In this conversation, Adam Callinan interviews Kevin Wohlman, the founder of Southern Scholar, a premium sock brand. They discuss Kevin's entrepreneurial journey, starting from his childhood experiences of selling candy and t-shirts to his transition from a Big Four accounting firm to launching his own business. The conversation delves into the challenges of growing an e-commerce brand, the importance of understanding metrics beyond vanity metrics, and the potential impact of AI on the industry. Kevin shares insights on resilience, work-life balance, and the lessons learned throughout his entrepreneurial journey.

Takeaways

• Kevin started his entrepreneurial journey at a young age, selling candy and t-shirts.
• He transitioned from accounting to launching Southern Scholar after realizing his passion for entrepreneurship.
• The importance of understanding metrics beyond just revenue growth was emphasized.
• Kevin learned that focusing on profit is more important than chasing vanity metrics.
• AI has the potential to disrupt e-commerce by improving efficiency and reducing costs.
• Building resilience is crucial for entrepreneurs facing ups and downs in their journey.
• Kevin's experience highlights the challenges of managing inventory and cash flow in a startup.
• The conversation underscores the significance of work-life balance for sustained productivity.
• Kevin's journey reflects the importance of adaptability in business strategies.
• The discussion reveals that there is no one-size-fits-all approach to entrepreneurship.
titles
• The Entrepreneurial Journey of Kevin Wohlman
• From Accounting to Socks: A Unique Transition
Sound Bites
• "I was packing my backpack with shirts."
• "I was doing nothing but work."
• "There's no one way to start a business."
Chapters
00:00The Simplicity and Complexity of Selling Socks
06:04From Accounting to Entrepreneurship: Kevin's Journey
10:32Early Entrepreneurial Ventures: T-Shirts and Skateboarding
14:56The Inflection Point: Transitioning from Side Hustle to Full-Time
19:06Navigating Growth and Cash Flow Challenges
23:58Reflecting on Business Strategy and Future Directions
29:43Understanding Vanity Metrics in Business
36:50Building Resilience: Intentional Challenges in Life
42:35Future Plans and Innovations at Southern Scholar
43:32PodClose.mp4
stuff out. So we're Sweet. So you and I met a month or two ago online and had a couple of chats and I'm fairly fascinated by the concept of building online business around something that seems at least at face value to be relatively simple and that is socks. Am I like out of my mind? Is it really not that simple?

Kevin (00:29.355)
Now I tell people all the time, like, it's incredibly difficult and wildly simple at the same time. I kind of picked the product category for that reason. An easy and cheaper entry into the menswear space than what I originally wanted to do, which was bespoke suiting. And I kind of was able to build what I wanted off of that.

Adam Callinan (00:36.803)
No.

Kevin (00:59.219)
know, single hero product more or less. I we do, we have 200 plus SKUs, but at the end of the day, it's all our, you know, signature blend dress sock. So a lot of design variants, but it's not like we're running, you know, 150 SKUs that are different products and then, you know, variances on top of that as far as style and design goes. So simple business, very difficult at the same time.

Adam Callinan (01:28.76)
So when Southern Scholar, like the concept for the business came up, were you just, what were you doing before this?

Kevin (01:35.063)
So I had interned at a Big Four accounting firm for three summers when I was in college. And I knew that that was not a long-term route for me, but they paid quite well for a 19-year-old. So I continued those internships. They offered me the full-time gig after the three internships. And the way that world kind of works is you go back to school, you get your master's in tax or audit, you take your CPA exams, and then you continue Big Four.

more or less for life, or at least that's their hope. I had no intention of doing that. I had been an entrepreneur my whole life. I had started a company when I was, I forget, 13, 14 years old. Ran it until I was 22. And so I knew I wanted to start something of my own, and I had kind of talked to my parents about that, and my dad's response was like, what do you have experience in to start a business? Might as well continue to pursue this accounting degree, because I had wanted to switch to...

My school actually offered an entrepreneurship program as a focus of the marketing school, or the marketing program. And he was like, you know, continue on with the accounting thing. You're good at it, you're making decent money, and then later on, once you have some experience and some stuff, you can see if you wanna start something. So I went back to school. I graduated with my accounting degree in your normal four, but instead of going back and getting my master's in something I had no intention in pursuing long term, my...

I went to Arizona State, W.P. Carey School Business, and they had just transitioned that entrepreneurship program from a focus of the marketing degree to its own degree. And because I was kind of an entrepreneur and knew this is what I wanted to do, I was taking entrepreneurship classes as my electives all through my business degree instead of all kind of the bullshit classes. so when they made that...

that entrepreneurship program its own degree, I was like 12 or 16 credits away from graduating with it. So funny enough, I finished that program in one year and I mean I had three, four classes a semester for that entire year.

Kevin (03:40.279)
I graduated at the end of that year and in the graduation book, I am the only name under the entrepreneurship program because nobody else could have possibly finished it already, right? So kind of funny. But I ended up taking that offer at the accounting firm and I think I was about seven days into that job.

Adam Callinan (03:50.102)
That's awesome.

Kevin (04:00.333)
when I noticed that everybody in my office was wearing some sort of patterned dress sock to kind of show a bit of style. You know, the business casual dress code had shifted quite a bit. Nobody's wearing ties, pocket squares. You're hardly ever wearing a suit or a jacket. So most guys are in blue trousers, white button-up, brown Oxfords, and throwing, you know, some orange and black camouflage socks or pink lightning bolt socks to show a little bit of style or individuality or whatever. And I just thought...

