Bottom Line Over Top Line, Earned Media & Beating Knockoffs with Service with Billy Thompson

Hey Marc, thanks for having me. I appreciate the consideration.

As you can imagine, it’s invaluable, because I have such an intimate understanding of the problem. I can put myself in the shoes of our customers and understand what’s important to them, even down to the most intricate details, like how the undershirt feels and choosing certain fabrics over others. One drawback, though, is that because you think you have such a great understanding, it can narrow your scope. You stick to your own preferences, and those preferences may not represent all of your customers. So you have to be flexible and go outside your comfort zone when it comes to your own understanding of the problem and the solution you’re providing.

One hundred percent, and in my opinion that’s the differentiator between those who are going to succeed and those who aren’t. It’s very difficult to start and maintain a business, so you have to be passionate. The mission has to be bigger than the task you’re going through, because it is brutal, and by nature it has to be. This was a problem I dealt with at a very young age. There was no solution, and nobody was really even talking about it, so I was suffering in silence. A couple of my guy friends in the small town where I grew up had the problem too, and that’s where I started connecting the dots. Then my business partner, Randy, has a different form of hyperhidrosis, which is excessive sweating, so he knew exactly what I was trying to do when I approached him.

The debt I racked up was personal debt to cover my living expenses. We were in Southern California at the time, which is expensive, and my wife had just had a baby, so we were starting our family. I used my credit cards to finance my personal expenses. As far as the business goes, Randy and I each put in about ten thousand dollars, and we were able to grow it just off of that, which in hindsight is very impressive for so little capital. You’re putting in a lot of sweat equity. For the first two years you’re not getting paid, you’re just dumping everything back into the business and grinding it out.

Thank you. We went from ninety thousand dollars in the first year to five hundred thousand in the second, which was very encouraging, and from there it just about doubled every year: five hundred to a million, a million to two, two to four. I think two to four was when we were starting to film Shark Tank, and the following year it went from four to eight. I’m sure Shark Tank had a lot to do with that as well.

You’re exactly right. People don’t want to talk about this problem. Even when they find the solution, they don’t want to talk about it, because they spent so long trying to hide it. Going back to being a customer, I totally get that. I didn’t even want to call it Thompson Tee. I wanted to call it something else because I didn’t want to be associated with the problem. I was embarrassed about it too. But I got over that and decided I was going to champion this thing and be the face of it.
With any marketing or advertising there’s a push or pull strategy. On the pull side, customers know about your product and pull it through the distribution channels by demand. If you start asking stores for a product, eventually a store will want to carry it. That wasn’t the case for us, so we had to push it through the distribution channel, and our channel was direct to consumer because it was the only one we could afford. We couldn’t go into big box retail. Even now, going into big box retail is a little scary, because the product could just sit on the shelf without anyone explaining what it does.
The dynamic has changed a lot since we started. Back then there were blogs, and there was a symbiotic relationship between providing content and the content providers needing content for their readers. Now everything is affiliate, everything is influencer, everything is pay to play. But we used the power of PR at the biggest level we could get at, and also at the most grassroots level, reaching out to bloggers with niche blogs talking about this problem, introducing it to the market, and growing from there.

As you probably know, that’s earned. And I think even more so now, the algorithms and the AI are smart enough that you can’t really fake it, at least not for too long. Back then there were certain ways you could do things, but we never wanted to do anything black hat, because we didn’t want to get dinged and we were building a brand. So it was a matter of going out every day and trying to provide the best product backed by the best service, and getting that message out there as much as possible.
We still to this day offer one of the most liberal return policies. It’s unusual for a garment company to let you wear it, wash it and try it for 30 days. That’s how confident we are in the product. Usually a garment has to be returned unworn, unwashed, in new condition with the tags still on. We don’t have that. So it comes down to providing the best product backed by the best service, getting out there and doing things like this, and becoming an authoritative figure on the subject, because when we started there wasn’t anyone focusing their attention on this.
Since then, big consumer companies have released clinical-strength antiperspirants at three times the cost of a regular antiperspirant, and biotech companies are getting a lot of capital to develop alternative solutions. The International Hyperhidrosis Society was always around, but it’s now getting more traction because of the extra attention. Outside of that there wasn’t much, so we were able to establish ourselves as an authoritative figure. When you put that footprint out on the web, it naturally picks all those pieces up. Again, it’s all earned. We didn’t do anything to fast-track into the position we’re in.

