Latest / What's Your Problem? / Bringing Back the American Hoodie

Transcript

Bringing Back the American Hoodie · What's Your Problem?

0:15
Speaker 1: Pushkin. Today's show is about some very big, very timely ideas, globalization,
0:25
Speaker 1: supply chains, the future of American manufacturing. Today's show is
0:31
Speaker 1: also about something very simple. A sweatshirt. A plain cotton
0:36
Speaker 1: sweatshirt with a zipper and a hood and a pocket
0:38
Speaker 1: to put your hands in when they get cold. The
0:41
Speaker 1: sweatshirt is made in America, it costs one hundred and
0:45
Speaker 1: thirty eight dollars, and it is wildly popular. I'm Jacob Goldstein,
0:53
Speaker 1: and this is what's your problem. My guest today is
0:56
Speaker 1: buyered Win, founder and CEO of American giant. Byron's problem
1:01
Speaker 1: is this, how do you make clothes in America and
1:04
Speaker 1: compete in a global economy. I grew up in the
1:07
Speaker 1: East Coast, and I grew up in a wealthy town
1:11
Speaker 1: in southern Connecticut where all the successful parents that I
1:14
Speaker 1: was around worked on, at least in my imagining of it,
1:17
Speaker 1: worked on Wall Street. And I got pretty fixated on
1:20
Speaker 1: that as a young kid and wanted to wanted to
1:22
Speaker 1: figure out a way to make money, I think, and
1:25
Speaker 1: kind of put my head down and did that for
1:27
Speaker 1: als of my college years and eventually got a job
1:29
Speaker 1: on Wall Street and realized pretty quickly that it was
1:31
Speaker 1: the wrong thing for me, and I had always grown
1:34
Speaker 1: up I always loved consumer products. I love clothing, and
1:38
Speaker 1: I have these very strong memories as a kid of
1:40
Speaker 1: my first pair of blue jeans and my first flannel shirt,
1:43
Speaker 1: my first Champion sweatshirt, all these things that these very
1:46
Speaker 1: sort of strong associated memories I was young, and I
1:49
Speaker 1: think that sort of informed for me an idea that
1:52
Speaker 1: I wanted to make something. So Bayard started working at
1:55
Speaker 1: companies that made stuff that sold physical products, and that
1:59
Speaker 1: was great for him, but those companies, like a lot
2:02
Speaker 1: of other American companies at the time, were moving production overseas,
2:06
Speaker 1: and that created a new problem for byired. The more
2:09
Speaker 1: I did that, the more I became really clear about
2:13
Speaker 1: both a disconnect from the product itself and there was
2:17
Speaker 1: a real loss attached to that, and a feeling that
2:19
Speaker 1: I couldn't control quality as well, and I didn't feel
2:21
Speaker 1: that sense of responsibility and stewardship over the stuff that
2:24
Speaker 1: I was making. And then there was also a human
2:26
Speaker 1: part of that that I felt that these people that
2:28
Speaker 1: had built relationships with that we were providing jobs for,
2:31
Speaker 1: that we were picking up and leaving. And as I
2:33
Speaker 1: got older, that really started to wear on me, and
2:36
Speaker 1: I began to contemplate the idea of American giant with
2:38
Speaker 1: a really simple idea, which was, I'd grown up around
2:41
Speaker 1: these great American brands Levies and Wrangler and wool Rich
2:44
Speaker 1: and all these amazing brands that had built very high
2:46
Speaker 1: quality products stood for something in my imagining of it,
2:49
Speaker 1: and I felt that the particularly an apparel, there were
2:51
Speaker 1: no brands like that left, and I wanted to do
2:53
Speaker 1: something different. I felt that not only could we make
2:56
Speaker 1: beautiful product here nearby, but also do it in a
3:00
Speaker 1: way that was consistent with our values, that respected environmental
3:03
Speaker 1: laws and human rights laws. And I thought the moment
3:06
Speaker 1: was right. E commerce was emerging, there was a bunch
3:09
Speaker 1: of advancement that happened in manufacturing and technology and data
3:12
Speaker 1: that I felt could build sort of a new American brand.
3:16
Speaker 1: And so in two thousand and twelve, we launched with
3:20
Speaker 1: a single product, a sweatshirt, a full zip sweatshirt. I'm
3:22
Speaker 1: wearing it now actually, and that sweatshirt we kind of
3:26
Speaker 1: poured my life into. I sort of everybody I spoke
3:28
Speaker 1: to told me it could be done in the United
3:29
Speaker 1: States anymore, and we battled our way through that. In
3:32
Speaker 1: real partnership with a bunch of people that remain suppliers
3:35
Speaker 1: of ours today. And late that first year, Slate magazine
3:39
Speaker 1: wrote an article about that sweatshirt. They called it the
3:41
Speaker 1: greatest hoodie ever made, and that kind of changed everything
3:45
Speaker 1: for us. I looked up that Slate article. It was
3:47
Speaker 1: published on December fourth, twenty twelve, so pretty much exactly
3:52
Speaker 1: ten years ago. So I don't know. Congratulations your ten
3:55
Speaker 1: year anniversary of making it as a company. Thank you.
3:58
Speaker 1: We're gonna do We're gonna do something special for that anniversary,
4:01
Speaker 1: by the way, So I appreciate you noticing that. Okay,
4:04
Speaker 1: So like tell me about seeing that article, Like someday,
4:07
Speaker 1: what happened? You get up to somebody email it to you.
