Latest / Marci talks money (and life) / Finance Major to Entrepreneur, Yes you can Have It Tall with Steven Hoel

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Finance Major to Entrepreneur, Yes you can Have It Tall with Steven Hoel · Marci talks money (and life)

• Marci (00:15) Hello, I am MoneyMarci. Welcome. I'm thrilled to welcome today's guest, Steven Hoel. Steve was reading stock tables in sixth grade, bought his first stock then, Texas Instruments. He went to ASU to study finance and got a BBA in international finance. He worked as an intern for Prudential Bache Securities one summer and made a quick score on Coleco stock there. After graduating, Steve realized that while he enjoyed the field, he did not enjoy aspects of it, and didn't feel that he had the temperament. He would feel worse about losing someone else's money than his own. His father in law from Japan asked him to send some ScotchCal advertising tape to Japan. Steven researched it, and his father in law added ten percent onto the order for his efforts. He made three thousand dollars for about three hours work. He was then making eighteen hundred a month at the bank, and after that, Steve was no longer in the banking business, he had become an exporter. One of his customers was very fast in the fashion market, and he asked if they could start a brand together. That brand, Ku, blew open markets. They did eight hundred thousand dollars in sales at a trade show in 1993. He later started The Ed Hardy brand as part of Ku, sold the company in 2009, middle of the great financial crisis, received about two million for his part after taxes, which is a good amount, but not enough to retire on with two young kids and a financial crisis going on. Steve realized he needed to sell directly to customers somehow with the wholesale apparel industry kind of dying. So he failed many times for seven or eight years. No income, just chipping away at the proceeds from the sale. Then he started selling on Amazon and did well. It suited his strengths. He ended up in the tall market because he could develop a unique selling proposition, which is much easier in a niche market. Welcome Steve. Steven (02:27) Thank you. Appreciate it. Marci (02:29) Wow. Well I'm thrilled to have you here. So you were supposed to be an investment banker. Steven (02:36) Well, it would seem so. Clearly not. That was my plan anyway. But yeah, I was an odd kid. My dad somehow turned me onto the stock tables in the back of the Detroit Free Press, all of the little charts with the one eighths and all of that, and then he was excited about Texas instruments and I took some of my Observer Eccentric Southfield newspaper paper money and I bought a couple of shares. From then on it just kind of evolved and I never stopped being interested in it. Marci (03:09) So was he a financial guy or it was just something he was interested in? Steven (03:12) No, he was an industrial psychologist, worked for Michigan Consolidated Gas and I don't know how. I was in sixth grade. I wasn't really cognizant of everything going on. I just remember being excited to look in the paper and see that my money was earning money instead of me working to earn money. So it's an exciting concept. Marci (03:34) That's fair. That's fair. And then you pivoted from there and eventually ended up as an entrepreneur and I guess he wasn't an entrepreneur either if he was an industrial psychologist. Was your mother involved in financials? Steven (03:48) No, no, she taught home economics in high schools. She was like an original frugal person. She used to take the envelopes, you know, you'd get a magazine and it had like a return envelope if you were interested in something. And she would and it wasn't postage prepaid, just a pre-addressed envelope. And she would save those envelopes and cross out the address of who it was supposed to go to reuse the envelope. Marci (04:17) Well, you know, we learn habits from our parents. That was something she may have learned from her parents and then you saw her being frugal. Did it transfer into your adult life? Are you a relatively frugal person? Steven (04:28) No. Well, that's not quite true. I will spend a lot of money on things that I really like. We were talking about trips and things. I'll buy very few things but really nice ones. So what I don't like to do is to waste money. So I will carefully research things. I'm okay to step up to the plate and spend money, but it has to be a good value. Marci (04:54) That's frugal. Steven (04:56) Yes, okay. If that fits under there then yes I am. I'm careful with the money I spend, but I'm not concerned about spending it. My goal is not to die with millions of dollars in the bank for my kids. Marci (05:10) Fair enough, fair enough. I hope they know that. Steven (05:13) They do. We have family meetings about budget and everything. Once a year we have like a key man, I'm key man in the company still. My son started working for it, but we have yearly meetings. Okay, here's where I'm buying all of these things now and this is so that the family could limp the business along if I go in a car crash tomorrow. So it's we've always been very open in family meetings about the family budget. Marci (05:40) For my listeners who don't know, a key man in an organization is someone who has knowledge, experience, connections, whatever else that may be crucial to the organization operating effectively, efficiently. And so it is not uncommon for the key man to be whether there's an insurance policy on him or