May 16, 2024

HatLaunch generates 75% of revenue from digital advertising spend across Google and Facebook, which Clearco funds

Samantha Lloyd

Data shows ecommerce grew at 7% to $331.6 billion at the start of 2024. Now more than ever, this continued growth means ecommerce businesses are investing in digital advertising to get audience eyeballs and revenue. Data compiled by the Small Business Association recommends that businesses which sell direct-to-consumer, including ecommerce brands, should spend 7-8% of their revenue on marketing. Other sources estimate average ecommerce marketing spending to be between 15-20% of revenue, with some spending up to 30% to acquire customers.

HatLaunch is no stranger to digital advertising. Their advertising spend drives 75% of their revenue, and they rely on continued investment in ads to reach their customer. Clearco supports the custom headwear company’s advertising spend through Invoice Funding. Tyler Smith, Chief Financial Officer at HatLaunch, was thrilled by the opportunity to join CEO and Founder, Robert Hamm, in scaling HatLaunch, and sharing their story with the Clearco team.

An obsession with cars leads to an apparel need for founder of HatLaunch

Robert Hamm, Founder and CEO of HatLaunch, began his entrepreneurial journey after a long corporate career. Robert understands the importance of owning your data, tools, and operations in-house. He was a software engineer by trade. 

In his spare time, Robert had an obsession with cars. Between his software engineering role and his side hustles, he’d always find a way to purchase a new car. He found himself on Facebook groups for those with similar interests in cars. Through the Facebook groups, he noticed an unfulfilled need from car-enthusiasts searching for custom hats, shirts, and other apparel that feature car brands. 

Robert decided to spring into action and fulfill the need – he designed his own shirts related to car brands, posted the products on Facebook pages to sell directly to customers, received orders, and outsourced them through print on demand. He acted as his own middleman – dropshipping the product to the customer himself. 

As Robert ingrained himself in the car community, he began attending races. At these events, he noted people always wore hats to provide a shield from the sun, but rarely were they on-brand. He figured it was time to do the same thing he was doing with shirts but for hats.

A software engineer at heart, he launched his website. Robert started with a few different hats and shared the products in Facebook groups.

Robert building HatLaunch in the early days.

HatLaunch’s early founder days: the balancing act of an apparel side hustle

For the first year of the business in 2018, Robert was stitching the hats one-by-one with a single machine out of his basement. As the business grew and more orders came in, he was able to repurpose many logos or design work for one hat. Robert covered everything surrounding the business from design, selling, production, shipping, and order handling. He got a multi-stitch machine – it was delivered to his basement the day after his first daughter was born.

Natalie and Robert with their baby.

Tyler Smith, now-CFO, has been friends with Robert for nearly 20 years, since freshman year of high school. Robert’s family owned a family restaurant in town where Tyler started to work and would meet his wife, Stephanie, who is also Robert’s cousin. Tyler and Stephanie would occasionally help babysit in the evening so that Robert could catch up on HatLaunch orders. Tyler could see how dedicated Robert was to making HatLaunch a success as well as a great customer experience.

The new printing machine for HatLaunch arrives to Robert's home.

For over two years, Robert juggled his full-time job while growing his ecommerce business. His wife, Natalie, would help stitch orders while he was at work (and their daughter napped). In 2020, Robert started thinking about outsourcing production to a part-time employee so he rented a retail space and hired his first team member. Robert would work from home in his day job 9 to 5 and then head to the retail space to oversee orders and production, often until 2 or 3 in the morning. Robert was stretched thin but his side hustle was about to become a successful, full-time endeavor.

Working capital for high growth at HatLaunch: a partnership between Clearco funding and bank financing

Toward the end of 2021, HatLaunch was using Clearco as a working capital to help support cashflow. 

“We use Clearco for funding Google and Facebook marketing spend. We are very aggressive on advertising and social media. We never want to be overlooked by someone who is looking for custom hats.”
  • Tyler Smith, Chief Financial Officer at HatLaunch

Invoice Funding required no liens on the business, as Clearco does not ask for collateral or personal guarantees. Moreover, Clearco capital is non-dilutive, which means owners don’t have to give up any equity. HatLaunch has considered other options for inventory financing; while some offered favorable rates, they also had hidden fees or memberships that didn’t make sense for HatLaunch. Many of these lenders also stated they would take their customers' inventory if things went wrong. It made the most sense for HatLaunch to use Clearco funding for marketing spend to save their cashflow for operations and inventory, while having a banking partner finance their equipment and other needs.

“The bank has first liens on a business, so it’s easier to get the bank to work with us when we use a funding partner [that doesn’t take liens] like Clearco. Thanks to Clearco’s funding driving growth, we can speak with higher-ups at the bank we work with. We have great relationships with our banking institution that allow us to get lines of credit or financing for building and equipment and further grow our business.”
  • Tyler Smith, Chief Financial Officer at HatLaunch

For HatLaunch, finance automation is necessary to get everything into fast production. Now that they have an established, positive relationship with their bank, the bank can provide financing for the things they need in a couple weeks’ time, while Clearco responds within 24 hours for their other needs, like marketing spend.

“We get funding [from Clearco] within a 24 hour turnaround. It’s super quick and that keeps our vendors happy. 75% of revenue comes from ad spend. If we were to have issues paying the ad bills when ads are the main revenue source, then that would greatly impact the business. Clearco ensures those bills are paid.”
  • Tyler Smith, Chief Financial Officer at HatLaunch

Other than leveraging Clearco funding and bank financing, HatLaunch is 100% funded by revenue from their customers. Robert remains sole owner and there are no outside investors. Tyler’s financial goals for the company are to maintain the proper cash flow so they can be aggressive on advertising spend, keep up with quick production, and build a company with longevity.

