A cowboy boot has no laces, which is a problem if you only sell online

Howdy y'all. Welcome to the big idea. I'm Elizabeth Gore, co-founder and president of Hello Alice. So, what's between the spreadsheets this week, Gus? No, not excited. The Small Business Administration announced nearly 4.9 million in grants over 5 years to expand its Veterans Business Outreach Center network. This is so critically important because US Veterans make up a beating heart of our business community. New centers, y'all, are coming to Alaska, Florida, and Louisiana along with supporting satellite offices. The centers provide free training, counseling, and technical assistance to veterans, active duty service members, member of the National Guard and Reserve, military spouses, and eligible family members. And I want to give a big shout out to military spouses, and I hope they use this. They can help you evaluate a business idea, build a business plan, find capital, market your company, pursue government contracts, and understand veteranowned business certification, which I hope all of you do because there's a lot of benefits behind that. The SBA now works with 51 veterans business outreach center locations nationwide. Love this. Its veteran entrepreneurship program have trained nearly 260,000 people since 2013. So go to sba.gov VBOC to find the center serving your area, even if there is not a new location in your state. The existing network provides support throughout the whole country. Now, let's cowboy up with a man helping turn a Texas boot company into one of the fastest growing brands in America. I am so excited, y'all. As a cowgirl at heart, let's go to Kovas. David Lefit is the president and CEO of Tokcoas, the Austinbased company known for its handcrafted cowboy boots, western apparel, and what it calls radical hospitality. Before joining TKOS in 2022, David spent nearly two decades as a corporate lawyer and then found the light and made an unusual leap from general counsel to the chief operating officer at Decker's Brands where he helped oversee y'all $3 billion portfolio that included UGG, Hocas, Tea, and many more. Today, TOAS has more than 50 stores, generates hundreds of millions of dollars in annual sales, and is expanding from a direct to consumer boot company into a national western lifestyle brand. So, y'all, David reportedly has almost 60 pairs of Tokovas in his closet. I mean, that's not one, that is a herd. So, let's welcome David to the Big Idea. >> All right, David, howdy. Welcome to the Big Idea. So glad. >> Thank you so much. Yeah, thank you for having me. I mean, clearly I'm incredibly biased because I'm from Texas, grew up on a cattle ranch. I'm surrounded by TOAS in my home. >> I love it. You're authentic. >> So gorgeous. >> Great. >> My bag that's been beat to death over the years, but it's still standing. >> Well, love that. It'll keep standing. I can I can assure you of that. >> Gus almost chewed it up once, but we we vented that. So, um, man, congratulations. What What a beautiful brand. Yeah, it has been fun. I must say it. I'm four years in and um and still kind of pinching myself. So, it has been fun. >> How was it going from very different brands? I mean, you you were leading um Uggs and so you know, Hocas and and now you're in this like quintessential western world. What's that like? >> You know, there's a lot of similarities as far as just brand building goes. Um a lot of things learned along the way. you know, one of my big sort of passions is is about building teams and culture. >> And I and I think that sort of crosses every industry and and every brand. And I'm sure the companies you run, you would probably agree that if you've got a strong culture and a strong team, you can you can do a lot. And so we we focus a lot on that. And that's where I spend frankly a lot of my time. Let's talk about your founder because um >> we talk a lot about failure on this show and what it leads to and and my understanding is that he didn't get into multiple business schools and that kind of was a or precursor to this. Tell me that story. >> Yeah. Well, he he didn't when you say multiple it's it was two Stanford and Harvard. So, uh he didn't exactly he didn't exactly >> I went to Texas A&M but I think I've heard of those. >> Yeah. And uh so he didn't exactly spray the the field and and sort of set himself up for some maybe easier entry schools. But yeah, so a after that he decided that he wanted to start a business and looked at frankly a lot of different types of industries. Everything from the funeral home industry to to boots etc. kind of looking at looking at it very objectively, not just what he was passionate about and and at the end of the day landed on on cowboy boots and western and you was a great steward of the brand and and he could have continued. I have no doubt he's an incredibly bright uh young man. Um, but I think at at, you know, year six or whatever it was at the time, you know, felt like he he wanted to bring somebody else in as the CEO and and so did a search and I I happened to have met him uh because actually Deckers was uh kind of kicking the tires a little bit on Tokovas at the time and also just learning because Tokova is one of the digitally native companies coming out in 2015. they were doing some things in performance marketing that even, you know, a firm like Deckers could learn from. So, we came out and had a full day with them