whether it's an active part of any planning and meetings to know the status of the key man because that is a major impact on the business. Had you planned on being an entrepreneur when you left being a financial advisor? Steven (06:17) No, so the what happened is like during high school I was still very much interested in investing. You had the whole eighties thing going on and Madonna like tapped into it. I'm a Material Girl. So if you're a guy growing up at that time, this was the Lifestyles of the Rich and Famous, Robin Leach. This whole culture was go out there and get a lot of money. That's the cauldron that we grew up in, at least as a guy. If I want to get a a girl, I need to bring the goods. Madonna even said so. And so so, you know, I remember, you know, Drexel Burnham Lambert, Michael Milken, all of these guys, Wolf of Wall Street. So I was still very much into it. I want to make a lot of money in this industry. And but at that age, especially you also have these blind spots. I had a Jimmy Page perm. I reeked of drugs and alcohol. So, like, are you gonna put your investment savings with me, even though I know what I'm doing? No, I can't wear a suit and tie. New York is three hours ahead. This means if I'm on the West Coast, I have to wake up at like 5 30 AM. So I didn't realize these things until I got my finance degree. Marci (07:39) But you didn't have to stay, you know, in California. You could have gone to New York, Chicago. Steven (07:45) That could be, yes. So I took the easy way out. My wife at the time was from Japan and we were living in Arizona at the time. I went to Arizona State and we decided to come to LA because it was much easier for her at that time to get a dub with her multilingual skills. All of the huge Japanese companies were based in LA, all of the trading houses and so we ended up in LA and I was working at Great Western Bank. It was easy. It was something. I didn't want to land there, but it was easy. And so I was pretty deep into alcoholism, so I didn't really have an impetus or a push to get out of it. We were comfortable, we were just going through daily life, and that's when her dad called about that ScotchCal deal. The universe pops out of nowhere with something that's not on your radar whatsoever. It wasn't a thought, it wasn't a plan. Yeah. Marci (08:42) And you were able to keep it up, to break into being an exporter, it was connections I guess that got you in? Steven (08:50) Well, okay, so that's how I met Tatsu. So the father in law bought thirty thousand dollars worth of the ScotchCal tape. If you look at a McDonald's sign, it's got an opaque white base and it's got this red tape applied and then the gold arches tape applied. That's what that tape is. That's how the signs get made. And so we went to visit the family. Now I've been bitten by this bug. I made a month and a half worth of the bank salary and I didn't have to set my alarm. Once a cucumber becomes a pickle, you can't be a cucumber again, even if you want to be a cucumber. I'm now stuck. I have to make this work. I've been ruined. So we were back in Japan and her mother owned a liquor store. And I hadn't gotten sober yet. This was great. It was downstairs from their house. And one of the salesmen who called on her store as a sales rep of one of the beers over there. His friend was Tatsu, who became my partner in Japan, and he came over to meet and we sat at the kitchen table and he was saying how other exporters were just charging him for research and things, and I was very hungry to get my first client other than family and I said, I'll just charge you ten percent. I'll check everything in, I'll do this, I'll do that and he said, Okay. And we just very slowly grew from there and then he told other people and I woke up a couple of years later and I had six or seven pretty large customers and and then Ku took off and this it was kind of floated into it. Marci (10:31) That's really cool. What made you guys decide to sell the company in 2009? Steven (10:40) Well, we only sold the Ed Hardy brand. There were a couple of factors in that. The Ed Hardy was a fashion play and all fashion plays go through cycles and then crash. Not crash, but it was a peak. And the financial crisis was going on and we had been in lawsuit with the licensee for like two years. And I'm a lover, not a fighter. I just wanted out, for those multiple of reasons. He wasn't conforming to the contract, he wasn't allowing the auditors to do their work properly. He was slapping his name all over it when he was supposed to get pre-approval on all design. Anyway, multiple things. He just was incapable of complying with a contract. You spend two hundred thousand a month on attorneys and they just keep grinding away and nothing happens and we let somebody else grind with him. Marci (11:35) Fair enough. Fair enough. And then you tried a lot of different creating companies. It says you failed for seven or eight years. Steven (11:45) Yeah, I tried to do a lot of online retail. I needed some way to connect with customers. So I tried Rogue Monk Workshop and Infinite Possibilities. I don't know, all kinds of projects, but I didn't have the skill set to connect with the customer. Marci (12:01) And then you ended up in the tall market because you're not tall. I mean, you're not short. Steven (12:07) No, five ten. No, I'm average, Marci (12:09) You're average height. I understand the niche market. What made you think, let's go tall? Steven (12:14) Okay, so first of all I ended up on Amazon, which