4:09
Speaker 1: What happened? Yeah, So the article hit and I got
4:12
Speaker 1: a phone call on the fourth at about five pm
4:16
Speaker 1: from the people that were managing our website and in
4:20
Speaker 1: a panic, and they said, you see what's happening here.
4:23
Speaker 1: I had no idea. I said, know what's going on?
4:24
Speaker 1: They said, we are getting orders now, we are getting
4:29
Speaker 1: hundreds of orders a minute. We would you get in
4:32
Speaker 1: a typical day, one hundred orders in a day? Probably
4:35
Speaker 1: not even actually back then, this is like a good
4:39
Speaker 1: news bad news situation. You're like, great, but oh my god,
4:42
Speaker 1: we don't have the sweatshirts. Well, so in the in
4:45
Speaker 1: the short time it was it was sort of unfettered
4:48
Speaker 1: great news. I mean, it was really what you hope
4:51
Speaker 1: for dream about as as an entrepreneur starting something. It
4:54
Speaker 1: really was wonderful. There was a there were tins of
4:57
Speaker 1: challenges like could we get the servers, could we get
4:59
Speaker 1: the site loaded the web? Yeah, yeah, so there's some
5:03
Speaker 1: short term crises, but but big picture it was really great.
5:06
Speaker 1: But pretty soon what happened is, you know, by the
5:09
Speaker 1: next morning, we'd sold out of everything we had. We
5:11
Speaker 1: had a bunch of stuff that was in the supply
5:14
Speaker 1: chain coming, yarn and fabric coming that would carry us
5:17
Speaker 1: all the way through till about June. So six months
5:19
Speaker 1: ahead we said, boy, why don't we put up a
5:22
Speaker 1: blog post and say we're sold out. But you know, Jacob,
5:26
Speaker 1: if you want a sweatshirt, you can give us your name,
5:27
Speaker 1: in your size, and your preferred color and we'll ship
5:29
Speaker 1: one to you and it may not get there till
5:31
Speaker 1: May or June. And that blog we sold out of
5:34
Speaker 1: everything in the pipeline within a day. Or two. And
5:38
Speaker 1: so that's when things got really challenging. I mean, I
5:40
Speaker 1: think we then had to sit down. Here we were
5:43
Speaker 1: in December sixth or seventh. We thought, the article has
5:46
Speaker 1: just hit. It's Christmas. Everybody's in a kind of a
5:49
Speaker 1: holiday buying mood. We're not going to get back in
5:52
Speaker 1: stock at the earliest until July. Is anybody going to care? Then?
5:56
Speaker 1: Should we order a hundred sweatshirts or a thousand or
5:59
Speaker 1: ten thousand? I mean that was a fool's errand to
6:02
Speaker 1: try to predict that well, and we were no better
6:04
Speaker 1: about it than you know, you and I might be
6:06
Speaker 1: trying to predict the future. And so we made decisions,
6:09
Speaker 1: we said, and by the way, those were scary decisions,
6:11
Speaker 1: because if we decided to bring in ten thousand sweatshirts
6:14
Speaker 1: and we only sold a hundred, and we would have
6:15
Speaker 1: bankrupted the company. Right, You've got to you've got to
6:18
Speaker 1: pay for the materials. You've got to pay for the
6:20
Speaker 1: materials now, and you don't know if you're going to
6:22
Speaker 1: sell a thousand or ten thousand. Yeah, And going through
6:25
Speaker 1: our head was in July, it's going to be ninety
6:27
Speaker 1: five in New York City, and no one's going to
6:29
Speaker 1: be buying a sweatshirt and this article is going to
6:31
Speaker 1: be old news. And so just to wrap the story up,
6:34
Speaker 1: what happened was that demand kept going. And one of
6:37
Speaker 1: the things I think we did in retrospect that was
6:39
Speaker 1: smart is we reached out to our customers and and
6:41
Speaker 1: we sort of have been this since the beginning. We
6:43
Speaker 1: were just very honest with them and we said, look,
6:45
Speaker 1: this is what's going on, and this is one of
6:47
Speaker 1: the challenges about domestic supply, and this is the situation
6:49
Speaker 1: that ran and all of our I mean maybe not
6:51
Speaker 1: all of them, they seemed like all of them were
6:54
Speaker 1: like cheering us on, saying that is the best. I
6:57
Speaker 1: don't worry. As soon as you can. If it's a
6:59
Speaker 1: year from now, I don't care. And people sat in
7:02
Speaker 1: lists wait lists that lasted for months. And then here's
7:05
Speaker 1: the kicker. In June or July of that year, I
7:08
Speaker 1: don't remember when, and far How checked back in with
7:11
Speaker 1: the business. I don't even know if you talk to
7:13
Speaker 1: me about it. But he wrote a follow up article
7:16
Speaker 1: that was titled the only problem with the greatest hoodie
7:18
Speaker 1: in the World is you have to wait six months
7:20
Speaker 1: to get it, And that did it again. It like
7:23
Speaker 1: tipped us back into this chaos. And so anyway, we
7:26
Speaker 1: were in this rhythm of trying to predict the future,
7:29
Speaker 1: probably being conservatives, so we didn't get too far of
7:31
Speaker 1: our skis financially, and we were constantly trying to catch
7:35
Speaker 1: up with demand without over committing to inventory. And that
7:37
Speaker 1: went on for long time and actually outship our capacity
7:41
Speaker 1: of our facility that we were making the sweatshirts in
7:42
Speaker 1: at that time, which was out here in California. We
7:45
Speaker 1: purchased a facility in North Carolina and had to scramble
7:48
Speaker 1: to get that up and running. So it was a
7:50
Speaker 1: chaotic time, but incredibly grateful for it because I don't
7:54
Speaker 1: think we'd be here today without without that, you know,
7:56
Speaker 1: that year of insanity and then all the demand that followed.
