June 13, 2018

#39 This Pitch is Damn Near Perfect

#39 This Pitch is Damn Near Perfect

Stefan Loble wows the room with his near perfect pitch for Bluffworks, a company that makes travel-business attire. But is his compelling story enough to get investors to sign on?

Today's investors are Nicole Verkindt, Michael Hyatt, Jillian Manus, and Charles Hudson.


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I’m Josh Muccio and from Gimlet Media, this is The Pitch, where real entrepreneurs pitch to real investors. 


Jillian:  Hello!

Stefan: Hello everyone. Stefan Loble.


Stefan: Nice to meet you guys.


In the pitch room today is founder Stefan Loble. He’s here to ask for 600 thousand dollars for Bluffworks, a startup that’s hell bent on making stylish clothing practical for people on the go.


Today we’re going to find out what happens when a founder serves up the pitch of a lifetime. And you might think a solid pitch is the secret to getting investment … but that's only one part of the equation. Which raises the question … for investors, what matters more in the end? The business or the pitch? Let’s find out.


Here’s who Stefan will have to convince.


I’m Jillian Manus

Jillian is a partner at Structure Capital and an angel investor on the side.

I’m Charles Hudson

Charles is with Precursor Ventures where he invests in early stage startups. 

I’m Nicole Verkent

Nicole runs a software company and in her spare time she’s an angel investor.

I’m Michael Hyatt

Michael built and sold two Canadian companies and now he invests for himself.


Alright, on with the pitch.


Stefan:  Ready, set, go.


Jillian: Ready, set, go.


Stefan: So, once upon a time, I took a job writing software in Hanoi, Vietnam, for... Wait a sec. I forgot something.


[background noise]


Michael: That’s quite the knapsack.


Stefan is rummaging through his knapsack on the floor.


Stefan: It’s just a blazer really makes all the difference. 




Jillian: You look really smart now.


Stefan: Thank you.


Michael: You look like a VC. 


So Stefan pulls out a crumpled up navy blue ball of cloth. Unfurls it... shakes it out… and voila it’s a blazer! Here’s the thing, all the wrinkles have already disappeared. 


Stefan:  So, as I was saying I took this job writing software in Hanoi, Vietnam for $4 an hour. And it was a fantastic adventure. We lived in an alley that was just this wide, my wife and I. At the back of the alley there were pigs and there were chickens. You know, we spoke Vietnamese, the whole nine yards.


Nicole: But did you wear a blazer?


Stefan: No. But while I was there, I wore travel clothes. Because I would get caught in the rain on my motorbike once a week. Travel clothes were easy care. I could wear them again and again, they never wrinkled, and they’re very durable. When I moved back to New York to start a family, I couldn’t wear my travel clothes. There was no way I was going taking travel apparel and wearing it into the office.


That's when Stefan thought ... I could be the guy to change this! But he knew it wouldn’t be easy. Travel clothes are meant to be comfortable and casual — think breathable, quick-dry hiking stuff by brands like Patagonia. 


But somehow Stefan found a way to make clothes that look good enough for a business meeting, but can be worn almost anywhere. And he started, with pants.


Stefan:  In 2012, I launched a single pair of pants on kickstarter, and in 35 days we sold over 2000 pairs. And we showed from that is that there were other guys that had the same lifestyle as me.  biking to work, shoving my pants in the bag, wrestling with my kid in the ocean, all that kind of stuff  And after that the travel community really picked us up. Since then, we’ve built an amazing following of passionate, so far men, who are leading extraordinary but normal lives.


And I’ve done everything to get here. From crying in the office and vowing no more, to moving my family in with my parents where my 18 month old son slept in the closet, to all the crazy short term capital that we’ve used this past year to double our business. And now I’m here to raise $600,000 to bring Bluffworks to more of the world and help men and women make their lives big and their wardrobes small.


Nicole: And what is the product? How does it work?


Stefan: What is the product?


Jillian: It's your blazer, right?


Stefan: It is. So last year we had three products. We had two pairs of pants and a blazer. And we added this dress shirt and another pair of pants late in the year.


Nicole: And what’s the innovation? They don’t wrinkle, or...?


Stefan: They don’t wrinkle.


Nicole: Okay.


Michael: Can you come over here with your jacket? Can I see it?


Jillian: I actually think, I think that's a smart looking jacket.


Nicole: Oh yeah. It doesn’t look like it’s ___.


Jillian: No. Okay, so...


