How Cuts Survived Every DTC Cycle with COO Sean Christman

Liam:

Sean, incredibly excited to have you on the podcast today. We just wrapped up at Grow, one of the best conferences of the year. Everyone knows Cuts — many people would think it’s an overnight success, but I’m excited for you to talk about the fact that it truly wasn’t. So many business cycles, so much growth, so many new products. You joined incredibly early as one of the first employees. For those who don’t know you, why don’t you give a quick introduction?

Sean:

Yeah, thanks for the intro. Sean Chrisman, COO at Cuts — hasn’t always been that way, especially in the early days. We’ve been around for nine years, really about eight and a half years that we’ve had a website and been spending on Facebook and actually acquiring customers. Before that, Cuts started on Kickstarter. Steve Grelli, CEO and founder still today, started it in fall 2016. I went to high school with him, knew about the Kickstarter, and bought into it — one of the first couple hundred customers. Fall came around, right around early December, I called him, said hey, you going to be home for Christmas? Love to hang out, also I haven’t got my t-shirt yet. And he said, I’m actually glad you called. At the time I was working as a data analyst and data scientist at Boeing, so he knew I understood data. He said, I need help with customer service, finding a manufacturer, and understanding how we’re going to manage this assortment. Cuts launched with around 675 SKUs — a big deal, built on this shop-by-cut model, almost made to order. We quickly figured out you can’t do made to order, can’t offer everything, and that assortment got cold almost immediately. That’s really how it started — me wondering where my t-shirt was. Started with customer service, got into email, got into ops, and we bootstrapped it two and a half years before ever going full-time. Haven’t looked back since.

Liam:

What phase is the business in today?

Sean:

Based out of Los Angeles, and a lot is the same — trying to acquire a customer who’s going to be around for a while. Over the past nine to ten years there have been so many different cycles of direct to consumer. The golden age of DTC — that’s when we got in. You could just throw money at Meta and get five back. But while you’re in those phases, you feel like it’s going to last forever. iOS 14, how you can target customers changed. COVID, post-COVID, a rush to retail, a rush out of retail. Now AI. It’s all cycles. Right now I would say we’re in an AI understanding cycle — at least that’s what we’re paying a lot of attention to at Cuts. A big part of that is understanding that in a physical product ecommerce business, there are things you pay attention to today and things you need to pay attention to for a year from now when that next product is going to launch. We’re spending a lot of time looking at our assortment and understanding how we can be ready for AI adoption within brands.

Liam:

What’s super top of mind right now — personalization, operations, warehouse?

Sean:

I think it’s twofold — one foot in today, one foot in tomorrow. The foot in today: we’re so used to optimizing the website for the human customer journey — great branded content, on-brand colors, the right messaging, peak somebody’s interest, guide them down the funnel. But now you have this other shopper potentially — an agent — coming and scraping information and feeding that back somewhere that’s not on your website. So a lot of what we’re focused on is paying attention to that consumer as well.

Liam:

Do you think agents will literally shop for people, or is the website actually more important than ever because LLMs need to get context from somewhere?

Sean:

I think it’s already happening for things like commodity purchases. But it’s too early to tell how prevalent it will be for brands like Cuts. We’re not going to come up on a search for “I need three white t-shirts as cheap as possible tomorrow.” The barrier of entry for that consumer behavior is trust. And where that trust comes from is the same place it comes from today — the experience matching the outcome, perception meeting reality. That’s exactly why customers return in the first place, and why they don’t when what they get isn’t what they expected.

Liam:

What’s the most overhyped thing in AI right now?

Sean:

Agent-to-agent interaction and purchase being the most prevalent type of commerce happening. I see that taking a while. Part of the reason is that shopping is a personal experience, it’s a hobby, it’s going from brand to brand and understanding who speaks to you best as a consumer. On the bargain side, that kind of automation will grow — it already exists in many ways with Amazon, telling Alexa to reorder what you’ve already ordered. But for brand discovery, I don’t think we’re there yet. We’re nearing it in the next six to twelve months.

Liam:

Where are you using AI right now?

Sean:

A lot on the backend, a lot of operational things. Workflows. Making sure we have structured data in the right way so we can ask the right questions. Understanding our data warehouse, validating data sources, setting it up so we can use LLMs internally as a kind of junior analyst or associate.

Liam:

Compared to the very early days to now — what broke, what changed?

