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our lives simply

6:00

outsourcing to China or Vietnam.

6:03

But that would defeat the purpose of

6:05

the business. The whole point

6:08

of American Giant was to build

6:10

a brand that was entirely American

6:12

made. And why? Why would

6:14

someone be obsessed with this idea? Well,

6:17

for starters, because it is really,

6:19

really hard. But more specifically,

6:22

Bayard Winthrop, the founder of American Giant,

6:24

couldn't find the thick and soft cotton

6:26

sweatshirts that he used to wear as

6:28

a kid in the 70s and 80s

6:30

when, believe it or not,

6:33

70% of clothing sold in

6:35

America was made in America.

6:37

So he decided to make them

6:39

himself. And he also decided to see

6:42

if he could create textile jobs in

6:44

some of the very same places that

6:46

lost them in the 80s and 90s.

6:48

Today, barely 3%

6:52

of all clothing sold in America is

6:54

made in the US. And

6:57

American Giant has managed to become

6:59

one of the very few US

7:01

made activewear brands. And Bayard

7:03

has proved with a lot of

7:05

difficulty that you can build a

7:07

sustainable and profitable clothing business without

7:10

outsourcing. You might make

7:12

a bit less money, but he'd

7:14

argue the long term benefits massively

7:16

outweigh the money. Bayard

7:19

grew up just outside of New York in Greenwich, Connecticut.

7:21

His parents split up when he was young and

7:23

Bayard went to live with his mom, who was

7:25

a real estate agent. Growing up,

7:27

they moved around every couple of years

7:29

and Bayard remembered not having a lot

7:32

of stability. I did at

7:34

a pretty young age get pretty fixated

7:36

on this idea of being stable financially.

7:38

And in that town, Wall Street

7:40

was kind of the thing. And starting, I think,

7:42

in my sophomore year in college, I got

7:45

a summer intern job at a bank

7:47

in New York City, in New York

7:49

City, and fairly doing fairly menial

7:52

work that first summer, the bank was called

7:54

Donaldson, Lufkin and Jen Rhett. I was working

7:56

in essentially the mailroom, the sort of private

7:58

wealth kind of back off. office part of

8:00

that bank. And

8:03

that kicked off, I think, three summers of

8:05

internships that eventually landed me a job in

8:07

their investment banking program, which was a

8:10

pretty prestigious program at a pretty

8:12

prestigious bank. And it

8:14

was one of a couple of professional moments that

8:16

was a real kind of aha, because when I

8:18

finally got that job, it became clear to me

8:20

that I was ill-suited for that as a career.

8:23

To get into finance and banking. Yeah.

8:26

Which is a grind. I mean, especially when you're starting out, it's

8:28

like 60, 70 hours a week, right?

8:32

Just a grind. But if you can

8:34

stick it out, you can make a lot of money. Well,

8:37

we did make a lot of money. And

8:41

it was a grind. You know, there's, DLJ

8:43

became kind of legendary. There's a book written

8:45

about how difficult the

8:47

life was as an analyst. You basically didn't

8:49

get days off. And that took

8:51

its toll. But, you know, I have

8:54

to say, that experience was phenomenal. I have tremendous

8:56

amount of appreciation for that job, because it taught

8:58

me how to work hard. It taught me how

9:00

to be accurate. It taught me how to get

9:02

things done and then over the line. But

9:05

at the same time, I was

9:07

surrounded by a bunch of folks who had gone to Harvard

9:10

and Wharton and Michigan and Stanford,

9:13

who were Econ majors and were

9:15

way smarter than me, were

9:18

outperforming me. And I

9:20

think that began to kind of creep its way

9:22

into my head that I just was not

9:24

in the right place. And I think about

9:26

it a lot. And that's a gift. If you can early

9:28

on figure out, even if it's what I don't want to

9:31

do or what I shouldn't do, it's a real gift. And

9:33

that certainly was that. After

9:35

my tenure in that program, I

9:37

decided to get out of banking, which was a big decision for

9:39

me, because it worked so hard to get the job. But

9:42

it had become clear to me that it was the wrong fit. So

9:45

you stay there for about two years

9:48

and you decide, you're going

9:50

to leave New York and not just leave New York, but

9:52

go to the West Coast, go to the opposite

9:54

side of the country. First of all,

9:56

what do you remember about that time? I mean, you're probably

9:58

25. Swiss

14:00

Army knife, what did they have you do at the

14:02

company? Yeah, I mean in the beginning it was literally

14:04

that. It was moving desks,

14:06

sweeping floors, cleaning toilets, just

14:08

doing anything I could. You know, the business,

14:11

they had done something funny. They'd been interviewed by a

14:13

reporter for the San Francisco Chronicle and they were –

14:15

nobody at that point. They were just getting started. And

14:17

the reporter said, where can I get this thing? And

14:20

one of the guys said, oh, they sell it at Marmot

14:22

Mountain Works in Berkeley, which was not true. The

14:25

socials were not there. And

14:27

suddenly a bunch of people

14:29

started calling and the owner of Marmot Lot called

14:32

up these guys and said, I keep getting all

14:34

these customers, I should get some pairs in. So

14:36

they were beginning to see some growth and

14:38

it was just the two of them. And one guy

14:40

helping to build Snow She's Mario. And

14:43

so I came in and said, listen, I'll do whatever. And you basically

14:45

have to pay me nothing. I think I offered to work for $15,000

14:48

a year or something like that. And

14:50

they finally agreed. Very quickly,

14:53

as the business started to grow, as

14:56

you point out, they needed

14:58

everything. They needed help in building the

15:00

sales force, help in running the production

15:02

floor. And so just by being

15:04

in the right place, I got to take on a lot

15:07

of those functions. And maybe most importantly

15:09

for me, all these theoretical

15:11

things I'd been learning at the bank,

15:13

I was now applying and finally understanding

15:15

how they impacted business. So understanding why

15:17

a cash flow statement mattered and what

15:19

margin meant and how it impacted the

15:22

financial performance of a business and all

15:24

those things. And so I

15:26

eventually ended up overseeing quite a bit of the

15:28

business just because I was someone there that was

15:30

willing to work really, really hard and I loved

15:32

it and I'd never left the office. And

15:35

so anyway, it was a period of rapid

15:37

learning and also just real joy

15:39

and passion for me. It was a really

15:42

important chapter. They got, I

15:44

guess, acquired by K2 Sports in 96. And

15:47

this is now kind of the dawn

15:49

of the.com era, right? And so at

15:51

that point, I read that you went

15:54

in that direction. You worked for a couple

15:57

years as the head of an internet company

15:59

called WebChat. that it was itself acquired in

16:01

1998. That's right. So,

16:04

what did you do after? I mean, I

16:06

would think that maybe went in

16:09

that direction. Like you worked for a couple

16:11

years as the head of an internet company

16:13

called WebChat. It was itself

16:15

acquired in 1998. That's

16:17

right. So, what did you do after? I

16:20

mean, I would think that maybe

16:22

there were other tech companies you were

16:24

looking at or other opportunities in that

16:26

space. Did you do that? No.

