-Next on "Start Up," we meet up with Jerry and Ricky, the co-founders of Ann Arbor T-shirt Company, a business that went from a college dorm room to a multibillion dollar company employing over 50 people.

All of this and more is next on "Start Up."

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♪♪ -My name is Gary Bredow, documentary filmmaker and an entrepreneur.

As the country faces extraordinary challenges, small-business owners everywhere are doing all they can to keep their dream alive.

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♪♪ This is "Start Up."

♪♪ ♪♪ Screen printing first appeared in a recognizable form in China during the Song Dynasty around 960 A.D.

It was then adopted by other Asian countries like Japan and introduced to Western Europe sometime in the late 18th century.

Fast forward to 1960, when American entrepreneur Michael Vasilantone invented a multicolor rotatable garment screen printing machine to print logos on bowling shirts.

He patented the machine and was instrumental in this new fad of printing on T-shirts.

Today, I'm on my way to meet up with Jerry and Ricky, the co-founders of Ann Arbor T-shirt Company.

From what I know, these two friends from college started printing and selling T-shirts out of their college dorm room and ended up with a multimillion dollar company that does everything from mass-quantity printing to super niche and everything in between.

I can't wait to learn more.

What is Ann Arbor T-shirt company?

-We're a screen print and embroider shop in Ann Arbor, Michigan.

-They don't really have one consistent theme.

One might be for pregnant women and a maternity shirt, a joke on there.

Another might be for rock-climbing enthusiasts.

And then locally here in Ann Arbor, we do a lot of business-to-business.

We print for the universities and hospitals.

We have some bigger national things, like, we back-end Lin-Manuel Miranda's private brand, TeeRico.

-Amazing.

-We have our hand in a lot of different weird cookie jars.

But at the end of the day, you know, it's the people here.

-That's some big contracts, man.

So take me back to the humble beginnings.

-The earliest iteration was I was in seventh grade.

It was sort of like childhood was over.

Everyone all of a sudden was worried about being cool and had name-brand clothes and stuff like that, and asked my mom if I could have an Abercrombie shirt.

This was late '90s.

-Sure.

And she's like, "You want a $30 T-shirt, you buy that yourself," which now, especially older and as a parent, completely respect.

But I was -- I didn't have $30 for a T-shirt, so I just -- I got invited to a birthday party of a girl I liked.

And so I took a white underwear T-shirt with a Sharpie and wrote "Abercrombie" across the front just as a joke.

And I got to the party and it was a hit.

It was funny.

And I realized it was way cheaper to be funny than cool.

I just kept making shirts with markers for a while after that.

Flash forward to high school in St. Clair Shores, north of Detroit, and spending the night at my buddy's house and my car got broken into.

I got a $2,000 check for the dashboard that they'd broken taking the stereo out, and I remember asking my dad, do I have to spend this on the dashboard?

Because the broken dashboard kind of fit my broken old Chevy and he's like, "No, you can spend it on whatever you want."

So I bought a T-shirt press and took that with me as a freshman at the University of Michigan here in Ann Arbor.

My buddy Ricky lived a floor down and could do websites, which was kind of a rare thing at the time.

-Yeah, big time.

-And so we set up a website to sell T-shirts, and within a couple of months had gotten our first cease-and-desist letter from Chuck Norris.

His attorneys felt that we were infringing on his likeness and name and trademark with some of our shirts.

And we didn't know that intellectual property existed.

-[ Laughs ] -So that was our first, you know, adventure in business, and... -Wow.

-...it kind of just snowballed from there.

-And I got to say, first of all, I'm just glad that you're actually here and alive to hear that you messed with Chuck Norris.

-I know.

-Gratitude.

-Thank you.

Each day is a gift.

-You guys seem like have a lot of fun here, a good sense of humor.

There has to be some T-shirts in the past, designs or something that -- that stand out to you.

-We decided that we were going to put a big panda face on a T-shirt.

And this is before we really knew how to sell T-shirts well.

So we came up with this white shirt with just panda spots on it and thought it was the next big thing.

