
Teespring Says It's Minting New Millionaires Selling Its T-Shirts, Raises $35M - sethbannon
http://www.forbes.com/sites/alexkonrad/2014/11/18/teespring-says-it-making-millionaires-raises-millions/
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jedberg
If you want to build a huge business, building a platform where other people
can make money using it is a great way to do that. eBay, AirBnB,
Uber/Lyft/etc, Teespring. Even Google, with their adwords product (and reddit
with it's self serve ads).

There's lots of great businesses where people pay you for a service, but if
you can create one where people make money when you do, they are heavily
invested in your success.

~~~
askinakhan
Yeh absolutely. It's another extension of the sharing economy. These kind of
business models change societal habits and as generations shed, the sharing
model will become more prominent (It's even been predicted by Gartner; not
that this should be taken as gospel). Think about the amount of income you
could make from renting your flat (AirBnB), Being a driver on Uber, Selling
your skills on Udemy and now selling your fanbase personalised t-shirts on
TeeSpring. Indeed it's similar to sites like Zazzle but adds a twist by
combining the concept with Kickstarter.

We are making entrepreneurs out of ordinary people, it's f __king awesome.

~~~
innguest
> We are making entrepreneurs out of ordinary people, it's fking awesome.

Or, people are naturally entrepreneurs stifled by regulation and AirBnB, Uber,
Udemy and TeeSpring are simply allowing the people's natural entrepreneur
spirit to shine through by shifting the compliance burden away from them.

~~~
unclebucknasty
>> _We are making entrepreneurs out of ordinary people, it 's fking awesome._

> _people are naturally entrepreneurs stifled by regulation and AirBnB, Uber,
> Udemy and TeeSpring..._

Not really. Renting out your house to someone is not entrepreneurial. Neither
is driving people around in your car or teaching people. Further, I know of no
regulation that prevents people from teaching for money. As far as Teespring
"designers", those people are not entrepreneurs either. They are simply
affiliates who market for Teespring and who also happen to give over whatever
creative ability they have to Teespring with the hope of being paid for it.

In all of these cases, the people being touted as "entrepreneurs" are no
different from employees working as independent contractors, and in some cases
it's worse. The only entrepreneurs here are the companies that built the
platforms and convinced people to give over their time and resources to
generate revenue for their business.

One can make value judgments about whether it's good or bad for the people who
participate, but to say that they are creating entrepreneurs is literally
saddening.

~~~
innguest
I agree with your points. I was stretching my usage of 'entrepreneurs' to make
a point as you noticed.

> Further, I know of no regulation that prevents people from teaching for
> money.

I do, because unfortunately the government has been using them against
bootcamp schools:

> To achieve compliance, institutions must pay a $5,000 application fee;
> provide a course catalog, enrollment agreement, and performance fact sheet
> publicly on their websites; and submit a few other minor documents included
> on the application.

[http://readwrite.com/2014/02/18/why-coding-bootcamps-
should-...](http://readwrite.com/2014/02/18/why-coding-bootcamps-should-be-
regulated)

> Over the past month, California regulators sent cease and desist letters to
> many of these hacker boot camps, saying they run afoul of the state’s
> educational laws, as first reported by Venturebeat. “They’re not properly
> licensed, and the law requires them to be licensed to offer an educational
> service like they are,” says Russ Heimerich, a spokesperson for the
> California Bureau for Private Postsecondary Education, or BPPE.