16:29

In fact, so we got acquired

16:31

and I was

16:34

so ready to get back to a tangible

16:36

thing. WebChat had seemed like

16:39

though it was a good financial moment for me,

16:42

it was a return to banking in that I was dealing

16:44

with a product I didn't truly

16:46

understand, wasn't passionate about. And

16:49

so, I didn't

16:51

even consider tech. I had met

16:53

another guy that had gone through the Stanford

16:55

product design program and his name

16:58

was Steen Strand and I had met him

17:01

when I was at Atlas and Steen and I became

17:04

close. And fast

17:06

forward a few years later, I had

17:08

sold WebChat. I

17:10

was sitting out on Clement Street in San Francisco

17:12

and had just come out of a bar with

17:14

some friends and I saw a guy go flying

17:16

by on a skateboard and

17:19

then he turned around and he said,

17:21

Bayard, it's Steen and we reconnected. And

17:24

he told me about the business he was trying to launch

17:26

and little by little kind of began to suggest to me

17:28

that maybe I could join him

17:30

and so that's what I did. So

17:33

this was, I think this company is called Freeboard.

17:36

Freeboard literally like skateboards, that's what it

17:38

was. Well, Steen

17:40

had become obsessed with this idea

17:42

of snowboarding, he loved snowboarding. He

17:45

started to work on a project at

17:47

Stanford that was trying to mimic the

17:49

action, the sliding and edging action of

17:52

a snowboard on pavement. And

17:54

he did that through a incredibly

17:57

complicated but innovative and brilliant design.

24:00

your core customers would leave you, and when they left

24:02

you eventually lose everybody. I had

24:05

seen moving manufacturing overseas. I'd done it myself.

24:07

I did it at Atlas, I did it

24:09

at Freeboard. And I

24:11

was had this growing discomfort with

24:13

both my disconnection from the product,

24:15

when something came from somebody that

24:18

was, where I'm sitting today,

24:20

the person that stamped our snowshoe cleats

24:22

is three blocks from me. And

24:24

I used to walk in there every day and pick up

24:26

cardboard boxes filled with stamped cleats. That

24:28

connection to him, to his business, to the five

24:31

people he employed, when that stuff all

24:33

began to ship overseas, I felt this loss of

24:36

quality and connection and integrity around the

24:38

product, but also more importantly, the personal

24:40

connection. When I made, ultimately I made

24:42

a really impassioned pitch at a board

24:44

meeting to Rory and his board

24:46

that we had to basically make a stand on,

24:49

on staying committed to local American

24:52

manufacturing and really, really high quality.

24:54

And from that foundation, we built a

24:56

great, great brand. And just to

24:58

clarify, they were moving manufacturing overseas

25:01

for obvious reasons. It's just much

25:03

more cost effective and efficient. And

25:05

if they could replicate, you know, the quality

25:08

or get pretty close to it, their margins would be

25:10

much higher and they would have maybe

25:12

a more sustainable business. I mean, that was

25:14

their argument, which is not an unfair argument.

25:17

That's a really sound argument. I mean, I

25:19

think his position was, we're gonna get

25:21

this thing into RAI and a bunch

25:23

of other mass retailers, we're gonna drive margin and we're

25:25

gonna ship manufacturing overseas. And to your point, that- And

25:27

they decided to move it to China or Vietnam. And

25:29

they were moving progressively, all

25:31

the manufacturing to Shenzhen and Guangzhou,

25:34

both the apparel, the footwear and the bags. And

25:37

I sort of

25:39

laid it all on the table there and just believed

25:42

that we were making a mistake for a business standpoint.

25:44

I also felt there was a moral part of it

25:46

too. And we had a responsibility to lead and he

25:49

disagreed. I mean, they must have thought

25:51

that you were very naive. Oh, I'm

25:53

sure, I probably was. I mean, I probably was,

25:55

Guy. I think that you have

25:58

to be a little bit, I don't know, naive or crazy.

26:00

or something to try to defy a trend like that. But

26:02

there was something in my bones that told

26:05

me that it was the right thing. I

26:08

knew that I wanted to be associated with a company

26:10

that felt really proud about the products we were making

26:13

and how we were making them. And that to me

26:15

meant with men and women that I knew and talked

26:17

to and could visit and that were, you know, my

26:19

neighbors are down the road from me. And I wasn't

26:22

going to be a part of something that wasn't

26:25

signing up to that basic commitment. So I

26:27

understand that. But that made you a total

26:29

outlier, right? Because I think at the time

26:31

and even now, a lot of people could

26:34

probably would have said to you, look, we

26:36

can still be proud of our product. We

26:38

can still visit those facilities. They're

26:40

just not going to be in the US. We but

26:42

we need more business at the end of the day.

26:44

We're not a charity. We're not

26:46

a, you know, a nonprofit. We have

26:48

to make money to pay our employees.

26:51

And this is the only way it can work. I

26:54

agreed with everything you just said up to the last

26:56

point. I think you do have to do all those

26:58

things. That's absolutely right. And but there are multiple ways you

27:00

can make it work. And and in my mind, you know,

27:02

there's another piece of this, which is, at

27:04

that time, I think it's more true now than it was then is

27:07

there was this emerging consumer desire

27:09

and interest in in local and

27:12

farmers markets and craft

27:14

fairs. Yeah. And I felt that that

27:16

spoke to a larger shift in mindset

27:18

and maybe even a growing sense of

27:20

loss among consumers for great quality

27:22

products that we grew up around. And

27:24

so if you exist on a foundation of

27:27

a commitment to a type of supply

27:30

chain, like American made or a really high quality that

27:32

gives you a leg up, you

27:34

could stand out and do something

27:36

unique and something that customers would

27:38

really value. And I, I

27:41

didn't know then whether that would be

27:43

2% of the audience or 5% or 10% or

27:45

20% of the audience. I'm not sure I even

27:47

cared that much. I just

27:49

felt that the challenge in

27:52

in consumer products is carving

27:54

out a piece of

27:56

turf that you can defend with a

27:58

relatively unique value proposition. to your customers,

28:01

and I felt that opportunity was wide open for

28:03

Chrome, and it definitely resonated. It

28:06

was just my head was in a different place. So

28:09

given that you were just committed to this

28:11

idea, which made you an outlier, if

28:14

somewhat naive as well, it was not tenable.

28:16

You were not going to—you couldn't really run

28:18

the company if the way you saw things

28:21

was so different than the way the owner

28:23

saw it. Yeah,

28:26

I remember it

28:28

was December. My

28:31

wife had just had our first child, Agnes.

28:33

It was December of 2010. December

28:36

of 2010. And Rory asked to meet me at,

28:39

I think, 5 a.m. at

28:42

the Starbucks. And

28:45

I remember saying to Allison before, I said, I think I

28:47

might get fired tomorrow. And we

28:51

both were like, no, we had Chrome was doing well. I

28:54

think probably it was the best year in my career.

28:57

I'd put to bed up to that point. But

29:00

anyway, so the next morning, after about

29:02

an hour of polite conversation in

29:04

the dark at a Starbucks, Rory

29:06

said, so we're making a change. Wow.

29:11

So my spidey sense had proven accurate

29:13

about that. They needed somebody who

29:15

was going to buy into what they wanted to do.

29:18

Yeah, and it makes sense, right? I mean,

29:20

if I was him too, I think you

29:22

can't have a CEO running your company that

29:24

is fundamentally misaligned with the way that

29:26

you want to build the brand. And to

29:29

your point earlier, his approach was

29:31

super logical. In fact, probably more

29:33

logical than mine was. So this

29:35

is December of 2010, and

29:37

probably you had a couple weeks to wrap things

29:39

up. Did you have a

29:41

plan? I mean, I don't—you probably didn't

29:43

anticipate this, or maybe you did for

29:46

a few months or something. But did

29:48

you just think, well, I'll go find

29:50

something else? Or what was

29:52

your initial thoughts in early 2011? Well,

29:55

it was a little terrifying. I mean, I had

29:57

a newborn baby. and

32:01

told him why. And I remember he was quiet

32:03

for a minute and he said, you got to do that.

