>>Bayard Winthrop: I’m the founder of a company
called American Giant. And we are a clothing company that makes all of our clothes entirely
in the United States and sell through exclusively our Web site, no stores.
And I think I’m probably the only speaker at the Zeitgeist conference this year actually
speaking about thread. And I’m going to take you through —
[ Laughter ] — I’m going to take you through a little
bit of the process that we went through making our — I think the product we’re best known
for, which is the hoodie that has been called the greatest hoodie ever made.
And I’m going to take you through that journey that we went down that, for me, was a very
inspiring and sort of caused me to rethink a lot of the fundamental assumptions I’d made
about manufacturing and the impact of manufacturing, more broadly, about beginning to rethink the
apparel industry as a whole, maybe what was wrong with the apparel industry as a whole,
and stimulated some questions about maybe even America itself.
To learn a little bit about American Giant, it might help to know a little bit about me.
That’s me in the middle. I grew up in the ’70s, the youngest of three
boys, raised by a single mom. And in addition to being a fanatical Boston Bruins fan —
[ Cheers and applause ] Wow! Excellent.
— I grew up in the ’70s in a time when the Great American brands were sort of thriving,
alive and well. I remember clearly wearing Levi’s for the first time and being struck
that I’m a Levi’s guy. I’m not a corduroy guy.
And probably the most impactful for me was actually a sweatshirt that my mom bought for
me at the local Caldor’s. She could afford it. I still have it. It lasted forever. It
got better and better with age. Made entirely in the United States.
That type of garment doesn’t exist anymore today. But it made an impression on me that
I think probably stuck with me through my career that made me want to get into, I think,
some kind of activity that would give me the opportunity to do something special with an
American brand and American manufacturing. And after a brief foray into corporate finance
in New York, I turned pretty quickly to apparel and footwear and spent me career doing that
predominantly. For those of you that have spent any time
around the apparel industry, what you realize really quickly is that the fundamental dynamics
have shifted there, that those businesses really have become about supporting very big,
very expensive, very complex distribution in the form of stores and malls all across
the country, and big marketing programs to drive traffic into those stores.
That’s often paid for, in my view, by a slow but steady whittling away of quality, manufacturing
moving offshore, brand values beginning to become maybe more wobbly than used to be when
we were younger. An interesting thing began to happen ten years
ago or so. I think consumers began to sort of become subconsciously, consciously aware
of this idea that quality was not as present. This is my interpretation, anyway. And that
you began to see consumers saying more and more, hey, quality is something that I’m missing.
Quality product, manufacturing stories, transparency about who the people are that were making
things, wanting to get closer to that, wanting to have a relationship with the products they
were consuming, the people that were making those products. But the market dynamics were
such that that was getting solved for in ways that really looked more like boutiques in
Brooklyn selling $300 pairs of jeans, relegating that interaction with product to the elite
consumer. San Francisco and Brooklyn, not mainstream America.
I was really interested in solving for the mainstream problem. I believed it was a universal
desire, one that was not relegated to people that were living in San Francisco, but that
the marketplace wasn’t solving for it very well.
And I had the desire to do something big and at scale of the size of a Gap, not of the
size of a boutique in a wealthy city, but always, I think, sort of began to believe
that that was sort of the dynamics had shifted enough that that was no longer possible. But
a funny thing began to happen about four or five years ago. The change that we’re all
familiar with about consumer behavior beginning to think the book industry and the video industry
and the music industry little by little began to impact the suburban mall and other industries,
like apparel, in our view. And slowly but surely, you had consumers saying, at least
as we interpret it, I don’t care so much about the store experience. I don’t care very much
about the suburban mall. I care a lot about quality. I care a lot about value. I care
a lot about brand values. And equally importantly, from where I sat, there was a desire or a
change in behavior that the great brands that were emerging today were being discovered,
were — loyalty was being generated from word of mouth communication, friends telling friends,
social networks, not big, unwieldy marketing budgets that looked like billboards in Times
Square or full-page print ads. So here I was, saying, wow, consumers are
saying quality matters, brand values matter, U.S. manufacturing matters. Stores don’t.