Stefan: Right. Here’s what I want you guys to take a look at…


Stefan uncrumples another jacket from his bag and hands it to Michael to try on.


Jillian: Actually, you know what, that doesn’t fit that badly. 


Nicole: It's nice looking. It's too big, but it's nice looking.

Jillian: Well, it's too big in the sleeves. But you know, your girth. So you're definitely filling it out. You know, the shoulders. That's not bad.


Michael:  It looks good. It feels good. Okay, if it was fitted, it’d be great. So tell us about it. What’s so great about this? And what does this cost? 


Stefan: Yeah sure. So it’s $295 sold exclusively through Bluffworks.com right now.


Jillian: $295?


Stefan: And what you really need to do is feel the jacket. Because that is 100% polyester.


Jillian: That’s 100% polyester?


Stefan: Here’s what we do. We take...


Stefan: We take technical fabrics, and we make them less technical looking, less technical feeling. Our customer wants a classic look and feel…  He needs help with his wardrobe. He wants this guidance. He's sort of more of an everyday guy. 


Polyester has kind of a bum rap — people think of it as cheap, not breathable, hot. But the Bluffworks version of polyester seems to have left the investors pleasantly surprised.


Stefan: These are our pants, these are also 100% polyester with mechanical stretch. This is our shirt, which is 98% poly and 2% span. This is a sweater  when people feel this, they're like, what's this sweater made out of? It's 100% poly. So the challenge for us, we have some products that will be IP protectable. But many, what we do  is it's just an aesthetic that says I want a shirt that's this soft that's going to perform. 


Michael: So let me say this for all of us. This is... Great clothes, looks nice, feels nice. Check, check. This is a really tough category, very competitive, low margin. Retail. Maybe you have a better distribution. Tell us why this is a business we want to invest in.


Jillian: Well, let's hear about the margins too.


Stefan: Should I start with revenue? Is that reasonable. So Charles, we don't have any revenue. We're pre-revenue. We got nothing. For everyone else, five years ago we went from 100,000 to 500... He's a pre-revenue guy. 


Nicole: This guy’s good!


Charles: Not exclusively. Not exclusively.


Stefan: 100,000, 500,000, 1.1. We had a brand misstep a year and only grow to 1.3. Love to talk to you guys about that.


Jillian: What was the brand misstep?


Stefan: I hired a New York firm to polish our branding and take me into the world, and they took me out of the brand. And the power of what we do is the authenticity and my authority on travel.


Michael: Oh yeah. For sure.


Stefan: Because I’ve cultivated... Everyone who is like...


Nicole: You need the Vietnam story in there. It gives you so much street cred.


Stefan: And through Kickstarter, what I've cultivated with our customers, and the way that our new customers, they communicate with us in the same way that our Kickstarter customers do... So yeah, that was a mistake. 


Notice how Stefan is controlling the narrative, before the investors could even ask about the slowdown in sales, Stefan told that story about the brand misstep. Smart move.


Stefan: And then last year we did 2.2 million net on just the three products I described. Two pairs of pants, the blazer.


Michael: What's the…  about the gross margin of the business. That's, to everybody, that's your revenue minus the cost of goods sold. So the cost of making the jacket, or your stuff. What does it put out in percentage wise at the top there?


Stefan: Yeah. So right now we've made every product in New York except for this shirt. All of these products are moving offshore right now.


Jillian: Okay. When you say offshore, how offshore?


Stefan: So the cost of goods sold would be 25%. So we make that blazer, even in New York, for $77. Happens to be our best margin product. We move it offshore, we're going to get into the 60s, we sell it for $295. So by moving offshore, the margins will be productive  


Michael: Explain to me... As a guy who travels, I think this is a great product. This is really nice. I get it. But again, let's go back to this being a really competitive, narrow margin, tough place, you've got to go offshore for that reason. That's fine. But tell me how this business gets to 20, 40, 50, 60 million, 100 million of revenue? Because until you get real bulk in size, nothing really happens in this space.  


Stefan: So the way we're acquiring customers today, when we do a paid customer we spend $49. Last year, we spent $49 to acquire a customer.  This year, we're acquiring customers at $56 for an AOV at 233. You winced. Our margin leaves $109 to acquire customers and break even. That's the first thing. The second thing though is we have such a powerful base through travel, word of mouth in travel, people want to talk about it. So at that moment, they have a problem to solve. When they search on travel pants or best travel blazer, they're not looking for one piece. They're at this moment, they've booked a big trip typically, they are more time sensitive, they are less price sensitive.