32:07

When we come back in just a moment,

32:10

how Byard found the money to get started

32:12

and why one of his first calls was

32:14

to someone who knew nothing about

32:17

apparel. Stay with us. I'm Guy Roz

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Mobile for details. Hey,

35:56

welcome back to How I Built This. I'm Guy Roz.

36:00

It's 2011 and while most

36:02

companies are outsourcing their manufacturing, Byard

36:04

has decided that he wants to

36:07

start a brand new clothing company

36:09

where not just every piece but

36:11

every thread is made in

36:13

the US. I

36:16

had a gut instinct that it was going to be hard

36:18

but it was possible. And

36:20

I did what I do, which is I kind of

36:22

got on planes and gotten cars and I started meeting

36:24

with anybody that would meet with me and

36:27

began to get a sense about

36:29

what was still around in

36:31

the US in terms of capability. And

36:34

it became clear that knitwear,

36:36

which is knits as opposed to wovens,

36:39

which is basically the two kind of

36:41

categories you have in your closet, knits

36:43

or t-shirts and sweatpants and sweatshirts and

36:45

things like that, that knits, that capability

36:48

was still in okay shape domestically, wovens

36:50

less so. But I

36:52

began to get enough faith that there was enough there

36:54

that we could launch certainly a sweatshirt. And just again,

36:56

to put this in context, this is around the time

36:58

of like, and I don't want to get into the

37:00

politics of this stuff, but it's like, you

37:03

know, the rise of the Tea Party and, you

37:05

know, whatever the reasons behind that, some would argue

37:07

that some of that was a reaction to the

37:11

collapse of the manufacturing base. And then, you

37:13

know, eventually what would happen to our politics

37:15

in this country. Were

37:17

you paying attention to any of that, any of

37:19

the sort of populist movements or conversations

37:22

around people being

37:24

frustrated, left behind, whatever it might be?

37:28

Definitely the latter part, that idea that there was a whole

37:30

bunch of people out there that had

37:33

jobs where they could get up every day and

37:35

make a decent living and serve on the school

37:37

board and put food on their table at night

37:39

and that those jobs were going, that was on

37:41

my mind a lot. I

37:43

really hated the political nature

37:45

of those discussions. I view those

37:48

types of things as patriotic and

37:51

nonpartisan in their very

37:53

nature. And this idea that,

37:56

let's say, the conservatives

37:58

have claimed patriotism. backstop

42:00

to the business in those early days. So

42:02

that money was going to be enough, I guess,

42:04

to get you started, to design the sweatshirt, right?

42:06

And what was the design going to be? I

42:09

mean, a sweatshirt or

42:11

a hoodie, how did you think

42:13

about what your sweatshirt was going to be? So

42:15

one part of it was just looking at what

42:18

I remember of the kind of the

42:20

heyday of American sweatshirts, which in my

42:22

mind were sort of the 50s and

42:24

the 60s with Champion and Russell and

42:26

building these really beautiful, heavyweight,

42:28

100% cotton, thick

42:32

sweatshirts that got softer and better over time

42:34

versus what was in the market then.

42:38

And so I knew conceptually, I wanted

42:40

to get back to some of the things

42:42

that I thought were so great about the

42:44

best of American fleece. And

42:46

then the other thing that I did that was

42:49

maybe smart was I hired a guy named Philippe

42:51

Manu, who was someone I'd known for a long

42:53

time. Philippe Manu. Philippe Manu. And he is one

42:55

of the smartest people I know or the hardest

42:57

working people I know. And he was an apparel

42:59

designer? No, quite

43:01

the opposite. He'd spent his career

43:04

in medical devices and working on the

43:06

early Apple iPod. He

43:08

worked on the glass surface on the iPod.

43:10

And you thought he was the right guy?

43:12

I mean, I thought he was very smart.

43:15

I thought he was passionate. And what I

43:17

liked was he had no apparel

43:19

experience, as counterintuitive as that sounds. I

43:22

really wanted somebody to come in that had

43:24

completely unencumbered eyes, where

43:26

he and I could

43:29

ask very open-ended questions about what

43:31

made a great sweatshirt. So I got

43:33

with him somebody that started with

43:36

no preconceived notions about anything. Not what was

43:38

possible, not the way things do things, not

43:40

the way the designers are trained or merchants

43:42

are trained. I wanted somebody to come at

43:44

this totally fresh. And he did. And he

43:46

challenged basically every single assumption. And we, piece

43:48

by piece by piece, began to assemble what

43:51

we thought was going to be a pretty

43:53

great product. Byard, this is 2011, the dawn

43:55

of the direct-to-consumer age. So

43:57

you're getting into it right at the really

43:59

at the right time. And you because you

44:01

decided, I think, from the beginning, this

44:03

is going to we're going to sell this direct to consumers,

44:05

right? We're going to go online and do it that way,

44:08

at least initially. Yeah, not only that,

44:10

but exclusively, I really, I, I

44:12

thought at the time, which proved out to be wrong, that

44:15

there was great economics to clean up

44:17

if you could launch a direct

44:20

consumer business and try to,

44:22

you know, pass on as much

44:24

value and quality to consumer without any distribution costs

44:27

as cost as we could. I

44:29

mean, it's interesting, I remember being in San Francisco around

44:31

this time with a friend walking through

44:33

like Union Square and my friend saying, brick

44:35

and mortar is dead. There's

44:37

going to be no brick and mortar, and parts of San

44:40

Francisco, that might be true. But in

44:42

general, that was wrong, right? I mean, everyone said brick

44:44

and mortar is dead. But now,

44:46

of course, direct to consumers is not

44:49

necessarily a bad model, but it's more competitive,

44:51

and that there are advantages to having a

44:53

foot in both. Yeah, I think, I

44:55

think that myself included and

44:57

just misanalyzed the problem. I mean, I think

44:59

we, physical stores

45:02

and resellers provide a critical piece of

45:04

the puzzle, which is just exposure to

45:07

customers that an online brand only

45:09

has a much harder time doing and it's expensive to

45:11

try to do that online. And I just didn't, that

45:14

wasn't even part of my calculus, didn't even consider it. And I was

45:16

just totally blind to that. So you

45:18

found the company and by the way, the name American

45:20

Giant, how'd you come up with that name? Yeah, I'll

45:22

tell you a quick, really quick, funny story about that.

45:26

When you are starting in a company and naming a

45:28

company, you have to go through this agonizing personal process

45:30

of what am I going to name it? And then

45:32

you have to, once you come up with a name

45:34

you might like, you have to make sure that your

45:37

URL is available and that there's no trademark

45:39

infringement or any other thing. And I

45:41

started to keep notes and lists and

45:44

pads of paper in my car or next

45:46

to my bed and everywhere that I might

45:48

jot things down. And I had gotten

45:50

it down to, I don't know, three or four that I thought were okay.

