In 1988, Eric and Ellen Gil opened the doors to their very first store. It all started with their modest 450 sq. ft. Sockshop & Shoe Co., which has since become an icon of our beloved downtown Santa Cruz. In 2007, along with Cassandra Aaron, they founded Socksmith Design. Over the years, from these small seeds, they have filled our hearts with so much more than just socks. Their partnership has survived more than most: store openings and closures, an earthquake, a recession, and most recently, a global pandemic.
But the thing we're all so eager to learn: how do you survive such a whirlwind and still come out so successful?
This is the story of the evolution of Socksmith Design.
Q. “Eric, what made you open a store all those years ago and why was owning a store so important to you?”
EG: “We moved to Santa Cruz from the South Bay in 1982, and I was commuting to Silicon Valley for many years up until our first child, Sarah, was born in 1990. When we originally got into town I didn't want to commute and I always had ideas in my head about how we would have our own business. I didn't know what it was going to be, but it was important to me to give it a go and not regret not shooting for the stars. Whether it was a restaurant or a food truck or something, I didn’t know.
I was a young guy and I loved downtown Santa Cruz, the boutique stores and the vibe of it. My wife Ellen was already working there in retail and was running the store she was working for, so I knew we could accomplish it. It was just a matter of money, energy and a good idea.
It was important for me to do something with Ellen, not just have these divided careers, come home in the evening and say, ‘What did you do today?’ I kind of got the idea, believe it or not, from John Lennon. He was with Yoko Ono when I read an interview with them and he said it was good that Yoko wanted to be involved in music, and that she was a natural born businessperson. I liked connecting in this way with my wife, to be able to grow at the same pace, in the same direction and that always impacted me. Everything we'd experienced led us to wanting to do our own thing together, but just what was that going to be?
I came up with our initial business idea in 1984. Owning a store with nothing but socks. I can't even tell you why that occurred to me, but it did. When I told Ellen, she said, ‘I don't get it.’
Ellen is from New Jersey and we went back there three years later during Christmas. We visited New York City, walked out of a subway, and there was a sock store right in front of us. I said, ‘See, everybody's going to do this!’. Ellen turned to me and said, ‘Let’s open one in Santa Cruz.’”
Q. “So after you came up with the sock idea in ’84, you let it ferment for three years until something happened in New York? Until then, nothing happened because everyone thought you were crazy?”
EG: “Yeah, for a few years I pitched it several times to Ellen and to friends. No one saw the vision. It really took until a few years ago, when we finally opened the store down at the Santa Cruz Wharf, for close friends and family to truly see what I was talking about so many years ago. My vision was the Wharf store that we have now. And I couldn’t get it out of my head, for whatever reason. It was full of knits and color and different kinds of yarn. The image to me was impactful right away and I knew it was a good idea.”
Sockshop, Santa Cruz Wharf, 11/2018
Q. “What happened next?"
EG: “Money was limited and we both worked full time. Ellen quit running a store for someone else and after only about six weeks, on April 1st, 1988, we opened Sockshop Santa Cruz, our very first store. A little boutique of 450 square feet with nothing but socks. We figured out what a trade show was and how to partner with brands. It was a hustle and you just can't open the way you want, and we didn't have enough money or knowledge."
Sockshop, Downtown Santa Cruz, 03/1988
"It was a struggle up until the fall hit and then everybody came to us for socks, for gifts, or for themselves. It worked almost right out of the gate. And we were just learning the game.
We grew in downtown Santa Cruz in a very small store until the earthquake hit us.
The earthquake caused me to leave my full time job for a month to move what was left of the store into tents that were erected in parking lots behind the downtown. It was a rough time for Ellen, the town of Santa Cruz, and me. If not for the city building the tents to save local businesses I don't think we would have stayed in business. These are the events that make you stronger or crush you under the weight of things you have no control over. I am resilient to these kinds of events such as a pandemic because that's how I grew up. Keep working hard and smart and eventually something good will happen. I'm good at ignoring all the negatives and so is Ellen. If I'm down, Ellen is up and vice-versa. It's been part of what gets us to do so much, we trust each other to get the other one to the other side.