8:00
Speaker 1: And so when you're in that position of being essentially
8:04
Speaker 1: having demand massively outstrip your supply, you have some set
8:10
Speaker 1: of choices. Don't sell a sweatshirt to everybody who wants one,
8:15
Speaker 1: Tell people they're gonna have to wait a long time,
8:17
Speaker 1: raise the price would be a classic response to that.
8:21
Speaker 1: I mean, which of those do you wind up doing
8:24
Speaker 1: over the course of that year or so well, we
8:26
Speaker 1: talked about all of them. I'm talking about all of them.
8:28
Speaker 1: I mean, yeah, there were people that were saying, like,
8:30
Speaker 1: go to China, Like what are you doing? Like go
8:33
Speaker 1: go get on the phone and have the switcher made overseas.
8:35
Speaker 1: There was every option you could think. I was on
8:37
Speaker 1: the table and and but to your question, I think
8:39
Speaker 1: we put a couple of stakes in the ground. We haven't.
8:41
Speaker 1: We did this with the pandemic too. It's always clarifying
8:43
Speaker 1: to me to figure out, what do you what are
8:45
Speaker 1: your core principles, what do you believe in One was
8:48
Speaker 1: that we were not gonna we won't go sacrifice quality,
8:51
Speaker 1: We weren't going to change our philosophy about how we
8:53
Speaker 1: made things, and we were gonna be honest with our customers.
8:56
Speaker 1: And and that looked like big, big delays. And you know,
8:59
Speaker 1: people ask me a lot like co did you do
9:01
Speaker 1: that on purpose? And boy, it's great to be backward
9:02
Speaker 1: And I'll tell you that um with the business was great.
9:07
Speaker 1: But but but having customers have to wait for that long,
9:09
Speaker 1: he is asking an awful lot of customers And that
9:12
Speaker 1: was not Uh. I wouldn't want to repeat that again,
9:16
Speaker 1: but that's the route. And it was just to sell sweatshirt, said,
9:19
Speaker 1: you can't swell all the sweatshirts people want. It's got
9:22
Speaker 1: to be a very mixed kind of blessing. Well, there's that,
9:25
Speaker 1: and there's the there's just the reality of the deep
9:27
Speaker 1: sense of trust that a customer puts in you and
9:29
Speaker 1: they decided to spend their money on something you make.
9:31
Speaker 1: And when you do that and you can't fulfill it
9:33
Speaker 1: and you're asking them to wait and it's gonna be
9:34
Speaker 1: another month, and this just changed it. Just you don't
9:36
Speaker 1: want to be in that situation. So it was a
9:38
Speaker 1: it was a it restored a lot of my faith
9:40
Speaker 1: in humanity and um and as I said earlier, I
9:43
Speaker 1: think we were totally honest about the whole process and
9:44
Speaker 1: that helped. But it was a it was a rocky
9:46
Speaker 1: couple of years there, for sure. So okay, so that's
9:49
Speaker 1: the that's the dramatic beginning. UM I wanted to talk
9:53
Speaker 1: about the present now. I would imagine in the long run,
9:57
Speaker 1: to make clothes for any significant market in the US,
10:04
Speaker 1: you have to do a lot of innovating, right Like
10:07
Speaker 1: you have to figure out how to be efficient, how
10:09
Speaker 1: to use technology. And so I'm curious what you have
10:12
Speaker 1: learned yeah, I mean, I think it just if I
10:14
Speaker 1: may just to kind of frame it up a little bit,
10:16
Speaker 1: because I think it's important to kind of contextualize it somewhat.
10:18
Speaker 1: I think if you, as a framing principle, say we
10:21
Speaker 1: are going to make things in the United States, Let's say,
10:24
Speaker 1: as a country, you make that decision, we're gonna we're
10:26
Speaker 1: gonna make We're gonna be a bit more protectionist in
10:28
Speaker 1: our leanings. And I would suggest that company countries like Japan,
10:32
Speaker 1: South Korea, Germany, Switzerland have adopted slightly more protectionist policies
10:38
Speaker 1: than the United States have, and as a result, they
10:40
Speaker 1: have to turn inwards to say, how do we remain
10:42
Speaker 1: competitive in a highly competitive world. The United States, on
10:44
Speaker 1: the other hand, largest marketplace in the world. The cost
10:47
Speaker 1: of entire United States is very very low. We've we've
10:50
Speaker 1: made a decision to have trade barriers be very low.
10:53
Speaker 1: And the result is is that there's overstating this. To
10:56
Speaker 1: make the point, there's less incentive to invest in capabilities
11:00
Speaker 1: domestically if there's an alternative right around the corner for
11:03
Speaker 1: apparel companies, let's say to say, why don't I go overseas? Sure? Well,
11:06
Speaker 1: I mean it's also the case though, if you look
11:09
Speaker 1: at Germany or South Korea, basically other rich countries that
11:13
Speaker 1: are more protectionists and have manufacturing, they're not making a
11:15
Speaker 1: lot of clothes, right like those companies. They're making high
11:20
Speaker 1: tech things where you have highly skilled workers using fancy equipment.