45:52

I didn't love them. But I

45:55

was sitting at a coffee shop. I was on a phone call

45:57

with part of the supply chain I was starting to build and

45:59

I was kind of how

50:00

to get that made. And in the

50:02

middle of all that, I had met in

50:05

a town called Gaffney, South Carolina, a

50:08

company called Carolina Cotton Works. And the

50:10

man that ran that company was a

50:12

man named Paige Ashby. And

50:15

Paige saw something that I think lit

50:18

a spark for him. And he sat

50:21

in his conference room on the second floor of

50:23

that building. And Paige looked at me and said,

50:25

I'll get this figured out for you. And he

50:27

did. What did they make? Carolina

50:30

Cotton Works originally was a

50:32

washing facility that just washed fabric, but

50:34

Paige grew it into what we refer

50:37

to as a finishing facility. So they

50:39

put color into cloth and

50:41

they put texture into cloth, in

50:43

our case, napping. And napping is, if you

50:45

ever think about a bath towel, that's essentially

50:47

a French terry. If you

50:49

ever stare at it, you can see that the

50:51

loops of the knitted fabric are intact. When

50:54

you nap that fabric, it's literally thousands and

50:56

thousands of needles that pick those loops,

50:58

they kind of cut them. And

51:00

that's what creates kind of a fuzzy backing,

51:02

let's say, to the inside of your sweatshirt.

51:05

Paige got us connected to a group

51:08

called Clover Knits in Clover, South Carolina.

51:10

Clover knitted the cloth and Paige figured out

51:13

how to get it napped and finished to

51:15

our specs. And it's not

51:17

an overstatement to say we would not be here

51:20

today if it hadn't been for Paige and his

51:22

leadership. And Paige passed away a few

51:24

years ago, but he was a remarkable

51:26

human and a remarkable business person

51:28

and a good friend and really

51:31

got us off the ground in a way that we couldn't have done on

51:33

our own. All right, so you

51:36

have this deal with them to make it. And

51:38

they produced the first

51:40

run of sweatshirts, right? And these were zip-up

51:43

hoodies. And I guess I should, at this

51:45

point, just full disclosure, Bayard. I own a

51:47

few of your sweatshirts. In fact, for this

51:49

interview, I'm wearing one now so I can

51:51

feel it as you describe it, because there's

51:54

those double stitches and it's heavy. And out

51:56

to media to get some attention. Like, how

51:58

did you get people to become aware of

52:00

this thing you were trying to do? Well,

52:04

the basic business idea was if you

52:06

built a really great sweatshirt and did

52:08

it in a way that both the

52:11

brand and your consumers would be proud

52:13

of that customers would care. So

52:15

that basic idea was what we wanted to launch

52:18

the business around. And so we poured everything into

52:20

the product, basically. And I sent

52:22

out, you know, a thousand emails to everybody I've ever

52:24

met in my life saying, hey, I'm watching this company

52:26

plus buy a sweatshirt. And

52:29

so we did that. And so we launched, we shipped our first

52:31

sweatshirt, it was men's only at the time, in

52:34

February of 2012. We

52:37

got a little bit of press and we

52:40

had friends buy stuff, but it was

52:42

still tiny, guy. I mean, I think we sold,

52:44

I don't know, maybe $10,000 worth of

52:46

sweatshirts a month. And

52:48

they were expensive compared

52:51

to the mass-produced, you

52:53

know, sweatshirts made overseas. They were... That's right.

52:55

I mean, like, you could buy, you could go

52:57

to, you know, Uniqlo and you

52:59

could get one for like $15, right? Yours

53:02

cost, what, $75, $80 at the time?

53:06

Right. Maybe $100, closer to $100. For my

53:08

brand, nobody knew. And that

53:10

was because the cost to manufacture them was

53:12

going to be, naturally it was going to

53:14

be higher if you were sourcing almost everything

53:16

from the United States.

53:19

Well, it was really every component

53:21

part. In fact, we underpriced the sweatshirt at

53:23

the beginning, but quite a bit. Yeah.

53:27

The fabric itself was expensive.

53:29

The zippers are expensive. The ribbing,

53:31

I mean, I can give you a chapter and verse

53:33

on all these different parts. The double-lined hood, the metal

53:36

aglids, the custom poles on the

53:38

zipper, all these things, they

53:40

are expensive. The needle in hiring,

53:43

you know, we really wanted craftspeople sewing

53:45

these things. We didn't want just ton

53:47

and gun sewing. And so at every

53:49

part, we were investing in the product

53:51

and asking our customers to trust

53:53

us on that because they weren't walking into a store

53:55

to feel it, right? They had to take it on

53:57

faith when it arrived in their house in

53:59

a box. Hey,

1:00:00

welcome back to How I Built This. I'm Guy

1:00:02

Roz. So it's

1:00:04

2012, and American Giants hoodies

1:00:07

are the subject of a viral

1:00:09

article. But at the

1:00:11

very moment customers are beating down

1:00:13

his door, Bayard realizes that he

1:00:15

just doesn't have that much inventory.

1:00:18

And not only did I have not that much inventory, the

1:00:21

contracts that we had for future yarn

1:00:23

and knitting and finishing were finite too.

1:00:25

We had maybe, I don't know, so

1:00:27

another, call it 10,000, not even probably

1:00:29

5,000 sweatshirts on order.

1:00:33

And so within the span of like 12

1:00:35

hours, we sold out of everything that was downstairs

1:00:37

in our facility in the mission, heading into holiday.

1:00:39

Which seems like a good problem to have.

1:00:42

Yeah, right. But, but... And in fact, you know, one

1:00:44

of the guys I worked with had come in a

1:00:46

week prior saying we have way too much inventory for

1:00:48

holiday. So that was gone in an instant. And

1:00:51

the next day we kind of all gathered and said, what

1:00:53

are we going to do? We said, why don't we put

1:00:55

up a blog post that said, if you want to get

1:00:57

a sweatshirt, fill out this form, which

1:00:59

people did, filled out a

1:01:01

form in droves and in

1:01:04

within 12 hours, bought

1:01:06

all future production. So

1:01:09

sweatshirts that we were not going to ship until

1:01:11

March, people were buying today in

1:01:13

December and saying, ship it to me when it's

1:01:15

done. So that sold out instantly. And

1:01:18

then we sat in a room and said, well, we

1:01:20

got to order more. How much are we going to order? And

1:01:23

that was a good luck with that conversation. You

1:01:25

know, by the time that new stuff was going

1:01:27

to land, it was going to be hitting our

1:01:29

warehouse in the middle of summer. That

1:01:32

article would be old news and it'd be

1:01:34

90 degrees in New York City. And so

1:01:37

we made a guess and off

1:01:39

we went. And what ended up

1:01:42

happening just to complete that story is he

1:01:44

wrote a follow on article about, I don't

1:01:47

know, eight or nine months later. And the title

1:01:49

of that article was, the only

1:01:51

problem with the greatest hoodie ever made is you have

1:01:54

to wait nine months to get it. And

1:01:57

so that took us from our being

1:01:59

completely. swamped and shoved us under

1:02:01

another 100 feet of water because

1:02:04

that article went as crazy as the first one

1:02:06

did. Those

1:02:08

two really created havoc for us. It

1:02:11

went on for about three years. Yeah.