A, those things don't look very good. They're not very professional. I too was shopping for patterned dress socks and I was walking to work at the time about a mile each way and I'd be running through a pair of socks after two wears. They'd be falling down my leg all day at work. I noticed other people in my office stopping in the hallway to bend down and pull their socks back up and so just kind of a light bulb dung and said, you want to get into the menswear space, you want to start your own thing, maybe this is a good starting point.

And then just kind of started literally one week into that job started working nights and weekends building Building this and I launched it and quit my job a year later. Well, I take that back I quit my job a year later and launched it about five months after that

Adam Callinan (05:12.214)
Amazing. So what year was that roughly?

Kevin (05:17.517)
I launched the business in November of 15. I started my full-time job at the Big Four firm in July of 14 and quit in July of 15. So I was building it on the side nights and weekends for a year and then quit my job to really get it launched before the holidays and we launched it in middle November of 15. I say we. I always say we, it's me.

Adam Callinan (05:30.453)
nice.

Adam Callinan (05:41.759)
Yeah, the one man show early on. That's awesome. How? Let's go back. You said something that I also think is actually quite fascinating because I was not this kid. You're running a business when you were 13. What was that? Let's talk about that. Okay.

Kevin (05:44.311)
Yeah.

Kevin (05:56.737)
It was a t-shirt company. So I was a big skateboarder. wasn't very good compared to people that are actually good. I was obviously better than people that didn't skateboard often, but I ended up...

Adam Callinan (06:08.288)
Yeah, you're doing it a lot. Yeah.

Kevin (06:11.373)
I was doing it nonstop. It's all I did. And I lived in Scottsdale, Arizona. It's 110 degrees in the summer. I'm skateboarding two miles to a bus stop to drive 40 minutes to a skate park to skate for nine hours to get back on the bus to go home to skate another two miles home every single day of summer. I was going to the skate park after school every day. Just all I really did. And I always kind of had that entrepreneurial bug. so I started I found this clothing company I really liked. I started wearing it. Everybody at my school, you know, started wearing

as well and I'm not saying I started that trend I'm just saying that brand got popular at the same time I discovered them and I hated showing up to school wearing the same thing as somebody else. So I started designing my own t-shirts and hoodies and whatnot and wearing them to school and the whole point was for me to have something that nobody else had and then all of sudden all these people are asking me where did I get it where can they get one blah blah blah and I thought maybe there's a business here.

So I started a company called ITP Co. Increase the Peace Company and started selling t-shirts at school and hoodies and eventually it kind of grew to other schools.

I never really took that, you I call that a business. wasn't, it wasn't so much a company as it was, you know, it was a little side business, but it did pretty well for a high schooler. Made a few grand a month and eventually transitioned, still doing that, but also started doing t-shirts for, you know, big football games at my school. A friend of mine that had started bands was doing all their merch. And then in college transitioned to intramural teams and fraternities and sororities and

Adam Callinan (07:21.716)
Yeah, it's great.

Kevin (07:43.497)
bands and rappers and things like that at my school. So kind of pivoted it a little bit and probably stopped doing that when I was about 21, 22.

Adam Callinan (07:55.787)
How are you distributing product at the age of 14 to other schools? Like you weren't selling it online, really. Yeah, it's just kind of.

Kevin (08:04.46)
No, so I tried to I tried to get an online store going and I at that point I don't even think I knew a Shopify was I can't remember what platform I Maybe not Let's see I was in I was in high school from 2005 to 2009. So yeah, I mean 2005 ish

Adam Callinan (08:12.266)
I don't think it might not have existed. I mean, what year is this? This would have been like 2005, seven.

Adam Callinan (08:23.754)
Okay, yeah.

Kevin (08:27.885)
And I don't remember what the platform was I was trying to use but long story short my dad basically said since you're under 18 the liability would fall on me if you know something were to happen. So I didn't get to push online which.

Doing what I'm doing now, that would have been some great experience back then. But I figured it out later in life. But mainly it was just friends of mine at other schools or friends of friends that were, they'd give my number, they'd text me and ask and I would drive to their high school after school and meet them and drop off shirts or have a friend if I was not 16 yet go and do the same thing. I was packing my backpack with shirts, taking the bus to school and getting rid of them that way, selling them at football games.

Adam Callinan (08:45.406)
Yeah, early days.

Kevin (09:11.882)
It was very disorganized. was just somebody asked and I'd find a way to get him a shirt.

Adam Callinan (09:18.698)
That's awesome. Yeah, I was definitely not that kid. You know, I these stories of the, you know, the kids that are like six years old running around the neighborhood selling rocks wrapped in cellophane and they have like a whole group of neighborhood kids doing deals and doing all this stuff. And I always think that is so fascinating to just to be wired like that so young. Cause again, I was not wired like that. was into science and sports and being a nerd.

Kevin (09:30.061)
Mm-hmm.

Kevin (09:33.866)
I mean...

Kevin (09:39.125)
Yeah. When I was in middle school, I would go trick or treating and the goal was to get as much candy as I could possibly get, but it wasn't for me. I would wait two months until all my friends, you the whole school had eaten all theirs and then I'd start bringing bags to school and selling candy. We... Yeah.

Adam Callinan (09:52.958)
Yeah, exactly. Like, it never crossed my mind. We just hammered it all.

Kevin (09:57.687)
We used to have this fundraiser at my schools for band and orchestra and everybody was required to take one of those and they'd give you this cardboard briefcase and it had like four or five pieces of five different types of candy. Everybody got the same candy. And I realized after the first fundraiser that two of the five pieces of candy were by far the most popular. So the next time we did it, day one, I went to everybody in my class and said, for your sour skittles and your shock tarts for one of each,

I'll give you two of any other piece you want and did this whole trade until I monopolized the market of the two popular pieces. Then I would sell them for five bucks a piece. I would pocket the four dollar difference and then I would still win the competition turning in, you know, all of your your fundraised money. So I've kind of always had the little thing. mean, in college I flipped concert tickets. I've done all sorts of things.