We were in tents for about 2.5 years. After we emerged, we had a holding place of about 300 Sq Ft until we moved into our first Sockshop & Shoe Company Pacific Ave, downtown Santa Cruz in 1200 Sq Ft. We were going big time, adding shoes. It took about 10 years for downtown Santa Cruz to get back to some sort of normal."
Sockshop - post Loma Prieta earthquake, downtown Santa Cruz, 10/1989
Q. “You opened a store, and then eventually more stores, and they proved to be highly successful. You even survived an earthquake. By the time Socksmith was born in 2007, how many stores were you managing at that point?”
EG: “We had stores in downtown Santa Cruz, Carmel, Los Gatos for a period of time, and one in Capitola. We had four stores. And then I had added this home furnishings idea, which was in ‘95. It was a small store and I was shaping an idea.
We owned our home furnishings store, Warmth Company, for ten years, which we purchased in 1995; it was not a smart move.
We had sold our store in Carmel and collected some money and I hate letting money sit, I always want to reinvest that dollar. So we started this store in Soquel, but it was hard for Ellen to manage multiple stores."
Sockshop Carmel, 04/2012 - now owned by former employee of Eric & Ellen - Becky
"I worked full time up until 1998. It took us about ten years of owning the Sockshop to really get on our feet, to really understand what we were doing and how to analyze it and capitalize on our ideas, aesthetic and customer service. During that period, I was just working. I was the guy that paid the mortgage and the bills, but we were building this business, trying to make a profit. And after ten years, we got enough inputs and understood how to analyze what we were doing to the point where it became profitable and Ellen needed help. So, I quit my full time job.
After I stopped working full time, I worked for Warmth Company and I was more involved with the furniture at the retail level. I was doing most of the buying for five or six years and then we sold it.
After we sold Warmth Company in 2006, that's when my gears started turning. What's next? What am I going to do with the money? I didn't want it to sit and stagnate. There were a couple of inputs that got me to the place where I said, ‘We're going to create our own line of socks, OK?’ That was in 2007.”
Q. “What made you get into the wholesale part of the industry, and how was Socksmith Design born?”
EG: “That was a long learning curve and we were anticipating—kind of hoping—that the industry would create the next cool thing. Several brands came along that were really interesting to me, and we loaded up on them in our stores and they did well. But I still wasn't getting everything I wanted that I imagined I could.
I think it was around 2007 that Hotsox got sold to a gigantic mill. It went from a creative little New York City-born company into this big thing. That really upset me for two reasons: I knew that the creativity would go down, and that their focus would now be on large retailers. So all of a sudden you have a lesser product and it was harder to get as an independent store.
There was a lot of consolidation going on during that period of time with shoe brands as well. It was frustrating to be an independent retailer. We were not getting the product that we ordered because they were sending it to department store chains.
And that’s when I said, ‘We can do this. We're a creative town.’ And I wanted to focus on independent retailers because I think they are a big backbone to what a community is and why we do what we do. I wanted to help create that sense of walking into a cool, small, niche store that has a different idea than everybody else. And it worked.
It felt like we could do justice to what we understood best, and that was the novelty sock world. I knew we could get our foot in the door with ideas that we already had, so it was just a matter of figuring out where to produce, how much it was going to cost, how we'd get it to market, etc. So we brought on Cassandra Aaron, who was the Hotsox rep at the time. She was the best at follow-through that we had out of all our reps (other than Hank actually, who’s now our Director of Ops). So we ended up partnering up with her and starting Socksmith Design."
Socksmith Design - meet our owners, 2015
"I basically took one of our employees from Sockshop, and together we got the accounting going, I got a manufacturer overseas, and we figured out how to do the design, translate that into what it should be for the overseas producer.”
Q: “This designer who you took from retail to help start your brand, was she untrained?”