Michael:  give us a little bit of a roadmap. Because I think we all like you, and I think we all like your product. Tell us how this becomes a big business. Just in your own words, tell us how you get to first, I don’t know, $50 million in revenue.


Stefan: Okay.  So first of all, we add products that meet existing demand that we know exists. The second thing is we continue to play in the travel space where we acquire customer and then we keep them back home. The third is, it’s competitive right? So how do we develop notable products? I have a very empathetic approach for our user. So I can think of problems that  for example, we’re working on a short which is protectable, that has a fully waterproof pocket. Why can I not have a swim trunk or a short that has a fully waterproof pocket? It drives me crazy. So we have an array of notable products like that. When we put something on Kickstarter, some of which will launch...

Nicole: Fully waterproof pocket?

Jillian: Of course. For the guys? Huge! Huge.

Stefan:  Right? Let’s go a little bit more on product. How do I get to be a $50 million business?  We're designing things like a technical, rag sweater, almost like a fisherman's sweater, that has elbow patches. You're like, what? It's almost a little like commando military. It's made out of polyester. You can wash it in the washing machine and it won't pill.

Jillian: I so need this.

Stefan: A raincoat. What's an elegant men's raincoat that will pack and then you can travel in? It has a few hidden pockets for travel. So that the design. 


This guy is tossing out new product ideas like candy from a parade float… and the investors are gobbling them up.


But this seems to be Stefan’s answer to how will this thing become a big business — he’ll just keep launching new travel-related products. Which may not be the answer that investors are looking for.


Michael:  I just need to bring you back to being a little more specific about how we’re going to get that jacket on enough people.  are you an online only? Are you going to go to retail? Are you going to go direct? How are you going to get these travelers? Give us a little... Go one level down.


Jillian: What’s the marketing strategy? Are you doing social media? Are you...


Michael: I don’t get a feeling that you have a plan to 50 million. You have this vision of people using your product, but I want a bit more meat.


Stefan: Okay. The plan to 50 million is for us acquiring customers online only and being through Bluffworks.com. There’s a point where a lot of digital companies end up adding their own retail store. And we’ve budgeted to add four stores in a couple of the out years. But we’re going to be majority ecommerce. We know, working with our advisors, that we’re going to spend 20% of our net on marketing.


Michael: So direct to consumer? Or are you going on Macys.com or whatever?


Stefan: Direct to consumer. All direct to consumer  The last part is, because we have the authenticity of the brand, I can move into other categories which are very popular. I know what’s popular based on data. Fitness, for example, is very, very popular. You see brands just try to reach for fitness. No one is doing fitness for travel. Exactly for our guy that says when you travel here’s the kit. We know that the travel market is big. We're data oriented so I know I can acquire customers. I can grow to even further in the data and we can leverage us being a lifestyle brand, and the efficiency of our acquisition to grow to be really at scale.


Stefan finally gave the investors what they were looking for, his plan for how to market his products to consumers. But did you notice what he did there at the end, he brought things back to new products. But this time he said the magic word… data!


Nicole: So it’s more products and then...

Jillian: It’s like an Allbirds. This seems like it needs something... It’s almost like Shave Club. You know, it had, you know, there was something there that people really like. It was fun, it was interesting. And people realized how much they needed it.

Stefan: And travel has so much potential.


Charles:  I keep coming back to - is this a cult brand or an everyman brand? And I think Dollar Shave Club sort of took in a general purpose product and tried to make an everyman-ish brand with a personality. And you’ve got these two distinct customers. You’ve got your backpacker, hard core, I want my life in a small bag for a month, and then you’ve got the business traveler. Can you speak to the same, can you speak to both of those people?


Stefan: You can.


Charles: And can you actually use some of the social media channels to grow? Or is this more... Because I think cult brands grow without really loud marketing. So how do you think about Jillian’s question in the context of customer segments? 


Stefan: That’s great. You know, the reason I made that brand misstep is because I had a hard time figuring out between these two customers. Is it the 80 year old guy who literally sleeps in his pants overnight to prove to his wife they won’t wrinkle? Or is it the 24 year old backpacker? We can do that a couple of ways. First of all, we know that the brand appeals, has a wide base. The things that they have in common. But second, we can advertise, and we can speak to both of those customers, for example, also by the products we develop. So lightweight blazer. Lots of search instance on a lightweight blazer. This blazer’s lightweight. We’re making an even lighter one, reducing the pockets, to go after that search instance and data. So that could be more of the business traveler guy. We can speak to that.