[http://www.wired.com/2014/01/california-hacker-
bootcamps/](http://www.wired.com/2014/01/california-hacker-bootcamps/)

~~~
unclebucknasty
Apples and oranges. There's a big difference between starting an "educational
institution" and sharing knowledge or otherwise teaching for pay as an
individual.

And, in the case of the boot camps you mentioned, it kind of argues against
your original point. That is, they apparently ran afoul of the regulations
_because_ of their attempts to make it a business that could be classified as
an institution versus there being individuals who could have generated income
from their labor, if not for some onerous regulation.

More relevantly, no one would have stopped any "teacher" from creating Udemy
style online courses on their own domain.

That situation in CA is intresting though. I wasn't aware of that. Thanks for
sharing.

------
dangrossman
It's surprising to me the degree to which Teespring has become part of the
affiliate marketing community. The same group of people that normally spend
all their time pushing "get rich quick" schemes, MLM programs, dating site ads
on social networks and fake news articles about diet pills have really
embraced t-shirts for some reason. There's a whole ecosystem of products
around Teespring marketing businesses -- landing page builders, ebooks, video
courses, mentorship and coaching, case studies, mastermind groups, etc.
There's a hundred variations of "How I made $6,123 with Teespring and Facebook
ads" posts out there, usually in connection with some other product. I wonder
how they made inroads with that community, and whether those marketers ever
create trouble for Teespring.

~~~
fabiandesimone
I'm an affiliate marketeer. Couple of points:

1) Not sure why all the hate towards us. We can take a company from zero to
millions overnight. I get that there are some shady stuff floating around but
that's not 100% of the industry.

2) Facebook + Teespring is almost a perfect combination.

3) Aff. Marketeers have created some issues in FB using Custom Audiences
(T-shirts that said stuff like "This was made specifically for Joe"). Those
sold like hot-cakes but FB went down hard on them.

4) Everyone wants a piece of the action, that's why you see so much tutorials
and stuff around it. It's also a great way to learn Aff. Marketing if you are
into that.

~~~
dsugarman
we work with <leading_affiliate_marketplace> and it is really hard for us to
find quality affiliates. it feels like they do whatever they can to get us
trapped into browser software and coupon websites, our profits are just
completely cannibalized. can you please email me at dsugarman @ zentail, we
would love to work with you!

~~~
fabiandesimone
Great, I'll shoot you guys an email :)

~~~
jasonwilk
Fabian, I'd like to chat as well. We too have had troubles finding reliable
affiliate traction and have worked with companies like CJ to no success.
jason@allscreenhq.com

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jhonovich
"At least ten, the company says, have become millionaires from the work."

Does this mean they sold a million dollars plus worth of shirts OR that, after
all expenses, they netted a million? The phrase millionaire implies the latter
but that is a far higher bar to cross.

~~~
joshuasortino
The latter. We have paid out, after expenses, millions to at least ten sellers
on Teespring.

~~~
Retric
That still excludes any of their external marketing costs.

~~~
rosser
It also may not include any taxes owed. That's just as orthogonal to how much
Teespring has paid out, which is the entirety of their claim.

~~~
smackfu
Right. That's why they should just say "paid out a million" (a statement of
income) rather than "became millionaires" (a statement of net worth.)

------
twic
T-shirt millionaires, eh? Reminds me a bit of the Team Fortress 2 item
designers who are making a living out of it:

[http://www.kritzkast.com/mym-day-1-of-3](http://www.kritzkast.com/mym-
day-1-of-3)

------
taude
How's this different than something like Big Cartel
([http://bigcartel.com/](http://bigcartel.com/))?

Not asking about business stuff specifically, but the usability or whatever-
it-is that this newer stuff does that the older online t-shirt printing
businesses don't? I don't really understand their story about starting because
they couldn't find someone to make their t-shirts...

~~~
michaelbuckbee
It's about who is taking the risk, with BigCartel you shell out money upfront
to buy shirts + print (guessing how many to get in each size, how big an order
you need, etc.) then try to sell them.

TeeSpring is kind of like a Kickstarter, you setup a picture of what the
T-shirt would look like when printed and then no money changes hands until you
hit your "funding level" of a certain number of shirts, and there's no excess
inventory because they only print exactly the right number for the sizes that
people ordered.