EG: “Yeah. Krystle was our sock buyer while she was going to UCSC, and she was really good at it and very organized. I'm not as organized as I should be so I recognized Krystle could help. She was going to go back to her hometown because she was done with school and she didn't know she was going to do. Krystle doesn't remember this, but I remember it clearly: I walked her out of the back door of the Sockshop and I said, ‘I got an idea. And I think you can help me get this going. I want to design socks and create our own sock brand.’ And she said, ‘Well, I've never done any design work, but I think I could.’ That was the beginning.
It took me about a year to get things off the ground. We didn't have the money to do it, but I just pulled it out of retail stores and we slowly but surely kept reinvesting. And I got a [manufacturing] partner, a really good partner. Probably the most important thing I did in that first couple of years was I got a partner who would work with me, who would manage lower minimums for me. They trusted me. And this was all over email, which is still amazing to me. We needed a five-year runway to kind of get things going and by 2012 I could see this thing was going to scale up quickly. So I started hiring people.”
Q: “Now, 13 years later, you have a successful brand with many employees, and multiple factories that you partner with. Then COVID hits. Could you point out a couple of things that were challenging pre-pandemic and now that we're practically a year into the pandemic, describe the new challenges? And do you think retail or small businesses can be saved?"
EG: “Certainly pre-COVID, retail was changing radically already, forced by online shopping, and the malls have been suffering for multiple years now. The consolidation of retail, brick and mortar had already started and some of the big guys were going out—J.C. Penney's, Macy's and even Walmart got caught by people buying commodities on Amazon. So that changed everything. I felt like the advantages that we had as an independent retailer were a lot of community input, and the ability to know what people wanted—since we had to really analyze everything over the course of many years. What we bought in shoes and socks and accessories was really focused on Santa Cruz lifestyle. We knew a big consumer store, like an REI, could move into town and really do us harm, but it might also bring more consumers that would discover us.
There’s always that potential and it’s a competitive market, no doubt about it. But the retail market was getting softer in 2019, and I saw that. I think the consumer was a little tapped out. I felt like the economy was slowing. So pre-COVID we were already reacting to that from a buying standpoint. We lowered our “open to buy” considerably. And then COVID hit and that accelerated everything. I feel sorry for the people that had just started [a business]. It's tough if you just borrowed a bunch of money and I know people that are stuck now.
"After COVID", which I'm optimistic is coming, I think there's a lot of opportunity for people who can focus on and truly understand their community. And if you're in a tourist area, there's always people who really want to experience a locality and take something away with them, and Santa Cruz is definitely one of those places, like San Francisco, New York, L.A. But Santa Cruz is a small seaside town, and really has pulled surfers and skaters and bicyclists in. I think post-COVID Santa Cruz is well positioned because people are not going to be working in the office so much and they can live anywhere, and Santa Cruz isn’t a bad place to live.”
The Socksmith Team, November 2019
Q: “Across the board, as we look at our very large account list full of independent retailers, do you think the small shops in those small towns will survive?”
EG: “If you have enough cash in reserves today. If you have a downtown that is community-minded. People that love their downtown for restaurants or practical hardware and post offices, banks etc. If you have a system already in place that's a beloved downtown, and it's well trafficked, it's a good time to start because you can make a good deal. Commercial real estate is going to get soft, but you've got to start small, then invest and stay focused. If you're a t-shirt shop in town, don't mix it up with too much stuff and spread too thin.
I think people get excited when they see a store that's really focused, and the salesperson really knows their stuff. That's a whole different experience for the consumer to walk into a store looking for something and somebody really knows the product—how it fits and why you should get this size and not that size and what European sizing means and all the materials that it’s made from. All of that matters.”
Q: “Let’s talk about some of the rewarding aspects of what retail and wholesale offers, because obviously you and Ellen have worn many hats. Why are being retailers and wholesalers so important to you?”
