Kickstarter has rightfully earned its place on my list of favourites, as one of the most brilliant concepts to bless the web. Thankfully, as of lately, there's been a wide array of outstanding projects who've seen their goals matched or even surpassed, with Hillflint being one of them.
Created by John Shi and Woody Hines, the brand sets out to deliver the perfect sweater, suitably named The Mark One. Admittedly inspired by a preppy aesthetic, reminiscent of “Take Ivy” times, Hillflint aims to recreate a luxury version of the timeless crewneck sweater. Combining over a pound of the finest two-ply Australian Merino wool, with ribbed cuffs and hem, raglan sleeves and 7-gauge stitching, they are able to deliver both exquisite quality and fit in a unique sweater. The brand has now surpassed their goal (over 50% in the first 12 hours), but feel free to visit their Kickstarter and give them hand!
John Shi didn't plan to become a garment maker. He studied philosophy and economics in college, interned in finance, and got a job at Amazon after graduation. But something he saw in an old Japanese picture book on east coast schools intrigued him.
Contents
Finding a Factory
The Reddiquette of AMAs
Fulfillment
Modern-Day Garmento
Amazon's Death Star
Competition
Most Helpful Tools
In Dartmouth's college bookstore, Shi saw hoodies selling for $70. Not worth it, he thought. So he created his own line of men's knitwear, and sold the sweaters to his classmates. Now, he's almost a year into his startup, Hillflint, and launching a Kickstarter campaign for a noncollegiate sweater, the Mark 1.
John Shi: I sold the first batch to my class, 2012, and lost about a dollar and change per sweater. But a lightbulb went off that there was a space for high-end knitwear sold direct to customer. It had to be minimally designed, and the company had to be really lean, so we could focus all the energy and design on sourcing the best material. Then we went to Princeton, then Yale, and now we're entering the general market.
Finding a Factory
Most people know Alibaba as the eBay of China. In fact, the e-commerce platform is a strange hybrid of ad revenues and third-party vendors. One of its specialties is manufacturing. If you want something made, that's where you go. (Remember to click on suppliers in the menu to the left of the search box.)
You find a hundred factories in various countries and send a hundred emails. Then you try to find out which ones are trustworthy. That's the most naive, basic way to do it. But it's costly to prototype again and again.
The real problem is that startups don't know how to find a good factory. There's a lot of noise that takes time to wade through. The biggest contract manufacturers, the ones who work with Ralph Lauren, won't give you the time of day, so you need to find a small, dependable one.
When Hillflint got started, they were working with a yarn manufacturer in New Jersey. The yarnmaker had their own buying agents in China, Italy and South America. So Shi uses their yarn in exchange for their sourcing network, and can take advantage of their economies of scale. We tag along on their shipments from the UK and China.
People who only want to produce a small run of garments as prototypes should use a factory in the US, because the minimum order level is lower, there's no language barrier and there's less risk. Maker's Row is a good place to find those. It connects entrepreneurs with designers, pattern makers and manufacturers. We had some good conversations there.
When you scale, look at South America. They're making shirts already. You tell them: "When Brooks Brothers orders one hundred yards of material to make shirts, just make an extra five yards and we'll buy that from you.
The Reddiquette of AMAs
People on Reddit are burned out on insincerity, and they're sensitive to promotional stuff. They want people to succeed, but you need to engage the community. They get a ton of people making a thinly veiled attempts to advertise, where all they do is link to their Kickstarter campaign and list their pledge levels.
Promoting your brand can be your implicit goal, but you need to frame it right. We sent a private message to the monitors of the male fashion advice subreddit and said "Hey, we've been working on this for 10 months. We've taken previous feedback from Reddit and incorporated it into the sweaters, and we're really pumped about it. We'd love to get feedback on the concept from this community but we don't want to spam anyone. Would it be OK to do an AMA to collect their thoughts?"
They didn't expect anything. They'd posted to reddit four or five months before and didn't get much response. But this time, the idea was more fleshed out, they knew their own product and what they wanted.
The monitors said yes, and said publicly they approved the AMA. Which was one reason why it went well.
We got some really good questions and about 100 people signed up in a day.
Anybody can post an AMA. It's just a question of whether people are interested in what you have to say. The normal cadence is you schedule one. You say I'm going to log on tomorrow between noon and 5pm. But because we're small and I'm not a public figure, I thought we'd just post it in the morning and I'd check in throughout the day, rather than be on continuously.