11:24
Speaker 1: They're using their sort of natural international advantage, right, and
11:27
Speaker 1: so clothes seem particularly hard. Tell me how you do it, like, so,
11:31
Speaker 1: I'll give you a couple of examples and maybe want
11:33
Speaker 1: to go a little bit deeper on. In a typical
11:36
Speaker 1: apparel manufacturing facility, what you'll see is what it's called
11:40
Speaker 1: batch sewing. So you'll see a line of operators made
11:42
Speaker 1: five operators in a line, and they'll be sewing a
11:45
Speaker 1: sweatsher and each operator will have a single task. It
11:49
Speaker 1: might be Jacob's task to sew a sleeve onto a body,
11:53
Speaker 1: it might be mine to attach a hood to a body.
11:55
Speaker 1: And the next person's going to attach the zippers, and
11:57
Speaker 1: the final person's going to attach the labels. There's a
11:59
Speaker 1: bunch of ancillary problems with that. One is is that
12:02
Speaker 1: you've got a massive amount of inventory tied up and
12:05
Speaker 1: in working process, and so you are you're the amount
12:07
Speaker 1: of inventory that's sitting on the floor is huge. You've
12:10
Speaker 1: got quality control problems. So let's say Jacob had a
12:12
Speaker 1: long land out in the town last night and he's
12:15
Speaker 1: attaching sleeves to bodies. He's doing incorrectly. Catching that qualities
12:19
Speaker 1: problem oftentimes takes hours, might take the next operator after
12:22
Speaker 1: a thousand units have moved down the line to him
12:24
Speaker 1: or her where they get caught. So there's a whole
12:26
Speaker 1: bunch of things there that are maybe a bit harder
12:29
Speaker 1: to see. I call them soft costs or hidden costs.
12:32
Speaker 1: And so one response that we've done there is we've
12:34
Speaker 1: moved that batch approach to sewing into what we call
12:37
Speaker 1: module or sew or bump. So and that is getting
12:41
Speaker 1: those same operators. First, they've got to stand up. That's
12:44
Speaker 1: a big, big change. To get operators to get out
12:46
Speaker 1: of their seats and stand all day, that's a big ask.
12:49
Speaker 1: And then have operators to cross trains, so that Jacob
12:53
Speaker 1: doesn't only know how to attach sleeves to bodies, but
12:55
Speaker 1: he now knows how to attach sippers and hoods and labels.
12:58
Speaker 1: He can do every function. One thing that that does
13:01
Speaker 1: is it eliminates a vast amount of your working process
13:05
Speaker 1: that's a big deal. It implements quality control that every step.
13:09
Speaker 1: That's a big deal, so you catch quality cotrol issues
13:11
Speaker 1: the minute they happen. The other thing is if you
13:13
Speaker 1: are productive as a team, which most of our teams are,
13:17
Speaker 1: and you beat your expected output, you get bonused for
13:20
Speaker 1: every additional unit you make in a given day. They're
13:23
Speaker 1: they're making more money, they're learning more, they're not just
13:26
Speaker 1: doing a single operation that's kind of a deadening on
13:29
Speaker 1: one thing all day, every day. So that that's an
13:31
Speaker 1: example of one of the changes that we've made. The
13:34
Speaker 1: reason why you don't see that more in the US
13:37
Speaker 1: is that the capital investments big. You've got to you've
13:40
Speaker 1: got to invest in the equipment. Number one, the stand
13:41
Speaker 1: up couldn't cost a lot of money. Number two, you've
13:44
Speaker 1: got to train your operators, cross train all your operators.
13:46
Speaker 1: That takes time. So let me ask you this, I mean,
13:49
Speaker 1: why couldn't someone at a factory in Asia do that?
13:53
Speaker 1: Or could theyre they you could? You could, yeah, and
13:56
Speaker 1: you and you do see that sometimes in Asia. The
13:58
Speaker 1: paradox is that there isn't a ton of an incentive
14:02
Speaker 1: to do it. But you do see it. You see
14:03
Speaker 1: it domestically too. You see it in Asia. You see
14:06
Speaker 1: some of the some of the facilities in Asia modernizing
14:10
Speaker 1: and using TOTA systems. I'm not sure I'm right about this.
14:13
Speaker 1: I think there's less of the sentive to do it
14:15
Speaker 1: in textiles because you can throw cheap labor at the problem.
14:18
Speaker 1: In place like that, there's less of the capital equipment.
14:21
Speaker 1: I guess part of what I'm looking for is, like,
14:23
Speaker 1: you know, besides sort of branding and price, which are
14:27
Speaker 1: clearly important, like what advantages do you get out of
14:30
Speaker 1: being in the US, And maybe one of them is,
14:33
Speaker 1: you know, more access to capital so that you can
14:37
Speaker 1: buy the fancier machines and a more highly skilled perhaps
14:41
Speaker 1: workforce that can you know, respond to this innovation. I
14:44
Speaker 1: don't know. I think that's I think it's one. I
14:46
Speaker 1: think I think the more profound ones are proximity to market, right, So,
14:50
Speaker 1: I think I think that you when you're close by
14:53
Speaker 1: from a manufacturing standpoint, your ability and my judgment to
14:56
Speaker 1: have higher quality control standards, closer relationships with your suppliers
14:59
Speaker 1: and is enhanced. So having spent a lot of time
15:02
Speaker 1: manufacturing things overseas, I can just tell you when you're
15:04
Speaker 1: five time zones away and a language barrier in between.
15:07
Speaker 1: It's much harder to on top of quality. I don't
15:10
Speaker 1: care what anybody says, it's just hard. You spend a
15:12
Speaker 1: lot of time on planes and trying to figure out
15:14
Speaker 1: what's going on, and oftentimes you find stuff when you know,
15:16
Speaker 1: too late, when it's on a truck or on a boat,
15:18
Speaker 1: and you're you know, you've got quality failures on their
15:21
Speaker 1: way to you. But look, Jake, the bottom line is
15:23
Speaker 1: it costs more money to make stuff. Here's what's sort
15:25
Speaker 1: of the frontier now, like on the manufacturing side, Like,
15:28
Speaker 1: what's the kind of frontier problem you're trying to solve now?