Nicole: But I don't google lightweight blazer.


Stefan: But I know how many other people do. 


Charles: So you’re the product genius. I mean, I always think every founder has one, maybe two superpowers. Based on what I’ve heard, marketing may be not your natural go to move, but product instincts. Because I was wondering, what am I betting on as an investor? And this company hinges on your ability to identify these really interesting travel inspired products.


Nicole: Yeah. 


It sounds like Stefan’s message — that he’s a product geek who really gets his customer — is sinking in. There’s just one more detail the investors would like to work out.


Michael: Walk us through how much you're raising and what are you going to do with that cash, and where does that cash bring you to?

Stefan: Great.  Why am I raising $600,000? We have a model that achieves 24 months of runway, and 24 months of growth based on a million dollars. I am attempting to oversubscribe the round. 


Nicole: And you haven’t raised any money to date?


Stefan: We have raised money. So we raised $850,000.


Michael: Let me ask you a question. And I ask this a lot. But I want you to tell me what the journey of my money is. So let me give you an example. Let’s say I wrote you, for example, a round number, like a $100,000 check in your $6 million round. Take me, take my 100,000 on a journey. Tell me what happens in how many years. What should I expect from that?


Stefan: The only thing I’d like to do is I’d like to change it to 600,000, just because under the lights I’m going to goof up the math.


Michael: Okay. Let’s do 600,000.


Stefan: Thank you. $600,000 at a $6 million valuation is going to be 10% of the company. We’re going to go two years from here. We’re going to be $13 million in revenue.  At that point, we’re going to do a series A. That 13 million will be valued, let’s say, it’s on 20. We’re going to raise $2 million, which is 10%. Your equity is going to go down from 10% to 9. I now have to get you a 9x return. So I’ve got to sell the company for 90 million. Apparel companies can do that. You get to 50, especially all ecommerce, we can sell you for 90. 


Nicole: 50 million in revenue you have to get to?


Stefan: That's right.


It's wild to me that Stefan was ready with an answer to this question. I think he nailed it! Let's see if the investors agree. Jillian is up first.


Jillian: I like you. I like you. You're smart. You're savvy. You're personable. You are the product genius, for sure. I think there's a lot coming out of you. And there's a tremendous amount... Um... I have never invested in apparel. And so I'm sort of sitting here... Have any of you invested in apparel?


Nicole: No. I hate clothes and I hate food when it comes to investments.


Jillian: Charles, have you ever invested in apparel?


Charles: I... Well, I’ve done something in eyewear, so I guess that counts.


Jillian: Okay. What’s your gut on this?


Charles: I think a lot of the things that Michael brought up I think are the trap. Which is if you don’t have a brand that can stand out in some way in the mind of the consumer, in crowded categories you just drown. So there’s got to be something that feels like fundamentally unique or compelling about the product. Whether it’s price or availability or brand personality. I think all of those things can work. But it’s very different than trying to assess a B2B software company.


Jillian: Yeah, of course. I mean, I do tech, so...


Stefan: It’s a good diversification play.


Jillian: The only time I ever didn’t do tech I... Well, it was tech, but it wasn’t. It was a company called Juicero. And I invested a lot of my personal money in, and it blew up in my face. And I remember at the time saying, Jillian, you invested in something out of your knowledge base that what the heck? And it really left me scarred. And I always have this little voice in the back of my head saying, don’t invest into something you don’t know. And I don’t know anything about apparel. But I have to say that I would buy this for every single man. I have three boys that are older. I would buy it for my 90 year old father. I would buy it for my boyfriend. I mean, I literally would buy this. And so that’s kind of the rub here. So I’m thinking to myself... So I think this is what I’m going to do, okay. I’d like to put just 50,000, my own money in, just as a vote of confidence. Because I think you’re going to do this. And if there’s anything in my ecosystem, my own community I can sort of pull in to help you, I will. But in all honesty... But with that 50,000, I want six jackets. Okay. One for my father, one for my boyfriend, and three for my sons.


Stefan: You bet. Jillian...


Nicole: That equals five. 


Stefan: You got it. You got it. Thank you 


Jillian is in! With 50k of her own money. Charles is up next!


