As management guru Peter Drucker observed, “Entrepreneurship is ‘risky’ mainly because so few of the so-called entrepreneurs know what they are doing.” The little secret of the tech world is that an entire industry has evolved to supply that knowledge to entrepreneurs, along with a complete starter kit of tools and components — in the process, vastly increasing their odds of success.
The tech startup toolbox includes classes, networking, mentorship programs, shared workspaces, and all kinds of funding options, not to mention thousands of off-the-shelf software and hardware components that can be used to assemble new product prototypes quickly and easily. It happens every weekend at 48-hour hackathons on hundreds of college campuses. Many teams produce working products in the course of a weekend. And if these products hint at commercial potential, testing the market via one or more app stores couldn’t be easier.
WHAT ABOUT SUSTAINABLE BUSINESS ENTREPRENEURS?
Now, try to start a new fashion business using the underdeveloped supply chain and distribution system for sustainable and ethical apparel. If you want to actually produce and sell a sustainably made garment, you’ll find that almost no roadmap or infrastructure exists to give you an edge. Shannon Whitehead set out to improve the odds for sustainable business founders.
“I started by asking, ‘Why isn’t it easier for entrepreneurs to get a sustainable fashion product designed, manufactured, and sold?’” Whitehead said. “Why isn’t it easier to manufacture in the United States? How can we make sewn-apparel production a more approachable process, so people don’t feel the need to outsource overseas?”
Enter Factory45, the accelerator program that Whitehead developed and launched in the spring of 2014 for entrepreneurs in the sustainable fashion space. Her insights into the needs of entrepreneurs grew directly out of her own two-and-a-half-year odyssey to launch a sustainable fashion brand, {r}evolution apparel, with a partner.
“The accelerator is a key component of the launch infrastructure that our economy needs in order to grow sustainable businesses.”
A LONG, STRANGE TRIP
Whitehead and her former business partner, Kristin Glenn, met while traveling on extended backpacking adventures in Southeast Asia and Australia. They shared a vision for a garment that could be configured to play many roles in a female backpacker’s limited wardrobe. Back in the US in 2010, they set out to make their idea a reality. Having witnessed the social and environmental messes created by the fashion supply chain in Asia and Central America, they were committed to manufacturing their garment using ethical labor practices and environmentally sound production methods.
The partners’ search for sympathetic craftspeople, sustainably grown fibers, US-based, environmentally friendly manufacturers, and targeted distribution channels was met with indifference, closed doors, and far too many unanswered calls and emails.
Whitehead explained, “In what’s left of the textile belt in America, you have mostly older men who have been running the sewn manufacturing industry since before offshoring in the ’90s, before most of their business went overseas. There’s very little trust left, which is entirely understandable, but which makes it hard to break into the industry. Kristin and I came along with a new kind of product and vision for our company, and it was hard to convince anyone that what we were doing could be of value to them.”
Two and a half years later, their product, the Versalette, finally came to market and quickly sold out its first production run. During those 30 months, Whitehead and Glenn learned more than they could have imagined about the business of funding, designing, sourcing, manufacturing, and marketing a sustainable fashion product. And they had a profitable business with six-figure revenue — a great start.
NOT FAILING FAST ENOUGH
Two and a half years is not what the startup gurus have in mind when they encourage entrepreneurs to “fail fast.” The idea is to get a good-enough product to market quickly and let consumers vote with their wallets. Then, if the market likes it, you can mold your product in response to market feedback.
Failing fast is accepted wisdom for tech startups, but the secret is that it’s made possible by the startup toolkit and the fully developed support ecosystem at their disposal. An important link in this ecosystem is the accelerator — an organization that provides entrepreneurs with all of these goodies in exchange for a small stake in the startup company.
Unfortunately, accelerators for sustainable businesses are few and far between , and the established technology accelerators are not branching out to new industries. A recent study of Y Combinator, a prominent Silicon Valley accelerator, found that of the 255 total graduates in the years 2012 to 2014, only 19 (or 7 percent) were developing sustainable technologies and services.
