Ricardo Larroudé on profitable business development: “I ask how much it costs to do this task, and then we do it ourselves”

Since its founding, the company — which boasts affordable pricing, vertically integrated manufacturing and marketing, and an on-site marketplace — has focused on slow, deliberate growth.

During the summit, Larroudé described the company’s unique processes and strategies. His comments from the discussion below have been lightly edited for clarity

Building a business without external investments
“Like the lemonade stand, it’s about unit economics. People make a business plan and it’s just a list of things that you can spend money on and hopefully it will have value. There is no, “I have to deliver a product. What is the most efficient way to do this?” Instead of spending money on the first guy who comes along and offers to put up posters all over town, I ask how much it costs and then do it myself. Same with factories. The factories told us they were charging this amount, and I asked how much it cost, and then I said, “Let’s do it ourselves.” Just do the math in the end. You need to understand how the product you sell is made.”

Attaching a name to a brand
“Putting your name on the (business) door adds credibility. The downside is that it’s harder to break away from. I put my driving license aside and it says Larroudé. I can’t get away from it. My son is wearing a Larroudé shirt. This is my name. Your suppliers believe in you more when your name is on it. That said, brands should not be built around people, but around products.”

Wholesale vs. DTCs
“We were growing faster in the wholesale business before we could tell our story through digital marketing. Now we are growing DTC much faster than wholesale. I think it has to do with the supply chain and how quickly we can restock your stores. We are everywhere and we don’t have to wait for people to go to the mall or other place (to buy our products).”

Customer acquisition cost
“With DTC, I need to make money on the first sale. Saying you have to get a customer is offensive. You should get your money back on your first sale. In the price range we run in, we are able to move faster. We also do the creation ourselves. We have a studio in Brazil. We create hundreds of ads and review them all the time to see what works. Five Brazilian women work in our studio and we are constantly creating new things. When I hear how much it costs to produce one photo in New York… I mean, our team in Brazil does it for free.”