Charles: I think you have a unique eye for your customer on what he really needs out of travel. And my hunch is that your instincts are going to pull you in directions that other people won’t go. And I just think you’ll end up building a brand that’s kind of a weird collection of assets, but that totally makes sense for the person that you’re going after. And people will look at it and scratch their head and say, how does he sell a travel backpack, a blazer, a running shoe, a beach towel? You’ll have a bunch of really interesting SKUs. So we’ve only recently started investing in apparel or what we call tangible goods at Precursor. But I have a good feeling about you. And so I’m going to invest $50,000. And I would be open to potentially doing more if I could get comfort with the rest of your team and the people you’ve surrounded yourself with. Particularly around marketing and brand execution would really be the question where I would want to go deeper. And I’m open to being convinced that it should be a larger commitment if all of that checks out.


Stefan: Thank you. I’m thrilled to have you.


Charles is in with another 50k! Stefan is 2 for 2. Nicole is up next.


Nicole:  So I think I... I think I’d want to buy some of the products. I want to see them being used. I’ve bought into you for sure. And I actually feel this very personal connection to the problem you’re trying to solve. I’ve bought into the person you’re selling to. I think I’d like to try the product and play around with it and then show it to a group of angels that I’m investing in with and see them try it. So I’d like to be included in the emails in terms of follow up and I will follow up. But I can’t say yes right now, because I have this immediate gut reaction to apparel because I don’t understand it and because it’s so saturated. But it feels like a cool catchy brand, and I’d like to try it.


Stefan: Thank you very much.


Nicole is out! For now. Michael is the last investor left.


Michael: Yeah, I normally wouldn’t want to be involved in apparel either. I think it’s a very tough brand. I really like you, though. I think you’re that kind of founder that we think is just quirky enough to make that great promotional video and I’ll tell you this. I’m in a family office with four or five other guys and my family. And a couple of my CIOs and my legal department and stuff like that. And this is what I’ll tell you. I will invest if we get them some of your jackets and they put them on, because they travel a lot, they like them, we’ll come in. 


Stefan: Thank you for having me. It was a real pleasure. And I love this show.


Nicole: You’re really onto something. This is something else.


Charles: You are.


[thanks and byes]


Stefan leaves the room with 100k from Charles and Jillian, and potentially more from Nicole and Michael! And they can’t get enough of Bluffworks. 


Jillian: I think daddy will go crazy over this. I'm not kidding. He's a really natty dresser. I mean, he's really...


Michael: I'm really interested to see what my brother and the guys in the office think. Inevitably they'll...


Jillian: But Charles, you're keeping that. It looks awesome.


Charles: I'm totally keeping it. Totally keeping it.


Michael: You know what's funny, I'm going to LA then Japan. So I'm going to... I didn't bring a jacket with me, so I'm going to bring a jacket with me, so now I have a dinner jacket.


Jillian: See. Sticky, sticky, sticky.


Charles: It's the one thing you can't fix.


Nicole: Jillian, don’t you wish he had women’s jackets right now.


Charles: It’s the one thing you can’t fix, when you travel for business, as a guy, you get off the plane, you can have a wrinkle free shirt but the jacket? You either got to wear it.


Nicole: I'm always hanging it on that stupid little nub on the chair in front of me.


Charles: Even if you roll. I've looked at every YouTube video about how to roll a jacket to minimize. It just... It's a fabric issue.


Jillian: Come on. This rocks. 


Nicole: I think that was one of my favorite, I think that was my favorite pitch.


Stefan left a lasting impression on the investors, and there was a sort of buzzing excitement in the room. I’ll admit, I was kind of geeking out in the control room. This guy is good. 


But after the break, Stefan learns the hard way that it takes a lot more than a good pitch for a deal like this to make it to the finish line. 




Welcome back. I talked with Stefan about four months later to see how things panned out.


Josh: Before we dive into what happened after the pitch, first I wanted to say - I was listening to the pitch again this morning, and your opening spiel that you gave was the best I think I've ever heard. I was basically just mouth open, like, holy shit - like, where does someone - like, where the hell did you learn to pitch like that?


Stefan: You know what I like to tell you before I went in, is that… I was nervous and I was physically struggling a little bit, had a couple of nights of crummy sleep and working really hard and crummy diet, and two things happened. The first is that you guys told me that this was the same recording studio where Journey had recorded Don't Stop Believing. And the second is that my best friend and right hand man sent me a text message and he said, "swing for the fences." And that was it - I took those things and I was basically like, screw it - let's just go. And that gave me the fuel to just really connect with my story, tell it like it is, and I don't know, go as hard as I could.


