customer, Underground Printing didn't really exist. Only Sconnie Nation existed. That was the only interface that the customer had, but behind Sconnie Nation was this whole kind of production black box, you could say, that was creating the order, fulfilling the order. So in that middle man relationship where Underground Printing was making the shirts, then they're invoicing Sconnie, Sconnie was invoicing the customer, there was room to make money. So that actually became a very profitable side of our business. It's something that we really enjoyed because it was all very much relationship-based. It was about getting the right decision maker within these different organizations, created trust around them, but at the same time, because we had no overhead, we didn't have a store, we didn't have a lot of other expenses, we were able to undercut all of our competition. 

So that was great for us. So I'll pull up their website, give them a little credit too. So these guys, like I said, they've always been around and been a partner of ours, Underground Printing. Kind of concurrent with that time line I was mentioning, they also were entering into a new business model where thus far they had just been kind of factory and warehouse where people would go to them to place an order, they saw a need because they came from college and they were only a few years older than Ben and myself, and they saw a need for college student needing easier access to be able to place a custom order. So what the Underground Printing guys did was to experiment by opening a retail store in the heart of a college town. So their very first retail store was in Ann Arbor, Michigan, at the University of Michigan, and the concept was a drop-in location where anyone could go place an order for custom t-shirts for their group or their organization. So you could see blank styles there, see all the colors, work with a live person, and you didn't have to borrow a car or you didn't have to have a car to potentially drive off-campus. So up until the store for us opening in Madison, there weren't a lot of options. So students would either have to own a car, borrow a car, and then they'd have to drive out to Middleton to like Top Promotions, or Madison Top Company. There was nothing really convenient for students on campus that meshed with the lifestyle of college students. 

So they saw a need and they experimented to fulfill that need in Ann Arbor, Michigan, and it was a great success for them. So they continued to expand and open more stores so that they expanded to Michigan State and then Western Michigan. And at this point they had their eyes set on opening a store in Madison. And so I can remember a time where Ben and I were walking down State Street as freshman after we had started the company, and we said, wow, this would be amazing if we could someday have a store of our own on State Street. And sure enough, that's kind of where the path started unveiling itself for us. And so now we're in the beginning of 2007. I had graduated in 2006. Ben was graduating in the spring of 2007, and so a lot of things were up in the air. I wasn't sure if I was going to go to law school. Ben had already accepted a job doing sales. 

And so we were kind of at this turning point in terms of the company. The company was making money, but at the same time it wasn't enough for both of us to be able to sustain or live off of post-graduation. So Underground Printing approached us again and said we want to open this store in Madison, we know what kind of volume you guys are doing for Sconnie retail because we're printing all your shirts whether they're for wholesale or sales coming directly to Sconnie.com, and furthermore, we know the kind of sales you're doing as this middle man for custom screen printing and we would love to be able to capture that market and grow it in Madison. So we entered in to a new relationship with Underground Printing where they would open a store on State Street in Madison at 521 State Street. Same location it always has been. That store opened in the summer of 2007. And under that relationship, it's really Underground Printing's store, and they manage all the employees. They pay, for the most part, the majority of costs associated with that store, but, again, this was going to be an experiment for Underground Printing because up until now there other stores had only been drop-in custom screen printing locations. None of them had a retail component where you could go in and buy a production shirt off the rack. So with the Madison store they were going to experiment by having both things. 

They were going to have custom screen printing, which they would control and fulfill, and they were going to have a retail component where all the Sconnie Nation inventory would be available for sale. So that store went live in the summer of 2007 on State Street. And since then it's been a great success. We continue to grow year after year in terms of volume, in terms of revenue, number of customers, number of orders, all things, and it's been a fantastic relationship. I should say that part of that deal was Sconnie Nation, so my company agreeing no longer to solicit custom screen printing orders. So Sconnie Nation no longer partakes in the custom screen printing side of things. That's completely Underground Printing's realm and territory. But, again, that was a partnership that were it not for that relationship there really would not have been a way for us to have a store on our own because of the fact that we weren't doing enough volume to be able to pay all the costs associated with it. Likewise, for Underground Printing, they were able to maximize their revenue per square foot by subsidizing their revenue stream by having this retail component. So it really was a win/win for both of us because a lot of customers came in and they knew about one or the other. 

