Interview: Castore co-founder Tom Beahon

Great to be here, Kevin, Kieran. Thanks very much for having me on, guys. So, yeah, I mean I'm born and raised in Merseyside, where I guess sport is, alongside music, quasi-religion. The depth of passion for sport in Merseyside runs incredibly deep, so I was in no way unusual as a young lad growing up in Merseyside in wanting to be a professional footballer. Unfortunately for me, my talent did not match up with my ambitions as a footballer, so I played for Merseyside's third team, the mighty Tranmere Rovers. Signed a professional contract at 16. The manager who offered me that professional contract, Brian Little, who had a very successful career as a manager, promptly got — I don't got fired actually, or left of his own accord — but left quickly. Thereafter new manager came in. I was not his type of player, which is an incredibly common thing in football generally and certainly the lower leagues. So despite signing a professional contract, didn't actually play professionally. Got to the age of 22, which is obviously young in the real world but positively middle-aged in the world of elite sport. And whereas most people have a sob story that involves an injury or some kind of terribly bad luck, I don't have that. I just realised that I wasn't good enough to make it at the highest level and that if I wanted to be successful in life I would have to go off and do something else. So made that decision. Fortunately for me, I've got a brother who was equally mediocre in his chosen sport, which was cricket, and between us — I mean we've got kind of no entrepreneurial background in the family whatsoever, our mum was a teacher, our dad worked in construction — but between Phil, my brother, and I, we said yeah, we're not going to make it as athletes, what are we going to do with our lives? Let's start a business, which was part ignorance, part naivety. But there you go, eight years later, here we are.

So to answer the second question first, yes it is. Our stores — I mean we always have been, which I think comes back to the kind of genesis of how we started Castore, where we didn't have any money. It was very much pull yourself up by your bootstraps, which I know sounds clichéd, but it was the reality in our case. And kind of when you go through that, and any entrepreneurs listening to this, I suspect it will resonate deeply with them, that when you've been through that, it becomes deeply ingrained in your soul, kind of focused on profit. I know Kieran kind of — revenue is vanity, profit is sanity, cash flow is reality. That maybe I couldn't have said it quite as eloquently as you, but that mindset becomes deeply embedded. So for us, the stores have to be profitable. The economics of retail have changed post-CO. So pre-CO, all of the leverage sat with landlords. They would force tenants to sign up to long-term leases, generally there was only upward-only rent reviews, very difficult kind of to get out of the lease if it wasn't going well. It was penal, it was hard to open stores unless you were very confident it was going to be successful, which of course when you're starting out is difficult. Post-CO, in a post-CO economy, and of course this has been well documented, the growth of e-commerce, but one of the outputs of that is the leverage has moved far more towards tenants and away from landlords. You can now have far more flexible leases, more of the rent is linked to revenue rather than a fixed cost. So it's become a lot more economically attractive. Combined with the fact that I guess we as entrepreneurs saw the post-CO world opening up again. People enjoy shopping, it's a very social thing to do. I was in San Francisco recently where kind of a lot of people talk about the ongoing digitisation of the world and this view that we're going to live on AR headsets and never actually speak to each other personally. And probably you wouldn't be too intelligent to bet against Mark Zuckerberg, but personally I just don't see that happening. I've always felt that people want to interact, that physical experience is really important. So those two elements together led us to opening up stores and they have worked well. And there'll always be a balance. I always think e-commerce and digital will be the engine of Castore's growth, but I definitely see that mix being very important.