15:32
Speaker 1: So we are working really hard now to take some
15:35
Speaker 1: of our learnings and pushing them up stream into our
15:37
Speaker 1: fabric providers and our dyers and our finishers and stuff,
15:40
Speaker 1: and getting them to work with us in inventory and responsiveness.
15:43
Speaker 1: So for example, you know, using working with let's say
15:45
Speaker 1: Carolina Cotton Works, one of our key suppliers in Gaffey,
15:48
Speaker 1: South Carolina, so that we can when we need another
15:51
Speaker 1: six thousand yards, we can let them know, pick them
15:54
Speaker 1: up a day or two later, and move them up
15:56
Speaker 1: the road by you know, in a few hours and
15:57
Speaker 1: be going again and constantly trying to lower work in
16:01
Speaker 1: process and increase response times that we can be into
16:03
Speaker 1: market much faster. So that is a game of increments.
16:06
Speaker 1: That really is a game of increments. And it seems
16:07
Speaker 1: like that's sort of abstractly how you get manufacturing clusters, right,
16:12
Speaker 1: you have these related businesses. I mean, if you go
16:14
Speaker 1: to lots of places in Asia where they make everything,
16:17
Speaker 1: there's like a million different companies that do each other
16:20
Speaker 1: stage and they all work with each other. I mean
16:21
Speaker 1: it seems like that's what you're trying to build at
16:24
Speaker 1: a regional level, basically in the southeast US. Yeah. Yeah,
16:27
Speaker 1: if you begin to build a let's say a fabric
16:29
Speaker 1: supply capability that is supplying American giant quickly high quality,
16:33
Speaker 1: they can pivot that and look at a poulstry for furniture.
16:36
Speaker 1: They can pivot that and look at a poultry for automobiles.
16:39
Speaker 1: And so there is this spidering out that happens, is
16:41
Speaker 1: that capability develops. It really does build, to your point
16:45
Speaker 1: a network of suppliers and capability regionally. So if you
16:47
Speaker 1: look like places like Gaffe, South Carolina or Spartanburg, South Carolina,
16:50
Speaker 1: they are becoming manufacturing centers. Gaffney place where we get
16:54
Speaker 1: a lot of our yarn out of Gaffey, we get
16:55
Speaker 1: a lot of our fabric out of Gaffney. Gaffey has
16:57
Speaker 1: got a really vital and vibrant little manufacturing textile industry
17:00
Speaker 1: that's growing. And the more people that work there, the
17:03
Speaker 1: better they get, the more customers they attract, them where
17:05
Speaker 1: they can expand outside of specific industries. So that's absolutely right.
17:12
Speaker 1: In a minute, Bayern and I will talk about the
17:14
Speaker 1: costs and benefits of free trade. We'll also talk about
17:17
Speaker 1: why the cost of his American Giant Classic hoodie went
17:20
Speaker 1: from seventy nine dollars to one hundred and thirty eight dollars.
17:31
Speaker 1: Now back to the show, I think it's worth talking
17:34
Speaker 1: about cost and price for a minute. In that article
17:38
Speaker 1: ten years ago, it said your classic hoodie was seventy
17:43
Speaker 1: nine dollars, which adjusted for inflation, is right around one
17:46
Speaker 1: hundred dollars today. The Classic hoodie costs one hundred and
17:50
Speaker 1: thirty eight dollars today, so it's a lot more expensive
17:54
Speaker 1: even adjusting for inflation. Tell me about tell me about
17:59
Speaker 1: the price, Like, how do you how do you arrive
18:02
Speaker 1: at that price? So I think a few things. I
18:04
Speaker 1: think for starters, you know, one of the things is,
18:08
Speaker 1: as when you start off a company and you have
18:10
Speaker 1: an idea you probably can relate to this is that
18:13
Speaker 1: you make a product, you pour your soul into it,
18:16
Speaker 1: and there's an inherent insecurity about gosh, is it really
18:20
Speaker 1: worth what we're investing in this thing? And will customers
18:24
Speaker 1: pay for it? And so we had underpriced the garment
18:26
Speaker 1: in the beginning, and I think a lot of that
18:28
Speaker 1: was frankly just insecurity. In my part, I just feeling like,
18:31
Speaker 1: you know, maybe we don't need to make much of
18:32
Speaker 1: a margin here, because if we charge, you know, one
18:34
Speaker 1: hundred and nine dollars for this thing, will people ever
18:37
Speaker 1: pay for that? And I think that was my reference
18:39
Speaker 1: about the Slate article in the beginning, about really kind
18:41
Speaker 1: of taking me to give me a boost a confidence
18:46
Speaker 1: that I feel like you needed. Now. At the same time,
18:48
Speaker 1: one of my board members said to me, congratulations, you've
18:51
Speaker 1: just sold a bunch of under margin products a bunch
18:53
Speaker 1: of people and so and so he was, in a
18:56
Speaker 1: not very subtle way saying, you think that you're what
19:00
Speaker 1: you're standing for that supporting US jobs and US communities
19:03
Speaker 1: and that level of quality is worth something. Prove it
19:05
Speaker 1: whether your customers will pay for it. It's a good question,
19:08
Speaker 1: good point, good challenge. So that's part of the answer.