We overproduced it and within like a month, we had to recall the inventory because maybe we sold a dozen.

Not to be outdone, we decided that we would try, like, a wolf T-shirt.

With the wolf, we knew how to market it.

You know, we're going to talk about how wolfy it is and how cool it is.

And we came up with this whole background story.

And so, you know, we'll double-down on the wolf T-shirt.

It turns out a giant animal face on a shirt was ahead of its time.

If you look now, they exist.

-Three wolves howling maybe.

-Yeah, somebody is making money off it.

But we were just too -- too far ahead of the game.

-What was your, I guess, aha moment?

-We had a couple of modestly successful shirt designs that people around campus liked.

-Yeah.

-Then a couple of years later, we graduate.

He says to me, "I am interested in trying to do this for real.

I can't do it alone."

Would you be interested in sort of half-believing that this would become what I would actually do?"

Signed on.

-We borrowed $16,000 from mostly people that we'd worked for in college.

We specifically didn't want to hit up family and friends too closely because we didn't want pity money, and we weren't sure it was going to work.

So that's for 16 grand was at like 15% interest.

But that let us get this digital printer and shove it into a small apartment in Kerrytown here in Ann Arbor.

-I have to assume there's probably some zoning issues.

-Yeah.

-But you did it anyway.

-What's great is we actually we went from one zoning issue to another because we knew we needed to get into a warehouse.

We needed more equipment, but we couldn't afford both that and an apartment.

So then we went from that to building bunk beds in a warehouse and, you know, just sleeping over every night.

And so that was a much more miserable year.

It was pretty cold and drafty.

The upside of it was we got very intimately -- like, we knew every single step of every process, and kind of always with the worst equipment and the worst inputs early on so we can afford.

And so it gave us very clear eyes as we grew the business of like, "We need this type of machine, this type of person.

We need that kind of upgrade."

-When you had that equipment, you're sleeping in -- in the warehouse, I would assume that contracts have to be the most important thing at that point, getting large-scale contracts, right?

-Yeah.

And we were always hoping -- trying for it.

But the thing is, when you start in a new industry with established players, you're sort of like the little bottom feeder picking up the bits no one else wants.

We were taking anything and everything that we could get.

I remember one of our first big orders we got was for Bellville Local High School Marching Band.

It's a very mundane screen-printing technique you need to do, but we didn't know how to do it yet because we were learning to print on the fly and the first order, it was coming out fuzzy.

And we're sort of looking at it like 3:00 a.m.

The customer is going to be there at 7:00 in the morning.

And, "This is OK, right?

This looks good.

"Yeah, yeah, yeah.

That's our shirts look."

And they came and picked it up, and the customer was super nice lady.

And she looked at it and was like, "Guys, these look really bad."

And we were like, "You're right.

So we're going to redo it."

We called one of our suppliers and we're like, "Hey, we have this issue."

And he's an older guy, been in the industry for a while.

Like, "Oh, yeah, you X, Y and Z, and you do this.

So we fixed it and then called -- I had a friend who had also just started a little bakery in Ann Arbor.

I was like, "Hey, can you make me a T-shirt-shaped cake that says, "Sorry, we suck"?

And so she made it.

So when she picked it up, we had her box of properly printed shirts and this cake, and she just started cracking up.

-That's hilarious.

-And we had that contract every year as long as she was involved.

So it's just a lot of being scrappy, being honest about what you don't know, and people are super understanding if you make mistakes as long as you own up to it, and they see you at your worst and then they trust you after that because they know you didn't try and put one over.

♪♪ ♪♪ ♪♪ ♪♪ ♪♪ -Tell me your name and when you started working here.

-My name's Teresa, and I started working here just over a year ago.

-What's it like to work here day to day?

-Oh, it's pretty awesome.

It's friendly.

The environment's like fun, creative.

There's a lot of creative people that work here.

So it's just a lot of fun.

-Tell me about the machine that you're working on right now.

What what is this?

What does it do?

-This is the Gauntlet 18-feed.

So it's capable of holding up to 18 different colors.

Right now, we're currently just using three screens, three heads, to create this print.