At the time, yeah, it was. It was very good. And I mean, we've been described, Kevin, and it kind of raises my eyebrows in a humorous way I suppose, but someone has described us as an overnight success. I was like, Jesus Christ, it didn't feel like an overnight success when I was moving back in with my mum and dad as all of my friends were buying houses, and kind of paying yourself a thousand pounds a month for the first couple of years while you try and get the business off the ground. And yeah, kind of an overnight success ten years in the making type thing. But certainly COVID was an inflection point for Castore in that we'd started the business digital first, so we'd built up that infrastructure, that capability, hopefully a strong level of expertise. And I guess if you can think back to those dark days of kind of Q1, Q2 2020, everyone had to shop online, there was no other way to purchase anything. And one of the very few times that all of us were allowed to leave our homes was to go and participate in exercise. So everyone was doing their Joe Wicks workouts or going for their walk a day. So if you couldn't sell fitness wear online during that period, you probably didn't deserve to be in business. So we were fortuitous by the circumstances that presented themselves, but we tried really hard to capitalise on those circumstances and grow the business in a way that probably wouldn't have been achievable had COVID not happened.

Yes, that is an incredibly interesting question, Kevin. And I suppose the first thing to say, and again, I'm sure there'll be people listening to this with whom this point resonates, when you're an entrepreneur, when you start a business, there's no training wheels, there's no safety net. I did, before between stopping playing football and starting Castore, I spent a short period in the finance world. So I did leverage finance for a bank for a period, basically because I didn't have any money and I needed some money to start Castore. So being the highly intelligent individual that I am, I thought, I know bankers get well paid, I'll go and do that for a couple of years. But in any corporate environment there is a manager, there's someone to check your work and mark your homework and make sure that you haven't made any silly mistakes. You don't get kind of put in front of clients without having someone to oversee you and help you if it gets difficult. Being an entrepreneur is the complete antithesis of that. So from day one you're in circumstances that you haven't encountered before. There's a million books written about growing a business, starting, scaling, but you will every day face situations that you don't know what the answers are. So you just have to think on your feet, work it out. And that's incredibly difficult I guess for a lot of people, but entrepreneurs, I genuinely don't think they're necessarily any kind of intellectually better than anyone else, but they will have a different risk appetite and they will have a different appetite for pain, for want of a better word, stress, hardship, difficulty. So the learning curve is incredibly high. Equally, you're so used to it since you start the business, that's all you've ever known. So when it comes to launching a partnership with Andy Murray, launching a partnership with Rangers, these are huge things that again there's no case study that you can read about how to do that effectively. Equally there was no case study how to start the business in the first place or get from zero to a thousand pounds revenue, a million pounds. So the mindset of here's a challenge, we've just got to work out and overcome it, that again becomes very deeply embedded, which actually makes it ironically easier to go through these difficult things because you're so used to it.

Yeah, so it definitely wasn't the latter. Like what's happened to Castore in the last ten years, there was no scenario in my head that I could have expected any of it to happen, being really honest. Equally, that's not to say that we weren't ambitious from the start, because we absolutely were. So I guess everyone's different. I don't think there's any singular route to starting a business and being successful. But for us, a big part of it, Kevin, was necessity. Like I didn't want my life to be how it was. I wanted my life to be better than how it was. Kind of failing as a professional footballer, I didn't want that to define me. So there was a real drive that I need to be successful, I'm going to make a success of myself no matter what. And it was that — again, that wasn't an academic thing, that wasn't driven by market analysis or any sort of deep cerebral intellectual thinking. It was, I'm going to make a success of myself by any means necessary. And only thereafter, upon that foundation, did the assessment or analysis come of, well, if I've got any chance of being successful, overcoming the difficulties and the setbacks and the hardships that are inevitable, I need to be really passionate about what it is that I'm doing. And the only thing that I'm passionate about is sport. So from that foundation came, I guess, a little bit more intellectual analysis of, is there a gap in the market? Can you compete with Nike and Adidas? Thinking ahead, because we knew that we couldn't go into team sports from the beginning, we didn't have the credibility, no team would trust us. But did think about it at the start and say, is that market serviced as well as it could be? Do Nike and Adidas provide the best possible product service to every single team? And we felt clearly the answer to that was no. There therefore has to be an opportunity to do it better. Most people would be scared by that and say there's no way on Earth we can compete with Nike and Adidas, but we felt if it's not working perfectly, why can't someone go in and try and do it better?

