Overview

* Paul Hedrick transformed the cowboy boot industry by identifying a market gap in the $200-$300 price range, creating Tecovas as a direct-to-consumer brand that offered quality boots with innovative features like softer leather and added cushioning.

* Starting with just $100,000 in personal capital and facing significant manufacturing challenges in León, Mexico, Hedrick grew Tecovas from $2 million in first-year sales to a projected $300+ million business with 42 physical stores across 20 states.

* Despite conventional wisdom that "brick and mortar is dead," Tecovas' experiential retail strategy featuring unique amenities like free bourbon and boot shining services proved highly successful, even helping the company navigate through COVID-19 disruptions.

* Hedrick's journey reflects entrepreneurial evolution—from personally inspecting every boot and handling multiple roles to recognizing his limitations and transitioning to executive chairman in 2022, allowing him to focus on product, retail, and brand creativity.

Content

Introduction and Background

* This "How I Built This" episode features Paul Hedrick, founder of Tecovas, a Western wear brand experiencing significant growth. * Western wear is currently experiencing a resurgence, partly due to pop culture influences like Beyonce's Cowboy Carter tour, with cowboy boot sales jumping 20% after her country-themed album release. * Tecovas was founded about 10 years ago, starting with cowboy boots and expanding to multiple product categories. * The company is expected to exceed $300 million in sales this year and has expanded to over 40 brick-and-mortar stores across the U.S.

Paul Hedrick's Early Life and Career

* Born in Houston in the late 1980s and moved to Dallas as a child, Paul had a strong connection to Texas identity. * He attended Harvard around 2006, studying economics. * After college, he worked as a consultant at McKinsey, then in private equity at El Catterton. * At Catterton, he focused on consumer retail businesses, specifically working on merging Farley's, Sather's, and Ferrara Pan into Ferrara Candy Company, which owned major brands like Sweet Tarts, Nerds, and Lemonheads. * Paul applied to Harvard and Stanford business schools, writing an essay about wanting to start a sandwich restaurant, but didn't receive interviews from either.

Career Transition and Business Exploration

* Paul gave up his Manhattan lease, using this as a forcing mechanism to consider his next career steps. * He reflected on his time at McKinsey and Catterton, noting his high risk tolerance and creative approach compared to colleagues. * Paul explored multiple startup ideas, including: - Canned cold brew coffee company - "Airbnb for X" type concepts - Airbnb for storage - Coffin manufacturing/sales business (a $16 billion industry with coffins representing over a third) - Cowboy boots business

The Cowboy Boot Opportunity

* Paul had worn cowboy boots since childhood and continued wearing them in college and New York as a way to embrace his Texas identity. * He discovered the cowboy boot industry was larger than initially perceived, estimated at $3 billion. * He identified a gap in the market: lack of mid-range options in the $200-$300 price range. * Existing boot brands were outdated, with most established 20-50+ years ago. * The category had low online penetration and was primarily wholesale-oriented.

Brand Strategy and Initial Steps

* Paul aimed to create a mid-market brand similar to Warby Parker, Away, and Kate Spade. * His goal was to offer high-quality boots at an attainable price point by reducing unnecessary markups. * Starting with approximately $100,000 in capital, he researched sourcing by cold-calling custom boot makers. * Most boot makers were unresponsive or dismissive of his startup concept. * Paul discovered most boots were manufactured in León, Mexico, and traveled there with minimal connections.

Manufacturing Challenges and Product Development

* His initial meeting with the first factory owner in Leon was unsuccessful as they had existing high-volume clients. * Paul spent months trying to convince factories to collaborate with his new, small brand. * His product differentiation strategy focused on two key innovations: - Softer leather construction (contrary to local manufacturing norms) - Added cushioning in the boot's midsole for improved comfort * Paul's Spanish fluency helped facilitate manufacturing discussions. * The factory that initially rejected him later became their primary manufacturing partner. * Paul designed his first boots by hand-drawing and then recreating designs in Microsoft Paint. * The manufacturing process involved multiple factories and approximately 10 prototype iterations (versus the typical 2-3). * Minimum order quantity was 2,000 pairs at an estimated retail price of $195-$235 per pair, requiring about $200,000 in total manufacturing costs.