1:02:13

There's a backlog for almost three

1:02:15

years. Yeah. I think everyone

1:02:18

asked about that, right? Which is like, why can't you get

1:02:20

in front of it? The thing that I think people don't

1:02:22

really appreciate is when

1:02:24

you sit in a room and try to figure out what demand is

1:02:26

going to look like in six months, it's incredibly difficult. You

1:02:29

make your best guesses and we chronically

1:02:32

underestimated demand. I think what that did was it

1:02:34

was creating the- Is that because you were worried

1:02:36

about spending too much money? Yeah. If

1:02:38

you get it wrong, you just, you'll bankrupt the business. You

1:02:41

end up being conservative in those bets and

1:02:43

that conservatism ended up in sellouts and

1:02:45

the sellouts added to demand. Everyone

1:02:48

thinks like, oh, that's great. It is partially great.

1:02:51

Luckily, our customers really stood by

1:02:54

us and we were very transparent

1:02:56

with the challenges that we were

1:02:58

having getting back in stock, but it's

1:03:00

not a great feeling when you feel like you're chronically

1:03:03

disappointing your customers and not able to deliver what they're

1:03:05

asking for. But yeah, it went on for a long

1:03:07

time. How long did

1:03:10

it take to make one sweatshirt?

1:03:12

Yeah. I'll just give you the

1:03:14

whole step-by-step process. The

1:03:16

big regions of cotton production are California,

1:03:18

Texas, and the Southeast, North and South

1:03:20

Carolina. That cotton gets grown.

1:03:23

It gets harvested typically in late

1:03:25

October, early November and goes

1:03:27

to a gin. If you remember your old

1:03:30

history lessons about Eli Whitney, the ginning process

1:03:32

removes seeds and leaf litter. It used to

1:03:34

be done by slave labor in the United

1:03:37

States, which was a big part of the

1:03:39

Southern economy. Now, it's done through

1:03:41

automated ginning machines, which are kind

1:03:43

of dotted all over the United States cotton

1:03:45

growing regions. It goes and gets

1:03:47

ginned. In this example that I'm giving you,

1:03:49

we get ginned at the Enfield Gin, which is in Enfield,

1:03:51

North Carolina. It gets cleaned and

1:03:54

then bailed. And so that gin takes in

1:03:56

raw cotton and out the other door goes

1:03:58

a bale of cotton. And that cotton gets

1:04:00

It's labeled, so you get varietal, you get

1:04:02

moisture content, color, but a whole bunch of

1:04:04

quality controls, much like a grape and a

1:04:06

wine. And then that bale

1:04:08

goes to a storing facility where it sets for anywhere

1:04:10

from a month to eight or nine months until it

1:04:12

gets pulled into a yarning production facility. They have to

1:04:14

turn into yarn. Has to turn into yarn, in our

1:04:16

case. That goes from North Carolina

1:04:18

where it was grown across the border into

1:04:20

Gaffney, where there is a company

1:04:22

called Parkdale Mills, and they convert

1:04:25

that raw cotton into finished yarn.

1:04:28

And that's a highly automated process. But that yarn

1:04:30

can't be turned into a sweatshirt. It's supposed to

1:04:33

be turned into something else, right? That's right. That

1:04:36

spun yarn would then go to Clover,

1:04:38

South Carolina. So another factory? Another factory.

1:04:40

This is a knitting facility. That turns

1:04:42

us into... So it takes the raw

1:04:44

yarn and converts it into knitted cloth.

1:04:47

Into basically fabric. The fabric that you would

1:04:49

see in that product. Correct. And

1:04:52

that fabric... Sheets of the fabric. That

1:04:54

look like the color of cotton grown in a field.

1:04:57

So it's sort of like a dirty white maybe. They

1:05:00

call it grayish color. And

1:05:02

it's sort of a tough fabric.

1:05:05

Rolls of that raw fabric. Then we'd go

1:05:07

to Carolina Cottonworks, right down the street from

1:05:10

Clover. Clover's in Clover, South Carolina. Now back

1:05:12

to Gaffney. Where

1:05:14

it gets dyed, napped, and finished. And

1:05:16

so... Finished means smoothed out. So

1:05:18

it's like not yet. Smooth. And

1:05:20

in our case, the back of it, the front of it

1:05:22

gets some sanding. The back of it gets napped. So

1:05:25

that fabric gives you that dry hand feel

1:05:27

that you can feel in your sweatshirt now.

1:05:29

And the napping gives that soft and cozy

1:05:31

interior. Now you've got finished

1:05:33

fabric in a roll that looks like basically what you're

1:05:36

wearing. And the final step is that

1:05:38

goes north about 140 miles.

1:05:42

Back to North Carolina. Back to North Carolina to

1:05:44

a facility that we own outside of Raleigh, where

1:05:47

that fabric is cut and sewn

1:05:49

into a final sweatshirt. And what emerges out

1:05:51

of that facility is the finished product that

1:05:53

you're wearing. There, I mean,

1:05:56

just the number of steps from field

1:05:58

to finish. going through so

1:06:00

many different places. So the costs add

1:06:02

up over time and the time to

1:06:04

do it, right? I mean, so given

1:06:08

that this is all done domestically

1:06:10

and all of those people involved

1:06:12

are domestic employees or workers of

1:06:14

those factories, by

1:06:16

the time it's ready to be sewn into the garment, the

1:06:20

cost of that role must

1:06:22

be relatively high. Yeah,

1:06:24

I mean, I think if I took you

1:06:26

through our supply chain step by

1:06:28

step, it's hard not to emerge out

1:06:30

of that process and think, boy, it's

1:06:32

underpriced maybe. The amount of craft

1:06:34

and knowledge and people that touch

1:06:36

it is remarkable. I think it's

1:06:39

important that we, as just

1:06:41

people, understand how hard it is to get

1:06:44

food produced or products

1:06:46

to get produced that we consume. And I think we've lost

1:06:48

touch with a little bit of that, but

1:06:50

it is amazing to see it up close and to

1:06:52

see all the people and all the skill that goes

1:06:54

into making a sweatshirt or a t-shirt. What

1:06:59

were the reasons people were interested

1:07:01

in buying the product? Was it a sense of

1:07:04

patriotism? Was it like, I want to support Made

1:07:06

in the USA? Was it, or was it something

1:07:08

different? Or was it a bunch of

1:07:10

different things? I think it was a bunch of different things.

1:07:12

I think at its core probably was, probably

1:07:15

what you experienced was this article that

1:07:17

came out that seemed totally unique and

1:07:19

different, went totally viral, you couldn't get

1:07:22

it. But I think in addition

1:07:24

to that, I got a handful of brands in my life that

1:07:27

I like giving them my money because I

1:07:29

admire what they're doing and it aligns with my own values.

1:07:31

And I think that is probably behind it is, let

1:07:34

me just get back to the earlier comment

1:07:36

about this sort of nonpartisan patriotism that I

1:07:38

think lots and lots of Americans feel, that

1:07:40

there's this intuitive sense that the

1:07:42

Amazonification of our lives is

1:07:45

not great and that we're getting this disconnected

1:07:48

reality from the people and the places that make

1:07:50

the things that we need and love. And we

1:07:53

got to turn back on that a little bit. And I think that's

1:07:55

probably part of it too. One

1:07:57

of the things I wonder about is, as you

1:07:59

are, introducing this product to people, of

1:08:02

course, one of the reactions was going

1:08:04

to be, this is too expensive for me. I can't spend $100

1:08:06

on a hoodie or $120 or whatever. How did you explain

1:08:11

to potential customers

1:08:14

why the price was what it was and why that

1:08:16

was worth it for them? Yeah,

1:08:19

we still get that, right? I mean, our stuff

1:08:21

is expensive. Anyway, look at it, it's expensive. And

1:08:23

it's, in many cases, too expensive for a lot

1:08:25

of customers of ours. You know, we can't sell

1:08:27

to the... You

1:08:29

can't make a $8 sweatshirt. It's

1:08:32

not possible. It's impossible. An

1:08:34

$8 sweatshirt is not possible, but... You can't make

1:08:36

a $20 sweatshirt. Yeah, what

1:08:38

is interesting, though, is the role

1:08:40

of volume and commitment, what

1:08:43

that plays with pricing. So if

1:08:45

you had a significant commitment from

1:08:47

a major brand or a major retailer,

1:08:50

the pricing paradigm changes pretty fundamentally.

