It was 26 degrees outside when Rainer Castillo and Kyle Hency stopped by the Forbes offices in New York in March. Oblivious to the lingering Northeastern winter, they showed up in shorts.
Sporting bare thighs in sub-freezing temperatures is an occupational hazard for the duo, who make up half the founding team of , a San Francisco-based online clothing brand that hawks a roster of shorts and swim trunks for men. The company’s 126 different designs—which include items like the and the ‘—all keep to a very short, old-school 5.5” inseam. Its sworn enemies are cargo shorts, "the only form of contraception that is 100% effective," and pants, "a necessary evil built for the work week."
That kind of web copy, and the company's unabashedly , has earned Chubbies legions of loyal customers, including . Even former President (Delta Kappa Epsilon, Phi chapter, Yale 68') owns a pair.
All of this has translated into undisclosed millions in annual sales for the company. Though they declined to reveal exact figures, the founders say that 2013 sales more than tripled those of 2012. During one day in March last year, the company sold 10,000 pairs of ‘Mericas alone. (At a pop, that’s 0,000 in sales…in one day.) The company declined to comment meaningfully on 2014 projections.
As befits the Bay Area’s frattiest company, there is no CEO of Chubbies. Instead the four founders, which include Castillo and Hency’s Stanford classmates Tom Montgomery and Preston Rutherford, run the company via a “quadfecta of management excellence.” Even without adult supervision--the company raised its first round of venture funding only three weeks ago—it’s a formula that’s worked surprisingly well to date.
Kyle Hency, Rainer Castillo, Preston Rutherford and Tom Montgomery are minting money with a retro-inspired line of men's shorts.
Chubbies traces its roots back to a July trip to Lake Tahoe in 2011. “Culturally at Stanford, we would wear costumes and just get outrageous, anywhere we’d go,” says Castillo, a large, lumberjack-looking dude with a long beard and shaved head. That culture continued through the foursome’s post-grad years, often culminating in an annual Independence Day celebration.
In 2011, they decided to put some extra effort into their holiday attire. Castillo raided a local fabric store for red, white and blue patterns, then put together an ensemble for a group of friends heading to Tahoe. It included Hawaiian shirts, fanny packs, mullets and, of course, shorts.
The shorts that year were basically early versions of the company’s , with one featuring a blue and white star pattern, and another featuring red fabric and a star-patterned back pocket.
Expecting the shorts to be a hit, they made around 20 extra pairs and carried them in backpacks during the vacation. “Basically anywhere people saw us, they were trying to grab them,” remembers Montgomery. Over the course of four days, they sold every last pair to fellow partiers for each.
The birth of Chubbies. Tom Montgomery (right) and a friend wear Castillo's star-patterned shorts amidst a sea of beer cans on the beach at Tahoe in 2011.
They were clearly onto something. In the weeks that followed, the four met casually in the Marina District to talk about creating a business to sell upgraded versions of the Tahoe designs. Their combined skill sets meshed nicely for an online retail operation.
Castillo spent four years at Inc., eventually managing men’s lines that included pants and shorts, before moving to a product development role at Levi’s. Hency, who graduated Stanford with Castillo in 2007, worked as an analyst covering e-commerce and Internet companies for Lazarde, then took a private equity gig with Mainsail Partners. Montgomery spent his days as an associate at IDG Ventures while Rutherford lead business development and product teams at , a software company that developed the default photo app for Android.
That summer, Castillo scoured the state for local manufacturers to refine his prototypes, eventually eating through ,000 after tweaking the design three times. In August they threw an open bar launch party that included a table full of shorts for sale. They easily sold out. The next month they made a couple hundred more and put them up on a website. Those too sold out within days.
Then came winter. A line of corduroy and dry-clean-only wool designs didn’t sell quite as well as the team hoped. Montgomery quit his job to work on the company full-time that October. Castillo followed in January and the team regrouped for a Spring surge.
They recruited 25 college ambassadors by sending out emails to fraternity presidents across the south. Even without shorts available on the site, they ended up building a hungry audience as college kids latched on to the company's marketing copy, a style originally created to crack up the founders' friends.
The Chubbies brand, in a nutshell. (This is one of the many thousands of user-generated photos the company gathers through Facebook and Instagram.)
When they finally debuted a Spring line with a couple hundred pairs of shorts that March, they sold out within hours. "We had acquired a ton of audience and didn't have any product on the site. So once we got product we just blew out of it," remembers Montgomery. Fed up with selling out so quickly, they decided to make one huge batch to last through the summer. When that batch, intended to cover the company for a couple of months, debuted in March, it too sold out in hours.
That year they went through dozens of small product cycles, making hundreds, then thousands of shorts, posting them online and selling out in hours. They turned to presales to make due, warning customers that their orders wouldn't ship for six weeks.
"Bascially we were sold out all year through 2012," laughs Montgomery. Speculators, meanwhile, took advantage of the shortage by selling the shorts on eBay for hundreds of dollars. (This still .)
Rutherford joined full-time that March, while Hency came on board in October 2012. They used a 0,000 SBA loan to fund much of the business, and raised a small amount of seed funding--less than k--from friends and family. By the end of 2012 the company had 12 full-time employees in a warehouse outside of San Francisco.
Chubbies produces all of its shorts domestically, a product of its scrappy early days. The "Made in the U.S." moniker also plays well with its male customer base. Getting that domestic supply chain--which includes two cutting facilities, eight sewing partners and a handful of fabric vendors--in order has taken more than two years. The company couldn't even consistently meet demand until the end of 2013.
"Now we're at a place where we could be a -0 million business, just with the supply chain we have," says Hency.
Chubbies now has 30 employees in San Francisco, along with 125 college ambassadors. They generally release 3-6 new styles each week, with some sticking around longer than others. Why the breakneck design schedule? "We want to be the shorts authority," explains Castillo. "We want to have the coolest new stuff on the market and always offer cutting edge new ideas." That ethos has produced an eclectic range of designs, including tie-dye shorts, sport utility shorts and a pair made from .
As the founders scale up the shorts business, they're also broadening their ambitions. "We're looking to do something on the 20-year-plus horizon," says Castillo. Soon, they hope to expand to other product lines, but not before a long, careful design process. Though the company has offered promotional tank tops, croakies and koozies before, they want to get everything right before wading into non-shorts territory.
"We will make sure," declares Castillo, "that when there's a Chubbies shirt offered, it's the most ridiculous thing they've ever seen and our customers will snap it up immediately."
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