Josh: There's this other moment that really struck me, was how well you know your customer, inside and out - like you have this unbelievable clarity around who is buying your products, what they like, and what drives them - and it made me think of the business textbooks that tell you to do all of that, but I've never actually seen someone, embody that in such a way that you did in the room that day. How? How do you do that?


Stefan: I think there's two reasons. The first is that I am the customer, and in fact, when you look at some of our competition, which are like, younger more urban brands, they were started by younger more urban guys who make products for their customer, so you know, when you're living the product, it's easier to connect with that person. But the second is, honestly, we had a hard time getting it right in the beginning, because I had everything - back in the day we just had a single pair of pants - I had everything from twenty-year old guys going to Europe, bringing that one pair of pants, to an 85 year old guy who slept in our pants just to prove to his wife that they wouldn't wrinkle, and so people -


Josh: That sounds like something only an 85 year old man would do.


Stefan: So people say, "what's your age and demo?" - and it's not - of course, we have a primary age and a demo, but it's really about what connects these guys and how they feel about their lives, their journey, and travel and what they're looking for in products, and it did take us quite some time to get there, honestly.


Josh: Yeah, I would imagine. So after the pitch - something happened with… All I know, is I was copied on an email from Jillian. Do you know what I'm talking about?


Stefan: Oh, sure. Absolutely.


Josh: Can you walk us through what happened?


Stefan: I mean, I assume that what you're referring to is we had a shipment of blazers that were crushed in the warehouse. They were packed 30 deep and that amount of pressure, put creases in the blazers,  and we shipped them and she was - she was - I think she was crestfallen. The response - she immediately told me, like "I am out" and I - I thought about that, was about to answer, and then I stepped back for a second, and I was like, "OK, wait a second - this Jillian in particular is so passionate - and the conversations I've had" - we were already talking to her, she was already helping connections and ideas - she was so passionate, and I thought - she just went out in that one shot - why?  and what I realized is that I let her down. I had - we'd connected to a degree that I'd raised her hopes and then I let her down.


Stefan: And in the moment when you're experiencing that, it feels like it's completely the world, it's gonna crush the company - and I've just learned over time that it's just not, and we're gonna go through it again in some other shape or form, and even despite it we're gonna keep going. And in the end, we got her blazers and you know, they - 


Josh: You weren't freaked out in the moment?


Stefan: I was disappointed, I was not freaked out in the moment. I mean, if Jillian was to, you know, not participate, I would find another way. It just was what it was. And certainly, I worked super hard to fix it - we got her replacements, we fixed the problem in the warehouse, we sent data that it affected 8% of our blazer shipments, it was just a really bad confluence for her and actually, it happened to others at the same time too. And then - in the end   you know, she ended up being out when she went into due diligence, which told me - the product worked, she got to the point where she liked it, and then she went into due diligence of apparel, and what she said to me, is that I just realized through going through this process of how little I know about the industry. 


Josh: Right, which was her fear - she mentioned that in the pitch, just like, I've never invested in an apparel company before. Oh man, that's disappointing, I was hoping that you were able to turn it around, because your response - like the first thing you did is you sent an email that night that said, "I want to let you know, I got your email, I'm sorry the blazers arrived wrinkled, I'll send you more information in the morning." Which I thought was really smart - let's not talk about this in the heat of the moment, we'll talk about this when things cool off a little bit - and then the <laughs> your response just, I sent it around to the team because I was just blown away with like, how you kind of saw through, and you mentioned this, that you realized she was disappointed in you, and it wasn't even just about the product, it’s that like - it was actually an emotional disappointing thing.


Stefan: I let her down. In the meantime, I had previously made contact with Phil Nadel, obviously also, of The Pitch. 


Josh: Yeah. 


Stefan: And Phil, Phil's approach was to put our -


Josh: The one investor who wasn't in the room.


Stefan: That's right, the one investor who wasn't in the room - and Phil's approach was to put our project on AngelList  So Phil has a syndicate, which means he has a number of followers on a platform called AngelList where accredited investors can participate in startups, but rather than having to do the deep, deep diligence that every investor does, and as I think we know, particularly Phil and the way he approaches numbers so -


Josh: Right, just trust his diligence.