19:11
Speaker 1: Part of the answer to is that is that over
19:13
Speaker 1: the last couple of years, cotton, our inputs have increased
19:16
Speaker 1: a lot. Really, two things have increased. The cost of
19:19
Speaker 1: cotton got very, very expensive over the last couple of years,
19:23
Speaker 1: number one, and the cost of domestic labor got a
19:25
Speaker 1: lot of expensive. We couldn't get people to work in
19:26
Speaker 1: the supply chain, and so those two inputs drove our
19:30
Speaker 1: costs up a ton, and cottons come down a bit,
19:34
Speaker 1: labor is not. So it's accombination of all those things.
19:37
Speaker 1: And you know, I think my hope is is that
19:39
Speaker 1: there's an opportunity to bring that one thirty eight down
19:43
Speaker 1: if input costs come back down. But the reality is
19:45
Speaker 1: we are you know, we are subject to to things
19:49
Speaker 1: like domestic cotton prices. So you mentioned labor costs going up.
19:54
Speaker 1: It's obviously been a tight labor market nationally. You know,
19:58
Speaker 1: one of the things I was curious about is what
20:00
Speaker 1: would it mean for your business if Congress raised the
20:04
Speaker 1: national minimum wage to fifteen dollars. My answer to this
20:07
Speaker 1: is always it's an incomplete question, because if if what
20:11
Speaker 1: you're saying is, should Congress raise them in wage to
20:14
Speaker 1: fifteen or twenty dollars an hour, but at the same
20:17
Speaker 1: time allow every textile business to avoid those minimum wage
20:20
Speaker 1: laws and make stuff in China, All you're doing is
20:23
Speaker 1: you're putting out a bunch of people and businesses out
20:25
Speaker 1: of business. You're just making it incredibly difficult digging textiles
20:28
Speaker 1: to compete. So so would it if the Congress raised
20:31
Speaker 1: the minimum wage of fifteen dollars an hour and didn't
20:34
Speaker 1: change it, would it would basically put you out of business?
20:36
Speaker 1: Is that? What? Is that? What? Now? I don't if
20:37
Speaker 1: it puss out business, but it would. It would It
20:39
Speaker 1: would increase our input costs, and so we would then
20:41
Speaker 1: have to you know, we we can just absorb that right.
20:43
Speaker 1: But to answer your questions, simply, if midium waves laws
20:46
Speaker 1: go up, our input costs go up, it means that
20:48
Speaker 1: we have to pass those costs onto our customers. And
20:50
Speaker 1: so do I my favor of mindum ways laws. Absolutely
20:52
Speaker 1: do I think that they should get higher. Absolutely. I
20:55
Speaker 1: think we should just have trade agreements that reflect that.
20:57
Speaker 1: That provides some measure of protection to the men and
20:59
Speaker 1: women that are trying to build you know, good working
21:01
Speaker 1: class jobs and communities all across the country and not
21:03
Speaker 1: get just hammered by competition for places that are not
21:06
Speaker 1: compliant with those rules. And so in that universe, we
21:09
Speaker 1: have a higher minimum wage in the US and new
21:12
Speaker 1: rules that either impose tougher labor standards, say on China,
21:16
Speaker 1: or or impose a higher tariff on imports from China.
21:19
Speaker 1: And so what we have in the end then is
21:21
Speaker 1: more expensive sweatshirts made in the US. Your sweatshirt is
21:23
Speaker 1: more expensive, and so are sweatshirts imported from, say China. Yeah.
21:27
Speaker 1: So I think forty years ago we said, hey, listen,
21:29
Speaker 1: we're gonna trade to everybody. And by doing that, what's
21:32
Speaker 1: going to happen is China is going to be dragged
21:34
Speaker 1: into the modern world and they're going to be a
21:36
Speaker 1: really good partner to us. And in fact what's happened
21:39
Speaker 1: is over the last forty years we've had a massive
21:41
Speaker 1: transfer of capability and capital to China, and China's become
21:44
Speaker 1: a more intractable foe, not the Chinese people, the Chinese government,
21:48
Speaker 1: a more intractable float for the faux of ours today
21:50
Speaker 1: when they were forty years ago. On the other hand,
21:53
Speaker 1: had our trade agreement been based on what I think
21:56
Speaker 1: Janet Yellen is referring to as friend shoring, meaning we're
22:00
Speaker 1: we're gonna do business with people that share basic values
22:03
Speaker 1: with us, things like freedom of the press, freedom of speech,
22:06
Speaker 1: rule of law, minimum wage standards. Then you have access
22:09
Speaker 1: to the United States marketplace. That would include everyone from
22:11
Speaker 1: Israel to France, to Germany, to South Korea to Japan,
22:15
Speaker 1: all countries that basically adhere to a set of standards
22:18
Speaker 1: that we view as being basically human values. I think
22:21
Speaker 1: that is the type of trade agreement where if you
22:24
Speaker 1: want to have access to the American marketplace, you've got
22:26
Speaker 1: to adhere to a set of standards that would translate
22:28
Speaker 1: over time, hopefully into consumers operating a bit more maybe
22:33
Speaker 1: European or Japanese or South Korean, where there is a
22:35
Speaker 1: bit less consumption, a bit higher emphasis on quality. Things
22:39
Speaker 1: cost a bit more, but they last to think a
22:40
Speaker 1: bit longer. And if you look at the underlying data
22:43
Speaker 1: in the textile worlds, it's discompanying. I mean, you know,
22:46
Speaker 1: the average I'll just bore you as statistics for a second.