So they were going there to place custom screen printing shirts, but they didn't know about the retail side of things. Other people came just to buy a Sconnie shirt, and they didn't realize I could also buy t-shirts for my student org here as well. So it really worked both ways, and that was a great relationship. Jumping forward to today, I mentioned I eventually went off to law school so I was staying in Madison, and I really had an interest in taking the company and growing it even further and really focusing on growth. At the same time, my partner, Ben, who I had started the company with, he graduated and took a job in sales, and so he was becoming more removed from the company, and frankly our differences in terms of strategy and stuff were starting to bubble to the surface. So I mentioned we were at this turning point now where as a partnership where does this business go? So I approached Ben and wanted to buy him out. So we were 50/50 partners up until that point, and I wanted to buy him out. Unfortunately, we did not have any sort of written partnership agreement, no operating agreement, no buyout agreement or anything like that, so there was no framework around which to negotiate a buyout, no process which, frankly, was rather unfortunate. So from the time I broached the subject of buying Ben out until that actually happened that took about a year, and, frankly, it was a very long and tough year because I wasn't too motivated to grow a company that I felt I was putting in 100% of the effort just to get 50% of the benefit. And so I wasn't interested in continuing to do that necessarily. 

And at the same time Ben had really strong feelings which were warranted to not want to walk away from something that he really helped to create as well. So there was a lot of emotion tied to these things. And so we ultimately agreed on a buyout. That happened about three years ago now. So since then I've owned Sconnie Nation 100% and have been able to take it in the direction that I wanted it to go. Ben continues to work in sales, has a very successful career, but unfortunately one thing that fell by the wayside was really our friendship. So a lot of people start these companies, and I think partnerships are great and I think they're important because oftentimes you'll have complementary skills. One might be a technical person and one might be more of a sales and marketing person. There's other complementary skills that fit together. But if you don't think about it carefully or plan ahead by having things in writing, people go their separate ways. 

At the time we started we were just 19-year-olds, and people told us you should put something in writing, have a partnership agreement, have an operating agreement, but we always just kind of dismissed those comments, and we said we're good friends, we're living in the dorms, we're doing this thing and it's doing all right, we don't need to worry about that, nothing will every come of it. And to be honest, people never disagree over or people never have a disagreement over how to split a pie which is worth nothing. They only have a disagreement over how to split something when it actually has real value. And so for us, we waited, waited, waited, never put anything in writing, and then all of the sudden we're at this decision point where we had differences of opinion, we had differences in terms of where our lives were going, and we had this pie which had significant value. And so that's what really lead to the falling out because it was a difficult experience to walk away from that, and I'd say the biggest regret I have with the company is losing, frankly, one of my best friends that I started the business with. So I think that's an important take-away of getting everything in writing because one piece of advice I'll say is you'll never agree more than at the beginning. You'll only tend to disagree more as time goes on, and that's due to lifestyle, that's due to life decision, that's due to finances, and it's due to just differences of opinion. And it's not to say one is right and one is wrong, it's just that it becomes difficult. So don't enter into it lightly, and definitely have things in writing. So for the last segment, to jump to where we are today, we continue to partner with Underground Printing. 

Now the arrangement is in the form of a license. So Sconnie Nation grants Underground Printing an exclusive license of our trademark, Sconnie, as well as the license to all of our designs. And then Underground Printing is free to sell them on Sconnie.com, which they completely manage and operate, and they're also free to sell our product in their store on State Street. And that license is in exchange for a royalty. So since that license exclusive, we've pulled out of other third-party retailers. So you can't find our shirts, with a few exceptions, anywhere but Sconnie.com, and then the Underground Printing Sconnie Nation store on State Street. And that, again, has been a fantastic partnership. There are some drawbacks in a license like that. At the time I originally entered into that license I was still a full-time student here at UW, and so it made sense for me because I had other things on my plate. It allowed them to really focus again on the things that they were good at, and it allowed me to focus on my core competencies. 

