An Underwear Millionaire
Greg Taylor was looking for a problem to solve. He was a rower with big legs and chafing had been an issue for him. He used creams and powders, but thought there must be a better way.
With $15,000 he had saved up, he flew to China and went to find a factory to make an improved boxer brief for men.
During a factory tour he noticed there was an empty seat. He felt the seat and it was warm. The sewing machine was warm too… Further down the line another empty, warm seat.
He asked where the people were… There was a room at the back. As he pulled the door open he found kids hiding. He decided ethical and sustainable production would be paramount to his company.
When he found a suitable factory he told them his idea and there was a bit of confusion. So he went back to the hotel, cut up some bike shorts and asked them to put them as panels between the legs. It worked great. The chafing problem was solved.
Then he wanted to solve the sweaty ball problem. So he put a piece of elastic around the pouch that would provide a good fit and create separation between the package and the thigh.
Greg then tried three different materials.
Cotton was too hot.
Modal was good, but too warm.
Then the last one… bamboo. The yarn is longer and concave which draws moisture away. It grows without pesticides and uses less water. Greg had found his underwear.
It was time for the first order. Greg was sure he had landed on a great idea. Right? Nope! Doubt is always present in the early days. He ordered half of the 5,0000 pairs in XL, his size. He though if it didn’t work at least he would have underwear for life.
The factory was confused. They told him he should order mediums in the highest quantity, then large, then XL. He stuck with his original plan.
With $500 he shot a 90 second video, posted it online and within a week he had a million views (2017 at this point). They sold out in a week. Mediums sold out first.
The next two years Greg struggled to stay in stock. By 2019 they had the process down. It now takes 90 days from ordering the fabric to export from their manufacturer and then an additional 30-80 days to arrive at their third party logistics provider.
The business was doing well. Step One sold $7.8 million in 2019 with gross margins of 79%, ad spend of 30%, new customer acquisition costs of $33.25 and average order value of $76.60.
Interestingly, their new customer acquisition costs are rising, like most companies in ecommerce, but are starting to come down in 2024.
In 2021 Greg took the company public. He owned 100% of the company. The IPO raised $81.3 million and $41.3 million of that was for existing shares (yay Greg!).
Greg owned 66.4% of the company after the IPO and based on the current market cap of $318 million that would make his existing stake worth $211 million.
The company has also paid out $9.2 million in dividends since they went public of which $6.1 million would be paid to the largest shareholder.
So within seven years Greg has created nearly $50 million in liquid assets (pre-tax) and over $200 million in public equity for himself. That’s pretty amazing.
And why is it called Step One? What’s the first thing you put on in the morning?
Sources:
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