on the types of things that they were working on. So, that's when I got to meet Paul and he and I kind of kept up maybe once a year just to check in with each other. I want to go back to that because I think everyone just assumes this is totally normal today. But when this launched, tell me what a digital native meant at the time and why was that groundbreaking particularly for a boot brand. >> Digitally native truly being selling only online ecom. I don't even mean direct to consumer. I mean solely uh selling through ecom and and at the time when Paul started the western market was pretty had two things uh that he sort of saw as an opportunity. One and very few brands were were were selling direct to consumer and then secondly the distribution was very fragmented. You had a lot of independent wholesalers, retailers, mom and pops. you had two larger uh distributors, Boot Barn and Cavenders, but but the point being a very fragmented marketplace. So, he saw the opportunity to take a brand and go direct to consumer. And at the outset, you know, kind of known as the Warby Parker of cowboy boots and taking out the middleman and, you know, going direct to consumer in order to provide incredible value to to the consumers and the product. a bit of a risk for an actual western boot brand because even though I live and breathe cowboy at that time it was not such a a household trend that it is today. Right. >> Correct. And and also not to mention it's a dead fit. You know there's no shoelaces. So you know if you order online and you're off you're off. There's no way to adjust it. So you're going to have a lot of you know your return rates are going to be fairly high. >> Um so yes you're you're correct though. and bulky shipping, right? And >> yeah, large packages. Exactly. >> Well, uh, pre-trend, then suddenly we have cowboy carter and the rest of the world waking up to to Texas and >> Yellowstone and tell me how y'all rode that trend. >> Well, I I do think Yellowstone was a big impetus of of a lot of this. You know, Taylor Sheridan show, that's where Tova's was very had a very successful advertising on that show. You know, I my view is that we're in now a complete cultural zeitgeist and and I I believe American is becoming more western. Um I I don't believe it's a trend. I think it's becoming more mainstream. >> You know, country music driving a lot of it. Uh you know, look at Ella Langley and being on the top 100 for what now 25 weeks. Absolutely stunning. >> World charts, not just >> Yeah, exactly. Not just country. >> Not just country, right? >> Yeah. And it continues to be the fastest growing genre in c in music that is country music, >> right? >> And and when when you look at people listening to country music, it's not in traditionally western areas. That includes the Northeast, the the West, you know, so it's not like 80% of the people in Texas listen to country music, but only 20% in California or 20% in New York. It's pretty widely distributed. >> It is. And um I want to go back to the Yellowstone um advertising and partnership. How did that come about? Was was >> who talked to who on that gig? I mean it it was so brilliant. >> Yeah, that was that was Paul. uh you know that was before I started and and there wasn't as much of a partnership as simply you know buying ad space on on their show and and just getting you know spikes on the website uh you know as as the show was was being seen by 13 million plus people. >> Right. >> Um and so you know it was putting content you know and fishing where the fish were were at the time. >> Right. Right. Well I love to fish so I get that. Um you all have a a concept for uh radical hospitality >> and I I want to understand first what that means and then why it's critical. >> Well, it it I think it's kind of evolved. You know, first of all, the other thing when I started the the beauty of my situation was that the aesthetic of the brand, the look and feel of the brand, the stores that had been opened up at the time, all I think were spoton. So, I didn't have to be in a position where I'm trying to refigure uh change the brand around or do something to reinvigorate, you know, brand heat. So, I think Paul did an incredible job of his both on the product, timeless product, as well as again the design of the stores, that type of thing. Um, and so I could just kind of ride that and and scale it. But radical hospitality, you know, one of Paul's values was just being and we want to stand for Western values, authenticity, hospitality, you know, being genuine, a straight shooting and all the values that I think in this day and time, whether you're on the left or the right, you know, can stand up. You people, it's hard to argue with those values and integrity and those types of things. Now when we talk about radical hospitality, we want to make sure that when somebody walks into our store, they are coming and getting an incredible experience. I don't care whether they buy a product or not. I want them walking out feeling like, "Wow, that's a cool place that was, you know, all the salespeople were approachable. I was educated about Boots. I was educated about their apparel. I We have a bar in every store. >> Um serving alcoholic and non-alcoholic drinks." We offer complimentary branding services. So if you do buy a product, you can get it customized and in fact to the point where 25% of the transactions in our retail stores have some form