Stefan: Phil can do that work and he presents investments to investors - opportunities to investors and he says, look, this is - you know me, I'm Phil, and I've done this homework and you see my track record and you know, I invite you to participate, and he has a fairly large, a very large syndicate there  and we did it, and we released it, and I'm on an airplane that, unfortunately had broken WiFi, and I land, and Phil says, "Yeah, great, we launched, we're ready to go!" And about a half an hour later he sends an e-mail that says Stefan, I have never received so many opt-outs so quickly.


Josh: Yeah, people opting out, people choosing not to participate in this particular deal that he's offering up on on his syndicate.


Stefan: That’s correct  And I - my spirits definitely sunk. We were trying to raise three hundred thousand dollars and I said, oh boy, here we go  And to myself, I'm like, "Damn it! I was just going on a weekend off with my son, I was trying to unplug and you know, it was not to be - we had to put our nose to the grindstone." So this is what happened. 


Josh: Yeah, that's the worst.


Stefan: Through this  So what we did in that moment, the first thing we did is we sent an email to our customers  and my team likes to joke that it's the most successful e-mail we've ever sent, we raised three hundred thousand dollars in venture from our customers.


Josh: How quickly?


Stefan: A week. I could not believe it. 


Josh: Oh my goodness. 


Stefan: So at the moment of - we're trying to raise 300 with Phil, boom we raised 300 from our customers directly  the next thing we did is we took a page out of your book. And I thought, gosh, if I could just tell my story better to this community, explain apparel investing to them, and tell them more about what we're about and all the opportunities we have -


Josh: Took a page out of my book? 


Stefan: Yeah, we released a single-episode podcast, and it saved the investment with Phil, it saved the project.


Josh: <laughs> Wait, okay - tell me more. What happen - what was in this podcast? What did you say?


Stefan: I got on it, and I started off by telling my story - is it - you know, we're here at AngelList to raise these kinds of funds, this is what we're trying to do. I told my origin story of the company and why, and I talk about what the product is about, and then I interviewed notable people on my team. We addressed their questions through this, about 45 minute long podcast, that I edited and it saved the project.


Josh: So you did this podcast and then Phil sent out another email or notification to his followers that normally invest in his syndicate, and told them to go listen to this podcast?


Stefan: We sent it to the syndicate, that's exactly right, and we ended up at 286. 


Josh: Oh my gosh. So you - in the end, you're raising 600k on our show.


Stefan: At the end of this, through our customers, through Phil, Phil's syndicate on AngelList, and other angels - we raised 1.4. We have a hundred thousand dollars left in the round.


Josh: I kind of want to go back to Charles, Nicole, and Michael. Like, they - you obviously just breezed over that. They decided not to invest, like what happened there -


Stefan: So, Michael, Nicole, and Jillian are out. And Charles, we had a difficult time connecting.  What finally happened with Charles is I got an email from him and he says, I'm just coming back on the airplane. I have worn your blazer a dozen times, and I've been counting, and we should talk.


Josh: So he was ignoring your emails while he was testing the product?


Stefan: I don't know if he was ignoring my emails, but he was testing the product. <laughs> But we had a difficult time connecting. Now - he knows me, I don't know to what degree he knows the industry, but he has the personal experience with the product  he's excited - so now when we talked, he came back with a sum that would make us one of our larger capital investors, and frankly, we actually didn't even have room for in the round, and I would've made - we would've made room for him, but then one other thing happened - the timing of his round changed.   the timing of Charles' fund was off for us - we have a hundred thousand dollars left in the round. We would be happy to have Charles - we'll see where it goes, but we're not under pressure to raise it.  


Josh: So let me make sure I'm fully recapping what happened. So, after the pitch - you send Jillian her jackets. She's upset, she has a product problem. You respond graciously and reel her back in, and she returns the jackets, you send her some new ones that weren't crushed in the warehouse.


Stefan: Correct.


Josh: She likes the product, then goes into due diligence, and again realizes how much she doesn't know about apparel, and decides to back out.


Stefan: That's correct.


Josh: And then, with Charles, you're like, "Where the hell's Charles?!" You know, all the while he's actually wearing your jacket, falling in love with it, realizing how much he loves the product. He finally gets back in touch with you, but by this point, you've already raised 1.4 million.


Stefan: That's right.


Josh: And the timing doesn't work out for his fund, for the capital that he has to deploy, so he's not going to make it into this round, essentially, and so that kind of falls through or at least gets postponed till later.


Stefan: That's right.