Yeah, so I guess you start there, Kevin, by taking a step back and thinking about the market before Castore entered. So there had been very little innovation within the team sports landscape really for a generation. Like I'm 34 and as long as I can remember this market has been dominated by Nike and Adidas. And it was a duopoly. And that's an opinion, not a fact, I don't want to get sued by the good people at those large companies, but it was certainly dominated by those two huge brands. And whenever you have a situation like that in any sector, it generally doesn't provide optimal outcomes for customers essentially, because there's no real incentive for the status quo to innovate. Why would they innovate? They'd be innovating against themselves. So that landscape we felt was right for disruption. We felt that the incumbent had an identical approach, whether it was to kit designs, whether it was to the channels through which they would sell products. The vast majority of sports merchandise historically had been sold through third-party retailers like JD Sports and Sports Direct. The world had digitised, more and more direct-to-consumer brands were being very successful, yet sport had been left behind in that sense. And in our view, Nike and Adidas focused their resources on a very small section of teams at the very top of the market, so kind of the top two or three percent of teams essentially, because that was what was economically rational for them. Nike's share price has come down a little bit this year, but 140 billion dollars odd market capitalisation, it's economically rational only for them to focus on teams at the very top that can move serious volumes of product. So historically the big brands had seen teams as billboards, marketing adverts for them to help them sell more trainers. They hadn't viewed them as individual brands that should be optimised. And I think this will resonate with Kieran from a finance perspective. If you think about the economics of sport — and you have to be careful here because fans don't like to think of themselves as customers, they're fans first and foremost and sport is always incredibly emotive — but a finance person would say that football has incredibly attractive market characteristics. You have, and I'm using inverted commas here, captive audiences. Fans don't change the team that they support. That is true of almost no other consumer brand. So Louis Vuitton is one of the most powerful brands in the world, but most of their customers will also own a Chanel handbag. Apple is one of the most powerful brands in the world, most of their customers will also own something from Intel or HP or Samsung. So that captive audience nature is a hugely powerful thing. You've got unique IP, intellectual property, to the point where football fans will get their team's logo tattooed on their bodies. That is not something that you see for Apple or Louis Vuitton, despite them being incredibly powerful brands. And then of course you've got the scarcity value that, as far as I know, they've not increased the Premier League from 20 teams. So if you're in that elite, that has an inherent value because they're not creating any more, you cannot disrupt, there's very high barriers to entry. So all of those things make it a very attractive market. And the market, in our opinion, had not evolved. There hadn't been innovation around digitisation, globalisation, teams thinking strategically about how do we sell more products in the Middle East, in Asia, in North and South America. That led to a big opportunity for someone to come in and do something different. And I guess to answer your question directly, Kevin, how we kind of pitched ourselves differently — honestly, and this was just my experience thinking back three years ago, the market was delighted to have an alternative, because it wasn't as if the market was working perfectly for everyone. So for Castore to come in — British brand, challenger brand, but most importantly with a digital-first focus — to go and speak to teams and say, look, the world is digitising, your fan bases are digitising, the younger fans that you have will all engage with you via digital platforms, you need to think about this differently, you need to think with a more international and more ambitious focus — that was not something that Nike or Adidas were saying to them. So I would never say go as far as saying it was easy, because it definitely wasn't, but people were really receptive to that digital innovation message.

Or very stupid, Kieran, I don't know, maybe a combination of the two. But I think it's an interesting point you make about students, and I get asked the question a lot because I didn't go to university, I left school at 16 thinking I'd be a professional footballer and that would be the end of it. And I do think there is a really interesting balance between absolutely thinking about a market through the lens of how can I offer something different, how can my proposition be superior to the incumbent, but personally, having started a business and grown a business, that cojones point that you make — I know it's tongue in cheek — but the ability to suffer pain, to go to bed every night not knowing what revenue is coming in the door the next day, whether you're going to be able to pay your bills at the end of the month, that is maybe something that's hard to really articulate in a lecture theatre. That is something that you can only go through it to really understand it. But you are undoubtedly stronger for the experience, there's no doubt about it.