EG: “They're both different because the retail side of it is so community focused. You get to work with people, and you get to say hi to friends and make friends and people come to trust who you are. And what you do in the community is a huge reward. Ellen and I have experienced that in spades in our retail side of what we do and it’s still fun and exciting. We're always trying to analyze how to get better. Obviously, you need to be profitable and make money, but also to get better. Naturally, if you get better for the community, and the consumer is walking in your store, it will translate into dollars later. It really isn’t just about the retail side, it's about being part of the community and trying to be a good player in town. We're saving people time and exploring different ideas within a confined area, with a cool aesthetic and cool people.
For wholesale, well, the better you get at business, the more interested you are in things that can scale up with relative efficiency. In retail, it’s very difficult to scale up, to run multiple stores. It’s super complex in too many ways—you get the product in but it’s not working in one place, or you can't manage the culture you really want to represent you. It gets harder and harder and harder. Ellen has always been of the mind to keep it small on the retail footprint. We have four stores and we're not looking at expanding; this is where we’re going to be.
As somebody who's interested in business and ideas that can multiply in a fairly efficient way, I knew that if our product worked in our stores, which is our little software-laboratory, I knew that it would work for other independents. It needed to be presented at trade shows. That was interesting and I'm not really a sales guy. I'm more of a product guy interested in kind of managing and analyzing the ideas that we bring to market and whether they're viable.
We had people that were interested in different looks on socks, and we’re more colorful than most, and I think we have a broader set of ideas than most. So it's just fun to figure this stuff out to me and I'm naturally curious about that. But in wholesale, you’re also building logistics, sales teams, customer service and design teams. It’s huge. But for me, I'm just kind of in the middle of the store, trying to figure out: what's most important today?
We’ve been through so much. Earthquakes, major recessions, a global pandemic. There's opportunity in every downturn and other people are going to be distracted by it. But I'm motivated to create, and we're working currently on new products. We're a design company at the core. We happened to start in socks and knit, but really, we're designing imagery that could be applied in all kinds of places so I'm excited about that. The wholesale side of it is more creative for me personally and Ellen really runs and manages a strong culture in retail stores. We both manage where we're going to really focus our time and money.”
Q: “Finally, if somebody were to ask you for advice in starting their own business or maybe their own brand, what kind of advice would you give them?”
EG: “Start small. Test the idea in a well-trafficked area. Whether it's a restaurant or a small store, it's going to take time to get traction for the brand that you're creating. Our first store was teeny tiny. It was barely noticeable and you could walk by it pretty quickly. But if you walked in and you met Ellen and you saw the impact of the socks, you didn't forget it. So the next year they’d come back because that's the go-to for that product. You want to really focus in on an idea that’s fit for the community, whether it's shoes or it's t-shirts or it's hats. You walk in downtown Santa Cruz, you can see a lot of those niche ideas—the surf shops, or a similar hybrid skate-surf shop, but most of them are pretty focused on their thing and that's smart. That's part of the reason that I think I conceived this idea, was the O’Neill’s and the Bill's Wheels skate shop in town.
There were entrepreneurs already kind of carving out this idea in a different world. I got lucky, and timing is everything. But I do think it's an opportunity for somebody with some ambition and a good idea, and who really understands the customer service part of it. You really have to like the people walking through the front door. I've met too many business owners who don't like their customers and it's like, well, you'll be out of business shortly. And they were.
It's funny because there are these people that are just successful in two years, and it can happen. We laugh now and say we made it. We're famous after ten years or so and we found success. But it took 10 years. But people thought, oh, wow, where did you guys come from? Well, we've been working on this idea and we've been analyzing it and we hired the right people that are positive and have to have good interaction with people and care about people. It worked. I mean, if I started with too much money, I probably would have screwed it up.
So going easy with a good idea, a good focus, learn your product and then teach the people that walk through the door what you know or what you've learned. And I think you'll find out without losing your shirt whether your idea was good or not. You've got to be an ambitious entrepreneur and all those things, and you’ve got to have energy for it.”
Thank you for reading.
If you only take one thing from this read, we hope that it's an understanding that success is not easy. If you're willing to embrace the journey, and to learn from it, you're well on your way...