Menswear Entrepreneurs: Naadam’s Sustainable Cashmere

March 18th, 2015

One of the benefits of our partnership with Liberty Fairs is getting to meet the entrepreneurs behind so many up-and-coming brands. Sometimes we forget that behind every menswear collection is a man with a dream, a vision, and a whole lot of guts.

Matthew Scanlan started his formal career in the Investment Banking world. He spent many long hours helping other entrepreneurs realize their dreams, and turn their passions into profits. In 2013 he decided to take the plunge, by focusing his energy on helping others. His story really resonated with us, so we decided to share it with you, as part of a new series titled “Menswear Entrepreneurs”.

The Birth of A Brand

“Before Naadam Cashmere I was at a Venture Capital firm in New York City. I spent a lot of time selling other peoples visions and then watching them succeed (or fail) from the sidelines. I was surrounded by hungry entrepreneurs and came to revere them for their passion, creativity, grit, and purpose. I used to see these guys (and girls) going through these extreme highs and lows; crazy stress and aguish followed by euphoria and manic behavior…I wanted that. It looked like fun. After a few years I just couldn’t do it anymore, I wanted to build something of my own, I wanted to be passionate about something, fall in love with something and go on the roller coaster ride that is start-up life.”

His years on the other side of the start-up life certainly helped. He spent much of his VC days studying supply chains and trying to gain efficiencies in the production of raw materials. Once he found his niche – in the luxury cashmere space – he also developed a one-of-a-kind sourcing structure that serves to give back to the farmers who work hard to provide his most important natural resource. It’s an inspiring philanthropic approach and, judging from it’s original response on Kickstarter (raising $103,439 – more than five times their goal of $20K), the people are all about it.

Re-Thinking Sustainable Sourcing

“We use sustainability as a business practice and source rare materials, specifically a long staple, low micron, white cashmere, to produce casual luxury fashion. We go directly to the source to purchase cashmere from groups of nomadic herders in the outer plains of Mongolia and then repatriate a percentage of our annual profits back to those same herders through a diversified micro economic development strategy that stabilizes their livelihood while continually insuring the highest quality material for NAADAM. It helps real people, cuts our costs in the long run, and it’s just good business!

My co-founder Diederik had just finished up his Masters degree in Econometrics (currency exchange rate analysis) and was blabbing on about a trip he had taken to Mongolia where Nomadic herders were harvesting rare white cashmere. I was determined to get out of the VC world and was interested in non-profit work, specifically how micro-economic development could be used to influence commerce. We took a trip out to Mongolia and by the virtue of our offer – “what can we give, not what can we take”, we found ourselves living in a Ger 20 hours into the middle of the Gobi Desert, eating Goat meat and Marmot. We were living with a family of Nomadic herders. The objective was to learn from them how we could assist to make their lives easier. We heard a lot of things they needed along with some things they wanted –  if we were going to help we had to make considered decisions on what was necessary and doable.

One day we asked what the goats were for and the next thing you know we were buying a couple hundred Kilo’s of cashmere to spin our first yarns and produce our first sweaters in facilities in Ulaanbaatar. The goal would be to sell the sweaters and then take the profits to fund the non-profit piece. What became clear early on was that we had a very unique product on our hands – a material that only existed in this part of the world, where the weather conditions allowed for the worlds finest cashmere hair. We had something valuable and we wanted to capitalize on it. That is when the real roots of the idea took hold and we saw for the first time that if we did it correctly we could not just change the lives of these people but we could also change the way an industry operates. Symbiotic supply chain mechanisms to maximize rare material sourcing capabilities…”

Entrepreneurship = Challenges

“There were a whole host of challenges we encountered early on and there are even more challenges to come. Strategic pricing was important. We needed to price our commodity competitively. Using price elasticity models and industry research we could develop margins to support a business and sell enough product to hit minimums. But then the challenge became on what platform would this be possible and would it be cost efficient. Marketing a brand into a very competitive industry can be costly. Marketing the brand to position us in the right market segment while developing our brand language all at the same time seemed nearly impossible.

The only thing we could do was start selling. We knew how much it needed to cost, we just needed to know how to sell it. We decided to diversity and sell in multiple ways, on multiple platforms. We used both our own website and social media, a Kickstarter campaign, and the wholesale channel to see where our success would come from. The real challenge was getting enough traction early on to establish brand value. Luckily our foundation was a great product at a good price. That enabled us, early on, to sell successfully across multiple channels. The next challenge was managing small business cashflow once we made our first sales… It’s a constant learning experience, both internally and externally.”

Early Successes & Growth

“Naadam’s menswear is currently stocked in 30 stores across the country. We debuted our first women’s collection during New York fashion week and the reviews have been outstanding… We started with just cashmere sweaters that we designed ourselves, and now we’ve hired a design team to produce full collections for men and women. We’ve also started to produce our own yarns in Italy, using our cashmere from Mongolia (of course), which we will be selling as a collaborative Yarn with Maiyet.

On the other side – the philanthropic side – we used our earnings to to build out a very comprehensive veterinarian program for our herders. We will be vaccinating almost 190,000 goats for 500 families of herders in a Mongolian region the size of Road Island! It’s a huge undertaking that will significantly impact the lives of the herders that we source from.

Lastly, continuing on with the success of our model, I will be headed to Peru on a grant from the Peruvian government to start work with alpaca herders in a very similar manner to the work we do with Mongolian goat herders. It’s a model we are fully invested in…starting on the ground level and supporting the people who create the world’s best raw materials.” 

Advice to Entrepreneurs

“Focus on building a great team. Naadam is still a small company but we have very talented people working on the business. This way everyone can focus on what they do best. I can focus on growing the business, our designer Hadas focuses on creating amazing innovative product, Diederik focuses on production and cash flow, Patrick focuses on positioning the brand in the marketplace, Whitney focuses on building our identity as a company. By not being greedy and allowing everyone to share in the long-term success of the business we have quadrupled our growth effort… It is hard to do everything yourself, you need a team to support and multiply your effort.”

Have a question about starting a brand, or generally about fashion entrepreneurship? Matt and I will do our best to answer from our experience, in the comments section below.

Thanks, as always, for reading.

Yours in style,

Dan Trepanier

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