But over time there are, especially after I've graduated and had more time to devote to the company and reflect on it, there are things that I would handle differently. For instance, customer service issues or store layout issues or employee management issues. There are things that I would handle differently, but, unfortunately, I've kind of relinquished those rights to Underground Printing. But, frankly, that's true in any sort of licensing agreement. It's true in personal relationships and life. There's always a give and take. People sometimes say it's your brand, can't you go in and demand certain things? And to an extent I can. That's drafted into the contract. But then there are other things with any sort of contract that always come up that aren't really defined in the contract but the parties just agree and continue on and business keeps going on. And so there's always that fear that if you push to hard on certain things, other things will start to fall off. 

And so really it's about finding that homeostasis point where both parties can agree and be happy. That being said, the licensing agreement isn't perpetual. It has defined timelines, and so there will be future renegotiations where certain concerns that I have, certain concerns that they have can be re-looked at and improved in terms of that. My role with the company today is limited to really whatever I want. I'm free to be as hands-on or hands-off as I want to be. I choose to still be involved in product development, product design, approving new shirts, as well as social media, so I still manage our social media pages. For instance, if you went to Facebook.com/Sconnie, that would be our Facebook page where we post all different things, and we really try to make it be not just about product, product, product, but about things that are relevant to the brand in general. So whether it's quotes by Bo Ryan, or things about the Brewers or Internet memes, or sports articles, other things about the greatest booze stash in the world, things like that. So you name it. I manage those things. 

I also manage our Twitter page. So just @Sconnie would be our Twitter account, which I encourage you guys to follow. So we find a lot of traction around social media. We began, really, as a word of mouth company in the dorms. I think we continue to be a word of mouth company in terms of the viral nature of the different products and promotions that we have and that we do. Some more reflection on what we currently do. One thing that we noticed was that we were having really uneven cash flows between the store and online, and we were finding we had a lot of seasonality. So when students moved back to Madison at the end of summer, we found big spikes. We found big spikes throughout the fall and continuing through the Christmas shopping season, but then in the first and second quarters of the year our revenue would drop off a lot. That's not uncommon. 

That's very common in retail. First quarter is traditionally the lowest for all of retail, but we wanted to find a way where we could improve on that. So for us the spark came by saying why don't we diversify. Since our slogan is celebrating the Wisconsin lifestyle, anything that fits into that bucket is fair game. Why don't we try and diversify? And so that's when we came out with our famous "We'll never forget you, Brent" Brett Favre parody t-shirt which went viral like crazy all across the country. It was just the perfect storm of news and sports related events in terms of Brett Favre's waffling, his retirement and unretirement and his trade and whatnot. And so it really became the gift that kept on giving because he kept going through these different, dragging fans through different turmoil. So we came out with that shirt. It was a huge hit. We continued to do other Green Bay inspired t-shirts. 

So whether it was for the Super Bowl last year with our Claymaker shirt or our champ belt shirt. So we had a lot of success with that. So we were able to really smooth our revenue year-round because now we were finding customers at different times of the year, and we're bringing new people into the brand, and it was absolutely fantastic. Another way we try to capitalize on that was to create a community specific to that product really. So that's when we created a Facebook page devoted just to "We'll never forget you, Brent" which ultimately became kind of a sounding board and a way for fans to come together to talk about the Favre situation, but really that evolved into a blog about the Packers in general. So Packers news, rumors, discussion, etc. And it's a page that is actually more active than our Sconnie page. It has more fans, more followers than our Sconnie page. So we took that and we said, well, I think we could build more brand around that, and that's when we created BrentFavre.com, which really was a play off of Perez Hilton, if you will. So where Perez Hilton is a celebrity gossip blog, we're kind of a Packers gossip blog. 

And so we hire bloggers to write and draft posts throughout the year, only during the football season so it falls off now. But we find that we get a ton of traffic to that site. We get a lot of cooperation with other Packers blogs. It's a very close-knit community. And then we advertise the shirts in a very, what I think is, subtle manner on the site. So the site is really, truly a blog, a news blog, gossip blog, but then we also sell t-shirts. So it's not a t-shirt site with a blog. It's really a blog that also sells t-shirts. So that's been really successful for us as well. In terms of going forward, we are, some of you may have heard, but we're working on launching a Sconnie beer. 