Adam Callinan (10:44.297)
That's awesome.

Adam Callinan (10:52.114)
Yeah, that creates such an incredible sort of like baseline of experience for startups. Obviously just kind of been like mentally hacking down that road for such a long time. So you fast forward, side note, I was born and raised in Flagstaff. I didn't realize you were from Phoenix. Yeah, I figured I incorrectly assumed with the Southern scholar concept that you were a Southern guy, but that's awesome.

Kevin (11:00.066)
Yeah.

Kevin (11:04.554)
Mm-hmm.

Kevin (11:08.723)
okay. Nice.

Kevin (11:16.107)
Yeah, so my mom's whole side of the family was from Texas. Some of them still live here. So I moved out here right after college, but lived in Phoenix, Arizona for 15 years.

Adam Callinan (11:28.169)
Awesome, I went to U of A, we don't need to talk about that though. That's University of Arizona for you, not Arizona people. So you start Southern Scholar, you're working a job, you spend a year doing both. What?

Kevin (11:31.425)
Yeah, fair enough.

Kevin (11:35.405)
Okay.

Adam Callinan (11:44.999)
I often see in super early stage companies that it takes a certain amount of time, rarely does it happen really fast, that you get this sort of first inflection point where it goes from being like a side project that you're hacking together on the weekends and in your spare time or whatever to you sort of have like a holy shit moment where it goes from being nothing to being something. Did you have that? if so, what was that?

Kevin (12:08.277)
Yeah, not that early. Yeah. So what I was doing at this firm, I mean, it was 80 plus hour weeks year round. So there wasn't much time nights and weekends to be plugging away. mean, I was working seven days a week. I was working till 11 p.m. midnight on Friday and Saturday nights.

Adam Callinan (12:11.942)
Yeah, I know. Mine were never that early. If we're bottle keeper, it'd take a freaking year.

Kevin (12:35.209)
at the accounting firm. the time outside of that was limited to build a company. But I never, it's just my personality, I just never had a doubt that I was gonna make this work. And that might sound arrogant, I don't know, it's just kinda how I'm wired that like, if you work hard enough, if you don't give up, if you can problem solve, like you're gonna be fine. And at that time I was living with my brother and he saw like how much I was working. He's a few years older than me, a couple years older than me.

He saw how hard I was working, he saw how hard I believed, and we had a conversation one night that was like, hey, I really need to get this launched before the holidays. That could be a know, liftoff point for a new brand to launch in a busy, you know, gifting time of year. This is before I even realized how big Q4 was for...

for direct consumer brands, otherwise I would have launched in October. And he basically was like, look man, he's like, you're never gonna be able to do this without being able to focus on it 100%. So we worked up a little deal for me to borrow some money from him, basically enough to cover my rent for, I forget if it was four or six months, to try and get this thing launched by November. And...

Adam Callinan (13:27.772)
Yeah.

Kevin (13:52.961)
I just went full bore, worked on this thing nonstop. The week that I quit my, the Friday that I left my job for good, I flew to Vegas with my brother and my aunts and uncles, celebrated, landed back in Dallas late Sunday night, woke up like six a.m. Monday morning with this tiny little desk and laptop in my room.

wall to wall, to ceiling with boxes of socks that I didn't know how I was gonna get rid of. Because to produce a textile product, you have to hit certain minimums per style. And we had zero customers at this point. So I'm looking at a year plus worth of inventory in my bedroom and this tiny little desk and I'm just like, all right, let's go. Gotta make this work at this point. You gotta pay your brother back somehow.

Kevin (14:41.121)
The launch day was pretty promising, but you know, at that point, the business is so small and I'm so gung-ho about it that I immediately jump into customer analytics and look and there's maybe two names of all the orders from November 15th to December 1 that were not friends or family.

So, you know, it was kind of, you know, sweet. People are supporting me, but also like, uh-oh, this isn't sustainable. But, you know, again, I just never had a doubt that I was going to make it work. So I just, I just dove head first and...

Adam Callinan (15:08.91)
Kevin (15:23.885)
You know, that was 10 years ago. This November will be our 10 year anniversary. So the inflection point didn't come until after I raised capital in 2018, probably. We had a, well, you know, it's hard to look back because right now, like the only inflection point I can really think of is the one that happened six months ago. But realistically, there's been 10 of them along the way. They just get kind of washed out by the most recent one. But.

Adam Callinan (15:42.757)
Yeah, for sure.

Kevin (15:48.749)
You know, there was some sort of inflection point between 2015 and 2018 where I was confident I could raise capital, that I had enough steam and enough, you know, proof that this was gonna work. And then after raising capital and having a bit of a marketing budget, because we didn't know paid media until we raised capital.

Then we kind had a little bit success with paid media and we're starting to double year over year and triple year over year and that was inflection point number two. And then after that it's me kind of learning more and more about the business and what does matter, what my time should be spent on, what it shouldn't be spent on, what's kind of vanity metrics, what's real metrics. That's inflection point number three or four five or six or whatever. And here we are now.

Adam Callinan (16:36.624)
What happened six months ago?