Fulfillment
I worked for Amazon after I graduated, and did some inventory management. When you run a startup, you want to maximize free cash flow and not have unhealthy inventory sitting in warehouses. For the first seven months, I was picking and packing everything myself and or outsourcing to my younger brother. Now I'm moving everything to a fulfillment and logistic company called Symphony Commerce. They take a 15 percent revenue share on each sale, but they have their own warehouses and picking and packing centers. It's not just Shopify."
Modern-Day Garmento
[Ed. note: In the latter-half of the 20th century, U.S. manufacturing, and particularly textiles, saw a decadeslong decline. From its peak in 1979 to its trough in 2009, manufacturing saw 41 percent of all jobs evaporate. The textile industry, once a vibrant part of New York City and with factories up and down the east coast, saw jobs plummet 63 percent in the eight years leading up to 2009. Since then, some textile mills have seen a light rebound, largely due to cheap energy from fracking.]
There's a garment-making renaissance in America. The barriers to starting a brand are going down. But it's category specific. Button-downs, shirts, ties -- you make them really well in the US. Pants are OK, maybe 7 out of 10. Bonobos had a lot of problems with quality control in the US. With knitwear, US manufacturing is not there. There are a few mills left: a couple in Massachusetts, one in North Carolina. They don't have the high-end Italian and Japanese machines. Even if you source really nice yarn, the product is really scratchy. The price to quality ratio in America is tough. But it's very possible to source globally.
Amazon's Death Star
Amazon's a great company. But if you are trying to sell a commoditized product, you cannot compete against them. They will crush you. If you're trying to be the next NewEgg, or any business where you sell other people's brands, you'll have a really hard time. And if you do start getting a ton of traction, Amazon will drive you out of the market. The can be very price competitive.
They have a vigilant retail buying team (which I was part of), monitoring pricing on other platforms, and they will undersell you. If Amazon's prices are not lower, they also host third-party vendors that have very low prices and consistently win the buy box. That means you're associated with the yellow buy button when the customer clicks buy. It's almost always the lowest price possible. Amazon is willing to accept a loss per sale to win trust.
One powerful way to set yourself apart is to create a proprietary product that you control exclusively, which cannot be sold anywhere else, including Amazon. That means creating something and vertically integrating. You design it, you manufacture it, you sell it online. The way to stay competitive is by being able to say: You can't get this on Amazon.
Amazon is not doing that, because they want to sell everything. They have an extreme focus on the focus. With Zappos, they set the gold standard in customer service. You cannot be a player these days without offering free customer returns.
There's a misconception that being an e-commerce brand and cutting out the middle man improves the economics of your offering. I don't think that's true. Because you need to handle logistics and returns.
Another way to distinguish yourself is to generate great content and build an audience. An example would be MrPorter. They have a very well done website, great customer service, nice packaging, great returns and cool creatives. Their product and lifestyle photography is awesome. They're carving out a niche in high-end men's fashion retail.
Competition
We get emails everyday from students at other colleges asking us to make sweaters for their schools as well. But it's a limited market and there are licensing issues. Certain monopoly players in college athletic apparel are applying pressure to licensing offices. They've got deep ties to Ivy league schools and they've convinced a few to revoke our license. Then they reverse engineered our sweaters with lower-end materials like cotton to loss lead us. Competition's always a good thing, but you've got to be ready to fight.
Most Helpful Tools
Pre-orders: Celery "Being able to run a Kickstarter after Kickstarter is really helpful. We built over half of our runrate over Celery. Any tool that allows you to maximize cash flow and reduce inventory risk is probably good when you're starting out."
Financial modeling, record-keeping: Excel "When you're saying -- "We have five mills with different costs and quantity breaks. Who's the cheapest?" -- being able to map that out is really nice. Or say we have 300 orders. I'll pull that in from Celery and feed it into my label printer through Excel."
Promotion: Photoshop "I use Photoshop for promotional graphics on our website, cleaning up product photography. All the photos that you see of our products on a white, blown-out background: that's me and a piece of posterboard using Photoshop. Typography, the Kickstarter page, elements of the website. I'm not a pro, but it's been really helpful. Treehouse has some good tutorials, but you really learn by doing."
Click here to learn about Airbrite, an order-processing API for developers. We also make Celery, an easy way for startups to take pre-orders.