So here, this is SconnieBeer.com.  So there's the image of the can, what's it's going to be. But this is something that's going to come out. I mentioned the whole Sconnie brand really revolved around what I call the Sconnie tripod, which is beer, brats, and cheese. So beer, being one of the legs of that tripod, it's been a long time coming. So it's been a side project, kind of a passion project on my behalf to make this happen, and we're excited to announce that it's actually going to become a reality here very quickly. We're looking to launch here in April, actually, so really shortly. Initially, it will just be on draft, on tap, only in downtown Madison, and then eventually we'll launch with 16 ounce cans which you're seeing here. So we're really excited about that. It's aimed at the similar demographic to like a PBR, Miller High Life, Schlitz, and that range. 

Price-wise it's on par with all those beers I just mentioned. It's a lager beer. It's lighter. Really broad tasting in terms of who would enjoy it. So we're really excited about that, and we think that we'll have a lot of fun with that and, hopefully, a lot of success. So that's where we are. So we went from my partner Ben and I becoming friends, meeting in the dorms here at UW Madison, starting this company, growing it, very much bootstrapping it. We never had to take outside money, never had to dilute ourselves. Started it with $600 of our own money, eventually expanded into wholesale, eventually started selling a line, and then working with Underground Printing, opening a store on State Street, licensing our trademark and other designs to them, and now coming out with a beer of our own. So that's kind of the history of our company and where we've been and where we look to be headed. 

And so I open it up to questions from all of you. >> Thanks, Troy. I'm going to hand off these mics to Chuck and Alexis who have graciously agreed to split up the room, delighted to do so, I can tell. Chuck, you want to head on to the other side? So, folks, just go ahead and wave your hand, and they'll hand off the mics accordingly. I'm going to, I see one right back there. Can you get to her, Alexis? >> I've got one right here. >> Okay, here and then we'll go back there, great. >> Go for it. >> Hi, thank you for coming, first of all. My question is regarding your business relationship, I guess the falling out more so, and, I guess, would you recommend avoiding those business relationships with close friends or is having a clause or a written agreement good enough? >> That's a great question. 

I think that's a topic that people when they're young our when they're just starting out in any business, they have blinders on, and I think they ignore the elephant in the room, which is how is this relationship going to work out if we have any measure of success. So that's exactly how I treated it when I got started. I was young, I was naive, and frankly I heard the advice but I didn't heed the advice. And I think that was my mistake. So if there's one thing you guys can take away it is to truly appreciate the fact that if you're starting a business with another person, treat it like a marriage, like you are intimately involved with that person of every aspect because things overflow into things other than business because life factors come up. He took a job elsewhere and that affected the business and that affected me personally because it affected income and all these things. So it really is more than business, and I think you have to appreciate that and understand that, and I think the best way to get around that is to put something in writing. So if you're an LLC it's to make sure to have an operating agreement that has buyout provisions for the partners. So how you're going to treat things if one wants to buy out the other, how are you going to treat that. That's especially important in a 50/50 relationship because in the absence of that you really have this deadlock where no party can act on their own, and so then that means the business gets neglected. 

And the business is the asset so that means the asset decreases in value, and then that means what you're fighting for is decreasing, decreasing, decreasing, and that's not good for anyone. It's not good for the person being bought out because their share of that asset is also diminishing in value so that means they're getting less. It's not good for the person that wants to do the buying out because that means they're taking over something that is declining rather than something on the upswing. So it's really bad. So I think having it in writing is the most important factor, and to address your question of do you think it's okay to start a business with a friend, or family member let's say. I think it's something you got to think about carefully because, like I said, it's not just business. It boils over into personal things. So I've had times where I've had friends that were employees over time, and there's times you'd want to discipline them in a certain way but because they're your friend and you're going to be going to poker night or hanging out at the bar later it's awkward. So I think it's best or it's easiest not to engage in business with close friends, but at the same time I think there's a lot of value to be had with a very close partner that you can confide in, that you can trust, and that you do have a good working relationship with. So it's very much a personal decision, and I think as long as you're comfortable with it and you're aware of what could happen and you have something in writing, I think you'll be okay. 

>> Hi. I don't know if you're going to be able to answer this question because it's kind of new issue on campus, but do you see a connection between your brand and the whole Coastie/Sconnie dichotomy? >> That's not new, that's old. [LAUGHTER] So that's always been kind of hanging out there, this whole Sconnie/Coastie rivalry. To be very clear, I would say we didn't coin the word Sconnie. We didn't coin the word Coastie. We didn't coin any of those words. In fact, we never used the word Coastie and never have in a single piece of marketing literature. We've never used the world in absolutely anything that we've ever done because, to us, it was never about this divide. It was about Sconnie being this brand, an identity really, that anybody could identify with. So it wasn't exclusively for people who were born in Wisconsin. 