It's a really interesting model.

~~~
pbhjpbhj
> _TeeSpring is kind of like a Kickstarter_ //

TeeSpring is almost exactly like CafePress or Spreadshirt or Zazzle or
Threadless or ... isn't it? Aren't Reddit just moving in to this space
(perhaps white-labelling one of these services?). Fair play to them if they
broke in to this market (which seems pretty crammed) and took a relatively
large slice of the pie.

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mathattack
I have to believe this is a bigger play than just T-shirts. If they're in the
"create your own retail company" business, they're either in comp with Amazon,
or an acquisition target of them. Either way, it's an interesting position.

When you look at their board, you see visionaries, not operators.

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mrmch
Congrats to Teespring, this is huge :) Awesome to see a customer growing like
this.

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_almosnow
Honest question. If your business is doing good, why would you want to raise
money?

~~~
anigbrowl
Economics. Suppose you have a factory and a growing order book but you're
running at or near full capacity; if you get any substantial increase in the
number of orders, it's going to take longer and longer to fulfill them, and
customers might start to go your competitors if they feel the quality of your
service has dropped. This is a _diseconomy of scale_ \- you've run out of room
to grow and the more business you get the lower your margins.

The obvious solution would be to set up another factory. Suppose for
simplicity that this costs $25 million and allows a doubling of capacity.
suppose further that TeeSpring is making a profit of $100,000 a week (a
completely imaginary figure - I know nothing about their finances). Because
it's near full capacity that weekly net isn't going to increase much. But
saving up the money to purchase the factory outright would take 4-5 years - an
_organic growth_ strategy - is plenty of time for competitors to move against
you and pull away customers.

So you have a couple of options. You could go into debt, either by getting a
loan or issuing a bond that pays interest (effectively the same thing). Now
some of your income goes on interest payments, but they're tax-deductible and
after you've paid off the debt you'll still have the second factory. As long
as the increased income resulting from the investment is greater than the cost
of borrowing the capital then going into debt can be perfectly sensible - the
same reason it makes good sense for governments to splurge on necessary
infrastructure during periods of low interest rates, just like we're not doing
now due to politics :-/

Another option is to issue equity, ie sell shares in the company to raise the
money. For large firms this may not be any more attractive than debt, because
shareholders will expect a dividend of some sort. For growing firms it makes a
ton of sense because early investors are not so much interested in dividends
as in the possibility for the shares to appreciate in value - who wouldn't
have liked to invest $1 million in Google or any other large company back in
the early days? This is ideal for a firm like Teespring that has a very simple
and straightforward business model - manufacturing a basic consumer product
like this is great from an investor's POV because it's so easy to analyze.

~~~
ensignavenger
Excellent answer- I wonder though why more start ups don't take out
loans/issue debt? Is it simply because they can't find anyone willing to lend
to them at reasonable interest rates? I would think a company like the one you
describe would be a pretty good bet for a lender to give a loan to build a
factory.

~~~
anigbrowl
Thanks for all the nice comments!

They do sometimes, but in recent years banks have been more reluctant to lend
and issuing bonds typically involves an awful lot of legal overhead, so I
think it's just easier to issue equity. Another reason is that if business
doesn't go as well as you hope the debt might allow creditors to secure your
secured assets/stock, whereas if you issue equity that's not an issue. Also,
for early stage companies raising equity can be a good way to meet people
you'd want on the board advising on the future direction of the firm.

But you know I just know about this second hand from being into economics. If
you search for 'capital formation' you'll find lots of stuff and some people
like grellas here at HN are specialists in that.

~~~
ensignavenger
Thanks again for another great answer. I can see where the legal/regulatory
overhead for issuing debt could be a big roadblock. It is my understanding
that a lot of early stage financing is 'convertible debt', with the idea to
convert it into equity at a later time. I wonder how often start-ups decide to
pay off this debt from revenue rather than allowing it to convert? Would that
be a big no-no?

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calcsam
Congrats Teespring!