-What are some of your favorite T-shirts that have come across this thing?

-I really like this one.

-It's out of this world.

Sorry, that was absolutely horrible.

-This is probably one of my favorite.

Or the other -- Another one with just Space Force, an astronaut, you know, punching an alien in the face.

-Nice.

What was the first big contract that you were like, oh, my gosh, this is a lot.

I don't know yet."

Was it scary?

Did you know if you could fill it?

-It was really exciting.

Yeah, all of the above.

So we we had a local theater group at the University of Michigan who put on a Harry Potter spoof musical called "Harry Potter Musical."

It was a really funny play.

And it went absolutely viral.

And so they came back to shoot a sequel in Ann Arbor.

And we had done some shirts with the production manager.

And so he was like, "Hey, do you want to do merch there at the theater?"

"Absolutely."

So we came out for that, and we thought it would be a kind of a one-time deal.

And we got there and saw, like, the intensity of the fans.

And so then we pitched, you know, doing them -- hosting a Web store for them.

And normally it was like, you know, you'd launch a product, you might get one or two a week.

This was like 50 to 100 every day and growing as the thing went viral.

And so that was also our first time that we had to grow really quickly.

We had to figure out how to raise money.

We had to figure out how to up production.

That gave us a ton of confidence to like keep growing, keep making promises and taking on bigger and bigger contracts.

-Starting in an apartment, I believe you said in Kerrytown to another warehouse, correct?

-Yes.

-To ultimately where we are today.

Was there ever a moment that you stepped back and just said like, "Oh, my gosh, we're here"?

-Absolutely.

We -- when we've moved into every space, it's felt so big and then... -Right.

-...you know, within a year of the first place, we had 1,000 square feet.

We didn't know how we were going to use it.

Then six months later, we're in 2,000 square feet, no idea how we're going to use it.

10,000 square feet.

Three years later, it's -- it's filled up.

We're bursting at the seams, and then we move into to 30,000 square feet.

When we bought this place, we were worried we would be able to even afford it.

We were getting ready to parcel it out and sublet it.

And we're here two years and now we're leasing space off site.

And so looking at our sort of expectations that we had when we moved into these giant spaces and how quickly we filled them up.

It's pretty humbling.

-Tell me about this place, man.

You got a nice, nice small little facility here you're working out of, right?

-Yeah, it's, uh -- we came out of 12,000 square feet two years ago, and at the end of that, we had to literally begin every day by pulling all of our pallets into the parking lot so that we could actually work.

So this place came available.

We bought it.

It's 33,000 square feet.

-Whoa.

-And definitely gives us a little more room to work in.

-What is this room?

This is like the screen printing room?

-Yeah, this is screen printing.

So you have all the presses over here.

You load them up with screens and ink.

All of the art is done prior to getting to the press.

And then the blank shirts get staged here and they come over to the operators and they cycle through, get their ink, come out, get cured, get folded and out the door.

-Man.

Just to give sort of a frame of reference, -What does one of these machines run, roughly?

-This one here, I think was almost -- after all the bells and whistles and installation, you're probably looking at like 200 grand, quarter million dollars.

-What?!

-Yeah.

-OK, I would have been way off.

Is it sort of a surreal thing sometimes to look around and this 33,000-square-foot warehouse and think, "Whoa!"?

-Yeah, I -- there's -- probably a once a month or so.

I'll have to come back at midnight to grab my computer or something where I wind up alone in the building and it's sort of like a... an almost spiritual moment to walk through and just be like, wow, like, I remember, you know, like sleeping on the futon in the first warehouse and we were living in.

And then this.

-To this.

Yeah.

♪♪ ♪♪ ♪♪ ♪♪ -Talk about the process of scaling.

-The first huge paradigm shift to get through if you want to grow -- You don't always have to grow -- is you have to be able to let go.

You have to be able to trust people, because especially early on, when you've been doing everything yourself, you may be correct that you are the best person at doing X, but if hiring someone and training someone who can do it 90% as well as you frees up 50% of your time to do something else, that's a win.

And then you pleasantly find out later they get better at it than you ever were.