Marketing budgets don’t. That was an aha moment for me and a moment
that gave me enough confidence to say, what if we did that? What if we put all of our
energy into what we believe our customers are asking for ask and had the courage to
abandon things that are costing so much money and that the consumers, the customers don’t
want anymore? The beginning of the idea of American Giant
for us. For me, I was obsessed with this idea of the sweatshirt. I felt it was the other
Great American silhouette, other than the blue jean. And unlike the blue jean, which
had been perfected and refined with many great brands, thinking about that and doing an interesting
job there, the sweatshirt had really gone the opposite direction. Nothing special, a
product that had been relegated to something that you wore to do laundry on a Sunday. And
I wanted to think about maybe using that as an opportunity to do something different and
special in manufacturing that said we are going to go look at that in a new way, in
a way that says release yourself from the constraints of having to pay for this unwieldy
business as it is today, and focus purely on making something really special, unencumbered
by the traditional constraints in the apparel manufacturing world.
For us, that began with cotton. We think that sweatshirts, the great sweatshirts, are 100%
cotton, not blends, not synthetics. We’re lucky enough to live in a part of the world
— or live in a country that grows some of the best cotton in the world. All of ours
comes from Southeastern-grown and Delta-grown cotton. And that fabric works its way up through
the harvesters and the ginners and the sorters up through a — in our case, a primarily Southeastern-based
supply chain. The yarners, in this case Parkdale Mills in South Carolina, that turns all of
our cotton into yarn that gets knitted into actual fabric, the dyers and finishers. We
were obsessed with not only the weight and the weave, but also the way the fabric felt.
I remember as a child that dry hand feel that you feel in cotton, backed by a soft-napped
back. You’re seeing a napping machine on your right
here that is — that actually picks the back of the cotton to give it that loft.
That process was about an eight-month process of, interestingly enough, almost having to
reverse-engineer the development of the fabric itself. Many of those old looms had been shipped
overseas many years ago. Hardware and thinking — doing the same approach
with hardware, thinking about custom hardware versus stock hardware, metal hardware versus
plastic, but sort of at a very elemental level, beginning to ask, what makes this product
great? What’s going to make it differentiated? What’s going to make it feel correctly? Operate
correctly? Fit is an interesting thing. Fit is something
that particularly in the sweatshirt category had really gone away. Fit’s complicated. Fit’s
expensive. You need to have good engineers around the problem that think about how do
you make a garment fit you correctly. It requires additional construction work, needlework that
oftentimes the industry has said no to in an effort to drive high initial margins on
a product. Additional paneling. We sort of set that free and said we want to make a garment
that actually looks good, that you could wear into the office, that you’d wear out of the
house and be proud to see the in-laws with, a garment that gives you shoulders and gives
you a waist. Fit was something we spent a lot of energy on.
And then, finally, as you move up that chain, the cutting and the sewing process. In our
case, all of our material is cut by hand. You’re looking at some footage here in a facility
in Wendell, North Carolina, where those layers and layers and layers of sweatshirt fabric
are getting hand cut, and then moving along into the construction phase, the sewing phase.
It’s easy to forget that 25 years ago, about 95% of the apparel that was consumed in the
United States was made in the United States. That ratio has almost flipped entirely now.
It’s almost 95% made overseas. And, yet, in the Carolinas particularly, there’s an incredible
amount of talent and assets and resources that are underutilized. We were lucky enough
to begin to work with a lot of those sewers and operators down there to help us bring
to market what, in our view, was something pretty special, something that I was very,
very passionate about, inspired by. And it was expensive. It was a garment that we’d
spent a lot of time, a lot of energy in, we were making it entirely in the United States.
We wanted to price it at a price that made sense for the mainstream consumer. But we
were able to do that because we’d given up on stores and given up on marketing.
That was the idea, anyway. And in February of 2012, we began to ship
the product, on the hope that if we began to get product out in the marketplace, customers
would talk. Friends would tell friends about it, people would begin to buy it for family
members, for other friends, talk about it on social networks. That began to happen.
Probably easier to see in retrospect than it was at the time, but we began to see consumers
coming back, talking about it, posting about it, buying it for their extended networks.
And then ten months after we started to launch the business, Slate Magazine wrote an article
about us. They called us the greatest hoodie ever made. I remember that day clearly.
[ Laughter ] It — The article came out — I actually didn’t
think very much of it. And about four hours later, we were getting absolutely inundated
by orders. And that was a great moment. It not only meant
that we suddenly had a great Christmas on our hands and we were going to sell an awful
lot of product, but maybe equally importantly, it kicked off a conversation in the media
more broadly about is American manufacturing viable? Is this hoodie as good as he says
it is? What is eCommerce doing to apparel and might
that change be coming that swamped previous industries to this industry?