Kevin (16:39.757)
I took a step back from my normal kind of day-to-day which was just get on the laptop and do as much as I can and as much time as I have and and then do it all over again the next day and Just kind of looked at it from a high level I kind of thought to myself this is really funny. I don't want this. I hope this doesn't sound bad, but

When people come to me for help with their businesses, I'm like so clear minded, give me 20 minutes of a conversation and I've got so much valuable insight for you. I've got actionable items. I'm more than happy to jump into your analytics and dive deep and find opportunity. But when it's your own brand that you are so like wrapped up and intertwined in for a decade, it's really hard to like take that step back.

and think about the one thing that's most important right now without thinking about once that's done then it's da-da-da-da-da-da or in order to get that done it's da-da-da-da-da-da, right? When it's somebody else's business, you can. And so I was helping a few different friends of mine that wanted to start their own businesses, some in direct to consumer, some in YouTube yoga channels, all sorts of different things, and there was this common theme of take a step back.

look at things from a high level instead of the nitty gritty and deep diving into the data and make a logical decision. And so I did that for my own business. And the decision that was made was, we're growing fast. We're doubling revenue at least year over year.

But we're still kind of struggling with cash flow. We're still having to borrow. We're taking out these credit lines and Shopify loans that are crazy high interest when you're a growing brand, right? You're paying them back in 90 days. They're designed to be paid back in 90 days or less. So then you take that step back, you look at the APR you're paying and you're like, holy shit, like I'm just burning money to have budget to advertise to make more money to pay back this loan.

Adam Callinan (18:28.015)
Yeah, yeah, it's the worst, yeah, yeah.

Kevin (18:44.427)
So, you know, that, around that same time or a little bit earlier than that, the valuation process on direct consumer brands had shifted dramatically as well. Before it was, you know, blank X revenue, now it's EBITDA. So we just kind of made that transition, that shift into let's slow down growth a little bit, let's clean up our books, and let's focus on profit and cash flow. And it's been.

It's only been six months or so, but it's been a game changer.

Adam Callinan (19:19.461)
Yeah, we got really lucky in timing. I generally think, you know, there's a lot of luck that has to happen inside of a like operating business, particularly in early stage one. But generally when you look back, luck, that luck has to do with timing most of the time. And we got really lucky with bottle keeper when we got acquired because it was in 2021 when it was a like. I mean, the company we got acquired by private equity and got positioned with Arctic outdoors and the

private equity group that acquired us called WinPoint Partners, the first three or four meetings that we had with them and it was like their full team, the chairmen of the boards, the heads of this, the heads of everything. We probably had five or six hours worth of meetings with them and not one time did they ask us what our revenue was, not once. They didn't care, I mean, if we were profitable, they just wanted to know did we have other investors and talk about IP and brand. It was fascinating. Obviously that changed dramatically. Pretty sure, you know, within a year or two of that, the world had shifted.

Kevin (20:04.141)
you

Kevin (20:13.644)
Right.

Kevin (20:17.023)
And I mean, was their strategy to roll it up into other things they had?

Adam Callinan (20:20.451)
Yeah, it was sort of two part. They had just acquired Arctic Outdoors six months before us, which is a bigger company. Arctic Outdoors for anyone that doesn't know, they're a lot different now, so I feel comfortable saying this. Their business model was largely built on just sort of doing what Yeti does at a lower price point. And much of their revenue was built on drafting Yeti doing exactly that. And then when point...

bought them, they put in a new executive team, which included a new CEO named Bill Pond, was Epic. And they went down a completely different strategy, which was a much smarter, healthier strategy of creating their own products and whatnot. So with Bottlekeeper, we had 42 patents. They really wanted the patent portfolio so they could remake their own versions of our stuff. We were also a premium brand with really, really high gross margins. And they weren't able to do a whole lot of retail distribution with the Arctic price point just because the

margins were too thin. So was part higher end brand part intellectual property revenue was like number seven on the list of things they cared about.

Interesting.

Kevin (21:31.787)
Yeah, times have changed. Quite a bit.

Adam Callinan (21:33.028)
Yeah, I know. I know they have. get to see it. And to your point, it's always easier for someone to look at someone else's stuff and quickly discern what's wrong with them. And that's a big part of Pentane is I can look at another company and tell you with a set of data in 45 seconds exactly what the problems are. It is so much harder when you're looking at your own business. And that's the thing. I deal with that every single day in building a new company. You're 100 % right on.

Kevin (22:02.955)
Yeah, and I mean, with Pentaen, you don't even need to know what I'm selling. You don't need to know what market I'm in, what niche. All you need is the numbers and you can determine if it's healthy and if it's not healthy, what needs to change to make it healthy. When you take that step back, like I said, I was helping a friend launch a online yoga YouTube channel slash brand. I don't know anything about that, but the business isn't different, right? So I'm able to help her.

Adam Callinan (22:09.825)
Nope, just math.

Adam Callinan (22:28.29)
you

Kevin (22:32.781)
I sell socks, she's doing online yoga and I'm able to help her because you're looking at it from a high level, right?

Adam Callinan (22:36.502)
Yeah, totally.

Yeah. When you, if we take a step back, looking at, and I'll give you an example of this, but like looking back at how you started this company, you know, in that like 2015 to 2018 time range, I ask this because I get asked this question a lot on podcasts and I think it's interesting. What would you do differently today if you were gonna start that company versus how you started it then? And a good example of that is like inventory. Would you start with?

Go in and buy in 12 months for the inventory and stick it in a room.

Kevin (23:12.237)
would change everything and nothing at the same time. I didn't have an option on the inventory. I already had to talk the manufacturer down from, I forget, thousand or two thousand pairs per style to 300 pairs per style. But in order to get them to agree to that, I had to order 12 styles upfront. Maybe even more. It might have been 500 minimum. I can't even remember at this point. I got them down quite a bit on their per unit.

Adam Callinan (23:14.902)
Okay, explain.