of customization whether that's hat branding or or boot branding. So we've taken that concept of radical hospitality and the fact is if we don't treat our own people with the same sort of mantra of radical hospitality there's no way in turn we can expect them to treat our consumers in that way. So now it's almost we we've put on our flywheel this concept of just cultivating a a a culture of radical hospitality. So it means to our own employees, it means to our vendors, you know, sort of like the CO industries principalbased management, we want to be the vendor of choice, our factory partners, our wholesale partners, because we do what we say we're going to do. We forecast well, we plan well. We don't put a PO out there to our factories and pull it back. And and we just want to be the partner of choice. If they had to choose, if I can only work with three brands, who would I want to choose? We want to be the brand that they would choose. And and I think that that culture has been incredibly powerful. And I think that when you look at the way in which we're operating in retail, I I just can't tell you the text and and emails I get from people that have walked out of stores that don't even know me, they found my email somehow of just talking about not even how great the product is, but just how they were treated in that store. >> And so, you know, people are, I think, wanting a respit from all that's going on in this day and time. And I think to walk in a door and be treated in a way that we would like to be treated ourselves, not to mention a product that has an incredible value proposition to it. So, it's really kind of become a very cultural thing at Tacobas and and one that I think is very important for our success. >> Do you have a a favorite story um around radical hospitality? That's >> I have I have several but one I'll tell you is we we opened a store in Detroit last year >> and there was a permitting issue and and that the opening had to be pushed about one week >> and we sent out a notice because when we do open a store we tend to get a line out the door of you know 100 people or more and the memo didn't make it to a couple who had happened to have driven in from an hour away and got to the store and it wasn't open yet. And we we heard about this um these two friends who had babysitters to to sit with their kids so they could come in an hour away and drive to the Detroit store. Our store associates heard about that and they said, "We're going to ship them a little goodie bag for their inconvenience and they realized that they drove in from Canada >> and we can't and we can't ship anything to Canada." So these two associates jumped in a car and drove it across the border. >> Oh my goodness. and met these two women >> and they were crying just like I can't believe you would take the time to come do that. >> But the amazing thing is and the important thing is they didn't call their manager. They didn't call me. They didn't call anybody to say is it okay if we do this. They just knew we would tell them that's the right thing to do. Go do it. >> So we're we want to empower people to use their judgment and just being empathetic. how would you feel if you were in their position and that that rather than sort of doing a bunch of policies and procedures like you know you need to make sure they can only get one of this so they can't only you know just use your judgment your discretion and and treat the people and make sure they have a great experience. So that that's one example. A long-winded one, sorry. But >> no, I love it. I love it. And I can tell that the the notion of culture radical hospitality when it's one of your store associates who again just took it on their own intuition, right? >> Absolutely. >> When you um well, how many employees do y'all have? We we have about well including all of retail I'd say I don't know 1500 uh at headquarters and I'll get to that in a second but about 180. >> I hate that distinction between headquarters in the field because my view is we are here at headquarters for that field. They're the ones on the front lines whether it's our CX team on the phones or our retail team members out in the field providing radical hospitality to our consumers. headquarters is here to to provide them with the tools and things that they need, great product, great marketing, but how can they best serve the consumer? So, I I just don't like that us versus them. But anyway, the the retail field is about 1,200, I'd say. >> When you're hiring these folks, cuz I mean, you're not one store anymore, right? You're you're all over the country. And >> um as as our small business owners think, is it time to go from one store to two to four? You know, it's very personal to them. It is. >> H how do you um in your founder ensure that notion of culture and customer service stays with over a thousand people? >> Yeah. It because we just we we obsess about it and and if anything is going to get in the way of you know can we open 15 stores the the answer is going to be it depends on the human capital. If we don't feel like we can get the managers and the and regional managers and people that can handle it, um, then we would pause. So, it's not even a matter of capital. Can we afford a new lease and and capital expenditure to go get the design and the aesthetic right. It it's going to be more of a human capital issue. And and we we spend a lot of time and