The shorts cost $11.98 to make. The $80 pair in your drawer costs about the same. Inside the open books and business strategy of Terignota, trail running's most transparent brand.
Terignota is the coolest and most interesting brand in trail running right now. A dude in a garage sending out cheap but quality gear through word of mouth by himself is 1000 times more "punk" than anything Satisfy has ever even imagined doing.
Thank you Seth, you get us. Somehow reading this financial analysis of Terignota made me tear up with pride. To add to the chart in the 'Anti-flywheel' section:
Terignota's average order value is $66.25 (including shipping & taxes)
Our average customer spend is $98.74 implying 1.5 lifetime orders per customer.
another good one, Seth, thanks. I heard about the shorts on the Conversational Pace podcast when Brett interviewed Rachel after Cocadona and she mentioned these are the only shorts she runs in and Brett said the same. I actually didn't here the brand name clearly, as I had never heard of it before, so I sent Brett a DM to get it from him. Good enough for Rachel, good enough for me so I ordered 2 pair a week ago and can't wait to try them on the trails soon. Thanks for supporting the small guys and their fit-for-purpose products.
The anti Satisfy. Love it. One thing to note is that by going DTC, Terignota cuts out the middle man (the retailer) and doesn't have to set wholesale pricing to meet their customers' margin requirements, either, which are usually 50% or better for specialty retail. Here's a basic example: COGS: $15; Wholesale: $30; MSRP: $60. In the eyewear industry, in which I used to work, gross wholesale margins were often 70%+, with full-price retail margins at 50%-55%. So, we'd have eyewear that cost $11 landed retail for upwards of $80. Wishing Alex all of the success! Can't wait to become a customer, once they're back in stock.
Great points! I'm inspired by Alex's decision to go DTC and rely on slower, organic growth with the trade-off of maintaining margin control and pricing transparency. It looks like some colors/sizes of some of the items are in stock!
I dig the business model, especially if he wants to keep things tight. It might slow trial and limit growth, but it does give him control over his range. At some point, he’ll likely need to rely on staff to help manage, but as he scales (and if he wants to), he could negotiate some cost concessions.
I’d like to know how much a low price point like that interferes with having your designs manufactured in a way that is at least somewhat ethically and ecologically sustainable. That surely must be another challenge.
The transparency is fascinating. My only pushback is that Terignota is proving what's possible without much organizational complexity, not necessarily that the complexity other brands carry is unnecessary.
That's fair, though I suppose it depends on the goals of those other brands. If the goal is to grow and scale as fast as possible or become one of the biggest brands in the world, then I would agree more complexity is necessary. If the goal is to make a living, enjoy life, and provide accessible trail running gear, then I think Terignota is proof positive that less is more.
I think where I get hung up is that 'necessary' depends on what we're trying to optimize for. If the goal is a great living for the founder and accessibly priced gear, Terignota is a kind of proof of concept.
If the goal is building products, funding athletes, investing in R&D, or operating globally, complexity starts looking less like waste and more like the cost of those ambitions.
The most interesting thing here to me is that Alex chose a unique set of tradeoffs relative to other startup apparel brands. He absorbed an enormous amount of labor himself, works for below-market compensation, and opted out of many of the functions other brands invest in. That's a very different claim than discovering fundamentally different apparel economics.
Exactly, the goals definitely determine the guardrails, what is necessary, etc.
I'd still argue it changes the apparel economics is for customers who don't really care about all the other stuff. Maybe some people will pay $80 for shorts and rationalize the price by convincing themselves they are also indirectly supporting athletes (though the larger the company, the more complex that claim becomes). Other customers will see the lower price point and transparency as a no-brainer.
Where I find things fascinating is where a company like Terignota continues to grow, at what point does the scale require additional overhead that, in theory, gets passed along via higher prices? If that doesn't happen, how do other brands compete? They have to differentiate on something else. Maybe it's ethically-sourced materials, maybe it's something else.
I agree that Terignota's apparel economics are a function of the trade-offs Alex made, but they are still real. And if he's content with those trade-offs, they aren't going away. And if they don't go away, I'd argue they are absolutely fundamentally different apparel economics.
I think I just realized where we're talking past each other... you're focused on apparel economics and I'm focused on founder economics.
The landed cost isn't particularly interesting to me because that changes with volume, sourcing, and energy prices. What stands out is the amount of founder labor being absorbed by the company.
Terignota's advantage comes from brilliant guerrilla marketing and Alex absorbing below-market compensation. That's admirable and a tradeoff many founders make. But what happens when that labor has to be purchased rather than absorbed by the founder?
At that point, he either raises prices, negotiates with suppliers, or rejects growth. All are valid and difficult choices.
