Greats raises $1.5 million in seed capital that it will use to hire staff and introduce new styles. Wholesaling “is an antiquated and outdated business model,” says CEO Ryan Babenzien.
The company, started last year by two veterans of the sneaker industry, introduced two styles of sneakers on its e-commerce site, GreatsBrand.com, in August, with prices starting at $59. The entire inventory of 2,400 pairs sold out in two months. Now the company has raised $1.5 million in seed money that it will use to develop new styles and hire staff, says CEO Ryan Babenzien.
Babenzien says he and co-founder Jon Buscemi aim to produce stylish sneakers and sell them directly to consumers, initially online, but eventually in physical stores. “The wholesales business of a brand making a product, selling it to a retailer who then marks it up 2.5-3x, is an antiquated and outdated model,” Babenzien says. “Jon and I know how to make sneakers, how to position them and market the brand. We have category expertise.”
That expertise comes from Babenzien’s experience as a marketing executive at sneaker brands K-Swiss and Puma, and Buscemi’s at DC Shoes and Gourmet Brand. Buscemi, the creative director of Greats, is well known to sneaker enthusiasts, Babenzien says. For example, he has nearly 35,000 followers on Instagram.
That reputation, word of mouth, and some early press helped Greats sell out its initial inventory without spending any money on marketing, Babenzien says. He says the company is currently out of shoes, with more expected to arrive by late May. At that point, he says, the company will start spending on marketing.
He says Greats also has hired its first two employees, a digital marketing executive and a manager of finances and operations.
Most of buyers of Greats sneakers to date have been men 18-24 years old, and 30% have come from each of the New York and Los Angeles markets, Babenzien says. “There are more early adopter customers in these markets, and they buy more sneakers,” he says.
Leading the funding round was Resolute Ventures, which was joined by High Peaks Venture Partners, Mark Gerson of Gerson Lehrman Group, and Adrian Wilson, a professional football player recently released by the New England Patriots of the National Football League.
Speaking of the company’s founders, Mike Hirshland of Resolute Ventures says, “They aren’t just building a new men’s fashion site or app—they are building a new brand. We love backing founders who have both the vision and the chops to do just that.”
Building the brand is the key, agrees Babenzien. “The idea of Greats is pretty straightforward: make a high-quality, stylish shoe and sell it a value price,” he says. “Style is super-critical. It’s going to be challenging to build a super-cool brand at a value price, because people often think value is not cool. We’re confident we can make it cool and provide value.”
In addition to its e-commerce site, Babenzien says Greats has been selling sneakers out of a small store at its headquarters in Williamsburg, a section of Brooklyn that’s increasingly known for restaurants, boutiques and cafes. “Amazon’s photo studio is down the street from us,” he says of Amazon.com Inc.’s New York studio, which shoots some 10,000 fashion photos each day. Within the next 12 to 18 months, Babenzien projects opening a conventional bricks-and-mortar store in Williamsburg. He could imagine more stores, and Greats operating shops within other retailers’ stores.“We don’t dislike retail, we dislike wholesaling,” he says. “Retail stores are still the best place to expand a brand and acquire customers.”