money training associates and making sure, as I said, we treat them well so they in turn will treat our consumers well. And if that starts to feel like we're getting too big to have that that feel, then then we probably need to slow down a little bit. >> I got to ask you, how many boots do you own? >> I'm I'm probably about 60 pair, I would [laughter] say. >> You have to build a new closet. Where are they? >> I they that my wife said, "You got to get these out of here and put them upstairs in an upstairs guest bedroom closet." So, >> well, they are beautiful. I mean, you could just do a full wall art, right? >> Absolutely. Yes. Yes. >> How do you decide, oh, I'm going to get the next pair, the next pair? >> Uh, sometimes it's I want to make sure, you know, just for my as a consumer wanting to make sure, like the human capital issue we just talked about, you know, that that our quality and and the out of the box comfort that I our product pillars are being met. So, >> I I act like it's me just testing product when I really want that cool new pair. >> Do you have one pair that you gravitate towards? >> I I rotate quite a bit. Right now I'm wearing a deer skin cutter toe that I love, but uh I I I rotate quite a bit. >> Well, I It's like choosing your favorite kid. I would. >> Exactly. Yeah. >> Um I want to talk through manufacturing uh I believe y'all's stuff is built in Leon. Is that right? In Mexico. >> For the most part. We've opened up uh India and Vietnam as well uh for different types of products where we may need different types of innovation and that. Yeah. But I'd say a large part of our what we call our best of breed product is in Leon, Mexico. >> What was the original decision to start there? And and tell me about those relationships with your manufacturers. >> Well, again, Paul started that Leon being known kind of as the boot capital of the world. There there are a lot of incredible tradesmen uh and and craftsmen working in Leon. you know, coming from Deckers where I was chief operating officer and kind of managed the whole supply chain ecosystem, I'm a huge believer and kind of what I said earlier about radical hospitality and and being the vendor of choice and establishing long-term strategic partnerships with our factory partners. You know, we're we're never going to be, you know, going and acquiring a factory, but that doesn't mean we don't treat them almost like Tokova's employees. And so we we build very solid relationships with our factory partners. Uh we want to treat them well. We don't want to be trading off on margin. What is the right long-term sustainable margin where they feel like they're making a good profit and we're making a good profit? That's how you do a win-win situation. If it's us grabbing every little, you know, nickel off the table, at some point they're going to come and say, "Okay, this doesn't really work for us." So we we really try and make sure we're very transparent with them. If we're not happy with quality, let's dig in and where we're having, you know, things break down and production lines. And the one other thing I'd say a lot of times you see, oh, those boots are made in the same factory as such and such. That really has nothing to do with the quality of a given product. We we have you there's standards on on any given production line that are very different. And e even at Deckers, you may have, you know, certain UGG products that are on one production line and another. There may be different standards. If it's a more pinnacle product, your standards are going to be very different. So, we we spend a lot of time. We've got probably 60 people in Leon and in a Mexico office that supports the factories and supports our product development. So, you know, we we spend a lot of time and money in product development in in quality control and and all of that stuff. So it we're we're proud of the factories and the work that they're doing and we help them wherever we can >> with tariffs and with all the policy changes and the whiplash with all of that. How do you one as a CEO plan for that from a cash flow perspective um or react I guess and then I'm curious the dialogue between the manufacturing leads when those types of things change so quickly. >> It's a great question. Fortunately, and we didn't know this at the time, but the the the the trade agreement we're we're under now. So, so tariffs have not been a problem at at when when all of this started, we just had a lot of contingency planning. And it's also why you need a diversified manufacturing base. uh you it's just it it there's too big of a risk to have all of your production in a given region much less a given factory >> whether it's a fire or or some regulatory issue. So you you've got to splinter that supply chain a little bit just to to mitigate risk and then then you use your the needs of of the product to to move to that other region and sometimes you dual source given you know the the size of a given style or product. Yeah. I mean I you you just do the best you can staying agile and and then knowing that sometimes you may have to to your point about discussing with the factory. Yes. let's let's see how we can each, you know, take some of the pain here um before we just pass it along to a consumer. And then sometimes, you know, you're going to have to do that as well. Um but we've been, as I said, fortunate so far um as far as the the trade agreement goes. >> So, we