That's why I see Terignota's pricing less as a function of fundamentally different apparel economics and more as a function of founder tradeoffs.
Ah, yeah, I was focused on the economics as a result of the trade-offs. I see your point focusing on the trade-offs themselves, which I find equally as fascinating.
I agree there is a question of how those trade-offs change as/if/when Alex decides to scale.
My primary point was that he doesn't *have* to scale and can continue to build a lifestyle business organically while controlling input costs. In this way, he can continue to control the economics while the business grows. And while I suspect prices may be updated to reflect additional overhead in the future (more shipping / CS help), I get the sense he's not actively looking for exponential growth at all costs, which helps him control the apparel economics.
On the other hand, for brands that have made different trade-offs, they literally *cannot* compete on the same apparel economics (as a result of those trade-offs). However, they can (as you point out) support athletes via sponsorships, invest in R&D, etc, as this overhead is already factored into their apparel economics.
I think we're actually saying the same general point about two different aspects of Terignota's business. Either way, I find both genuinely fascinating and appreciate your engagement here. Our back-and-forth has helped highlight the clear trade-offs that enable a business like Terignota, as well as how the trade-offs enable certain future paths (or not). 🤝
Goruck is another example of a brand who used this approach in the early days and published an annual transparent financial report. As they scaled, this disappeared.
Scale and the desire to maximize profit changes incentives over time for many brands, businesses, and individuals. Whatever the market will bear is the asymptote all businesses approach over time.
Buried lede: a single net promoter in the right place at the right time led to this 4,000 word story. Brands often forget that influencers are people in the right place at the right time who authentically and organically promote your brand. This interaction didn’t happen on Instagram or at a Satisfy Running 500k on the surface of the moon. It happened at an aide station, by chance.
Fantastic write up. Thanks! I’m in the NW and own a few pieces of Terignota. Definitely pleased. And definitely pleased with the business attitude of Alex! Congrats!
Great writeup (surprise surprise) Seth! Alex and Terignota are huge inspirations for how we make business decisions as well. Right now we basically get there through discounting but he's inspired me to look into lowering our prices too.
Thanks, Zach! I could see pricing transparency being a very natural fit for Open Fuel, especially as/if you move into more sustainable packaging, which I assume will be more expensive than the typical single-use plastics.
That's a great story, but... one day Alex will have a larger business. maybe $2M? or $3M or $5 M and he will realize he can't do it all himself. He can't design the shorts, source the materials, unpack the factory shipments & pack the customer orders and answer the phone & emails, enter orders into an ERP system, pay his bills & so on. So, if his margin stays the same at $17, he will have to add to it in order to hire people to do some of these tasks. AI won't be able to do it all! Now that $29 short is more expensive. That short maybe became $35. OK, he needs the margin to service his business. If Alex decides one day he wants to sell to a retailer, they will want 50% (or more) of the selling price. (Lots of DTC brands missed this as they tried to diversify their distribution.). With retailers selling it, they can provide huge distribution help, huge product placement help, service to consumers and so on, that short is now $70+. It's easy to understand how an item priced from a factory and the same item sold to consumers can price wise grow exponentially. The people who one day work for Alex and the retailers who may one day sell his merchandise do earn their income and provide real value in the food chain of product pricing! Alex can still be transparent with his customers and other stakeholders as his business evolves. I'm wishing Alex the best of success!
If Alex can build the business to $2M, $3M, or $5M by himself or with minimal packing/customer support help, why would he need to sell through retailers? That's just giving away margin to a middle man for the sake of growth or exposure, which is precisely and intentionally what's he opting against.
Can that change in the future? Sure. But even as the business scales, there's nothing that says he has to do anything. What you're saying makes sense and is consistent with how most brands work. I don't think Terignota is *most brands*.
I don’t see Alex being a greedy owner where he needs to make millions of dollars personally. So, unlike brands that have to pay a CEO a top salary, my guess is Alex sacrifices some of the personal income to continue to grow the brand. That eliminates the need to recoup dollars by raising prices.
There's definitely a trade-off between accelerated, paid growth and the flexibility of maintaining a lifestyle brand where you have more margin control. I'm excited to continue to follow his journey.
Terignota is the coolest and most interesting brand in trail running right now. A dude in a garage sending out cheap but quality gear through word of mouth by himself is 1000 times more "punk" than anything Satisfy has ever even imagined doing.
Exactly my thoughts. Terignota is the punk ethos. Ive been a huge fan since I ordered during his first run.