So not margin, no, Kevin, in the sense that it broadly costs a similar amount to make a rugby shirt as it does a football one, a cricket one as it does a football one. And again, the prices are not massively different at the top end. So the margin is not so much — the volume of revenue or volume of product that you're going to sell is where the difference will be. So a Premier League football team will have — most of them, and everyone thinks it's only the big four, which I know is kind of evolving into the quasi big six — that only those guys have international fans. That is not the case. We have the data, we run a lot of websites that tell us every hour of every day which countries we're selling these products in, and the vast majority of Premier League teams will have fans in multiple countries around the world. That is not yet true for rugby teams. That's not to say that it can't be the case, but it's far, far smaller. Rugby is followed — Premiership rugby will be followed by I guess exact communities in South Africa and Australia and maybe a little bit in places like Dubai, but it's nowhere near the same volume as football. And that just shows the weight of power of the Premier League.

Yeah, of course. I mean, whatever you're doing, we — I guess we've used the word disruptive, haven't we, Kevin — whatever you're trying to be, disruptive, bumps in the road are inevitable. So I guess to Kieran's point earlier about kind of students and the difference between reading about it and doing it, going through those bumps, again, there's no way of coming through them other than to grit your teeth, bite down on the gumshield so to speak, and come through them. So firstly, to have a level of humility — and it is an interesting balance as an entrepreneur to be very ambitious, have huge deep self-belief, but also have the self-awareness to acknowledge where you do need to improve. And I mean, we've grown Castore from zero to multiple hundreds of millions of revenue in a short space of time. You don't do that perfectly, no one does. So you do need to acknowledge where improvements need to be made, and we've tried our best to do that. I did kind of say slightly tongue in cheek when I was asked by a journalist recently about has the Villa kit affected performance, and I don't know if it's the right response, but I said, well, if it has, we should do that for all of our teams because Villa are having the best season that they've had for a very long time. I guess there is a serious point that you have to learn from these things. You can't be hard-headed and say, oh no, that's not our fault. You do have to learn from them, which we've tried to do. Equally, I guess it's also true to say that all brands, all teams change brand. In this market, well documented recently that the German national team have moved from Adidas after 77 years. A lot of noise at the moment about Barcelona and Nike. So if these things happen to Nike and Adidas, there's no logical reason why it shouldn't happen to Castore every now and then. It's a competitive market, we love to compete, we play to win. We generally win more than we lose, but that doesn't mean that you're going to be perfect, and you've got to learn from those experiences.

No, you may be surprised, Kevin, to hear that, no, it's not necessarily. I mean, I talked earlier about we've been very profit-focused and cash-focused from the beginning, which is very easy to say, and I promise you is incredibly, incredibly hard to do, particularly in sport where a lot of your revenue is linked to performance. And if a team qualifies for the Champions League you'll sell more, if they lose a big game you'll sell less. And managing working capital through that, particularly when you have kind of 50-plus teams as Castore now does, it is not easy. So being profit and cash-focused is really important to us. And I say this as someone that has been rejected by every bank in the country and many of the investment community in the country. It's actually ironically easier to raise a hundred million than it was to raise a million quid back in the day, just because there's different types of investors that focus on different opportunities and they're a lot more comfortable writing a bigger check than they are a smaller one, which is strange but true. So actually once you get up to that level where we kind of raised not far off 150 million quid, which obviously is a lot of money, actually the question is more about who you're partnering with. There's a lot of people out there that can write a check for 150 million quid, I know it sounds strange to say but it is the reality. So you're thinking about, well, is this person going to add value, can they open doors strategically that maybe I can't open myself, do they have the same values as me, are they going to be long-term focused like I am. So for us, choosing to partner with Rain Group, who are really well known in this market, they do a lot of sports deals, it was more about the people at Rain than it was about the money itself. And as we sit here today, I don't have any plans to go and raise more money. Equally, if you want to be a global brand — and our ambition is for Castore one day to be the British sportswear brand that competes on the global stage. Adidas, Puma are the German champions, Nike and to a lesser extent Under Armour are the US champions. To my mind, Britain should have a champion that competes on the global stage. If we're going to achieve that ambition, probably at some point we'll need to raise a bit more money. But I've always taken a view, maybe old-fashioned, that if you build a really good profitable cash-generative business, there's going to be opportunities to raise money. You won't need to go and look for them.

