DES MOINES, Iowa (AP) - Just over a decade ago, Raygun founder Mike Draper was a struggling entrepreneur trying to get people to buy T-shirts with hyperbolic positive messages about Des Moines.
Fast forward 14 years, 70 employees and four retail locations later, and he is ready to open the company’s first store in Chicago this summer.
To make the jump to the Windy City and set up future expansion, Draper opened Raygun to outside investors for the first time, selling 20 percent share in the company to raise about $582,000 in equity financing.
“We want to be a Midwestern-wide store, so if we can’t hack it in Chicago, it’s better to know it now than five years later,” he said.
Back in 2005, people chuckled at the clever T-shirts that Draper printed at a small East Village storefront.
But most of the time, shoppers left empty handed.
“I should start charging admission,” he remembers thinking.
With catchy sayings that heaped praises on seemingly meager Des Moines, the Iowa native’s merchandise captured a tone Midwesterners could understand.
“We are all being flown over together,” Draper said.
People who came in to laugh started bringing friends. Foot traffic and sales picked up.
Draper hired his first employees in 2007. The company grew in Des Moines and elsewhere, adding stores in Iowa City, Kansas City and Cedar Rapids.
Raygun’s 10,000-square-foot flagship store opened at East Fifth Street and Grand Avenue in 2015. It’s a go-to spot for many Des Moines visitors.
Along the way there have been multiple side projects - a book, a woodworking shop, a short-lived line of jeans.
A couple of times Draper’s come close to running out of money. But Raygun has continued to grow, the Des Moines Register reported.
“It’s like the joke that’s never stopped,” he said. “We’re seeing how insanely large we can make this joke.”
Raygun’s biggest step yet - at least in distance - comes this summer when it opens a 4,800-square-foot store in Andersonville, a north-shore neighborhood not far from Wrigley Field.
Raygun will move into a former Giordano’s pizza restaurant - it doesn’t get more Chicago that that.
The store will be similar in design to other Raygun locations. Merchandise will be sold in a two-level space.
Once the Chicago shop is up and running, Draper will turn his attention to opening the company’s sixth store, in Cedar Falls.
It’s part of a stepped-up growth plan that would see the company add two stores each year.
Since opening its first branch location in Iowa City in 2010, Raygun has averaged a new store about every 18 months.
To make that happen, Draper has brought on 17 investors - a mix of longtime friends, employees and business owners. Most are Iowans, he said.
After store openings in Iowa City and Kansas City, the company’s balance sheet dipped below $0 as the new locations searched for their customer base, Draper said.
Bringing on investors and additional capital should help ease the stretches as fledgling stores get their feathers.
Equity financing is helpful for business owners who are looking to spread out their risk, but still want to expand or try a new concept, said Philip Goldstein, a partner at Denman & Company, a business consulting firm.
For small businesses, gaining equity financing means investors typically see there’s potential for profit, whether it’s immediate or in the future.
“Investors see upside there,” Goldstein said. “They don’t have to be profitable, they’re just forecasting they will be successful in the future.”
At a time when big box stores are collapsing and formerly beloved retailers are liquidating their inventories, Draper said he’s able to expand because of Raygun’s uniqueness.
Even if people don’t buy something, they have fun walking around the store, he said.
A small, tight-knit staff also allows the company to react quickly to trends.
When video of an Iowa woman scooting past presidential candidate Kirsten Gillibrand to get some ranch dressing went viral last month, Raygun was able to quickly turn out T-shirts with the catchphrase, “Just trying to get some ranch.”
In 2017, the company made “Nevertheless, she persisted” shirts after Senate Majority Leader Mitch McConnell uttered the phrase in reference to U.S. Sen. Elizabeth Warren.
Draper said he immediately started printing shirts, knowing the short and catchy phrase would stick.
Finding those things that work is key to the store’s success.
Some of Raygun’s most successful designs have been around for years - T-shirts with phrases like “Des Moines: Hell Yes” and “Des Moines: French for the Moines.”
Those that don’t stick get quickly pulled from shelves.
Each time someone walks into a Raygun store, they should find something new, Draper said.
“You forget that old-time retail used to be edgy and entertaining,” Draper said. “It’s re-discovering why people enjoy retail in the first place.”
___
Information from: The Des Moines Register, http://www.desmoinesregister.com
Please read our comment policy before commenting.