um love to talk about mistakes because we all learn from them and and we call them our dirty unicorns. I wonder if if you've had one in business that >> uh that you could teach us about. Well, I I think to your point, we all have them and and I think the key is learning from them and moving on. And I I think, you know, as a former lawyer, what I would say is >> I don't mind risk. Business is all about risk. What what you don't want is falling backwards over a cliff that you didn't know was there. So, I think just identifying risk and then managing how you want to navigate those risk is important. And as you said, you learn from all of those. You know, I I don't want to have people looking over their shoulder. I want to empower them. Make a decision. Let's move on. If it turns out to be the wrong decision, if we had the right process, that's more important because then more often than not, we're going to get the right decisions made. >> But in I guess to answer the question more specifically, about one year after I got here, I I feel like things were were starting to we started to get very diluted in our our look and feel, our content. it it didn't feel like rich storytelling and and yet Western steeped in that ability to do storytelling and I felt like the the brand started to move away from a northstar which in my view and in our view is you know gritty, authentic, romantic. Um, and I thought it got a little too watered down and diluted. And as a result, we stopped putting our content in upperfunnel and focused more on lowerfunnel type work. And I mean, we started to really feel the results. So, we we needed a hurry up offense. We needed to get back to a northstar, aligning the entire marketing and frankly product team and company around this northstar and and then getting out and creating content that met it. So that we felt proud to be putting the content back and spending an upper funnel to grease the skids for for the lower funnel. And but we really saw a dip in in traffic, qualified traffic, and started to hit our results. Uh fortunately we we did a hurry up offense and we were able to correct that and and that's been now a couple years and and and things have been on a much better path. But you know those are the types of things also that sometimes it's not just one decision. It it's you allow things to kind of incrementally millimeter at a time go out of place and before you know it your ship is just going in the complete wrong direction. And and you can't look back and say, "Well, it was that one thing. It was just" and and that can happen in product if you take your eye off the ball and allow well, what's the big deal? It's just a a stitch that's out of place. You know, but those things accumulate over time and then people let their guard down and all of a sudden you've got a major problem on your hands that didn't happen one decision or overnight. It was just it was the cumulative nature of these things adding up. The word diluted is really interesting and I'm curious if as you grow and you get more customers, more interest, more employees, it's not taking your eye off the ball it sounds like, but but it's serving so many opinions and agendas. like how does that >> It's a great great great question and I think that our goal is to make sure that that we stay anchored and if we open up in Soho and New York City, we're not going up there in a way that is going to try and cater to a consumer in New York City. We need to go up there authentically western >> um and being who we are and either over time convincing them, you know, that here's a shirt or here's a Monterey, a slip-on product they can wear. or they're not quite ready for cowboy boots, >> right? >> But I think to try and >> create a product line Yeah. to try and create a product line that's suited for that um region as opposed to what we are good at, >> that's where we have to just make sure we're staying true to ourselves and our consumers. And I and I do think, you know, threading the needle of of welcoming people into the tent of Western, but in a way that doesn't embarrass the the you, you know, who is authentically from Texas and grew up on a ranch and that where you would be proud of the way in which we're doing it and stewarding it as opposed to embarrassed by it because it's like this drugstore cowboy or concrete cowboy, whatever you want to call it. >> And I think we try and look at >> called All Hat No Cattle. >> Exactly. Yes, that even more appropriate. So, we want to kind of use a filter of of folks like yourself to make sure that that you would be proud of what we're doing and not embarrassed by it. >> Yeah, I appreciate that. Um, >> you know, a Yeti is a great example. You know, that they >> again Texas Aggie. >> Yeah. and and they um you know going hardcore fishing and hunting, but the the the person sitting in an office in Chicago that might have a Yeti cooler, a Yeti tumbler on their desk, they're not going to go market that person like here's a Yeti that you can put on your desk, >> you know, that that it's an aspirational situation where that person knows what that brand stands for and and and wants to be part of it. And I think [clears throat] that's they're they're a great example of as they were growing and and you know and expanding that beyond their their roots but in a way that that remained authentic. >> Absolutely. So David, you've had such an incredible career