Kevin (23:44.705)
minimum But had to order a year's worth right and for us it wasn't a year's worth for us because we were at this time We were subscription only we weren't gonna have 300 or 500 subscribers in month one probably not in month two I Don't think we even hit it in month three four five to be frank So I was buying 12 styles and at that time we were shipping one style per month So I say in a year of inventory realistically, it was multiple years of inventory for me

Adam Callinan (24:07.458)
you

Adam Callinan (24:10.932)
Yeah, yeah.

Kevin (24:12.341)
But that was the only way I could get going. And thankfully, like I said earlier, socks are a cheaper way into the menswear space than most other products. So it wasn't a crazy amount of cash up front to stock that, but it was all of the cash we had. When I launched the business in November, we had like 800 bucks in the checking account. So it was like truly bootstrapped and...

Truly all or nothing.

I don't really know what I would have done different at the beginning. I probably would have raised capital a lot earlier, especially at the time that this was all going on in 2014, 15, 16. I probably could have gotten as good, if not better, valuation basically pre-revenue than I did three years in.

Kevin (25:13.185)
people were just kind of throwing money at DTC brands at that time.

Also and not to take you know credit away from anybody Who got in earlier and was running Facebook ads in 14 15 16 But it was more or less put a dollar in take 10 out. There are a lot of brands that succeeded Because of that that frankly likely would not have survived had they launched later And so looking back in hindsight 2020 if I would have raised capital earlier and I had budget to run ads and I would have run ads earlier I probably would have gotten

Adam Callinan (25:30.304)
Mm-hmm.

Kevin (25:49.229)
to where we were three years in, in six months, as far as revenue numbers go. But I also think that I learned so much more about what it takes to make a business work, especially when it's difficult and you don't have this home run platform that I've made it farther by this point than I would have. You know what I mean?

Adam Callinan (26:13.577)
Yeah, I know exactly what you mean. mean, like, let's let's be honest, Bottlekeeper was that exact company. We started in 13. It took off in 14, 15, 16 and 14. We did 150 grand and 15. We did 1.8 million and 16. We did 8 million with no employees, no investors. And that was entirely because we could not spend money fast enough on Facebook. The summer 14s when they launched their video ad platform, it changed everything because we could show the product in action and it

Kevin (26:37.761)
Yeah.

Adam Callinan (26:42.869)
went bonkers and we continue to scale like the company remained healthy but it got so freaking hard and the fact that we didn't have to focus on building organic and really outside of those paid media channels until year 17, 18, 19 when things got a lot more difficult. mean, it made it a really challenging last couple of years when we were at, you know, we were at eight figure scale trying to support that on paid media was really difficult.

Kevin (27:01.793)
Yeah.

Kevin (27:11.597)
Yeah, I mean one thing that I've learned about myself over the last 10 years is that I am not good at hiring. I pick the wrong people. I bring people on at the wrong time. I overpay. And that's probably why I'm more or less a one man operation right now. If I would have done things differently and raised capital in 14 and got into Facebook ads in 15 and blown up.

I don't know, could have been great, could have forced me to become good at hiring. We could have sunk the ship because I'm not good at that, And it would have been way too much for me to handle as a one man team. So when I say change everything and nothing at the same time, that's kind of what I mean. I think I did so many things wrong the first eight, nine years. Frankly, I mean, I'm still doing things wrong today, still learning today. But I think that by doing all those things wrong, I learned a shitload.

And I was able to kind of have an opportunity to push through a very difficult time in DTC, especially when you're building a business for seven years, you know, with the hope of a revenue multiple, and then that gets wiped away. You got to completely, you know, switch strategies and change more or less everything about your business. So yeah, I mean, everything and nothing at the same time. I don't know how else to put it.

Adam Callinan (28:22.324)
Yeah, yeah.

Adam Callinan (28:34.656)
I mean, that, and that makes perfect sense with the context. I wonder though, I'd be interested in your thoughts on this given that you're running a physical product company.

If AI, we're gonna go down the AI rabbit hole for a minute. If AI is gonna come and disrupt.

in some capacity, everything in many places, literally everything. And I don't think obviously in like the services industry, it's not gonna massively impact plumbers and electricians and construction workers and things like that. I wonder though, how AI will influence valuations and looking back at like revenue multiples and things like that in e-commerce because AI can do and supplement a lot of the things that

that we do in an e-commerce business, but obviously it can't like make the product. It can't, you know, it's not gonna store, you can use AI to supplement all the things in the process. Like how do you look at that or think about that?

Kevin (29:40.269)
I wouldn't be surprised if within the next couple years AI could successfully build a tech pack for for manufacturing textiles I Already use it a little bit for like design inspiration I don't use it to actually build the designs but for inspiration on what I need to design I Think the way that it's play into multiples is

I mean, what's the number one cost for scaling direct consumer brands right now? It's their people, right? It's their payroll. So if you can start implementing and using AI to reduce the amount of hours needed by human, then you reduce the amount of humans you need and you reduce your payroll. There are certain things that it's not gonna be able to do.

Adam Callinan (30:16.34)
Yeah.

Kevin (30:33.419)
I mean, I don't know the future, but I would say, you know, unlikely in the next 10, 20 years. But at the same time, it's moving so fast, like, what do I know? We use it very, very minimally. We use some agents for, you know, reporting just to kind of give us a high level look at what happened yesterday, what happened last week, and why do you think it is, you know, why are these numbers?

Adam Callinan (30:42.771)
Yeah.

Kevin (30:57.781)
trending in the direction that they are. But even then, it's just data, it's polling data that you can do on your own. It just gives you time on doing that. you know, if you can cut your payroll cost by 30 % on a bunch of manual stuff you're using, you know, VAs and Upwork and contractors for, and you no longer need those people, it's a huge cost saving. It goes directly to your bottom line, you're gonna get a better valuation based off that.