1:08:53

Even with the cost of labor in the

1:08:55

US, like even though just the built-in costs

1:08:58

are higher because American workers are paid

1:09:01

more. That is true. And

1:09:03

you cannot get around that, right? So the

1:09:05

cost of labor in the United States compared

1:09:07

to China, they're

1:09:10

not really comparable. And

1:09:12

I think we

1:09:14

should be addressing some version of that in our trade policy.

1:09:17

But there's an inherent cost structure

1:09:19

by making the United States that is forever

1:09:21

going to make it more expensive than, say,

1:09:23

manufacturing in China. But you can close the

1:09:25

gap down massively if there was

1:09:27

volume and commitment there. But

1:09:30

to your original question, how do we communicate that to our

1:09:32

customers? I think we try to communicate on our website. We

1:09:35

try to talk to the media and

1:09:38

we hopefully deliver on the quality, but

1:09:40

how our customers understand that they're buying

1:09:42

and supporting communities and neighbors when

1:09:45

they buy products from us. And

1:09:47

hopefully that is part of the value proposition,

1:09:49

right? By the way, there's no

1:09:51

judgment attached to that. There are many people that need

1:09:53

to shop at places where they can get a sweatshirt

1:09:56

for 1999. And it's important that they could

1:09:58

do that. that

1:10:00

have the ability to make choices there, I think

1:10:02

that that is part of the value proposition. That if I

1:10:05

can direct my dollars for something that I think is going

1:10:07

towards something I believe in and is consistent with my values,

1:10:09

it's part of how our customers

1:10:12

think about value when they buy

1:10:14

a sweatshirt or a t-shirt or a pair of jeans from

1:10:16

us. You acquired

1:10:18

a manufacturing company called

1:10:20

Eagle Sportswear, which means that you essentially

1:10:22

became a manufacturing business. I mean, you

1:10:25

earlier talked about how most apparel companies

1:10:27

are just purchase order companies. They're

1:10:29

not buying out forms. They're probably designing it,

1:10:31

and then everything's just made for them in

1:10:33

China or wherever. You

1:10:37

had to become a manufacturing company in order to

1:10:39

do what you wanted to do. Yeah.

1:10:42

So, the real quick story there is we were making all

1:10:45

of our stuff in a facility about 20

1:10:47

minutes south of where I am today called SFO Apparel.

1:10:50

And that facility is run by a guy named

1:10:52

Peter Mao, who was a very important partner

1:10:55

of ours. When that

1:10:57

slate article hit, I went down and saw Peter. It's

1:10:59

Peter. I need all your capacity

1:11:01

through the end of the year. And

1:11:04

in any normal circumstance, that would be the

1:11:06

best news ever if you were a domestic

1:11:08

sewing facility. And Peter said,

1:11:10

okay, let me spend the weekend. I'll talk

1:11:12

to my team. I'll get back to you on Monday.

1:11:14

And he called me on Monday and said, I've just

1:11:16

gotten a phone call from Under Armour, and

1:11:19

they have a container ship of, I forget what it

1:11:21

was, jerseys or something that had a problem with it.

1:11:24

And they needed Peter to fix them. And

1:11:26

he said, I love American Giant. I love you guys,

1:11:28

but you've been around for a year and

1:11:30

this is Under Armour and I can't turn this business

1:11:32

down. Yeah, I got to do it. Yeah, and he

1:11:34

shrunk our capacity down. I think we had two sewing

1:11:36

lines at the time. He said, I can keep one

1:11:38

open for you. Yeah. And so, in the middle of

1:11:41

all that, we were panicking. And I

1:11:43

remember I met with Mr. Kendall

1:11:45

and- This is Kendall, the

1:11:47

guy who was your- Yeah, sorry. This

1:11:50

is my primary investor and our

1:11:52

kind of guiding force. And

1:11:54

he said to me, do the

1:11:57

customer want the product? I mean, it's like the

1:11:59

most basic question. And I

1:12:01

said, yeah, we're having a hard time supplying them. And

1:12:03

he said, well, then you can't have your manufacturing

1:12:06

be a constraint. And

1:12:08

so we ended up buying a facility

1:12:10

in Middlesex, North Carolina, which

1:12:12

is a sewing facility called Eagle

1:12:15

Sportswear that now sews probably

1:12:17

60% of our product. Wow.

1:12:20

Byard, in March of 2024, a

1:12:24

book came out called American Flannel by

1:12:26

a guy named Stephen Kuretz. And

1:12:29

a lot of this book is about you

1:12:31

and about, it's about basically

1:12:33

about entrepreneurs who are trying to

1:12:36

make clothing in the United States

1:12:38

and how hard that is. And

1:12:40

part of it talks about this saga that

1:12:43

you went through to create a flannel shirt,

1:12:45

which I think initially when you

1:12:47

launched American Giant in 2011, this

1:12:50

was like in your vision, you wanted to

1:12:52

make a flannel shirt, but it would take

1:12:54

like seven years to figure out how

1:12:57

to make a flannel shirt in the United States. I

1:12:59

think most people think of that and they're like a

1:13:01

flannel shirt. What's so hard about making a flannel shirt?

1:13:04

What's the challenge there? Why can't you make this in the

1:13:06

US? What was so hard about that?

1:13:10

Well, yeah, so- Where do you begin, right? Yeah,

1:13:12

I mean, I think when I

1:13:15

originally thought about the business, I thought of, there

1:13:17

are probably four iconic American silhouettes. There's

1:13:19

the t-shirt, there's the sweatshirt, there's the

1:13:22

blue jean, and there's the flannel shirt.

1:13:24

And of those four, the flannel

1:13:26

is the most complicated and much

1:13:29

more complicated than I even gave it

1:13:31

credit for. The difference is just to

1:13:33

try to keep it really simple. When I was

1:13:35

young, the great flannel shirts you bought from Woolrich,

1:13:38

LL Bean, that lasted forever, and they were

1:13:40

beautiful and got more and more patina as

1:13:42

they aged and got softer as they aged,

1:13:45

those were yarn dyed flannel shirts.

1:13:47

And yarn dyeing is kind of

1:13:49

half art, half science, the

1:13:53

individual strands of yarn are

1:13:55

dyed and then woven into

1:13:57

the fabric to create the flannel pattern. Oh,

1:13:59

it's not like dyed, you don't just make

1:14:01

the shirt and then just stamp a flannel.