We definitely created this category, which is why we have the patent. No product existed that did what we were doing, a foolproof, waterproof barrier that keeps sweat from passing through. Some shirts doubled up on the normal fabric, but nobody was doing this. Now we have a plethora of knockoffs and people trying to work around our patent.
But to answer your question, and this applies to everyone: no matter what you do, if you figure out an opportunity to be successful in commerce, people are going to jump on board and try to take a piece of what you’ve discovered. It’s human nature. And quite frankly, the competition also drives us to stay on top. It reduces complacency. When we know the wolves are at the door, we know we have to continuously be our best for our consumers.
It really comes down to one thing. You can copy the product, the marketing, and the look and feel, so the one big differentiator is going to be your people. People can’t be copied: the people in your company who are executing for you, the partners who are executing for you, and in our case our customer service team. I think we’re one of the only ones with a dedicated customer service team and live phone support based here in the US, and that differentiates us from our competitors.

Without a doubt. I saw that differentiator a while ago and we’re going to stick to it: the liberal return policy and the customer service. We want to make sure we’re always the top choice. We have a patent, but a patent is only as good as the money you have to enforce it, and the way the system is set up, the lawyers are the only ones guaranteed to make a lot of money. Everyone else fights it out, it gets dragged out for years, and you have a bunch of time, money and resources tied up in it. If there were a blatant knockoff, we’d go after it. But there’s enough of a workaround that they can make it a thorn, and we’d rather put that money, time and effort into making ourselves the best business we can be.

Exactly. And all of this earned media you’re talking about, no one else in our space has even a fragment of what we’ve done. Nobody wants to talk to the me-too product. They want to talk to the original. The original is the story.

I’m glad you pointed that out. It caught me off guard when he said it on set. I didn’t know exactly what he was talking about, and that was my mistake, because we were so close to the supply chain. My business partner had a personal relationship with these people and had been working with them for a long time, and I had met all of them, so we really felt we had ownership over the manufacturing of the product. To answer your question, I don’t believe it was either a compliment or a criticism. It was a matter of fact. At the time I didn’t understand, but after the fact I realized that’s technically what we are, and there’s nothing wrong with that. Apple doesn’t make its iPhones. That’s contract manufactured. It’s really about what fits your business model.
In clothing, it’s more common than not that brands don’t own the supply chain, even the biggest brands. Once you get to the global brands, they do very little manufacturing themselves, if any at all. At that point it’s a licensing play. So when he said that on the show I was a little confused and thought, no, this is our product. But in reality he’s right. We don’t own the manufacturing piece, and a lot of big, well-known brands don’t either. It is what it is.

The first piece was me understanding what he meant. Other than that, it wasn’t necessarily motivating. It’s not like I wanted to become vertically integrated and bring it all in house. That wasn’t something we needed to do, though we had thought about it.

Especially now, Marc, it is a very, very difficult time in e-commerce. Direct-to-consumer e-commerce used to have fifteen to twenty-five percent margins, and cash flow was great because you’re getting the money up front. Ever since COVID there’s been a steady decline in margin, because all of the costs went up and all of the competition went up. Now I’m reading that e-commerce businesses are running on two to eight percent, which is crazy. But that forces you to dial it in, get better and do things better.
That’s what we’re going through right now too, and it’s not just us, it’s everyone. Customer acquisition costs are through the roof, returns in apparel are through the roof, discounting is through the roof. All of that puts pressure on your bottom line, so you have to be very focused on it.

It’s going to be very company- and product-specific. If you’re looking to go retail, how much of your product can move off the shelf? That’s ultimately what all of retail cares about. They have a physical footprint and a certain amount of space to allocate, and they need product moving. Bottom line, the product needs to move, and it can’t have a huge return rate. If you feel your product can move with little effort on the shelf, then going big box or retail is a viable option. There are intricacies with financing, cash flow and margins, but that’s the blocking and tackling that can get done, because if your product moves off the shelf you can figure out the logistics.
In our case, I have a sales background, so within a few weeks of launching I was able to get in touch with all of the big box buyers to see whether it was an option. I didn’t know how retail worked at that point. I thought I give you product, you give me money, and that’s it. But there are terms. They want guaranteed sell-throughs, chargebacks, markdowns, a whole slew of things. Once again it comes back to that simple thing: if your product is going to move off a shelf, put it there. If you have massive advertising budgets to draw people into the retailer, that changes things too. But for smaller companies, it comes down to whether the product can move virtually on its own with little effort on your behalf.
I wouldn’t say do that at the expense of direct to consumer. At this point a hybrid model is probably the most viable option if you can make it work. Direct to consumer is a lot more advantageous for cash flow, and used to be a lot more advantageous for margin. There are pros and cons to each channel, and I think regardless of where you start, you’re going to end up in both, because growth will be tapped out on one side or the other. Then you see what the mix is and what you like.