I agree with all of that, Kieran, and a lot of it, Kevin, is driven by incentive. So four years ago when interest rates were zero, investors would literally — it's not an overstatement — throw money at any business that was growing. To Kieran's point, you didn't have to be profitable, you didn't have to generate cash, if you were growing and you had a good sales patter and could talk TAM, total addressable market, if you could convince investors that you had a huge TAM for your product, people would throw money at you. Fast forward three, four years, interest rates are a lot higher, investors are a lot more cautious. So there just isn't the incentive to focus just on revenue anyway because you're not going to be rewarded for that. I do think particularly in the sports market as well, if you're not very, very careful and disciplined, your ego can run away with you. And there's a chance to do a partnership with, you mentioned earlier, the Liverpools, the Man Uniteds, the huge, huge teams. And if you were just focused on revenue, a partnership with those guys would very quickly grow your revenue. But as the founder of the business, I've got kind of 500 staff, and you're responsible for their ability to pay their mortgage every month and taking their kids on holiday this summer and their pensions, you cannot be driven by ego. That is only going to end one way and it's not going to be positive. So there is always a balance as an entrepreneur between ambition, wanting to be ambitious, grow, that takes investment, you do need to take risks as you do that, but being very disciplined in how you go about it.

It's interesting, since we raised the money, Kevin, which we did last year, I've been asked more than ever before what my exit plans are. And I'm like, what? I don't have an exit plan. Why do I need to have an exit plan? This is my business. I was here at the start, I hopefully want to be there at the end. I've got nothing else I'd rather be doing with my life that makes me as excited and passionate as building Castore and trying to build a British sportswear champion does. So it does interest me. But I guess whenever you force the status quo of a market to change, there will inevitably be pushback. And you see that all the time in the tech market where someone will come up with a really clever technology or creative way of doing things, and Amazon, Google, Meta will instantly go and buy them out. So I mean, we have a lot of knocks on the doors from weird and wonderful people interested in investing, acquiring, whatever Castore. But until I have a conversation with someone where I think, this will add real strategic value to the business and help us achieve our long-term ambitions, then I'm yet to be convinced that they would add value. But I think it's an interesting question in the sense that for Nike and Adidas, either you adapt and you say, okay, well, do we become more digital and do we partner with teams and help them grow their brands digitally and help them utilise data more intelligently? That is not easy for them to do. They are oil tankers. They have far more kind of pressing strategic priorities which often involve selling their own products rather than teams' products. So either they adapt, or they think about, well, can someone come in and do what Castore does? Again, that's difficult. There's very high barriers to entry in this market. The supply chain is very difficult, the operational infrastructure — I know I've got far more grey hairs on my head now than I did three years ago — because if you don't deliver a fan's product on time, it's a big thing. That's kind of a kid's birthday, that's their first experience. That is a big thing, that is an emotional thing that you wear. So that is not something that a lot of other companies can do. You have to be an incredible brand in the sports market. There's a lot of talk three or four years ago about kind of the Chinese fashion brands looking to come into sport, and I know that they did a lot of analysis looking at it and decided against it because it is incredibly difficult. So we are in a very interesting market that has kind of big long-term secular growth drivers, rather than thinking about who could acquire us so that I can go and play golf every day. I'm not very good at golf, I'd rather be here. So we're enjoying doing that at the moment.