1:14:03

And print flannel on it. And that is

1:14:05

what you buy today. Oh, most

1:14:07

of it's printed. Yeah, absolutely, yeah. And

1:14:10

so I wanted to do a yarn dyed flannel

1:14:12

shirt in the United States. So you have to

1:14:14

actually buy the yarn and then dye it, unlike

1:14:16

the knitted fabric that we spoke about earlier, but

1:14:19

it has to be individual strands of yarn need

1:14:21

to be dyed. Wow. And

1:14:23

so I got it in my head that I

1:14:25

wanted to do a yarn dyed flannel program. And

1:14:29

I reached out to the New York Times and there was

1:14:31

a reporter there who worked in the fashion

1:14:34

team named Stephen Kuritz and

1:14:36

asked him if he wanted to come along for the

1:14:38

journey. I didn't, had no clue whether we were going

1:14:40

to be successful or not. And

1:14:42

he's a guy that grew up in Western

1:14:44

Pennsylvania under the shadow of Woolrich, grew up

1:14:47

in a mill town and had witnessed the

1:14:49

decline of that brand and the offshoring of

1:14:51

his production. And I think it struck

1:14:53

a note with him and he said yes.

1:14:56

And he ended up following us for

1:14:58

a year, basically, as we went down this

1:15:01

incredibly arduous path of

1:15:04

assembling the component parts necessary to make

1:15:06

a yarn dyed flannel. And we

1:15:09

released it in time for Christmas of that year. I

1:15:11

think it was 2017. And

1:15:14

Stephen wrote an article for the New York Times

1:15:16

called the Annals of Flannel that

1:15:20

tracked that journey. And I think Stephen got approached

1:15:22

by two or three publishing houses to turn it

1:15:24

into a book. But

1:15:26

I think the thing that's interesting about that

1:15:28

book is it poses pretty fundamental questions about

1:15:32

what happens to a country if we don't make things anymore. And

1:15:35

I'll shamelessly plug Stephen's book because he

1:15:38

did a heck of a job. And I think Stephen

1:15:40

King said it was, without question, was

1:15:42

gonna be one of his favorite books of 2024. And

1:15:46

if I just will say, I think it's

1:15:49

a good example of I think

1:15:51

the nonpartisan nature of

1:15:53

domestic manufacturing. You got people on the right and the

1:15:55

left that care really deeply about this

1:15:57

stuff. And I think that's as it should be.

1:16:00

be. You've been at this

1:16:02

since 2011 and even before,

1:16:04

but publicly pushing for making

1:16:07

things in the U.S. And there are some brands

1:16:09

that were doing it, American Apparel was doing it

1:16:11

for a while, but you've been

1:16:13

on this out there talking

1:16:15

about this. Have you

1:16:17

seen any movement? I mean, have you

1:16:19

seen manufacturing, at least

1:16:22

in the apparel business, moving

1:16:24

towards making more stuff in the U.S. or has it not

1:16:26

really happened yet? Well,

1:16:29

here's the thing. About

1:16:31

40 years ago, we

1:16:33

made a bipartisan decision to place

1:16:36

consumption at the center of our

1:16:38

foreign policy. We felt that

1:16:41

getting consumers the cheapest prices and the most

1:16:43

choice was the absolute best thing to do,

1:16:45

as opposed to putting manufacturing

1:16:48

at the center of our foreign policy. And

1:16:50

I think that a lot of that policy

1:16:52

makes some sense, right, that we now can get flat screen

1:16:54

TVs for cheap, lots of choice. But

1:16:56

there's also a lot of consequences of that

1:16:58

policy, which has resulted in real devastation to

1:17:00

lower middle class jobs, to urban rural communities

1:17:02

that have been just decimated. If you have

1:17:04

a four year degree and you can be

1:17:07

a consultant or work in banking or you're

1:17:09

doing well, you can be in the stock

1:17:11

market, you've done great. If

1:17:13

you have not done those things, if you've got

1:17:15

a high school degree and you have a job

1:17:17

that's going to put you into the

1:17:19

trades or manufacturing, the last 40 years have been

1:17:21

absolutely devastating. And that doesn't end

1:17:23

well for a country. And I

1:17:26

think that was a fundamental mistake. It was

1:17:29

a bipartisan mistake. We cannot

1:17:31

build a country on the

1:17:33

back of consumption arriving at your door, $8

1:17:35

pair of sneakers the next day. We are

1:17:38

going to hollow out the middle class in

1:17:40

this country in ways that have long term,

1:17:42

very bad consequences. I think the

1:17:44

good news is that consumers are waking up to

1:17:46

it, policies makers are waking up to it. And

1:17:48

so have we seen movement? I

1:17:51

think you're definitely seeing movement in DC. Certainly

1:17:53

the Biden administration is doing that in a pretty

1:17:55

important way. And the Trump

1:17:57

administration was as well actually too

1:17:59

pretty opposed. boost, administrations, obviously, they're

1:18:02

quite consistent on trade policy. Bob

1:18:04

Lighthizer, who is the US

1:18:06

trade representative under Trump, and

1:18:09

Ambassador Tai under Biden, actually

1:18:11

see the world quite similarly and are

1:18:13

doing good work. Ambassador Tai

1:18:15

particularly doing good work at beginning to

1:18:18

restore some protections to domestic manufacturing that

1:18:20

are going to have good long-term consequences.

1:18:22

There's a lot more work to do,

1:18:25

but she particularly has been at

1:18:27

the fore of driving real

1:18:29

change that we're going to see the benefit

1:18:31

of in the coming years. Yeah. A

1:18:34

couple years ago, you guys

1:18:36

took on a strategic investor who

1:18:38

gained a controlling stake in the

1:18:41

company, Miguel McElvey, who

1:18:43

co-founded WeWork. Tell me

1:18:45

about why you sort of

1:18:50

made the decision to partner with him. Well,

1:18:54

I assume it's appropriate to talk about

1:18:56

this, but I got a phone call one

1:18:58

morning when I was out walking my dog

1:19:00

in the Presidio in terms of going from

1:19:02

you guy, and you had reached out

1:19:04

to me and said, you and I hadn't spoken for a long time,

1:19:06

I don't think. And you had

1:19:08

said that it's appropriate to talk about this,

1:19:10

but I got a phone call one morning

1:19:12

when I was out walking my dog in

1:19:14

the Presidio in terms of going from you

1:19:17

guy. And you had reached out to me

1:19:19

and said, you and I hadn't spoken for a long time, I don't

1:19:21

think. And you had said that you

1:19:23

had a guy that was interested

1:19:25

in US manufacturing and was

1:19:28

kind of poking around and someone that you felt

1:19:30

was a good human and was wondering if

1:19:33

you could make an introduction so that I could share

1:19:35

some of our scar tissue with him. Yeah.

1:19:38

He was Miguel McElvey who had been on the

1:19:40

show. He was looking to start

1:19:42

a sneaker company because he played basketball in

1:19:45

college and he wanted to make the sneakers in the

1:19:47

US. And I said, oh, you should

1:19:49

talk to Bayard Winthrop who makes everything in

1:19:51

the US. He could be a really good

1:19:53

resource. And he wasn't looking to invest or

1:19:55

buy anything. He was just looking for some

1:19:57

advice on where he could make the shoes.

1:20:00

And you know, like all these things, you

1:20:02

spend enough time banging your head

1:20:04

and fists against the wall. You

1:20:06

learn stuff, right? You learn who can do what things

1:20:08

and what things are possible domestically, which aren't where

1:20:11

to spend time, where not to spend time. And I was

1:20:13

trying to, you know, as you know, Miguel's a great person.