From viral marketing to consistent ad performance with up to 4X ROAS for HatLaunch’s products

At the start of 2023, HatLaunch’s business doubled overnight. A random social post went viral. The hat that was shared said ‘Stewarts Concreting,’ and users on Facebook started commenting on whether ‘concreting’ was a real word, generating massive engagement on the post and new customers. HatLaunch funneled money into the post and it took off.

The HatLaunch image that went viral!

The viral post generated a 5-6x return on ad spend (ROAS) – which HatLaunch invested in until engagement tapered. In 2024, relying on an outside agency, their ROAS was about 2.5X. Now with the internal team onboarded and new campaigns live, they’re back into the high 3-4X range.

Their next big marketing push was a name change from LidLaunch to HatLaunch as a certain large headwear retailer forced them to change their name to avoid a lawsuit and large legal fees. Robert’s main argument then was how a word that is used to describe container topper can be the same thing as a hat, and how could the large retailer own that name. He decided to create a humorous ad to announce their name change:

Topping up the team as revenue doubles for HatLaunch

Clearco’s Invoice Funding has allowed HatLaunch to invest in other areas of its business, including  hiring. Today, HatLaunch is bringing industry experts and formerly 100% outsourced teams, such as marketing, in-house.

Both the CFO, Tyler, and COO, Danny, were onboarded in 2023. Tyler’s finance background spans Merrill Lynch, Wells Fargo, and other industry titans. Tyler was originally doing basic bookkeeping on the side for HatLaunch in 2022. In 2023, revenue doubled, and the need for Tyler’s skills fulltime was apparent. Tyler was officially onboarded as CFO in 2023 as was their other high school friend, Danny Gifford. Danny, who was working for World Wide Technology managing their talent acquisition team, has a strong understanding of go-to-market and began supporting the business part-time, focusing on sales, until also coming onboard full-time as COO in 2023.

Team members Danny Gifford, Robert Hamm, Tyler Smith.
“HatLaunch seemed like an incredible opportunity to join a more startup-style business and lead the financial strategy and decisions. It was a no-brainer to accept the role.”
  • Tyler Smith, Chief Financial Officer at HatLaunch

A true family- and friend-run business, Robert’s mom, Mary, is HatLaunch’s operations manager and handles production scheduling. Both Robert’s sister, Sarah, and his sister-in-law, Andrea, are also part of the customer service team.

Robert also recently hired another Senior Developer, Justin, to support him on the software engineering for the manufacturing side of the business. They handle the efficiencies for HatLaunch’s manufacturing to get top output on a daily basis. They also manage the custom website build in order to continue to enhance the customer’s experience.

“Everything we do is custom-built and that’s what sets us apart. We can take the information from the front-end for the user and how that feeds into the back-end of our operations across inventory, product, and customer service. Our in-house builds make it easier to adjust when we don’t see efficiencies.”
  • Tyler Smith, Chief Financial Officer at HatLaunch

HatLaunch is now on its third location – occupying 8,400 square feet of space. They recently purchased a new warehouse that is under construction and stands at about 64,000 square feet, which Robert is overseeing.

The move to a bigger warehouse space for HatLaunch.

The future of custom apparel with HatLaunch

Aside from selling to consumers, HatLaunch is starting to dip into the commercial product side, such as promotional products and merchandising. 

“Our goal is to be the number one source for custom apparel needs. We primarily service small business America so if you walk around the site you’ll see lots of service business logos where headwear count is about 20 pieces per order. Moving into larger retail orders is the next stage and part of that is bringing our detailing to the US. This allows brands to order large quantities of blank hats and apparel overseas without having to commit to thousands of the same designs or logos; in addition, design minimums overseas are very high.”
  • Tyler Smith, Chief Financial Officer at HatLaunch

HatLaunch looks forward to a future where they venture into promotional products. As their business continues to scale, they are considering what an expansion into other products looks like. In November 2022, HatLaunch acquired a screen print business. ShirtLaunch is now live and ready to offer custom apparel with an end user experience like no other.

What is HatLaunch?

HatLaunch, formerly known as LidLaunch, is a custom headwear company located in Collinsville, Illinois, near St. Louis. The company was founded in 2018 with the aim of creating a superior online source for quality custom headwear due to the lack of good options available online. HatLaunch has grown significantly since its launch in 2018, starting with a single-head embroidery machine in the founder’s basement, and now operates from a state-of-the-art 8,400 square-foot production facility and is about to move into a 64,000 square-foot space. HatLaunch prides itself on providing the highest quality end product for its customers, made possible by their proprietary technology that powers all their custom-developed processes in-house. The company’s ultimate goal is to become the number one custom headwear business on the web.

Who is the Founder of HatLaunch?

Robert Hamm is the Founder and CEO of HatLaunch. Robert is an entrepreneur that approaches every challenge with a technology first mindset. He has over a decade of experience writing software solutions for fortune 500 companies and the US department of defense. He has scaled his custom headwear business HatLaunch to a deep 7 figure annual revenue business in a few short years with continued explosive growth.

For any of the Clearco team who has made it to the end of this piece - something exciting is coming your way for the onsite, courtesy of our friends at HatLaunch! 😉

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Samantha Lloyd
Director of Marketing, Clearco

Samantha Lloyd is the Director of Marketing at Clearco. A longstanding marketer in the business-facing technology industry, Samantha focuses on accelerating startup and transformative growth at companies. In her free time, you can find Samantha dreaming of the ocean.