It was not exclusively for people who went to school in Wisconsin. It was for anyone that had any sort of connection with this state and appreciated that connection and appreciated things like the Wisconsin lifestyle, so beer, brats, and cheese. If you like those things, you can identify with Sconnie. So I'll pull up, for instance, the definition on our web page which we really try to make very inclusive. So, for us, and I'll read it out loud here. So the idea behind Sconnie Nation is simple. Anyone from Wisconsin, who attends school in Wisconsin, or just loves the dairy state in general can identify with Sconnie. Sconnie is anything of or relating to Wisconsin. Sconnie is an identity. It can be used as a noun. 

For instance, I am a Sconnie. Or an adjective, look at that Sconnie truck. You don't have to be from Wisconsin to appreciate the Sconnie movement. It's all about embracing and celebrating this genuinely Wisconsin-esque environment we call home. Sconnie is tailgating, bowling, bubblers, washing cheese curds down with a beer, having a tractor-shaped mailbox, or eating a cream puff. If you like eating a brat and cheering for the Pack, you know what we're talking about. So, for us, we wanted to make it very open and inclusive, and it was gently poking fun at those Wisconsin stereotypes. We make no bones about that. But it was never meant to be derogatory towards Wisconsinites. It was never meant to create a divide between people from Wisconsin and people from outside of Wisconsin or people from the coast. 

And we've never played into that. We just completely ignore that that divide exists. To be honest, our customers are a huge melting pot of all those groups. They're people from all over the state. We've shipped orders to every state in the country. We have customers that come from all over, and we sell to students who obviously come from all over. So we really don't play into that, and for us it's always been about being positive and being open to anyone that wants to identify with Sconnie. And I wish that that divide didn't exist because I think it's harmful, and I think that the more we can embrace each other for our differences, I think the better. >> Hey, Troy. Thanks for being here. 

>> Yeah. >> My name is Darian. You've already given really valuable insight on this, but I'm going to bring us back to the whole partnership agreement that Justin just touched on. My question is, when you're starting out you're pretty much at this equal playing field and how do you really decide when you're both getting all the really good advice, ideas, and opinions, you're really coming together and collaborating as a partnership. When you're starting off with something in writing, do you advise going a 51/49 so there is this one person has more of a leading role, but how do you really start with that putting it into writing? >> Sure. So that's one approach. You could make it off balance like a 51%/49%, but then there's ramifications for that because the partner getting 49%, does that mean even though you're just talking a percentage point apart, does that person feel relegated to the back? Do they not feel like they're the leader of this company? Because I think people want to feel empowered and especially founders of businesses and there's ego at play and they want to have a say and control. And even if something on paper says I'm lesser than my partner, that might lead to differences that arise. I think really what's most important is to have, just spell it out in writing. So make it say if one party wants to buy out the other, here's the procedure that we're going to follow, and you're agreeing at time zero what that procedure is going to be. 

Are you going to take the book value of the company if you have hard assets? Are you going to take it to an independent accountant to do a valuation of the company and its assets? What things can or cannot the accountant take into account in terms of coming up with that value? If one party objects to the valuation, can they have a second appraisal done? Do you average those appraisals? Do you get a third? Do you have a third-party pick a third? So there's all different ways of doing it. Kind of as the stop-gap, if you're talking a 50/50 partnership, the arrangement that I really like is, some people call it a shotgun, but essentially it's where you have this procedure in writing that says if I want to buy you out, I can make an offer for a dollar amount or whatever the consideration for the exchange is and you can either accept it, meaning you'll take that money in exchange for your share, or you can flip it and say I'm going to pay you that much money for your share. So that keeps everyone honest because that means I can't low ball you because if I low ball you, you might just flip it on me. So I think that's kind of a stop-gap measure that can prevent a lot of these things. >> Do we have a final question for Troy on this topic? Well, I know all the students join me in thanking you so much, Troy. Very, very much. [APPLAUSE]