Sean:

Our focus and our understanding of how each function works together. Through each of those cycles, a lot of brands were shed — brands that were booming, high revenue, are no longer around. It wasn’t because the market kicked them out. It was because they didn’t have great fundamentals. Where we focus a ton today is on the back-of-house things that enable exceptional marketing to actually be exceptional. Cash flow and inventory. Not novel ideas, but understanding how they enable marketing to be that great lever. The brands with cash, when there’s an opportunity — a competitor goes dark, a new channel pops off, a new placement is available — they’re the ones who can capitalize.

Liam:

If you were starting Cuts again in today’s AI world, would you do anything differently?

Sean:

That’s a difficult question because we’re constantly reinventing ourselves. I talk about nine years like it’s a long time, and in DTC it is. What’s allowed us to stay around and stay relevant is that constant reinvention — understanding symmetric risks, understanding what happens if this isn’t as big an opportunity as we think. Are we over our skis? If we were restarting, that mindset is where I’d start.

Liam:

How do you think about cost of acquiring a customer today, and the balance between new versus returning customers?

Sean:

Our business is built on returning customers. That’s what allows us the ability to go acquire more. We pay very close attention to LTV to CAC and the payback period. Understanding that time horizon is ultimately what allows us to feel confident making that next ad, spending that next dollar, acquiring that next customer. It’s the governor on growth — the ultimate all-ruler of everything else you’ve done. Throw it into the market and it’ll tell you if it was worth anything.

Liam:

What are your thoughts on the constant discounting cycle some brands get into?

Sean:

It could be labeled as another one of those cycles. We live in a fair market where the consumer has a lot more say than they maybe understand. We used to be incredibly brand sensitive about our external appearance around discounts and sales. Understanding each cohort — the growth of each cohort and the retention of each cohort — allows you to make better decisions about how much you discount, when you discount, and who you’re actually acquiring when you do. Is it a one-time customer, a decent customer, or a lifelong one?

Liam:

What are the biggest mistakes brands make in the transition between cycles?

Sean:

Everybody, to varying degrees, wants to feel comfortable. Doing what you know best allows you to feel comfortable, and you kind of get there after all the hard work — like, thank God, we finally figured it out. And so you have to be comfortable with being uncomfortable, constantly reinventing yourself. Putting yourself in the mindset of that emerging brand before the emerging brand comes for you. Understanding that each cycle has a lifespan, that the opportunity is ultimately going to get priced. The way we look at it is an 80/20 — 80% living in the opportunity space that’s working, doubling down. But taking that 20% — whether it’s product assortment, inventory, test allocation for a new channel — and always trying to find that next thing before that next thing finds us.

Liam:

How do you break through the barrier of job justification as a leader in a world where AI is changing roles?

Sean:

AI is here and here to stay. You can use it as a tool or be scared of it. What we communicate and advocate for internally is for everybody to be AI native. Understand it, try the new tools — 20 bucks a month, let’s go. How do we incorporate this into our roles so that we can do more? The goal is to double revenue on the same headcount, or as close to that as we can. That’s an internal benchmark. And there’s actually a level playing field here — there aren’t brands that have been utilizing AI in ecommerce for more than a couple of years. It’s a pivot point of who can harness it best, internally and externally. It’s a race to that opportunity.

Liam:

You mentioned before we started that you see your role as a support function for every other team. Talk us through that thinking.

Sean:

The way I think about it is every function in the business is a support function for marketing and content. How do we go create more compelling stories, better brand stories, work with better people? The role of the rest of the business is to create more marketing and content. I’m more or less the liaison between product, marketing, and planning — making sure everything leading up to go-to-market supports that go-to-market. And a lot of the information I get, yes there’s market research and competitor analysis, but we go to marketing and ask — what’s working, how long do we see this working for, what’s the next thing we think we can use? And we build products based on what’s working. It becomes a growth loop that allows perpetual growth of channel, growth of category. The nucleus of that is marketing, which is our consumer — converted or not — and that’s where we’re getting our answers from.

Liam:

What does that look like on the daily?

Sean:

Everybody internal speaks marketing. You can be a designer and still understand what marketing is talking about. That’s an expectation. It’s a lot of being a fly on the wall in daily standups, weekly growth meetings, getting real-time feedback on products the product team worked hard to design — how are they performing in market? What does Zuckerberg think about it, because he’s a huge judge. How does Facebook receive this? Then on a more routine cycle — take that information, how do we do a better job tomorrow? That’s website, advertising, content. Better in three months? That’s buying, planning, inventory management. Six to twelve months out? That’s product. That feedback loop continues quarter over quarter, season over season.

Liam:

What’s your biggest marketing channel today?