and and I'm I'm so proud that you you stepped to the right from a legal profession into bringing us all these beautiful brands. Um, I'm curious if there's an an artifact or something that kind of embodies your experience. >> I don't know that that crosses over all of that, but I do have one thing I'd like to share. Um, and I I actually met Will Gera, who was the author of Unreasonable Hospitality, fortuously fortuitously at a at a duck hunting trip. He and I were guest of a host. And I'm embarrassed to say at the time, this is last year, I wasn't aware of Will, uh, I hadn't never met him, but I was not even aware of him or the book, but as as you may know, he was he took the helm at 11 Madison Park in New York and at the time a twostar restaurant, brought it to a uh, the number one restaurant in the world, three Michelin stars. and I happened to meet him and he and I were talking actually I told him I was talking about our our concept of radical hospitality not knowing at the time he wrote unreasonable hospitality >> and I told him the example of what I shared with you about the couple who drove to Canada from Detroit >> and so after the duck hunting trip we had a great uh time and over drinks and talked about where hospitality is going and and I just learned a ton and then I got home and and he sent me an autographed copy of his book. So, I'd say this is an artifact and just because it we were such at the time, you know, building this concept of radical hospitality and and then to hear him take it to the next level and now applying some of the stuff that he you uh applied in his restaurant to to our world. And now actually he's coming this spring in in 2027 to to talk at our our annual retail conference where we have all of our field managers come come to Austin. So I'm I'm really excited to have him speak to the entire group about unreasonable hospitality. Yeah, >> that is great. But he's quite a guy that book. >> It's incredible. It is a very good read. I think no matter what industry you're in and even how you treat your own friends and family. >> Yes. >> I mean that is that is important. >> Yeah. Very good. And and and and it does apply in not just our world or the restaurant world, but really any industry. I think >> every business starts small and we love to give back on our show and shout out a small business that's doing amazing work. I'm curious, David, if you have a favorite. >> One would be, it's not very small anymore, but it's founder led and it continues to be founder led and owned, which is BIES, which I'm sure you know very well. I I just Yeah. I mean, you talk about hospitality, you know, you walk into their store, you're greeted, hello, ma'am, hello, sir. It's spotless. Um, their attention to detail. So, I I'm just a huge fan of what they've been able to do in these, you know, big box sort of stores, but doesn't feel big box. They've got a lot of point of sale service across the entire store. So, that that's one I'm >> Wait, so now I just got to say really quickly. >> Yeah. When I land in Texas, there's multiple things I have to have. And one of those is a chopped beef sandwich. >> Absolutely. >> At Bies. I mean, I I go and then I do the thing where I I do a dirty soda where I get every fountain drink like in there. [laughter] >> But the choppy sandwich, I like crave it. I love it. So, >> yeah, I agree. My my drives to Austin to Dallas, I I I stop there every time. I'm like, and get a car wash, which is incredible, too. >> [laughter] >> Uh the other one I'd say which is again not very small business but Mark Majori I mean I think recently at his auction he just sold about $9 million worth of paintings and actually I've got I don't know if you can see but two prints in my office here. That's one and then one behind me. I can't afford his originals but he's somebody else I just look up to as far as storytelling in western and what he's able to accomplish with that small brush is just unbelievable. >> Incredible. Um and and again how he's inspiring western as well. So that's another one I would say. >> Beautiful. I love both and um as a fanatical I think I've read every western and I love all the art and >> that's [clears throat] amazing. Well I David just want to thank you for giving us your storytelling and your time and um and truly to you and Paul it is so important to me if you saw my office here. It's, you know, >> I can tell >> from the ranch >> and and growing up on agriculture and being a cowboy is, >> I think, the heart and soul of this country. It's how we were built. And the fact that it is everyone is embracing it now is is a is a big testament to you all. So, I I have a thank you quote for you and actually it's from my grandmother Opal. Um, and she I love that. She would always say, "Uh, keep your horses spent, your boots polished, and your wits about you, and you'll be just fine." >> I love it. Yeah, that's great. Well, thank thank you to Opal on the big idea. >> Oh, my pleasure. Thank you for having me. It's been fun. >> Oh, thanks again to David for joining us in his radical hospitality and Paul's beautiful boots. Oh, so amazing. And thank all of you for joining us this week. I'll see you next time with more stories and insights to help your small business succeed. Until then, come say howdy to me at any of my social channels at Elizabeth Gore USA. As my grandmother always says, hold your head up high and give them hell. [bell]