For a lot of these direct consumer holding companies and these PE firms that are just doing roll ups and what not, if they can look and see, you know, we've got a team of 20.

and we're using a little bit of AI and we were able to knock our team down to 15, well then they can look at that and say, hey, if we acquire this brand and we use AI better, we can probably knock it down to 10 employees, which will save us money. Or we only need it over here because we know what we're doing. We have this huge holding company of all these different people and systems and processes. This 10 person team, we can manage with two.

Now you're not going to necessarily get a better valuation because they have their systems in place to be more efficient than you are. That's why they're buying you. But you might have a higher likelihood of being acquired because of that.

Adam Callinan (32:18.352)
Earlier you mentioned going through an inflection point around vanity metrics. Explain. I have deep personal feelings around metrics and what are vanity metrics and...

Kevin (32:32.109)
I bet you do. mean, the biggest one being revenue growth. That's all we cared about for the first, I don't know, five, six years. Of course you want a higher ROAS, you want a lower CPA, you want a higher conversion rate, and you want blah, blah, blah, blah, but at end of the day, all we cared about is are we doubling or more revenue year over year. There was almost this cultish,

Adam Callinan (32:41.755)
Yeah.

Kevin (33:03.085)
feeling of acceptance if you went from that $10,000 a month to $100,000 a month to $500,000 a month to a million dollar a month and being able to say, oh yeah, seven figures a month. And that's kind what people chased. And I think it was a combination of like, I mean, it's a vanity metric, so it's kind of a combination of the hope that you're gonna get acquired for.

7x your revenue multiple or your revenue And also just being able to say that you built a quote-unquote seven figure brand eight figure brand whatever I Don't give a shit if you're running a eight figure brand versus seven figure brand if the seven figure brand has a higher EBITDA What would you rather operate? You know at the end of the day, it's the money that's left in your bank account

at the end of each month or the end of each year and for six years we didn't care. We wanted to more or less break even year over year and not have to pay a whole bunch of taxes and still be doubling or tripling our revenue and we thought that was a good path to go down. It's hard to, it's much easier to stay.

lean and profit focused from the beginning all the way through, then to not focus on profit at all and then try and claw back at it. And that's kind of where we're at now. Or where we were six months ago, I should say.

Adam Callinan (34:26.609)
Yeah, totally agree.

Adam Callinan (34:32.262)
Yeah, it's hard because we like as operators, spend so much time looking, not everybody, obviously, most of us spend a lot of time looking at data. And in those data are all these metrics. And the challenge is that every single metric, literally pick one, every single metric can be used as a vanity metric if you don't have context. Like a million dollars in net profit is epic unless you made $200 million in revenue and then it sucks.

Kevin (34:59.468)
Yep.

Adam Callinan (34:59.931)
Literally every single metric is a vanity metric without context.

Kevin (35:03.501)
Were you guys ever using ad agencies for ball keeper?

Adam Callinan (35:09.533)
I ran all of the paid media through eight million in revenue, then we hired an internal ad, like a VP of ad or a paid media. And we did test twice, taking our ad budgets to third party agencies, both times they were an absolute disaster. And we always brought them back in house.

Kevin (35:30.795)
Yeah, yeah. I wish we would have done that route, but the reason that I asked is because you said without context, every metric is a vanity metric. And my favorite thing about ad agencies is they onboard you with this promise of a return on ad spin or a customer acquisition cost or whatever it is, whatever they pick.

Adam Callinan (35:50.577)
Yeah, pick one, yeah.

Kevin (35:52.105)
And then month one, they don't hit that metric that they say they're focusing on. But they turn around and they say, but look, we dropped your spend by 500%. But your profit went up 12%. So you're actually making more money at the end of the day. Or, you know.

Adam Callinan (36:00.806)
Yeah.

Kevin (36:12.397)
Reverse, it's whatever they choose, whatever metric speaks at that time, at that point in time, at that month, that week, that reporting day, whatever it is, speaks to them being better than before you brought them on or better than your last agency, that's the one they're gonna pick. And then the next month, whichever metric they chose to use that was good at the time has dropped and now they're gonna use the other metric that went up, right? So at the end of the day, that's what I'm saying, at the end of the day, all you should care about is your net profit.

Adam Callinan (36:41.468)
100 % agree.

Kevin (36:42.957)
and maybe a little bit about growth percentage, but it shouldn't be all we care about is double year over year. It should be let's continue with a 8 to 15 % revenue growth and focus on our net profit number.

Adam Callinan (37:00.86)
Yeah, I say that building a business is like putting together a thousand piece puzzle. The challenge is that all the pieces are not equally weighted. They're not all the same size. And all of the things play a role, like your role as it does matter. It plays a role. Your conversion rate matters. Your AOV matters. Your click through rates matter. Your impression, like all that shit matters. It just doesn't matter at the same level. It doesn't matter at the same rate.

and you can crush a 10 ROAS and still be hemorrhaging money. Like I've seen that happen quite a lot actually, because the math is not right. The systems are not right. The stuff is not right to do that. So, like, know, ad agencies, some are great and some are terrible, just like doctors and lawyers and accountants. But I have it since Pentane, have seen ad agencies shift, at least the ones that we have worked with shift much more towards

Kevin (37:42.189)
Hmm.

Adam Callinan (37:54.555)
that data-driven net profit approach. And the reality is like the business has to be in a position to be able to tell them, tell the ad agency at what ROAS and ad spend equals good for them. Like what drives a 10 % net margin? You can actually, I mean, need to know that. And that way they're working off your metrics instead of them coming up with their own.