Funding and Branding

* Paul cashed out his 401k (accepting tax penalties) and took on approximately $30,000 in credit card debt. * He negotiated a 4-month payment spread for manufacturing. * Paul hired a branding agency for $15,000-$17,000, including web design. * The name "Tecovas" was chosen in December/January, referring to a rock formation in Palo Duro Canyon. * The name was selected for being obscure, legally available, having linguistic connections to "Texas," and sounding like a Spanish/Native American word.

Launch Preparation and Strategy

* Paul spent six months preparing to avoid a weak launch. * Used Harry's open-source email gathering tool to collect approximately 2,000-5,000 email addresses. * Deliberately avoided pre-orders to maintain a "fast and free" customer experience. * Tecovas launched on October 27th, 2015, with 2 men's boot styles (Cartwright and Earl) and 2 women's styles (Jamie and Penny). * First day sales reached $20,000 (about 80-100 pairs), with approximately half coming from friends and family. * Initial gross margin was around 40%.

Marketing and Quality Control

* Paul deliberately highlighted the Mexican manufacturing heritage in marketing. * He hired a photographer/videographer to document the boot production process. * Created custom work shirts for factory workers to create a more professional image. * Paul was extremely product-focused, personally traveling to Leon to inspect every boot production run. * He spent weeks reviewing and rejecting boots that didn't meet his standards.

Early Growth and Expansion

* Tecovas quickly achieved over $100,000 in sales within two months of launch. * Paul actively sold boots through multiple channels: online, at farmers markets, and even at his middle school's holiday market. * He hired Brandon Wendell as a "growth lead" in late December, focusing on digital marketing and social media. * They started working with a Facebook advertising agency in January, finding success due to few competing Western boot brands advertising. * First year revenue was just under $2 million, increasing to $13 million in the second year. * By 2018, the company was making a significant industry impact, with competitors noticing their business model.

Funding and Retail Strategy

* Tecovas raised $30 million in a Series A round by the end of 2018. * They planned expansion beyond cowboy boots to include apparel, accessories, and potentially cowboy hats. * The first flagship store opened in Austin on South Congress Street in early 2019, going against conventional wisdom that "brick and mortar is dead." * The physical stores were designed to be fun and customer-centric, offering unique amenities like: - Free drinks (bourbon) - Boot shining - Personalization services - Boot stretchers

COVID-19 Impact and Response

* In March 2020, the business experienced a dramatic 50% drop in sales. * Tecovas had to close six stores, including one just recently opened. * They implemented a crisis management plan: - Reduced workforce from 70 to 50 employees - Lowered employee salaries - Raised an emergency funding round - Continued product innovation when other brands cut back - Maintained relationships with partners and landlords * Stores reopened in Texas in April (only closed for three weeks). * Despite the initial sales drop, Tecovas ended the year $10 million more profitable than the previous year.

Recent Growth and Leadership Transition

* The business experienced significant growth, expanding from $80 to $140 million in revenue between 2020-2021. * In June 2022, Paul transitioned from CEO to executive chairman, bringing in David Lafitte as the new CEO. * Paul wanted to focus more on product, retail, and brand creativity, recognizing he wasn't naturally good at management. * The transition out of day-to-day operations has been an "exercise in self-awareness" for Paul.

Current Status and Future Outlook

* Tecovas will exceed $300 million in net sales this year. * The company now has 42 stores across 20 states. * A new flagship store is planned for Soho, New York in fall 2025. * Paul remains committed to Tecovas as founder and chairman but is uncertain about his next steps. * He has shifted from believing success is purely about hard work to appreciating the role of luck and circumstances. * Paul is embracing uncertainty about his future path, saying: "I have no idea. And I am just getting comfortable with the idea that I don't know. And that's okay."

Tecovas: Paul Hedrick