22:49
Speaker 1: The average American family today spends about sixteen hundred dollars
22:53
Speaker 1: on apparel and footwear per family. In nineteen eighty, in
22:56
Speaker 1: today's dollars, the average American family spent about sixteen hundred
23:00
Speaker 1: dollars per family, So that in dollars to dollars has
23:04
Speaker 1: not changed much. But in nineteen eighty it represented about
23:08
Speaker 1: eighty items. Today it represents about one hundred and eighty
23:11
Speaker 1: five items. And the average American family throws away about
23:16
Speaker 1: eighty pounds of clothing a year, and so there's been
23:19
Speaker 1: a structural shift among the American marketplace towards cheaper stuff
23:23
Speaker 1: that we throw away, and I think that's got terrible
23:26
Speaker 1: implications for the environment for us as consumers, for our
23:30
Speaker 1: ability to provide good jobs to places that need them,
23:33
Speaker 1: and so I would advocate for that. I think you
23:35
Speaker 1: have to do it over time, and you get through
23:36
Speaker 1: it slowly. My preference as a consumer would be to
23:39
Speaker 1: be able to buy clothes that are made in the
23:41
Speaker 1: developing world ethically, basically right, because I do feel like
23:47
Speaker 1: lots of people in the developing world, like more than
23:49
Speaker 1: a billion have gotten out of poverty in that forty
23:53
Speaker 1: year period because of trade, and that that is basically good,
23:57
Speaker 1: and I agree with you that lots of bad things
23:59
Speaker 1: have come along with that. And I'm curious, like, are
24:04
Speaker 1: there any apparel companies that you think manufacture in the
24:08
Speaker 1: developing world and do so in an ethical fashion? It's
24:12
Speaker 1: very very hard. Yeah, So I appreciate your your not
24:17
Speaker 1: being Yeah, yeah, I appreciate the dream. Yeah. What about Patagonia,
24:23
Speaker 1: Like I kind of believe Patagonia, Like, am I right
24:25
Speaker 1: to believe Patagonia? I think I think you are right
24:28
Speaker 1: to believe Patagonia. But if if you if you read
24:32
Speaker 1: what Patagonia says, they recognize that they operate in an
24:36
Speaker 1: imperfect manner. I mean they say we try to do
24:38
Speaker 1: more more good than harm. And I think inherent in
24:41
Speaker 1: that statement is we make things in China, and inherently
24:44
Speaker 1: making things in places that are far away means they
24:46
Speaker 1: have to sit on container ships for long distances. To me,
24:50
Speaker 1: either way, I agree with you. By the way, I
24:51
Speaker 1: think trade and capitalism lift people out of poverty. No
24:54
Speaker 1: no better way to do it than I'm aware of.
24:56
Speaker 1: But I think that we also have to reconcile to
24:59
Speaker 1: what extent are we are we comfortable with trading with
25:02
Speaker 1: countries that maybe practice things that are you know, our
25:05
Speaker 1: human rights violations or that environmental violations. Do we care?
25:08
Speaker 1: And if we care, what do we do about it?
25:09
Speaker 1: And I would suggest that what you do about it
25:11
Speaker 1: is that you make trade deals with countries that that
25:15
Speaker 1: respect basic standards of behavior. Those would include, for me,
25:19
Speaker 1: democratic elections, free and fair, freedom of speech, free, free
25:24
Speaker 1: a good and functioning judicial process, and they're Unfortunately we
25:28
Speaker 1: trade with a bunch of countries that don't. Don't Are
25:31
Speaker 1: there countries in the developing world that meet those standards?
25:34
Speaker 1: For you? Yeah, I think a lot of countries in
25:36
Speaker 1: our hemisphere. By the way, Mexico are much better, Yes,
25:41
Speaker 1: much better, hunt us El Salvador, Mexico. There's a lot
25:44
Speaker 1: of good and that that that reshowing to this hemisphere
25:48
Speaker 1: is happening quite quickly, and that is a very good thing.
25:51
Speaker 1: It's environmentally good, doesn't have to travel so far, doesn't
25:53
Speaker 1: to go on containerships forever. And those countries by and
25:56
Speaker 1: large are genuinely trying to have good institutional functional norms
26:01
Speaker 1: that we can so yes, absolutely there are yep and
26:04
Speaker 1: I and just to be clear, I think the one
26:06
Speaker 1: end of the spectrum is a you know, total protectionist
26:08
Speaker 1: that that doesn't work for anybody. I just think we
26:10
Speaker 1: have to ask some questions about what should be in
26:12
Speaker 1: our trade agreements, and how do we think about domestic capability.
26:15
Speaker 1: And you know, I think the counter to your argument
26:18
Speaker 1: about I would love to have textiles in a developing world,
26:21
Speaker 1: me too, But I also want to have good vibrant
26:23
Speaker 1: jobs for people. You come from my supply chain. Some time,
26:25
Speaker 1: go to some of these rural communities in the Southeast,
26:27
Speaker 1: and you know, you see lots and lots of towns
26:29
Speaker 1: that have no jobs. And that's a that is a
26:33
Speaker 1: tough thing to reconcile too. That you know, we've we've
26:35
Speaker 1: got a responsibility there as well, that we've got to
26:37
Speaker 1: figure out ways for young men and women, maybe they
26:40
Speaker 1: only have high school degrees, that are looking for jobs
26:42
Speaker 1: to help, you know, help chip in, help pay their way.