I think most businesses that could grow which don't are probably the owner-operator cannot let go of that.

It's terrifying.

It's your reputation and everything -- that early on was a huge thing.

And it took me years to really get comfortable with, like having employees and then seeing like, "Oh, wow.

Like, they're so much better at that than I ever could have been."

So that's the first thing.

So then you get to where you can have employees and have them well, and you realize you have to take care of them.

You have to understand they have their own lives.

They have their own considerations.

And that's certainly a different skill set.

It's not just about "Can we make shirts now?"

It's like, you know, "Can we make a workplace?"

-And now you have families relying on you.

It adds an element of pressure.

-I remember our first employee was like, first car payments, like, "Hey, I bought a car."

Oh, OK, all right.

You got a car.

I get it.

I get it.

OK." We really got to, you know, and then, "I got a mortgage," and then I, you know, "We're pregnant," you know, and those things get normal over time.

But yeah, it really ups the ante every time.

-Tell us your name and what you do.

here at Ann Arbor T-shirt Company.

-Yeah.

My name is Emily Stout, and I mainly sell Web stores to some of our clients that want one place where they can order a lot of stuff, whether that's for the hospital, bands, departments, that kind of thing.

-What is it like working here?

What's the environment like?

-It's really obvious how much Ricky and Jerry care about their employees here.

Not only is it inclusive and a creative place to work, it's like really easy to want to come in and do your job, you know, see a lot of cool things going on.

It's great to work in a place where things are made, you know, and you can really see the final product go out afterwards.

-What do you think is like that one defining difference that makes a good or a bad workplace, work environment?

-Ooh, yeah.

I mean, I think the metric of "Do you want to go into work every day?"

says it all.

-At what point did you guys transition to online?

-We had to get on it very early because you realize extremely early on -- you think, "Oh, I'll learn to print, we'll get good product, we'll get good quality, and then we'll have the capacity.

And now I'll go approach like a big box retailer or something like that."

And you realize they just sort of laugh you out the door, like, "Oh, we're not buying shirts from you."

-Are you talking about, like, approaching a J.C. Penney or Kohl's to get your shirts in there?

-Yeah.

Like they have these massive contracts.

They, you know, I can't speak to any particular business, but they tend to be low-margin, overseas stuff.

Maybe some other companies have had success with it, but we never did.

We -- That was actually how we wound up on Amazon was we were like, "Oh, wait, we can start our own store here.

Oh, we have full control."

Like, we can, you know, they take their cuts and everything.

But that gives us immediate access to -- I don't know what they're at -- a hundred million people in America have accounts.

Something crazy.

And so, "Oh, and we can also launch a very niche T-shirt that that might be a maternity shirt for someone having triplets."

And that's not a thing that any brick and mortar store would stock, because how many triplets are born in any given small town in a year?

-Sure.

-But there are perhaps thousands of couples across the country every year who do go on there.

So it aggregates all this demand and it lets us slot all these niche things that the brick and mortars are not because they have to be mass-market appeal.

That was something that we just were very successful with early on, and we've just been doubling down, and it kind of gets better for us every year.

And so we keep going for it.

-When things started to become really real in March, what were some of the things that were going through your mind?

-We're predominantly an e-commerce seller.

So we were hoping that would help get us through it.

And we had four months of inventory in Amazon's warehouses, so we expected that we would be shut down.

So then the big question became, you know, what happens to our people?

So we told everyone kind of early or mid-March when everything was cratering, like, "Sit tight.

We're not going to make you go on unemployment.

We're going to keep paying.

We don't know how long we can do that," but it did buy us a couple weeks and then our sales started to recover and we got the government loan.

And so at that point, we were able to just tell everyone, you know, "Sit tight."

And we did pivot.

We started -- We made about 25,000 medical face shields to donate to local hospitals in Detroit and Ann Arbor area.

-Awesome.

-And then sales recovered.

Everyone switched to shopping online.

So we were very fortunate with that.

And now we're kind of back in action, sprinting to try and restock the shelves with the idea that there may be another shutdown this fall, and we want to make sure that we have the inventory to make it through that to the other side of that one.