No, it's interesting, Kevin, because I probably slightly unfairly, and with a number of very high-profile exceptions, I meet a lot of British entrepreneurs and I meet a lot of American entrepreneurs, and there is a clear distinct difference between the two parties. The Americans generally, they believe that they can take over the world, they believe that they can change the future. Sometimes it is quite funny to hear, but it's — I mean, you're not going to change the future unless you believe that you can, it's a pretty good starting point. Whereas often, and again not all to be really clear, but often British entrepreneurs think, oh, if I can sell my business for X million or Y million, I'll go and buy a house in the Chilterns and that will all be dandy. So again, I've got nothing against the Chilterns, it's a lovely place, absolutely no prejudice against anyone who wants to do that. But for us, we kind of feel like we haven't come this far just to go this far. It's been so hard, there's been so many challenges and hardships. It's worth to us something that's far deeper than purely the financial. The chance to build a brand that is recognised and respected all over the world — that's what gets you out of bed at 5 a.m. every morning.

Yeah, I guess the first part, I suspect, and I don't have any insight, but I suspect Nike were not too disappointed by the furore. It's people talking about them, it's their name in the media. Again, it's kind of strange for us to think, sat here in the UK, but the UK is one of many, many, many markets in which Nike operates. So I suspect they weren't overly disappointed by that. And then you had a really interesting question, the definition of a disruptor. To me, it's a group of people, someone, a group of people, a business, that wants to do things differently, that wants to change a market and provide a product or service that is superior and different to anything that has come before it. So it's one of those terms that everyone will strive to be, of course, but it's far harder to be genuinely disruptive when you are the status quo than if you are an outsider looking in. When you're an outsider, as Castore was — and this will become more challenging to us as we become more established in the market — when you're an outsider you have nothing to lose, so you have to disrupt. There's no choice. And that's always been our mindset at Castore, we have to wake up every day wanting to eat someone else's lunch. No one's going to give us anything for free. Of course, as you get bigger, that becomes a lot more difficult. So yeah, everyone loves the word disruptive. I believe that far fewer people actually live and breathe a disruptive mindset.

The short answer, Kevin, is absolutely yes. So I spoke earlier about I can't be emotive about these partnerships, they have to be level-headed, data-driven decisions. I'm not a gambler, I'm not hoping this team might qualify for the Champions League and therefore I'll pay them a big fee and pray that they do qualify. You do not build a sustainably successful business by doing that. So we have to be very clear-headed, logical in our decision making, believing that we can add value. Equally, I couldn't look you in the eye and say, the chance, as someone who started a business in England, who loves football, who loves sport, to one day be the partner of the national team — that would clearly be very, very special. So we do the Republic of Ireland at the moment, which is an amazing partnership for us. I guess to always evidence what I just mentioned earlier about helping teams digitise their revenues, we sell significant volumes of product for Ireland in America. You've got huge cohorts of Irish Americans in Boston, Chicago, New York, that previously no one had really thought about, well, how do we engage with that community. Castore has thought about that, and we have the infrastructure to help monetise and engage with that audience. So that partnership's been fantastic for us. The other countries in the British Isles, we've got an amazing partnership with Rangers. We've got a Welsh partnership in Wales. We're ambitious, Kevin, so there's not a lot that we wouldn't look at and be excited about.

I absolutely love it. I can't do justice with words. I love competing. I just love it, Kevin. You're never going to win every round, you're going to take a few punches, but I just love the competitive spirit, the ability to dust yourself down, get back up again and try and achieve something. Like building a British brand that competes on the global stage — what an opportunity. I just absolutely love it. Every day when my alarm goes off at 5 a.m., I'm in the office by 5:30. I just live and breathe it. There's nothing else I'd rather do.

Absolutely, guys. No, very much appreciate you having me on. Thank you very much.