Kevin (38:09.665)
Right, MER.

Kevin (38:15.373)
Yeah, contribution margin and MER is kind of what everybody's operating on, or at least should be operating on now. The last two agencies we worked with are the first and only that have done any sort of forecasting, profit focus. The rest have always been, well, with your last agency, your CPA was 65 bucks, we're gonna get it down to 45. Or your ROAS was 1.5, we're gonna get it up to 2.5. And then they don't, and they have 110 reasons on why they didn't, and 110 reasons on...

Adam Callinan (38:20.955)
Totally.

Kevin (38:45.355)
what other metrics did improve and why that matters and blah, blah, blah.

Adam Callinan (38:48.205)
Yeah, but the challenge again, last harping on this, then we'll move on. Like the challenge of that, if they take your acquisition costs from 60 to 40, that's great unless they also cut your ad spend by 80%. Yeah, now your business, now we're back in the place where your business is more efficient, but it's still hemorrhaging money. Cause you're not creating enough contribution margin or contribution profit to pay for the fixed expenses. So you're still upside down. It doesn't matter. It's all that then is a vanity metric out of context.

Kevin (39:01.216)
Exactly.

Kevin (39:17.771)
Yeah, yeah, a lot of people might not realize that you kind of have to look at your revenue in buckets, what's coming from returning, what's coming from new. And if you're not, and it's different for every brand, the ratio, but if you're not bringing in enough net new customers per month, then three months from then you're gonna be just hemorrhaging money.

But at the same time, it costs money to be acquiring these net new customers, so you're kind of burning cash up front. You have to look at the effect over 30, 60, 90, 120 days. So whenever that happens and a new agency drops our spend by 80 % but tells us our net profit's up 300 % for the last 14 days, I say, don't give a shit. I wanna see what's gonna happen over the next three, six, nine months.

not what happened the last seven days. Of course what happened is important, but what that's going to affect is more important.

Adam Callinan (40:16.846)
Yeah, the trends. All right, moving on. One of the things that I think is really important and I like to spend some time talking about are the hard, are there intentional, intentionally difficult things that you build into your life, whether it's marathons or, you know,

Kevin (40:19.81)
Yeah.

Adam Callinan (40:45.166)
go-rock events or just like crushing your life away at the gym. Like what are the things that you do in your life in order to build durability? Because at the beginning of this, you said that, you like you firmly believe that you will get it done. And I'm honestly, I'm the exact same way. Like there's just not even a doubt in my mind, like I'll figure it out. It's off the table. But that doesn't make the shit not hard. And it doesn't make these like big massive swings that we experience as entrepreneurs not extremely difficult.

they all have emotional stuff in them and all that. So like, what do you do and have you built into your life to sort of withstand that, to remain resilient through those massive ups and downs?

Kevin (41:25.645)
So ironically, year, probably nine months to 15 months that I worked the least hours, my business was in the healthiest place. And what I was doing outside of those hours where I used to be, where I would have been working, was the gym, playing hockey, and hate to say it, meal prepping.

and not meal prepping like chicken and rice and top of where that you eat the same thing every day, like cooking good meals that were just calculated. And my business had never been in a better place. And I never really thought about that until you just asked that question that maybe that was part of it. Because I have kind of fallen off of that regimen in the last six months or so. November probably was, yeah, so about seven months.

But during that period prior to that where that was like that was all my life was was work out eat healthy go play hockey go for runs I was constantly moving and I was working a lot less than I had the prior eight years and That was like the most recent inflection point prior to the profit focus That just kind of happened So yeah, you bring up a good point

I will tell you this, that when I was first building this thing, the first year two, three, and it was nothing but work, I don't think there's ever been a less efficient founder in the world. Like I was spending so much time on things that didn't matter because I felt obligated to. It was almost like if I'm not working or sleeping, then I'm not.

being productive and so I'm like scrolling through QuickBooks three times a day, every day for no reason whatsoever except that it was only 10 p.m. and I didn't have to go to bed yet. And that's just a wildly inefficient way to build a business and a wildly terrible way to live. So I moved away from that kind of work schedule probably like 2021.

Kevin (43:25.869)
2022 maybe, and I wish I would have done it sooner. 2022, 2023 was when I really got into the workout regimen and eating healthier and sleeping more consistently and yada yada and that's when everything changed for the better.

Adam Callinan (43:42.008)
Yeah, there's so much to be learned in that. I think that anybody that's been doing it for a while goes through those cycles. God knows I did. I mean, I was the exact same. My business before this that I was in was a freaking slog. Like you couldn't get away from it before Bottlekeeper. And I remember in the early days of Bottlekeeper, the whole point of it was to be able to operate a business from anywhere on the world with internet. I felt like I carried a ground tons, like literal metric tons of guilt.

if I wasn't working all the time. And it took quite a while to get away from.

Kevin (44:13.837)
Yeah, and the whole point of launching it was lifestyle flexibility.

Adam Callinan (44:20.469)
Yeah, yeah, was to be able to do it and like go sir for go paddleboard or go I mean at the time I was living on the beach so go and do stuff outdoors like yeah it took a while to get around that but but it's really important.

Kevin (44:30.347)
Yeah. It is, and I tend to ebb and flow a little bit. You know, I go through seasons where it's, I have this crazy good work-life balance where when I'm not working, I'm doing things that are good for me. I'm, you know, going to hang out with friends. I'm going on vacations. I'm going to the gym. I'm playing hockey. I'm working out. I'm going on runs, whatever. I have other times where I'm doing nothing but work. I have other times where I'm hardly working, but I'm like not.

Adam Callinan (44:35.329)
Sure, most people do.