No, it is just same business as any other, just cooler story
Thank you Seth, you get us. Somehow reading this financial analysis of Terignota made me tear up with pride. To add to the chart in the 'Anti-flywheel' section:
Terignota's average order value is $66.25 (including shipping & taxes)
Our average customer spend is $98.74 implying 1.5 lifetime orders per customer.
Thanks, Alex. It means a lot for you to say that.
And thanks for sharing the additional numbers! 1.5 average orders makes the point hit even harder :)
another good one, Seth, thanks. I heard about the shorts on the Conversational Pace podcast when Brett interviewed Rachel after Cocadona and she mentioned these are the only shorts she runs in and Brett said the same. I actually didn't here the brand name clearly, as I had never heard of it before, so I sent Brett a DM to get it from him. Good enough for Rachel, good enough for me so I ordered 2 pair a week ago and can't wait to try them on the trails soon. Thanks for supporting the small guys and their fit-for-purpose products.
That's amazing, thanks for sharing! I'm planning to get some myself but can't decide on the color(s) I want :)
The anti Satisfy. Love it. One thing to note is that by going DTC, Terignota cuts out the middle man (the retailer) and doesn't have to set wholesale pricing to meet their customers' margin requirements, either, which are usually 50% or better for specialty retail. Here's a basic example: COGS: $15; Wholesale: $30; MSRP: $60. In the eyewear industry, in which I used to work, gross wholesale margins were often 70%+, with full-price retail margins at 50%-55%. So, we'd have eyewear that cost $11 landed retail for upwards of $80. Wishing Alex all of the success! Can't wait to become a customer, once they're back in stock.
Great points! I'm inspired by Alex's decision to go DTC and rely on slower, organic growth with the trade-off of maintaining margin control and pricing transparency. It looks like some colors/sizes of some of the items are in stock!
I dig the business model, especially if he wants to keep things tight. It might slow trial and limit growth, but it does give him control over his range. At some point, he’ll likely need to rely on staff to help manage, but as he scales (and if he wants to), he could negotiate some cost concessions.
For sure. It’s not to say prices will never increase, just that he maintains control over how much, when, and why they do.
Great reporting & cool story! You convinced me to check out their product.
Thank you, Sarah! I’m waiting for the restock on some items myself :)
Great article, reminds me of Costco
Excellent article about an extraordinary company!
I’d like to know how much a low price point like that interferes with having your designs manufactured in a way that is at least somewhat ethically and ecologically sustainable. That surely must be another challenge.
The transparency is fascinating. My only pushback is that Terignota is proving what's possible without much organizational complexity, not necessarily that the complexity other brands carry is unnecessary.
That's fair, though I suppose it depends on the goals of those other brands. If the goal is to grow and scale as fast as possible or become one of the biggest brands in the world, then I would agree more complexity is necessary. If the goal is to make a living, enjoy life, and provide accessible trail running gear, then I think Terignota is proof positive that less is more.
I think where I get hung up is that 'necessary' depends on what we're trying to optimize for. If the goal is a great living for the founder and accessibly priced gear, Terignota is a kind of proof of concept.
If the goal is building products, funding athletes, investing in R&D, or operating globally, complexity starts looking less like waste and more like the cost of those ambitions.
The most interesting thing here to me is that Alex chose a unique set of tradeoffs relative to other startup apparel brands. He absorbed an enormous amount of labor himself, works for below-market compensation, and opted out of many of the functions other brands invest in. That's a very different claim than discovering fundamentally different apparel economics.
Exactly, the goals definitely determine the guardrails, what is necessary, etc.
I'd still argue it changes the apparel economics is for customers who don't really care about all the other stuff. Maybe some people will pay $80 for shorts and rationalize the price by convincing themselves they are also indirectly supporting athletes (though the larger the company, the more complex that claim becomes). Other customers will see the lower price point and transparency as a no-brainer.
Where I find things fascinating is where a company like Terignota continues to grow, at what point does the scale require additional overhead that, in theory, gets passed along via higher prices? If that doesn't happen, how do other brands compete? They have to differentiate on something else. Maybe it's ethically-sourced materials, maybe it's something else.
I agree that Terignota's apparel economics are a function of the trade-offs Alex made, but they are still real. And if he's content with those trade-offs, they aren't going away. And if they don't go away, I'd argue they are absolutely fundamentally different apparel economics.
I think I just realized where we're talking past each other... you're focused on apparel economics and I'm focused on founder economics.
The landed cost isn't particularly interesting to me because that changes with volume, sourcing, and energy prices. What stands out is the amount of founder labor being absorbed by the company.
Terignota's advantage comes from brilliant guerrilla marketing and Alex absorbing below-market compensation. That's admirable and a tradeoff many founders make. But what happens when that labor has to be purchased rather than absorbed by the founder?