26:44
Speaker 1: We've got to prove I think we've got to provide good, viable,
26:47
Speaker 1: dignify jobs to those people's safe jobs, jobs where they
26:50
Speaker 1: can move up. And I think it is a shame
26:55
Speaker 1: that we let our biggest companies ignore that. And I
26:57
Speaker 1: think they are ignoring that. I think they're they're they're
26:59
Speaker 1: choosing a cheaper way that is, we're turning a huge
27:02
Speaker 1: amount of value to their shareholders, and they're not wrestling
27:04
Speaker 1: with a lot of the things that I think societally
27:06
Speaker 1: we need them to be wrestling with. Right now, we'll
27:11
Speaker 1: be back in a minute with the lightning round. Now
27:22
Speaker 1: it's time for the lightning round. Let's close with the
27:25
Speaker 1: lightning round. Just a bunch of questions somewhat lighter in
27:29
Speaker 1: tone than this conversation we've been having. Are you ready
27:31
Speaker 1: to pivot to the lightning round? Ready? So? I know
27:35
Speaker 1: you used to work at a snowshoe company, and I'm
27:38
Speaker 1: a big fan of skiing and cross country skiing and sledding,
27:41
Speaker 1: but I never really got into snowshoeing. Can you like
27:45
Speaker 1: briefly sell me on snowshoeing. Oh that's an easy one, Jacob. Yeah,
27:49
Speaker 1: snowshoeing is it requires? If you can walk, you can snowshoe,
27:52
Speaker 1: no lift ticket required. There's nothing quite as magical as
27:56
Speaker 1: parking on the side of a road and putting on
27:58
Speaker 1: a pair of snowshoes and walking really twenty yards into
28:00
Speaker 1: a snowy forest and suddenly it is silent and you
28:04
Speaker 1: are immersed in wilderness and quietude. Unlike anything you look experience,
28:09
Speaker 1: and so I think you can do it with families,
28:11
Speaker 1: young people, old people. You don't need to pay to
28:14
Speaker 1: do it. I just think it's magical. I think it's
28:16
Speaker 1: magical and it's a it's a great fun activity for
28:18
Speaker 1: the whole family. If you were going to start another
28:21
Speaker 1: company that didn't make clothes, what would you do? Uh?
28:25
Speaker 1: I love to make pizza, So I want to start
28:27
Speaker 1: a pizzaia in some beautiful spot. What. I don't care
28:29
Speaker 1: about making money anymore. That's your dream and that's your escape.
28:32
Speaker 1: Your escape fantasy has moved to Napa. I don't think
28:36
Speaker 1: it's Napa. I don't think it's the North. I think
28:38
Speaker 1: it's getting back home. Yeah. Well, last question, Uh, what's
28:43
Speaker 1: one piece of advice you'd give to someone trying to
28:45
Speaker 1: solve a hard problem? I don't give up. I really
28:49
Speaker 1: think that the mistake that that that entrepreneurs make a
28:52
Speaker 1: lot is that they don't keep their legs pumping against
28:56
Speaker 1: the blocking sled. I think that you know, eventually things
28:58
Speaker 1: start to break your way. It's not always the case,
29:00
Speaker 1: but I think I have found that when I'm at
29:03
Speaker 1: my most tenacious and I hang in there, the longest
29:05
Speaker 1: things break you away eventually good. I got one more.
29:08
Speaker 1: What's it? What's a tip to what's a tip to
29:10
Speaker 1: make clothes last longer once you've bought something like, I
29:14
Speaker 1: like my clothes to last a long time. I don't
29:17
Speaker 1: like getting buy good stuff by good stuff, I know.
29:20
Speaker 1: But once I've bought good stuff, what do I do?
29:22
Speaker 1: Buy good stuff? Were wash them less? Huh? I mean,
29:26
Speaker 1: I don't know if you got kids or not. I
29:27
Speaker 1: got kids. You know, they will wear a sweatshirt and
29:29
Speaker 1: it's in the it's in the laundry pile. It's like, no, no, no,
29:32
Speaker 1: that that sweatshirt does not need unless you pitch your
29:35
Speaker 1: spaghetti on it. If the pitch that's my advice. Ask
29:38
Speaker 1: me a question again, And the next time I masted,
29:40
Speaker 1: I'll say, sniff the pits. Don't wash you need to? Yeah,
29:43
Speaker 1: buy good stuff and and wash them. Don't wash them
29:46
Speaker 1: that often. That that I don't make your clothes last
29:47
Speaker 1: a lot longer. I try and hang dry my stuff.
29:50
Speaker 1: Am I fooling myself that that helps? No? No, no, no, no,
29:53
Speaker 1: that's right. I mean that's right. I mean you put
29:56
Speaker 1: you put fabric, you have cotton, You have cotton to
29:58
Speaker 1: be caught in garments and and synthetics. You know, they
30:02
Speaker 1: are under high heat. Not it's not great for them
30:04
Speaker 1: and they get banged around a lot. So yeah, hang,
30:06
Speaker 1: drawing is great, Okay, yeah, but just wash them less
30:08
Speaker 1: and you'll be doing a good for the environment while
30:09
Speaker 1: you're at it. Byard Winthrop is the founder and CEO
30:17
Speaker 1: of American Giant. Today's show was produced by Edith Ruslow,
30:22
Speaker 1: edited by Robert Smith, and engineered by Amanda k. Long.
30:27
Speaker 1: I'd love to get your suggestions for who else I
30:29
Speaker 1: should talk to for the show. You can email us
30:32
Speaker 1: at Problem at Pushkin dot fm, or you can find
30:35
Speaker 1: me at Twitter at Jacob Goldstein. I am Jacob Goldstein
30:39
Speaker 1: and we will be back next week with another episode
30:41
Speaker 1: of What's Your Problem.