Kevin (44:57.129)
using that off time correctly. Just kind of laying around and being lazy. So it's not a perfect science. You're not just gonna, I some people maybe can build this perfect little system. I'm not one of those, but I definitely, as you mentioned, have noticed that when I'm locked in on the productive, on my personal side, I'm.

Adam Callinan (45:07.574)
Yeah.

Kevin (45:24.703)
also far more productive and far less time on my business side.

Adam Callinan (45:28.524)
Yeah. And that to me is, what work life balance means. Like I feel like that term or phrase has been absconded by, you know, like either Y Combinator companies that think it's insane and there's no possibility you can ever have work life balance if you're going to be committed. think who is it? read, hate or read Hastings, Reid Hoffman founder LinkedIn recently got, did one of those, like, if you think work life balance is what you are, then you're never going to be a successful founder thing. It's like, okay, let's.

Kevin (45:48.973)
Mm-hmm.

Kevin (45:56.13)
Yeah.

Adam Callinan (45:57.419)
Let's clarify that. If the work-life balance is balance your life, know, life first, work second, and okay, maybe, but I do think that there is a way to create a healthy balance where you actually get significantly more productive when you are doing work because you can step away from it. You have to step away from it.

Kevin (46:15.65)
Yeah.

There's no one way to start a business, no one way to run a business, no one way to scale business, no one way to operate nothing. I mean, I have friends that have started businesses and they're just so good at systems and processes that in eight months, their business is a well-oiled machine better than mine is after 10 years. And that allows them after eight months to have a ton of work-life balance and flexibility because their systems work for them in the back end. They have all these little menial tasks outsourced. They only have to focus on the big picture.

Adam Callinan (46:20.748)
course.

Kevin (46:47.151)
And that's wildly impressive to somebody like me, because my brain doesn't work that way. If I could bring somebody on right now, that's what it would be, systems and operations. But at the same time, I have friends that have started businesses that have not seen the light of day in seven years, because that's their mentality. I have to just be grind, grind, grind.

Different people work different ways. For me, that balance where I have freedom and flexibility to do what I want and I spend that time not just laying around wasting it, that's when I'm at my best. The key, which I have yet to find, is how to maintain that year round and not go through these kind of ebbs and flows.

Adam Callinan (47:29.854)
Yeah, I think that's just part of being human. Forgive yourself of that. I have the same problem. I think most people have the same problem. Awesome. Anything else you want to leave us with before we step off? Where can people find you? Where can people find Southern Scholar?

Kevin (47:34.752)
Yeah.

Yeah.

Kevin (47:49.645)
Yeah, Southern Scholar you can find southern scholar.com Instagram is the Southern Scholar We've got some really cool things coming this year launching a ton of new collections and Bringing back handmade silk and wool ties and pocket squares. So very excited about that We're gonna set up kind of a shop the look system on our website where you can go and kind of mix and match complimenting ties pocket squares and and ties

We also have a new website launching where you can go and sort based off of what you typically wear. So you can filter for what goes best with a brown trouser or a blue trouser and brown shoes. So it's gonna be pretty intricate. Make it very easy for you to kind of see what works with your wardrobe.

Adam Callinan (48:37.47)
amazing sounds awesome thanks a ton man I appreciate taking the time and yeah thanks again, Dying Up

Kevin (48:42.092)
Yep.

Kevin (48:48.053)
Yeah, you have me.

Keywords entrepreneurship, e-commerce, Southern Scholar, business growth, vanity metrics, AI in business, resilience, sock brand, Kevin Wohlman, Adam Callinan
Summary In this conversation, Adam Callinan interviews Kevin Wohlman, the founder of Southern Scholar, a premium sock brand. They discuss Kevin's entrepreneurial journey, starting from his childhood experiences of selling candy and t-shirts to his transition from a Big Four accounting firm to launching his own business. The conversation delves into the challenges of growing an e-commerce brand, the importance of understanding metrics beyond vanity metrics, and the potential impact of AI on the industry. Kevin shares insights on resilience, work-life balance, and the lessons learned throughout his entrepreneurial journey.
takeaways
• Kevin started his entrepreneurial journey at a young age, selling candy and t-shirts.
• He transitioned from accounting to launching Southern Scholar after realizing his passion for entrepreneurship.
• The importance of understanding metrics beyond just revenue growth was emphasized.
• Kevin learned that focusing on profit is more important than chasing vanity metrics.
• AI has the potential to disrupt e-commerce by improving efficiency and reducing costs.
• Building resilience is crucial for entrepreneurs facing ups and downs in their journey.
• Kevin's experience highlights the challenges of managing inventory and cash flow in a startup.
• The conversation underscores the significance of work-life balance for sustained productivity.
• Kevin's journey reflects the importance of adaptability in business strategies.
• The discussion reveals that there is no one-size-fits-all approach to entrepreneurship.
titles
• The Entrepreneurial Journey of Kevin Wohlman
• From Accounting to Socks: A Unique Transition
Sound Bites
• "I was packing my backpack with shirts."
• "I was doing nothing but work."
• "There's no one way to start a business."
Chapters
00:00The Simplicity and Complexity of Selling Socks
06:04From Accounting to Entrepreneurship: Kevin's Journey
10:32Early Entrepreneurial Ventures: T-Shirts and Skateboarding
14:56The Inflection Point: Transitioning from Side Hustle to Full-Time
19:06Navigating Growth and Cash Flow Challenges
23:58Reflecting on Business Strategy and Future Directions
29:43Understanding Vanity Metrics in Business
36:50Building Resilience: Intentional Challenges in Life
42:35Future Plans and Innovations at Southern Scholar
43:32PodClose.mp4