Sean:

Still Meta. Been the bell cow from the beginning and still is today. How we go about sourcing content, how much is internal versus external, and the number of channels we’re marketing on has grown over the years. But Meta is still the bell cow.

Liam:

You spoke on stage at Grow today about agentic commerce. Give us the brief summary.

Sean:

I was on the panel kind of as the brand that’s gearing up for this moment. We talked about skepticism — when is this real wave coming? The honest answer is we don’t know, but we want to be ready. So it’s one foot in, one foot out — setting that up today as a data exercise and a metadata exercise. Making sure your website is equipped and you’re able to come up on LLMs as much as possible. We’re using tools to understand what searches we’re getting pulled into, how many, and which direction that’s trending. It’s an upward trend. Not massive yet, we’re not ranking number one. But you don’t want to be behind by the time it matters.

Liam:

How do you think about retention in an AI world?

Sean:

It takes retention a level deeper. For a consumer to be retained, expectations have to exceed reality. For them not to return something, expectations have to at least meet reality. But how do you create that ecosystem of loyalty — especially in a highly commoditized, highly subjective space like apparel? Personalization is a big part of that. On-site, make sure they know you know who they are — show them the things they care about first, plus a couple of new things you think they’d be interested in. But it’s the full funnel and the personal unboxing experience too. Where personalization and retention really gets better is where it’s not aggregated anymore. Where the flows aren’t standard but become a truly personalized experience. All those signals — which emails they’ve opened, which SMS they’ve left unread, what they’ve clicked — that data is there. Harnessing it and using it is going to build that personalization and retention even further.

Liam:

Do you think email and SMS will remain important?

Sean:

Certainly. The channel might change a little, but it’ll get better through that change. When we started, personalization was “Hey Liam” with your last name — that was it. Now personalization means being able to work your way into someone’s life more effectively. Understanding the individual cycle of shopping. When on average does somebody come back for that second purchase? What are they buying in that second purchase relative to the first? That tells you so much about how to stay relevant to them.

Liam:

How do you think the overall customer journey will change in an agentic commerce world over the next 12 months?

Sean:

Over the next 12 months you’ll start to see much more than just your cart still being full when you come back. The page you land on, the products you’re shown — it’ll start to be genuinely representative of your experience on that site last time. That funnel will shorten. I see agentic commerce as more of another channel — similar to the Shop app, TikTok Shop, Instagram shops. Not all checkouts will happen through the website, but the website experience will just continue to increase in importance. Your product catalog is there, your brand information is there — what do you want to feed into that LLM? To help it rank you higher when it’s shopping on someone’s behalf. And once they make it to the website, there’s a reason they made it that far. What else can you show them?

Liam:

To finish — what are the top three things a brand should absolutely be getting right right now?

Sean:

One foot in, one foot out. Understand that agentic is coming and AI is here — do more than the bare minimum to make sure you’re ready for it. From a brand standpoint, think about your assortment — how wide do you need to go? Because in the agentic world, if you catch rank, it’s going to come like wildfire. Do you have the inventory for that? Today if you run out of stock you turn off a Facebook ad. In the agentic world it becomes a ranking issue. And the third thing — learn as much as possible. Understand that 12 months from now, we don’t know what we’re talking about today. It’s going to be different, it’s a cycle like we talked about. Learn as much as you can, get over yourself, and enter this new era with an open mind.

Liam:

Sean, great to have you on the podcast. Looking forward to coming back in 12 months to see how smart or dumb we both look.

Sean:

Thanks for having me. Let’s do it again.

They dive into: • How Cuts scaled from scrappy startup to category-leading apparel brand • Why so many DTC brands didn’t survive the shifts in ecommerce • How AI is changing ecommerce operations, personalization, and decision-making • What agentic commerce could mean for brands over the next 12 months

If you’re an ecommerce operator, founder, or marketer trying to understand what’s actually changing (and what still matters), this one’s for you.

Chapters

00:00 From Customer to COO of Cuts

02:31 How Cuts Started: From Kickstarter to DTC Brand

05:16 The Golden Age of DTC, iOS 14, COVID & AI

07:11 AI, Agentic Commerce & the Future of Shopping

10:12 Why So Many DTC Brands Didn’t Survive

12:21 CAC, LTV & Building a Profitable DTC Business

14:37 The Biggest Mistakes Brands Make Between Growth Cycles

17:15 How Cuts Is Using AI Internally Today

19:28 Why Every Team at Cuts “Speaks Marketing”

24:48 Preparing for the Agentic Commerce Era

33:22 Sean’s Top 3 Priorities for Brands Right Now