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Daniel Kane on the Rise of the Skinny Wallet and How to Build a Moat Around Your Business

The 28-year-old founder of The Ridge describes how he built a $20m/yr business on the back of a $1,500 Kickstarter campaign

8 Minute Read

Daniel Kane was a 19-year-old student at UC Santa Barbara when he launched the skinny wallet company, The Ridge.

In 2013, he prototyped the first version of what would become one of the best-selling direct-to-consumer wallets, scraping together $1,500 to get a Kickstarter campaign going.

When he started, the ecommerce landscape had yet to be flooded with hundreds of copycat products. Advertising campaigns for the Ridge were much more cost-effective, at times almost 8x cheaper than today.

By 2018, The Ridge had grown into a $20m/year company, with a 60% year-over-year growth in revenue from 2018 to 2019. Wallets continue to be its bread-and-butter product: The company sells about 700 wallets a day.

Kane, now 28, sat down with us to reflect on the company’s explosive growth, biggest challenges, and how he inadvertently built a protective moat against the growing number of minimalist wallets. 

Key Takeaways:

  • Capitalize on early successful channels. 90% of all of The Ridge’s sales come from its website. It’s important to own your channels, Kane says. 
  • Build for the long-term. The Ridge offers a lifetime guarantee on all of its products. Less than 2% of its products are returned.
  • Understand your customer base, iterate, and expand. The Ridge launched bags and phone cases in late 2017. Each new product category is on track to do $1m+ in 2019.

* * *

How did you come up with the idea?

I looked around on Kickstarter for products I liked and was inspired by a card holder with a money clip. I came up with a concept for a wallet with a few of the tenets I wanted — most importantly, a one-piece design. I wanted a slim but sturdy product with a small footprint and no extra edges. 

What makes The Ridge stand out? 

All of our wallets come with a screwdriver and parts you can use to fix the wallets yourself. They’re modular and all the pieces are built to last a long time. If something does break, customers don’t have to return their wallet, we just send them the replacement parts. 

How did you get started?

For the first prototype, I cut up credit cards and put them together and my mom sewed together a case. I found some metal shops in Moorpark [California] and told them my idea, and they CNC’d out the original prototypes. I took the original prototype to a manufacturer in China I had worked with before for a prior startup, sent them my physical prototype, and they iterated and improved on it.

How much did everything cost up until this point?

The samples didn’t cost more than $500. My friend shot the video for the Kickstarter. We probably spent around $1,500 to take The Ridge from idea to Kickstarter. 

Do you think this launch could be replicated today?

It would be very difficult to do what we did today. We had a lot of luck with the novelty of Kickstarter and the digital marketing landscape of 2014 to 2015. 

The production value for Kickstarters today is super high-quality. Look at my original Kickstarter videos––they were crap! Today, you pretty much have to hire an agency to get a professional project done before you launch. 

It was also much easier and cost-effective to advertise online when we were starting out. Digital marketing from 2014 to 2015 was significantly less crowded than it is today. This means cheaper CPMs, higher CTRs, and ultimately higher conversions. 

If you had to start from square one in 2013 again, what would you do?  What if you had to start today? 

Assuming the same landscape as before, I would want more starting capital. We had a lot of cash constraints as we scaled that prevented us from getting the most out of every campaign we launched. I didn’t run any ads on the Kickstarter, I was sort of scared of our success. I didn’t want to be one of those “successful” projects that failed to deliver because they sold too much and they imploded. We could have 3x to 4x the Kickstarter funding if we invested more time and effort into the marketing. We left a lot of sales on the table, but it’s always easy to look back and say that.

Today, it would be extremely difficult to do it without substantial capital. We sort of eased into it. You’d have to run a ton of ads, and even then there’s no predictable success. Smartphones dictate we don’t need much stuff on us anymore, and it’s difficult for a brand new minimalist wallet to compete.

What were the next steps after the Kickstarter?

The next big challenge after the Kickstarter was figuring out how many more wallets to make while improving the design.

The toughest thing to do has been to constantly improve the wallet design over the last 5 years, while simultaneously balancing and scaling all the marketing channels. Our wallets are modular and life-time-guaranteed, so if someone’s wallet from 2014 needs a replacement part, we had to find a solution to get them the correct part even though we don’t make that model anymore. 

There was a lot of trial and error, and we changed the design a lot. 

Changing the product’s design is risky. People don’t like the products to change on them. We underestimated how many people would want the old product. 

We called the first Kickstarter The Ridge, the second kickstarter The Ridge 2.0, and then every iteration was just The Ridge. We had to make sure all the parts had to fit all previous versions, and create a system of notes of all customer wallets to address wallet returns. 

We launched the second Kickstarter to place a new bulk order for inventory. We wanted to make some major upgrades to the design, but it was too risky to change everything. We didn’t have enough money to buy a new wave of new inventory, which was solved once we raised more money. 

If you take too much time to iterate and stop selling, you’re dead in the water. Inventory issues, so what––do what you can to keep the steam going.

How do people find out about The Ridge?

We focus a lot on the top of the funnel and email captures. Facebook, Instagram, and Google have been big for us. Google made a huge comeback in the past year for Google display. A lot of our digital spend fluctuates between Google Adwords and Facebook ads. 