was a predicator of this, and we were doing and still do sorority and fraternity and marines licensing. So people are searching for Phi Beta Pi sorority and we pop up. So they're already looking for something. I'm not trying to create a brand. And that's how I got into Amazon. And then after about two years of that, I developed enough skill set to not need a partner on a new project on Amazon. So I started up a new seller account just for my family. And it was originally going to be just simply taking a common brand, a Gildan, and changing the label and putting it on and adding just a little more than Gildan. And the reason sellers do that is is you're now not competing with the eight hundred thousand sellers selling Gildan, but your own whatever, make up a brand. That didn't work for me because the margin was too small. But then I started doing the research of companies who were doing that. And at that time, if you looked in Amazon at the reviews, you could see the size and the color that they ordered. So I spent days going through the reviews and just making little hash marks. I didn't have AI or anything. I was just manually making these hash marks. And what I discovered was after size three XL or four XL, everything leveled off. It didn't decrease anymore, but it stopped at 4XL. And most brands stop there because when you're cutting fabric, you get two shirts side by side and then you're at the end of the roll. So anything after 4XL you're wasting fabric. It wastes a lot of fabric because you can't fit two across. And so I was thinking, I wonder what happens at 5X or 6X. And then I did research and it turns out 5X and 6X guys do want it a little longer. I'm reading the reviews also for 'I wish this was longer.' 'I wish this was longer.' Well I can do that. I'm already weighed making these six XL shirts. What's another two or three inches in length? And that's how I came up with well, since I'm gonna do those in in extra length tall, then I'm just gonna do the whole size run in tall. So I kind of backed into it. I didn't necessarily target tall. Marci (14:39) But I mean that's important when you're building a business. you can say, Yeah, wow, everyone wears shirts. We should make shirts because we're gonna put a different picture on it or we're gonna whatever. But you looked at it and you said, you know what, there's this sizing thing. Steven (14:53) Mm-hmm. Marci (14:53) You did the research, I guess, is what it comes down to is you did the research, you put in the work to see where there was a need. Steven (15:01) That's right. Marci (15:02) And you've got this new I don't know, do I call it a new product line? Coming out with ordering by the measurements. Steven (15:09) Okay, so now I'm looking at it, that fast forward five years and I've doing well with the tall. It's stable. And I start getting emails from people who aren't tall but have been buying my shirts. And I monitor that in the reviews too. I know ladies have been buying it like as a sleep shirt or a sleep dress. I had somebody who wrote a review or asked a question that somebody answered, is this okay for concealed carry? And that just never occurred to me. So I added that to the keywords. So people buy long shirts for various reasons. And I started getting emails from people who are like in the trades: plumbers, electricians, HVAC guys, and they've been buying it so that they can tuck it in and avoid plumbers' crack. Marci (16:02) Which we appreciate it, the customers. We definitely appreciate not having plumbers crack. Steven (16:04) I don't know if you remember there was a commercial on TV back in the 70s. I look on YouTube and I can't find it to save my life. Hey, get that butt crack out of here. My kids are trying to eat. They're at the kitchen, little round kitchen breakfast table, guys. So and then I started getting emails of 'my husband has lost a lot of weight, he's on Osempic, and he doesn't need the extra length any longer, but he really loves your shirts.' So I'm getting all of these requests and then I was looking at the ladies' offerings and some of them like very crop top, some of them like it to match a high rise gene, a low rise gene. So women have this much wider range of ways that they would style a top. Guys are pretty much at the waist or longer to tuck it in. And then there was an influencer woman on Instagram, And she is six foot three, six foot four, but she wanted a crop top. So she's falling in this really like Netherlands. Nobody offers this exact length of a shirt. So I said, I'll make some for you. So I made them, and as she was opening it, she was like gasping and speechless, and she's told me that she really was. She wasn't acting for her crowd. And I told my wife that and she said, well, that she suspects that she felt seen or something tailored to her. She needed this. And then I thought, I'm the only person in the industry that I know that is starting with blank canvases that are long enough to accommodate anything. Marci (17:54) Right. Steven (17:55) If you start with a regular t-shirt, you can't turn it into a t-shirt dress. I mean you can, but it's gonna look like an add-on in aftermarket. And so I started really jumping on this and I've got four shirts on the back end that you can find them on my site, but it's very difficult. And I've already had orders for them, so they're finding it. And so yeah, you pick your size, your color and your silhouette from slim fit, medium and relaxed fit, and you tell me how long you want it and in a day to three