At that point, he either raises prices, negotiates with suppliers, or rejects growth. All are valid and difficult choices.
That's why I see Terignota's pricing less as a function of fundamentally different apparel economics and more as a function of founder tradeoffs.
Ah, yeah, I was focused on the economics as a result of the trade-offs. I see your point focusing on the trade-offs themselves, which I find equally as fascinating.
I agree there is a question of how those trade-offs change as/if/when Alex decides to scale.
My primary point was that he doesn't *have* to scale and can continue to build a lifestyle business organically while controlling input costs. In this way, he can continue to control the economics while the business grows. And while I suspect prices may be updated to reflect additional overhead in the future (more shipping / CS help), I get the sense he's not actively looking for exponential growth at all costs, which helps him control the apparel economics.
On the other hand, for brands that have made different trade-offs, they literally *cannot* compete on the same apparel economics (as a result of those trade-offs). However, they can (as you point out) support athletes via sponsorships, invest in R&D, etc, as this overhead is already factored into their apparel economics.
I think we're actually saying the same general point about two different aspects of Terignota's business. Either way, I find both genuinely fascinating and appreciate your engagement here. Our back-and-forth has helped highlight the clear trade-offs that enable a business like Terignota, as well as how the trade-offs enable certain future paths (or not). 🤝
Goruck is another example of a brand who used this approach in the early days and published an annual transparent financial report. As they scaled, this disappeared.
Scale and the desire to maximize profit changes incentives over time for many brands, businesses, and individuals. Whatever the market will bear is the asymptote all businesses approach over time.
Why do you think it disappeared? New investors, more overhead, profitability expectations?
Buried lede: a single net promoter in the right place at the right time led to this 4,000 word story. Brands often forget that influencers are people in the right place at the right time who authentically and organically promote your brand. This interaction didn’t happen on Instagram or at a Satisfy Running 500k on the surface of the moon. It happened at an aide station, by chance.
Fantastic write up. Thanks! I’m in the NW and own a few pieces of Terignota. Definitely pleased. And definitely pleased with the business attitude of Alex! Congrats!
Thanks for sharing! It’s been cool to see how many fans of Terignota there are in the trail world.
Just placed my first order! ($105.50)
Let’s go! 🙌
A fantastic write up as always, Seth! Alex’s path has been incredible to watch.
Appreciate the shoutout at the end :)
Thanks, Morgan! Hopefully see you at TrailCon!
Great writeup (surprise surprise) Seth! Alex and Terignota are huge inspirations for how we make business decisions as well. Right now we basically get there through discounting but he's inspired me to look into lowering our prices too.
Thanks, Zach! I could see pricing transparency being a very natural fit for Open Fuel, especially as/if you move into more sustainable packaging, which I assume will be more expensive than the typical single-use plastics.
Where are those garments made?
That's a great story, but... one day Alex will have a larger business. maybe $2M? or $3M or $5 M and he will realize he can't do it all himself. He can't design the shorts, source the materials, unpack the factory shipments & pack the customer orders and answer the phone & emails, enter orders into an ERP system, pay his bills & so on. So, if his margin stays the same at $17, he will have to add to it in order to hire people to do some of these tasks. AI won't be able to do it all! Now that $29 short is more expensive. That short maybe became $35. OK, he needs the margin to service his business. If Alex decides one day he wants to sell to a retailer, they will want 50% (or more) of the selling price. (Lots of DTC brands missed this as they tried to diversify their distribution.). With retailers selling it, they can provide huge distribution help, huge product placement help, service to consumers and so on, that short is now $70+. It's easy to understand how an item priced from a factory and the same item sold to consumers can price wise grow exponentially. The people who one day work for Alex and the retailers who may one day sell his merchandise do earn their income and provide real value in the food chain of product pricing! Alex can still be transparent with his customers and other stakeholders as his business evolves. I'm wishing Alex the best of success!
If Alex can build the business to $2M, $3M, or $5M by himself or with minimal packing/customer support help, why would he need to sell through retailers? That's just giving away margin to a middle man for the sake of growth or exposure, which is precisely and intentionally what's he opting against.
Can that change in the future? Sure. But even as the business scales, there's nothing that says he has to do anything. What you're saying makes sense and is consistent with how most brands work. I don't think Terignota is *most brands*.
I don’t see Alex being a greedy owner where he needs to make millions of dollars personally. So, unlike brands that have to pay a CEO a top salary, my guess is Alex sacrifices some of the personal income to continue to grow the brand. That eliminates the need to recoup dollars by raising prices.
There's definitely a trade-off between accelerated, paid growth and the flexibility of maintaining a lifestyle brand where you have more margin control. I'm excited to continue to follow his journey.