And that elevated the brand. It got awareness that we could have only dreamed of a couple
of weeks earlier. And we found ourselves in a different situation than we were a month
earlier. We were now going from a tiny little startup in San Francisco into a scrambling
business, hiring temp workers as fast as we could. I’m embarrassed to say shipping in
boxes that we were buying at the local Home Depot because we didn’t have enough boxes
to ship the product in. And off we went. And that kicked off a process that has gone
on new for two and a half years for the business where we have been flat-out trying to meet
demand for the product. It’s an interesting challenge with a manufacturing
business. Many of the people in the room here are aware of and familiar with what happens
when a technology company gets press, gets awareness, needs to scale quickly. That may
look like downloading. 100,000 people find out about an app. 100,000 copies of the app
get downloaded. We had a different challenge. 100,000 people found out about our product.
We had to go make hundreds of thousands of products. And that is an interesting experience.
We went from a partial production line in a factory in Brisbane, California to another
factory in Southern California, to a third and a fourth and a fifth in North Carolina,
trying to run as fast as we could to scale up production.
That’s a great thing. It’s fun to be a part of a business that’s going through that moment.
It also had the sort of ancillary benefit that suddenly we were impacting factories
that had been idle or close to idle for many, many years. We were hiring in places that
had not seen hiring in a long time. It wasn’t just the sewers. It was also the
people that were behind the supply chain. That’s Jerry Hamill on the far left, one of
our key cotton growers and his team of people that harvest bring their cotton to market.
He is a North Carolina based cotton farmer. And like many of these examples, he is one
of these sort of generational businesses that have been around for a long time in the apparel
trade. The ginning and the yarning facilities. Parkdale
Mills, in this case in Gaffney, South Carolina. Interestingly enough, one of the most modern
yarning — maybe the most modern yarning facility in the world in a tiny town that you might
all know from the Peachoid, from the Netflix political series. That town actually has one
of the most modern yarning facilities in the world in it.
To the yarners, impacting the yarners, and up the chain to Carolina Cotton Works or dyers
and finishers, owned by the Ashby family, a third generation family that has been knitting,
dyeing and finishing fabric. We’re now the largest customer of CCW.
And all along the way, we found ourselves not only impacting the front end of the production
line but the layers and layers of people down the supply chain.
And that — When you’ve spent your career manufacturing and you’ve spent your career
in, at least in my case, being removed almost arm’s length from your manufacturing process,
when you suddenly find yourself diving deep down into the supply chain for me it was a
pretty profound experience and got me to rethink what it means when you build a product. What
consumers value in making a product. In towns like Middlesex, North Carolina which
is about 20 miles outside of Raleigh in Nash County, when we first arrived in Middlesex
in 2012 or 2013, unemployment was north of 13%. It is a town that looks very much like
other towns around Raleigh. Lots and lots of old vacant warehouses that now suddenly
were — it’s funny. I remember clearly going into this facility for the first time and
it was just filled with parking spaces. I pulled up right in front, went inside, met
the line supervisors. Today if you go to that facility there’s no room in that parking lot.
They actually moved to a field next-door and the parking lot is overflowing there.
That’s an interesting thing. It’s an interesting thing that we really set out about to do with
a fairly narrow goal. We sort of looked at this thing and said we want to do — consumers
are driving something interesting. They are saying in industry after industry pay attention
to the things that matter to us. Pay attention to the quality. Pay attention to the value.
Pay attention to the brand values. Don’t invest in anything else.
That simple idea for us took us both down a path of a manufacturing process that was
fascinating to me and was interesting and had us impact a whole bunch of interesting
layers of the supply chain but more broadly got me to begin to think about what change
is in front of us. As technology begins to move into not just software and businesses
that maybe are more digital — digitally scalable but into old-world manufacturing businesses,
what does that open up for the consumer and their ability to have an impact on the kind
of change or businesses that they want to support.
I think that — and all of you, if you have a badge on your — in your Google Zeitgeist
badge, in there there is sort of an archaic note about a special gift at the concierge
desk. It’s a sweatshirt for all of you. I hope you go pick it up.
[ Cheers and Applause ] When you get it, I hope — you know, I hope
you look at it. I hope you like the sweatshirt. I hope it fits you correctly, hope we got
the size right, all that sort of stuff, but more importantly I hope it stimulates thinking
of what the next wave of change is going to look like on the heels of technology and what
does that mean for us as consumers and how we can impact the things that matter to us,
whatever that means. Whether it’s American manufacturing or something else. How technology
is unlocking the ability for us as consumers to begin to direct our dollars to things that
matter for us. Thank you very much.
[ Applause ]