What we’ve really been focusing on lately is content creators. We want to build a brand with more effective marketing vs. just selling more products. We work with a bunch of podcasts and YouTubers. You kind of just have to deal directly with the content creators. For example, Theo Von has been great and his audience has embraced it.

Content marketing can be a very powerful segment, but we haven’t done a ton of that yet. For the past few years, we struggled to have enough wallets produced to meet orders. We avoided the whole pitch and story for what we were doing. I don’t enjoy talking up the company, it’s just not in my nature. But we’re doing more of it now. We’re more comfortable now. In order to crack into the mainstream, you have to have some kind of story. You can’t just be a product.

Where would you say your comfort comes from?

I think our comfort comes from having a really solid moat built from our early success. We’ve had hundreds of copycats try to rip off our designs and products. We’ve dealt with the scaling pains early on. We’ve adjusted to a new advertising landscape. We’ve grown to embrace new channels like Amazon. We’re not really that replicable and we’ve survived a lot, and we feel confident in that.  

Do you have any scrappy growth tactics you’d like to share?

I did all the early marketing by myself with my best friend Austin. I had no marketing background. In the early days, I was winging it and wearing all the hats––knowing how much product to buy, how much cash we needed to save, how much we could afford to iterate while selling products and keeping the company afloat. 

The scrappiest time was [the early years on] Facebook. I was managing our ads for 2.5 to 3 years. I was getting $3 fully blended CAC and it was insane. Most of the sales were organic, too. We  would spend roughly $3 to sell an $80 wallet on average. Today, our CPAs on Facebook hover around $20 to $25––it’s nearly 8x more expensive to sell a wallet now than it was then. 

Our only limiting factor was our production. We could sell as many as we could get made. We could scale to our inventory no problem. We were extremely lucky and at the right time. 

What do you think will be the next golden age for marketing?

I think the next golden age is going to be content creators. Twitch streaming, content creators, and not just a formal channel. For example, Joe Rogan is the pinnacle of that… He’s a new breed of reach. His audience goes out of their way to watch him, and his word carries weight. 

What are some pitfalls you recommend avoiding?

You have to be really good at spotting influencers and fake accounts. It’s so easy to get tricked.  There are a lot of people looking to take advantage of companies because influencer marketing and product promotion is such a gray area. “Pay this much money and I’ll do this”––and some of the metrics are shaky and unreliable. Whoever is managing this part of your marketing has to have a really good gut instinct. 

Do you do your marketing in-house or do you work with an agency?

Today, all of our advertising is done in-house. When we first started, we had a small team of early employees––me, my dad, two of my best friends––doing it all day-to-day. 

Later on, everything outside running the business was outsourced. We outsourced our marketing team, email team, and fulfillment. In the past 2 years, we pulled things back. We’ve built out everything internally––marketing, email, customer service.

Bringing things in-house made things more productive. In order to create a good unified brand, we needed to bring everything in, get the messaging right, and get everyone on the same page.

Outsourcing your marketing can be good because it allows you to focus on other mission-critical things, but it’s tough to build a consistent brand voice. In-house gives you more control and faster communication. 

What are your thoughts on Amazon sales? Many DTC brands are tepid at best to embracing Amazon. 

We were very against Amazon early on because it was tough to see exact copies of our products and Amazon refusing to do anything about it. It was how they operated. Manufacturers would creep on crowdfunding projects and make the products before the Kickstarter even finished. Third-party sellers list the products on Amazon with no problems. 

A year or two ago, Amazon opened up its platform to third-party sellers in China. People in China started merchant accounts and sent their product to Prime warehouses, so they no longer needed a distributor or warehouse. They bypassed design patents. Amazon got flooded with lower-quality products and copycat products. We have 30 patents that haven’t been issued yet, and Amazon likes to tiptoe the line.

Frankly, we hated Amazon for a while. But it came to a point where it made more sense to work with Amazon than against it. If you can’t beat ‘em, join ‘em.

We started to list our products on Amazon in a limited capacity, and people just loved it. Amazon has been very positive for us since we started to embrace it a bit. They’ve been a good partner and seller for us. We don’t have our entire product line on it. We’ve been able to outrank all the copycat wallets and found out the copycats don’t really affect us much. 

What’s in store for The Ridge?

We want to shift from being just a wallet company to an “anything you carry” company. Our core product and the bulk of our sales, about 90%, is still our wallets. But we keep coming out with new products.

A lot of people design products for solutions that don’t exist. Even if it seems cool or looks cool, if it’s not functional, it’s a gimmick. 

We’re looking for staple products that can emulate our vision. Phone cases are successful… Bags have a lot of potential. 

I have an optimistic view of what we’ve done. It would be very difficult to copy our design and undercut us on price. It just wouldn’t work––the margins aren’t there to market effectively to get keyword rankings.

Anyone who tries to build a brand gets drowned out in the landscape of how expensive CPAs are. It goes back to the solid moat we’ve built by being an early fast riser in the category. Today, we can afford the higher CPMs and CPAs. Our customers are happy with us and we’ve got word-of-mouth to bolster us.