THE LIGHTBULB MOMENT
“The ‘lightbulb’ for this idea came on gradually,” Whitehead said. “Kristin and I amicably parted ways. She started her own brand, and I consulted on projects for both startups and established brands. In that process, I realized that I really liked working with startups, but they couldn’t afford traditional consulting fees.”
Taking a page from the tech world’s approach, the idea that took shape was to develop her own accelerator, but with some fundamental differences.
“I believe that the venture capital (VC) system for the technology industry is, in some ways, fundamentally flawed,” Whitehead said. “To the small percentage of startups that get VC funding, they say, ‘Here’s a few million dollars, go start a company.’ Although many of these entrepreneurs will have passed through some kind of proof-of-concept phase with angel or bootstrapped investment, many don’t yet have any customers or traction. I looked at that model and thought, ‘Why are these companies raising all this money without even proving a market need first?’
“I also looked at online learning platforms, like Coursera and Skillshare. They lay out the content and give you resources to learn, but there’s no accountability or mentorship. I looked at both of the – approaches and flipped them on their heads to create a new model.
“My thought process in creating Factory45 was this: You can bootstrap a company with $5,000 if you allocate $3,000 to an accelerator program, like mine, and save $2,000 for samples, patterns, and other preproduction expenses. Then you can launch with a successful Kickstarter campaign, which will repay your investment in Factory45 and fund your first production run.”
While it might be easy for tech entrepreneurs to hand over 7 percent of their new venture to Y Combinator for needed resources and advice, Factory45 asks for $500/month for six months — not a lot in the business world, but hard-won savings for Whitehead’s mostly young entrepreneurs.
“Starting a new company, let alone a sustainable apparel company, is one of the hardest things you can possibly do,” Whitehead said. “The entrepreneur needs to have skin in the game. It needs to hurt a little bit. It needs to feel like, ‘I’m putting my $3,000 on the line and I’m going to make something of that.’ Otherwise, what stops them from giving up?”
“People see the industry changing. We’re no longer saying that it’s going to change one day, because it’s changing right now. It’s happening.”
LAUNCHPAD FOR A SUSTAINABLE INDUSTRY
Factory45 offers a six-month program built around a custom online classroom. The curriculum, resources, and industry contacts are accessible to each student to work at his or her own pace. Each incoming class meets biweekly, and Whitehead is available every day for one-on-one coaching. She takes her mentor role very seriously: “I’m not in the business of just taking your money and saying, ‘Good luck, have fun, go start a company.’ I need to be invested and responsible as well. So I’m available every single day for six months, as much as the entrepreneur needs me.”
By the time they graduate, Factory45’s entrepreneurs have become knowledgeable businesspeople, with sustainable fabrics and materials available to source, sew shops in the US ready to partner, and a viable plan for going to market. They have navigated all the challenges involved in planning a product launch and negotiating and working with suppliers, and are ready to market and distribute a product.
To date, every Factory45er who launched with a Kickstarter campaign has been successful, with each one raising $19,000 or more. As a result, they have each pre-sold several hundred units of their product to their first customers and have had enough capital to fund their first production run. At that point, they are ready to either continue bootstrapping their company’s growth or approach investors with a proven business.
The accelerator is a key component of the launch infrastructure that our economy needs in order to grow sustainable businesses. Whitehead is training entrepreneurs to be more successful, and Factory45 is getting them to market much faster than if they followed in the footsteps of {r}evolution apparel’s two-and-a-half-year, do-it-yourself odyssey.
“People see the industry changing,” Whitehead said. “We’re no longer saying that it’s going to change one day, because it’s changing right now. It’s happening.”
Factory45 is enabling and accelerating that change. On a higher level, it’s a catalyst driving the growth of a more robust launch infrastructure that will support sustainable business entrepreneurs not just in fashion, but across industries. It’s a launchpad for a new economy.
Chet Van Wert is a marketer who works with companies adapting to radical change: digital disruption, media transformation, and the clean economy revolution. He focuses on the challenges of marketing sustainable businesses to consumers across the “50 shades of green” spectrum at www.NextBestPractices.com and www.GreenerDailyLife.com
