Secrets of Success: Entrepreneur had an epiphany at gunpoint

Each Sunday, the AJC brings you insights from metro Atlanta’s leaders and entrepreneurs. Matt Kempner’s “Secrets of Success” shares the vision and realities of entrepreneurs who started their dreams from scratch. The column alternates with Henry Unger’s “5 Questions for the Boss, ” which reveals the lessons learned by CEOs of the area’s major companies and organizations.

Find previous columns from Unger and Kempner at our premium website for subscribers at www.myajc.com/business.

Allen’s tips:

— Listen to customers if several are saying the same thing. Don’t be afraid to pivot into what may seem like an unrelated market or unfamiliar territory.

— Encourage customer testimonials on outlets such as Facebook.

— Look to go into a business where you can dominate the market before competition heats up.

stuff4GREEKS

Based in Atlanta (west Midtown).

Ethan King Allen, CEO and co-founder (with his wife Monica Allen).

Launched website in 2002.

Annual revenue: $1.2 million in 2013. Projecting $1.5 million this year.

Staff: 10 employees (most full-time), plus the Allens.

“I ended up being pretty known in the night club adult entertainment industry as the go-to-guy for your flyers and your marketing.”

“Listen to the voice of your customer. They will tell you exactly what they want and what they are going to spend money on.”

“Before I knew it, this guy brandished a gun…. I felt like it was a sign from God that I wasn’t on the right path.”

Ethan King Allen wanted to be a fine artist. But after college, much of his work was designing raunchy flyers and posters for metro Atlanta strip clubs. Then came an epiphany at gunpoint.

Now, 36-year-old Allen has a handful of small businesses centered in part around creating embroidered jackets and other customized clothing and accessories for people in fraternities, sororities and other groups across the nation. He and his wife, Monica Allen, co-own Atlanta-based stuff4GREEKS and a small retail shop, Zeus’ Closet.

With their 10 employees they generated $1.2 million in sales last year and filled about 10,000 orders, Allen said. The company’s profit margin is about 20 percent, he said, much of which goes to cover his salary and that of his wife, with each making less than $100,000 a year. The Allens are building their business even as they raise their two young children.

I thought I wanted to grow up and be a fine artist. My parents (a preacher and a physician) said it was a terrible idea, and I would be a starving artist. They forced me to go to a four-year university. I ended up going to UGA. I still majored in art. I’ve always been pretty hardheaded. If I had not gone to a four-year university and joined a fraternity I wouldn’t be in this business.

(After moving to Atlanta,) I started doing freelance graphic design and working odd jobs. That was a pretty rough patch in my life. I didn’t have a consistent source of income. I took out the trash at a strip club called Nikki VIP. I would also do stuff for people at the strip club, like the DJ if he was throwing a party and needed flyers. I ended up being pretty known in the night club adult entertainment industry as the go-to-guy for your flyers and your marketing.

One night he got lost on the way to a club. He stopped his car at an intersection to get his bearings.

This man is walking up toward my car. Before I knew it, this guy brandished a gun. He told me to get out of the car. I handed him my phone and handed him my wallet, and I took off running. I thought this guy would kill me.

I could hear my car spinning away. That was a very pivotal moment in my life. I felt like it was a sign from God that I wasn’t on the right path. Most of the graphic work I was doing at that point I couldn’t even put in my portfolio because it was so vulgar.

I vowed that I wouldn't do graphics work like that any more. About six weeks later I ended up getting a full-time job at a classified (ads) newspaper, being the senior graphics designer.

He had a side project. While in college, he was heavily involved in a fraternity. He often did designs for its t-shirts or party flyers. Later, he created a website, stuff4GREEKS.com, both as a class project and a way to solicit freelance graphic design work from other sororities and fraternities.

I didn’t really do anything with it for a couple of years. It was just a glimmer of an idea. (Eventually,) stuff4greeksGREEKS got some traction on its own. It got pretty high on search engine rankings.

Customers asked for his help customizing what is known as a line or crossing jacket.

It is a staple in African-American fraternity life and also a lot of the Asian, multicultural, Latino fraternities and sororities. It has all the information about their Greek experience: the letters of their organization, the official emblem, the year that they crossed, the season, the chapter, their school, their nickname or line name, their line number.

We took it a step further and we offered artwork on the back of the jacket.

But if customers wanted to put Allen’s artwork on their jackets, they had to find a shop on their own that would do such work. That made it harder on the patrons. Allen and his business partner (who also was his girlfriend and would become his wife) resisted doing the work themselves.

We would tell people no, because we didn’t know how to. Listen to the voice of your customer. They will tell you exactly what they want and what they are going to spend money on. We finally said, “Yes.” That’s when things really started picking up.

We didn’t even know what the process was called at the time. We found this company nearby that does embroidery. I was surprised they used a lot of the same software that I learned in school. We outsourced to them.

Initially, the Allens charged $150 to $200 for customized artwork added to the jackets worn. Now, charges vary from about $300 to $900.

We did about 130 orders in that first year. That’s when we knew we were on to something. The (embroidery) company got overwhelmed. It was causing them to fall behind on their orders for their core customers.

Allen convinced the shop owner to teach him the process.

I took my notepad and just soaked up everything I could in that one evening about how he took our graphics files and actually put them on to the jackets.

There’s a trade show for everything. We found an embroidery trade show. We drove over night to Tampa and picked out our first embroidery machine. I think it was about $23,000. We got a loan from the bank.

Allen quit his $30,0000-a-year graphic design job to focus on his own business. That essentially dropped his pay to zero, temporarily making his wife, Monica, the sole breadwinner. Eventually, she quit her job to focus on the young business.

A lot of our friends and family said behind our backs that it wouldn’t work out, that we would be getting a divorce because we would be around each other too much. But it has actually helped our relationship because we work together moving forward on a vision.

My wife and I are very different. She handles all the HR, payroll, insurance type stuff for our company. I love the creative part, the strategic part, the marketing. We stay in our own silos and don’t bump heads much.

The reason a lot of artists are starving is that we love what we do so much that we don’t charge enough for it. Monica really helped me focus on the business side of the artwork.

When we had our first child, it was a difficult time for us. It took her (Monica, his wife) away from the business.

At one point, they operated the business with eight employees in the basement of their subdivision home. Eventually, they bought and improved a building for $700,000, depleting their savings and using loans to cover the cost.

We’ve gone through times when we went without a paycheck or two. A few years ago we would say, it feels like we were making a lot of money, but there were times where we could barely meet payroll.

The business also pays royalties to fraternities and sororities to be able to use their letters on the jackets, sometimes paying out 8 to 10 percent of the total sale.

Our goal is to service every fraternity and sorority regardless of race. Typically in white fraternities and sororities, the Greek experience is a four-year thing. Once you graduate from college, it is over. With African-American sororities and a lot of the minorities, it continues throughout adulthood. We have literally done embroidery pieces to go on peoples’ coffins.