Last Minute Gear is on its last legs - can you help save it?
Before we continue, 2 quick housekeeping notes:
- If you have an outstanding order with us, don't panic - all orders are still fine, we'll notify you directly if otherwise
- Thank you for forgiving me for sending you this email even if you've unsubscribed. Getting this email does not mean you are resubscribed, you are still not; rather I decided to send this to anyone who has ever rented from us, just this once, because the only way to save the business is to spread the word
Anyway, at this point, what we really need is someone/a small group of people deeply passionate about the mission to reduce waste & increase access to the outdoors to invest in or take over the business. I thought there'd be no better folks to ask than our wonderful customer community - so please - reach out, spread the word, send intros, and help save the last small, independent outdoor gear shop in SF.
What happened?
Moving to downtown SF in 2020 from our spot in the Mission was a bad idea - I own that. I thought the pandemic would be over in a few short months, but it dragged on, and SF has made the news time and time again for its laggard recovery. One of our customers recently texted: “I will meet you anywhere in the East Bay, or anywhere on the Peninsula, just not downtown SF” - and the ones that come in-store, I see how paranoid they are, running back and forth to check on their cars or trying to leave ASAP. Without getting to the politics of what’s real, this is what perception is, and that’s all that matters in the mind of a customer!
How can the business be saved?
My founder's intuition is that the downtown location is killing us - we tried to wait for the situation to improve, but business has declined year-over-year since 2020. Commercial moves are pricey and since the business has been bleeding cash, I can't initiate this. That's why I'm looking for new investment. And either I'll continue operating the business, OR you can operate/ transform it how you want (happy to stay on where I can support).
And that's basically the only route I can see. I've received infinite suggestions on how to grow/pivot, and have been trying several ideas this year, but nothing has yielded enough results - sure, some may pay off over a longer period, but we don't have the time.
What's the timeline?
I've asked the landlord to let us stay in our current spot through the end of the year (with basically no rent) so we can sort out next steps. If they disagree, then really we'll only have until October end to figure things out.
How much $$$ are we talking?
$X00,000. Six figures is a minimum seed investment in any business, let alone one like this that needs physical space and assets, and costs in SF remain high for everything! Even if you wanted to operate the business out of a warehouse, setting aside just a year's worth of rent/ operating expenses can be easily $50k+. Also, most places need build outs of some kind just to be brought back up to code and usable. For example, we had to install our own flooring and lighting, that was $20k.
Why would anyone invest that $$$ in a dying business?
This is not a decision to make a short term return.
This is a decision to make because you're passionate about our values. Because you wonder what happens if people just buy things endlessly. Because you know how healing it is to get into nature - and you want to help people get out there. Customers
absolutely love what we do, and there are several areas in which our values make us unique. For example, we rent high end gear, so that renting doesn't limit folks to a lesser experience; and we let folks borrow gear for free - helping thousands get outdoors for the first time. And, even if you don't see it, trust that we try so hard to do right by you, the customer - if you've ever been hit with a late or maintenance fee: it's been well under what the actual cost was, and we didn't raise prices from 2020 until just August of this year. For all this value that we provide, I believe the return on investment will come if we navigate out of downtown.
Or, this could be a decision to make because you love the outdoors and you've always wanted to run your own business - and you want a headstart with one where there's already revenues and the high emphasis I've placed on self-service automation means that the business can be profitable when it can get customers in the peak months. Perhaps you have your own ideas that you want to implement to get that return on investment.
And really, in this tech capital of the world, six figures isn't a lot of money.
What would you do next if someone invested in you to operate the business?Top 3 things
1) Move out of downtown SF - I want to be somewhere still accessible around the center of SF, with better parking
2) Brand + community building - I've not done very much here; that would change
3) Improve checkout flow - I know the parts that suck about the website, and I know how I would fix it, I just need the resources to do so
Can folks take over the business to try to grow it without investing $$$?
What if you have tons of ideas on growing the business, and want to put your time into this without getting paid? I appreciate your energy - this is exactly what I've done! But the reality is that you'll need cash to pay operating expenses like rent. And again where we're at is that revenues can't cover costs for most months in the year.
I can't invest, how else can I help?
Spread the word, please. Hopefully we're just a few degrees of separation away from someone who can. Again I've tried other ideas, but just haven't gotten traction at the speed needed to save the business.
I need more information?
Ask away! Happy to share data you need to do due diligence. Here are some other data points:
- In the 4 years prior to pandemic, we had ~30% annual growth
- Business is driven by SEO/word-of-mouth; for most local keywords, we're in the top 3 results
- Rentals can generate 6x the margin of retail
- But rental is operationally intensive, and SF is expensive, so my big focus as a founder has been on
automating and streamlining (i.e., building tech) to where we see 70+% gross margins, and we can be profitable in peak months
- The business has basically been bootstrapped; there are no investors
What will we do in the meantime?
Depends on our landlord. If we stay through the end of the year at our current space, we'll do some delivery models to try to experiment with a scaled-down version of meeting you outside of downtown SF. This is the last experiment, and also a consequence of entering the fall slow season and needing to optimize our last resources.
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In any case, this has been a roller coaster of a decade. I started Last Minute Gear out of my apartment, where I stored all my inventory and had strangers coming in to work, until I almost got evicted because it turns out you can't do that. I then moved to a small office showroom on Mid-Market before settling into the Mission for a few years prior to the pandemic. The first inventory pieces were my own equipment, and since I've chosen to invest in quality and sustainability - some of those pieces are still rentable today! I taught myself so much to build this business - including coding (our site is fully custom-built, which is why I know where we need fixes!), the law (negotiating commercial leases and unfortunately, settling claims), and even light construction (during COVID it was impossible to find a contractor so I did some of the build out at the downtown location myself). Oof - definitely took a pause here to cry.
Anyway, the burden of a founder is that you make decisions with what data you have, and then you hope for the best. Clearly, I haven't always made the best decisions - and that's led to today. But I've always tried to do the best in line with my values, and I still (will always) deeply believe in the mission of reducing waste and increasing access to the outdoors.
I want to thank you for choosing Last Minute Gear when you did, and supporting small, local businesses.
James