We also have a bit of a personal relationship. Our wives’ families grew up together, which is how we knew each other. So you have that added consideration when we’re navigating things, and we don’t want it to ever get weird. But what I think it really comes down to is this. We’ve been very fortunate to work together in this capacity for as long as we have, because it is like a marriage. When you’re starting a business, the stress and pressure are very difficult on two fronts. It’s stressful when you don’t have any money, and believe it or not, it becomes stressful when the money starts coming in.
We are very different. I have a sales background and he has an ops background, so we complement each other, though our skill sets overlap to a degree where we can relate to one another. But fundamentally, based on our experience, what has kept us together is that we’re fiscally aligned. Our financial goals are very much aligned. Despite the emotions and the qualitative things in a business, the numbers don’t lie. The numbers are pure. If you’re aligned on the numbers and you have the same goal, that supersedes everything else.
We also made an agreement that if either of us opposes something the other wants to do, we don’t do it. That doesn’t mean I’m the biggest fan of everything. If you’re very passionate about it, let’s try it, and there’s a lot of that. But ultimately, if someone draws a line and says, “I completely disagree with this,” we just don’t do it. And being fiscally aligned, there’s no ambiguity. The numbers are the numbers. When you don’t have money, you make sure you’re aligned, and the other partner isn’t going out to buy $150 steak lunches. That’s not going to work. Even when the money starts coming in, we don’t need to upgrade our desks. I don’t need a ten-thousand-dollar ergonomic chair or a ten-thousand-dollar mahogany desk. We have a very fundamental understanding of what our capital can do for us, and that’s probably one of the biggest factors in us staying aligned. Let’s focus on making the money and paying our people.

Exactly. And of course there are conflicts, and healthy conflict, because there is no progress without conflict. I want people to understand that, and not to look at conflict as something negative. Sure, there is unhealthy conflict, but in the most pragmatic sense, conflict is like being hungry. My current state doesn’t match my desired state, so I need to go eat. Or I’m hot, so I turn the AC on. If Randy and I were so aligned that we weren’t constantly challenging each other from our different perspectives, growth would have suffered. You definitely need a little of that in a partnership. You can’t be so alike that you’re an echo chamber for each other, or you could be blindsided by mistakes.

I want to be very clear about that, because that is what a partnership is. Randy has just as much, if not more, influence over my financial well-being and my day to day as a spouse would. So take that into consideration when you’re looking into a partnership. Treat it like a marriage, because it basically is. You’re going to have assets that need to be divvied up. At the end of the day, don’t take it lightly.

We still have the same mission: provide the best product backed by the best service. Specific to us at this point, we really want to tighten up our bottom line. Over the last few years people have been chasing growth, chasing top line, and spending has gotten a little out of control. There are a lot of fragmented pieces to that equation, but for us it’s now about the bottom line, and making sure it is as healthy as possible. We honestly don’t even care about top line anymore, because it’s been such a struggle. Top line has been holding steady and looks good on paper, but when you get down into it, the bottom line is suffering. At the end of the day, if there’s no bottom line, there’s no business.
So we’re doubling down on the fundamentals and going through everything with a fine-tooth comb to make sure we’re not leaking or wasting money anywhere, reducing our costs and increasing our profit margin. Once we get that, and we’re sort of turning the corner, there will of course be distribution channel expansions and potential product development expansions. But first and foremost, before you can do all that, you have to make sure you have a very viable business from a cash flow standpoint.

I do believe that. Biotech has gotten involved, and medical equipment companies are getting involved. They’re looking for a solution, and if there’s a solution better than the one I have, then that’s what customers need. I firmly believe that, but it also drives me to make sure I’m providing the best. And with all of those other options there are barriers to entry. Take Botox. You could get Botox in your underarms, but what percentage of the population is actually going to do that? This problem starts at a young age, and teenagers may not have access to Botox or even want it. I wouldn’t want to be pumping Botox into my teenagers if I didn’t have to, if there were an alternative.
A lot of people wearing this shirt are wearing an undershirt anyway. Having that intimate understanding, it was very important to me that you put the shirt on, take it off, wash it, dry it, done. That will always be a viable option. We just have to make sure we do it better than anyone else.

Likewise, Marc. I appreciate you guys having me. Thank you for having me on the show. It’s been a pleasure.