-What's your biggest fear right now?

What keeps you up at night?

-It is terrifying to think of what, you know, four months from now looks like.

I mean, at a point we were six months in, and the year had already brought about more left turns than the last 10 years.

-Right.

-And to be able to still nimbly divert with those things is a testament to my team who has been rolling with the punches left and right.

And so I don't know what the next punch is, and... -No one does.

-And that's the scary thing is if we aren't as good for the rest of the year or somebody gets COVID fatigue and can't keep being so resilient, will we be able to do this without them?

And that is -- that's my big fear, is I worry that it's going to be me and Jerry at the end trying to figure it out.

And we can't do it without everybody else.

♪♪ ♪♪ ♪♪ ♪♪ -I heard recently that that 30% to 70% of small businesses could close over the next year, a lot of brick and mortar.

some of their only means of survival will be to go fully online, transfer to large online retailers and whatnot.

What advice do you have for some of those businesses right now, since you've been in this space for a while?

-I think you're going to have to admit stuff that you don't know, and that is a tough area to navigate.

So reach out to other businesses that have had success in these sorts of areas and figure out who or what resources available to me so that I can know what I don't know.

If you're an old dog, you're going to have to learn new tricks.

And that's something that you can't be ashamed of, and swallow your pride and learn what you don't know.

-What would you consider the most gratifying or fulfilling aspect of what you guys have created?

-I am always blown away when somebody has a very good experience with my company that I have had nothing to do with.

A T-shirt seems so small, but to somebody else who may be in a bad place or may have had a bad experience, just being thoughtful, being personal, being attentive, it really makes an impact.

And when these things come back to me without me having had to have a direct hand in them, it's -- all these stresses make you realize my efforts are actually going somewhere for not just the consumer, but for my employees.

And that's the most rewarding thing.

-There's going to be maybe some person out there, maybe on the other side of the country watching this, get inspired and want to do a T-shirt business, right?

What advice do you have for them?

-You just need to be very adaptable.

A lot of people come in very rich and they go, "Well, I made a business plan and said, I will do X, Y and Z."

And it's like, "Well, reality said P, Q, and S." So we spent years just constantly reworking and repivoting what we thought we were.

And yeah, why would you coming into it out of the blue know more than you -- you who has worked on it for three years, so have some humility about your business plan and just be ready to dance and shift, but keep a consistent reputation for quality and communication and, you know, plain dealing.

And that's, I think, how you'll eventually find your niche.

♪♪ -Jerry and Ricky may not have been very successful when they first started out, but what they did have was an unrelenting belief in their vision and just the right amount of stubbornness that wouldn't allow them to give up.

And it's a good thing they didn't because today they employ over 50 people and give back to the community and have a lot of fun doing exactly what they love.

I've always heard stories about these companies that start in a college dorm room like Def Jam Records or Dell Computers.

And meeting these guys actually feels a lot like that.

A couple of young people that turned a dream into a truly successful business.

And although that success never seems to come easy, it's always worth it in the end.

For more information, visit our website and search episodes for "Ann Arbor T-shirt Company."

♪♪ Next time on "Start Up," we meet up with Drew Patrick, the creator of Michigan Fields, a company that connects people with locally sourced and grown grocery products.

Be sure to join us next time on "Start Up."

Would you like to learn more about the show or maybe nominate a business?

Visit our website at... And connect with us on social media.

♪♪ -♪ We got a long road ahead of us ♪ ♪ A long road ahead of us ♪ Got a long road ahead of us ♪ Before we pay our dues ♪ We got a long road ahead of us ♪ ♪ A long road ahead of us ♪ A long road ahead of us ♪ ♪ Before we pay our dues ♪♪ ♪♪ ♪♪ -Vistaprint -- a proud sponsor of "Start Up" and small businesses everywhere.

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Banking should not be one of them.

From business checking to merchant services, payroll to employee health savings accounts and more, Fifth Third Bank offers personalized products for your business goals.

Fifth Third business banking is proud to support "Start Up."

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-I wanted a book that featured a girl with big hair.

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