Josh: And the other side of this story is that after things don't go well - like, during that time when you aren't hearing back from Charles and things aren't - you don't know whether Jillian's going to invest or not, you're doing this syndicate with Phil and you have that thing where their - all of his syndicate are like, "no, we don't want to do this." And so you hijack his syndicate, do a podcast, send all of his followers to that, reel 'em back in, all the while getting all of your customers to fill out 300 thousand in your round  you end up getting 285 from the syndicate, 300 from your customers, and raising a total of 1.4 million. Essentially, bypassing the investors that were in the room, and blazing your own path.


Stefan: That's right.


Josh: Oh my gosh. Well, if this isn't a story of a scrappy entrepreneur who doesn't take no for an answer, I don't know what is.


Stefan: Like my buddy says, swing for the fences.


Stefan’s challenges after the pitch, this is the kind of thing you see all the time in the startup world. You reach an agreement with a VC, something happens, things fall through, you try again! You have to show the kind of hustle that Stefan showed. 


What I really want to talk about, though, is his pitch. Because this was about as perfect a pitch as I’ve ever heard. 


It wasn’t that the investors didn’t have any concerns about Bluffworks — they’re always going to poke around and prod at the business. What was impressive was that Stefan had an answer ready for just about every one of those questions.  


From the moment he set foot in the room, he knew the exact story that he wanted to communicate: he knows his product. He knows his customer. He has a plan to keep Bluffworks growing. And Stefan kept coming back to that story, again and again and again. Stefan’s pitch was truly a master class on how to control a room.


And when you’re pitching to four investors, from different competing firms, all with different backgrounds and investment strategies, you better know how to control the room.


This is our last episode for the season! But we will be back with a whole new batch of companies starting on Wednesday, August 15th. We’re actually recording them next week. So wish us luck! Wednesday, August 15th The Pitch will be back!

Our show is produced by me, Josh Muccio, Kareem Maddox, and Molly Donahue. We are edited by Blythe Terrell.

We are mixed by Enoch Kim. Original music composed by The Muse Maker. Our Theme Music is by Breakmaster Cylinder.

Thanks to Lisa Muccio for planning the recording of this pitch.

And as a reminder, no offer to invest is being made to or solicited from the listening audience on today’s show.

All right -- you’ve been listening to The Pitch from Gimlet Media.  

OH, this is your final reminder. If you’re in Brooklyn on Saturday, June 16th! That’s this weekend. Get your tickets to GimletFest, and come see our live show. See you there.

Jillian Manus // Structure CapitalProfile Photo

Jillian Manus // Structure Capital

Investor on The Pitch Seasons 1–10

Jillian Manus is Managing Partner of an early-stage Silicon Valley venture fund, Structure Capital. Branded “Architects of the Zero Waste Economy," they invest in underutilized assets and excess capacity. She was named one of the top 25 early-stage Female Investors by Business Insider in 2021. Jillian serves on numerous corporate and non-profit boards, these include: Stanford University School of Medicine Board of Fellows, NASDAQ Entrepreneurial Center Board of Directors, Fuqua School of Business at Duke University.

Michael HyattProfile Photo

Michael Hyatt

Investor on The Pitch

Michael Hyatt is a serial entrepreneur and active investor. He is the co-founder of BlueCat, (acquired by Madison Dearborn Partners), and previously co-founded Dyadem (acquired by IHS). He currently serves as a Director of BlueCat and is also a weekly business commentator on CBC, is the Host of “Business Unplanned”, a podcast to help small businesses.

Nicole VerkindtProfile Photo

Nicole Verkindt

Investor on The Pitch

Nicole Verkindt is an entrepreneur, investor and CEO. Nicole was StartUp Canada's 2019 Woman Entrepreneur Ambassador of the year, named StartUp Canada's 2017 Woman Entrepreneur of the Year, was a Dragon on CBC's "Next Gen Den", and was one of Adweek's 2018 "Toronto Brand Stars.”

Charles Hudson // Precursor VenturesProfile Photo

Charles Hudson // Precursor Ventures

Investor on The Pitch Seasons 2–10

Charles Hudson is the Managing Partner and Founder of Precursor Ventures, an early-stage venture capital firm focused on investing in the first institutional round of investment for the most promising software and hardware companies. Prior to founding Precursor Ventures, Charles was a Partner at SoftTech VC. In this role, he focused on identifying investment opportunities in mobile infrastructure.

Stefan Loble

Founder at Bluffworks