days we'll ship it. Marci (18:32) Yeah, 'cause I mean people come in all proportions. You can be really tall and very thin or you can be very short and very stocky and you know, what do you want to do? You have to take your shirt to a tailor? Steven (18:46) For a garment like that it's just not worth it. You'll take a suit in, a four hundred dollar suit. Yeah. Some women are bustier and that creates a hang then and it will drape differently. So all they have to do is measure a current shirt that is close to what they like, and then just measure it. So it accounts for all of these different silhouettes. Some people are broader in the shoulders and so the way that it drapes on you will change. We iterated that with your son. Take a shirt that you already have, and then how would you modify this if you could? That's the easiest starting point. Marci (19:20) I have to say, so I know Steve from high school and we'd been talking, you know, 'cause I saw about his brand and my son who is not tall, he's five nine, but he's very long in the body. And a lot of times when he buys the shirts that fit him right, they're just not long enough because just his proportions. Steven (19:42) Mm-hmm. Marci (19:45) So yeah, we tried it and it's great. It's amazing. I don't normally do shout outs like this for products. I don't typically have used the people's products, but here here it is. Steven (19:54) Well, and to be fair, you got one that the stitching came apart. That's a boo on the blue one. Marci (19:59) That is a boo. Steven (20:00) But if customers send me a photo of something like that, I just give them a refund. Or I'll say, Do you want me to send another one out? I don't make them return it. That's clear that they've got a damaged good. And it's the best you can do. No. Marci (20:15) Right, you can't do anything better than that. So this is a family business now. Steven (20:21) Yeah, my eldest son is now been working for about two years and every six months I ask him, does he want to re up again? 'Cause I don't want him to feel obligated to take this business. He's got his own life. But he's now twenty, so he hasn't gone to college yet. And he may not. But I said, Okay, in a worst case, even if you don't end up doing tall apparel, you're learning how to operate an Amazon store, you're learning how to operate a Shopify store, inventory planning, cash management. He's getting a business curriculum in real life that from where I'm sitting, he's not missing any time of learning stuff. Marci (21:06) Right. Steven (21:06) And again, if I die in a car accident tomorrow, he could limp the company along for a while while they decide do they wanna sell it, do they wanna license it, or do they wanna keep going? And my other son is now eighteen, so I'm sixty-three. So there's this weird like family planning of what to do with an asset like that. That it's not like a portfolio 401k or a house or the just it's something more cut and dry of okay, we'll just sell it and cash out. How long do I wanna keep doing this? How long do I wanna wait while they're deciding? There's that. Man makes plans and God laughs. We'll see. Marci (21:49) Pretty much, So what kind of things did you learn as an entrepreneur that surprised you? Steven (22:49) Okay, so you have this image of well, you know, you can work whenever you want and you have no bosses and it's not true. Everybody has bosses. And if it's Thanksgiving Day, or the day after, I can't work whenever I want. If the buffalo are running, I have to hunt. And so in one way the illusion of working for somebody else is simply replaced by the outside external circumstances. If I have a container fire, I have to go. Not don't bother me, I'm off the clock. So yeah, I would say that's the biggest one. I would say there's more freedom for sure. I can sleep in, I can take a nap most days, but it's not this total nirvana that everybody paints it to be. And I have woken up in the morning, this is before I'd already taken off, and I had six sewers downstairs making things at the factory. It was Friday and I had no idea how I was gonna pay them that day. And as we said, that's one of the reasons I couldn't become a stockbroker is I can eat nineteen cent ramen myself. I'm not preferring it, but I'm okay. But for me I ended up somehow paying them, but I couldn't go to them and say, I just don't have the money and that's pressure for me. Marci (24:23) When you work for yourself, it's not that you have no bosses, it's that all of your clients are your bosses, all of your employees are your bosses and you actually have more bosses. Steven (24:32) Yeah. Kind of. That right. again, these external things that aren't thought of until you're in it. It does. Marci (24:47) But in some ways you have more freedom because it's not when you have to do it, it's when it has to get done. But then there's also you're not necessarily pegged to a desk if you don't have something that needs to get done right then. You can say, Yeah, I can take care of it tomorrow and there's no one breathing down your neck on that. Steven (25:02) That's right. I can take my wife to lunch and be there and that's right. Marci (25:08) So what were things that really helped your family talk about the financial stuff? When did you start sitting down with them for these annual meetings and bringing them in on that? Steven (25:20) Okay, we used to do it more frequently. One of the things that my p, my parents were twenty two when they had me, so they were pretty young. And my dad went to school