Opening Retail Stores vs. Going Wholesale: What the Numbers Say

**Matt Bertulli** (0:00)
Welcome back to the Operators podcast. Boys, today is the great retail showdown. I have decided that I would like to see Mike and Curtis get into a bit of a pissing match.
I wanna hear, like, look, I wanna know the pros, the cons, the good, the bad, everything about opening stores, and contrast that with, Mike, you just do a ton of wholesale, right? You're in like every major box. It's sort of one of your competitive advantages.
And I just think this is a conversation a lot of operators want to hear. Like, my curiosity got the best of me when I was thinking about what to do today. I'm like, oh, I gotta get these two guys to kind of go at it and see if, see if we can help people decide. Because, and I'm gonna start with Mike. To me, I gotta start here, Curtis, because I need to tee you up, dude. I gotta like, I gotta lay out the red carpet. Mike's gonna do that for you. So to me, owned retail is like one of the swan songs of being in consumer. It's like, oh, I want my own stores. You go to a mall or it's like, you just want your own stores. So Mike, let's start with you. Why would you not want your own stores? Give us the argument first of like, why this is a bad idea. And then we're gonna let Curtis defend it for the next hour.

**Mike Beckham** (1:13)
I feel like this is too easy. It's like, it's like, you know, Curtis is showing up with a water gun and I've got an Uzi. Like I don't even understand what we're trying to do here. Like I have on my side the Behemoth Megacorpse, a ton of history.
And anyway, let me, I don't know. They're so innumerable, Matt. Like I think it's insane to operate your own locations except for in some very, very specific circumstances. How do I count the ways? Well, first is, do you have any idea the number of competencies it takes to operate physical retail? You're now getting into real estate and thinking about leases. You need to be the expert on all the markets that you're in and where the foot traffic is. You have to deal with crazy legal or lack of legal enforcement in a lot of blue states. You're dealing with shoplifting. You're now not dealing with all of your inventory at 1.3 PL. You've got inventory in a bunch of disparate locations that you have to manage. You probably have teenagers now that work for you. They're super motivated. We all know that. And I'm not even getting started.
Like, I'm not even having to try. This is no notes. This is off the top of my head extemporaneously. Here's the reality. You're insane if you open physical retail, probably. It's probably a passion project. It's probably something you're doing because you think it makes you look cool. And it's insane. There are two siren songs that every consumer brand, I think, inevitably tries. And it usually goes poorly. They want to go international and they want to open their own retail. And in time, they realize there's reason why most people don't do this, because it is really freaking hard.
And I think likening it to going international is probably the best way, because you're just opening yourself up to a whole new set of things that you have to be competent in, and a whole bunch of stuff that you really don't know. So that's my start. Oh, and by the way, you're doing that, you're competing with now Walmart and Amazon. It's not just choosing whether or not to sell on their platforms, you're literally trying to compete to get people to come to your thing instead of their thing.
So I think it's only appropriate that we brought a truly insane person to take the other side of this debate.

**Matt Bertulli** (3:38)
I was going to say, he keeps calling you crazy, Curtis, but I think that's a compliment for you.

**Curtis Matsko** (3:43)
Well, it's interesting the twice he came at.
If you want to go into an area, you have to have competency, and he's chosen not to go into those areas. Yeah, you have to learn it in this world.

**Mike Beckham** (3:54)
Part of intelligence is knowing where your limits are, right?

**Curtis Matsko** (3:58)
Now, here's the beautiful thing. I mean, so many things jumped up. We've run that competency thing. I get to learn about all of those things. All those things you said are absolutely true. And yesterday, we had a nine-person internal meeting that basically said, one year ago today, we had three stores. Right now, we have 16 Within five years, we plan to have 100 to 120