until I was like twenty-eight. So we were always pretty tight. But one of the things that they really did correctly is when I had my paper routes or shoveling snow or whatever, they let me spend half of the money right away. And they had me put the other half in a bank account and then once a year, once every so often, I could then spend that on something big. So that they were teaching me these principles through real life action, not just telling me or learning about it. And so after we sold Ed Hardy, I had enough pile of money to... That was another weird thing. After selling it a weird thing happened in that I became much more conservative with spending. I didn't buy a new car, I didn't because the mentality shifts to the flow has stopped. So anything that I'm taking is coming out of seed. And it was a really unexpected emotion or realization. Marci (26:37) But you sold Ed Hardy, you still had the Ku brand, right? Steven (26:41) Yeah, but that had the sales had gone way down. That was a fashion brand too. That it didn't go away, but it wasn't earning anything. Marci (26:48) Okay. Steven (26:48) That wasn't part of the sale. So now at the financial crisis, I've sold the money producing asset, and we're still in the middle of a crisis. We don't know if the banks are gonna fail. Where do you put this money? In hindsight, it's very easy to say what you should have done. But when your mom is calling you from Michigan saying, Is my bank okay? This is people don't realize how close it was to being really bad, I lost my train, the financial meetings. So our kids were in a private school here in LA, a humanistic school and learning respecting people and that cost money. it was like where I put their college budget mentally. If I'm gonna give them this head start. And so we couldn't do some things just not enough money to keep going over to visit her parents, my wife's parents, or go out to eat every night. Or and so, but I didn't want them to be concerned, but I wanted them to just understand the reality of what was going on. And so the family meetings became okay, here's the money that we can spend every month for now, and here's how much rent is, and here's how much this is. And I would always say, I wanted to give them a say in where the family budget went. It's not simply, you can't get this or so they got a voice in where this extra money at the end of the month would go. And I would always tell them, Well, we're not gonna starve. I said in a worse case, we may have to move out of California to a cheaper state. We may have to give up the school. These things could happen. And so I would do that probably every three months, six months. I can imagine a far worse scenario than what's actually happening. My mind can make a horrible story. So they always had a reality of what was going on so that they didn't have concern of, you know, well what if we're sleeping under the bridge? I don't know. Marci (28:57) I think that's fabulous that you had those conversations and obviously your wife was involved in the decisions and the conversations. That's scary that you had to do it but so beneficial for them that you did. Steven (29:12) I think so. I couldn't help but to have some stress of course. And we never like when I say we had to cut back, this isn't like mm soup kitchen but it I could see as the runway was getting shorter and shorter, my stress was building and you can't help but not have the kids pick up on that. Marci (29:34) Right. Steven (29:35) It's there, so you may as well just acknowledge it. Well, I'm feeling a little bit of pressure, but we're okay. I mean there is no that I could see a disaster scenario at the end of this. Just simply, well, we may have to move to Arizona, I don't know. Marci (29:52) No, not Arizona. Steven (29:55) And we're out of coffee Marci (29:58) Well if we're now forget the Arizona. Arizona's fine. Out of coffee? That does not fly. Okay. So I do have a question this this season on my podcast. What is wealth to you? Steven (30:13) Wealth, I would say wealth to me is measured in me having the ability to spend my time as much as possible how I like. Wealth to me is having a health lifespan. So there's a lifespan and a health lifespan. I don't wanna have amputated feet and diabetes or heart attacks or whatever and limp along the last twenty years. So wealth is taking care of my body enough that it keeps operating properly. So we've got time, health, and Time and health. Being able to spend time with loved ones and friends, which falls under the time. I'm gonna go with time and health. Yes! I don't need to call an outsider. Marci (31:11) Okay, that's a good it is that your final answer. Steve, do you have anything else to mention that maybe we didn't cover? Steven (31:26) No, just that it's been a pleasure. This is the first time I've done something like this. You said, When are you gonna do this? I don't know, when are you gonna invite me? Marci (31:34) Well I'm so happy that I invited you and I'm so glad you were my guest today. We appreciate you taking Steven (31:40) Yeah, same here. Marci (31:41) the time to join us and share your story. Steven (31:45) Yep, a pleasure. Marci (31:47) And to my listeners I will be sharing a link to Steve's information and Have It Tall in the show notes. Please check them out. There's interesting information and interesting shirt sizes. Don't forget to subscribe, leave us a review and stay tuned. I'll see you next time. This has been MoneyMarci on Marci Talks Money (and Life). You got this.