1:20:16

And so it was just those were invigorating conversations to be

1:20:18

able to speak to somebody that has done

1:20:20

interesting things and was thinking about the problem

1:20:22

well and was kind of trying to enter

1:20:24

into the industry. And so those were really

1:20:26

good conversations. And I began to

1:20:28

sense that, you know, the conversations though, were

1:20:31

kind of in the micro about footwear, where

1:20:33

they're more broadly about his interest in trying

1:20:35

to improve work environments for

1:20:37

humans. And you

1:20:40

know him, he's a very philosophical, deep thinker.

1:20:43

And the conversations often took on that form. And

1:20:45

I remember one day I was talking to

1:20:47

him and said, you know, why don't we do

1:20:49

something together? You know, you're, you're

1:20:51

thinking about this in a way that's different than me, but

1:20:54

that's very much consistent and aligned with what we're trying to

1:20:56

do here. And

1:20:59

I think you have a huge impact. And

1:21:01

I think it would allow you to explore some of the things that you're

1:21:03

interested in. And that conversation

1:21:05

over the course of a long time

1:21:07

evolved into into him saying that

1:21:10

was something that he'd consider and then ultimately

1:21:12

happened. And like

1:21:14

those two years ago now or three, two years

1:21:16

ago, yeah, he's your main investor now. And

1:21:19

he's now our main investor. And I think it was a condition on his

1:21:21

investment that he wanted to be able to really have a long term view

1:21:23

about how to build something great

1:21:25

and be able to do the things that he felt were

1:21:27

important. And so it was really important to him that he

1:21:29

could, he could have controlling interest in the company. And

1:21:32

so, and so that's what he ultimately did. It's just been a, it's

1:21:35

been a fascinating thing for me to have a thought partner who

1:21:37

really thinks about things quite differently than I

1:21:40

do, but has made

1:21:42

me a lot smarter and I think

1:21:44

more thoughtful about how we're approaching the problem. I'll

1:21:47

give you an anecdote. In our facility

1:21:49

in North Carolina, he came in one day and said,

1:21:51

he was asking about labor and

1:21:54

the challenge of getting labor there. And

1:21:57

Miguel said, well, you know, who's the typical worker

1:22:00

here and Miguel said, you know, it's

1:22:02

all women. The fact she's playing 98% women. And

1:22:06

Miguel said, a lot of them have kids. Yeah, a lot of

1:22:08

them have to get kids after school. Yes, be home after school.

1:22:10

Yes. And so Miguel said, why

1:22:12

don't we convert a couple of these

1:22:14

offices into an after-school program? Put

1:22:16

in some computers, provide some snacks. In North

1:22:18

Carolina. In North Carolina. We haven't done that,

1:22:20

but that was a suggestion eight months ago.

1:22:23

And it hit me like a ton of

1:22:25

bricks, guy. I was like, well, yeah. What's

1:22:27

that going to cost me? $50,000 maybe? You

1:22:30

know, I worry about whether I've got

1:22:32

free coffee and snacks in my offices in San

1:22:34

Francisco, but it didn't even occur to me to

1:22:36

do that in North Carolina.

1:22:39

So we're looking into that exact thing. And

1:22:42

so that kind of thinking is

1:22:44

pushing us forward. You

1:22:46

know, you mentioned earlier, you mentioned this idea of scale,

1:22:49

right? And so to produce

1:22:51

something inexpensively, like to make an $8

1:22:54

t-shirt, you can do that if you,

1:22:56

you know, make a bunch of them in Asia and

1:22:59

then put them in a container and ship them over

1:23:01

here to do domestically much harder. But is

1:23:04

there a world where you can actually use scale

1:23:07

and domestic labor here

1:23:09

in the US and produce

1:23:11

something competitively priced? No

1:23:14

question about it. It can be done. Absolutely

1:23:17

can be done. The key factors

1:23:21

are volume and

1:23:24

durability of commitment. What

1:23:26

I mean by that is if you had

1:23:28

a major retailer, of which maybe there

1:23:30

are three or four in this country or

1:23:34

a major brand that said, I am

1:23:37

going to make a commitment to a t-shirt,

1:23:39

let's say, and I'm going to commit to

1:23:42

it in a reasonable volume. Maybe that's

1:23:44

some small fraction of the number of t-shirts you sell

1:23:46

in a year, but I'm going

1:23:48

to do it domestically and I'm going to be

1:23:50

steady in that commitment measured in years, not months.

1:23:53

So that the supply chain partners

1:23:56

knew that there was going

1:23:58

to be steady volume over time. That

1:24:01

has a fundamentally transformative

1:24:03

impact on cost. And

1:24:05

that therein lies the irony, is that

1:24:08

there is a real chicken and egg with

1:24:10

domestic textile production, that

1:24:12

it is all offshored. And

1:24:15

so the businesses that are left are

1:24:17

constantly trying to land the next, you

1:24:19

know, 5,000 piece order. But

1:24:23

if you had a way to

1:24:25

drop in a order quantity measured

1:24:27

in the hundreds of thousands of

1:24:29

units, it changes price

1:24:31

in the most basic levels and

1:24:33

blows up entirely the negative paradigm

1:24:36

of, boy, American manufacturing is so

1:24:38

wildly, you know, expensive, it's only

1:24:40

available for the elite. So

1:24:43

in theory, a t-shirt, right, that retails

1:24:45

on your site for 50 bucks, which

1:24:47

is, again, we know the supply

1:24:49

chain, the cotton's American, it's spun in four

1:24:52

different factories, it's made in a

1:24:54

facility in North Carolina. The

1:24:57

cost of that could go

1:24:59

down considerably if you had, you

1:25:01

know, a factory that was

1:25:04

on order to produce 200,000 of them. Yeah,

1:25:07

I mean, I could produce a great quality, 100%

1:25:09

cotton t-shirt that you would love that

1:25:13

would retail for 15 bucks or

1:25:15

less. Made in the US.

1:25:17

Made in the US. Entirely domestically sourced.

1:25:19

Entirely of great quality. Wow.

1:25:22

Yep. Amazing. That is the impact

1:25:24

of, and the thing is,

1:25:26

what we need is we need a retailer

1:25:29

or a brand to step up

1:25:31

and lead. So,

1:25:34

I mean, what kind of impact

1:25:36

can consumers have on this? I mean,

1:25:38

if consumers make the decision to, instead

1:25:40

of buying, you know, four shirts at

1:25:42

H&M, buying one

1:25:45

shirt that's American made, they could

1:25:47

have a significant impact on how

1:25:50

big retailers behave? Well,

1:25:54

I think there are a

1:25:56

number of constituents that are going to

1:25:58

impact domestic manufacturing. Consumers are the... least

1:26:00

important in my mind or should bear

1:26:02

the least responsibility because as

1:26:04

we keep talking about, there are many, many, many

1:26:07

customers out there that don't have the luxury to

1:26:09

spend 40 bucks on a t-shirt. And

1:26:12

I don't want to be in a position where we're asking someone like

1:26:14

that to make trade-offs that they otherwise may not

1:26:16

be able to do. I think

1:26:18

the people that really play roles are brands

1:26:21

like American Giant or pick

1:26:23

any other brand that you may admire. Are

1:26:25

they trying to have some values component? And

1:26:27

to be clear, if

1:26:29

you make stuff in the United States,

1:26:31

you get the human rights benefits, the

1:26:33

environmental benefits, the worker safety benefits that

1:26:35

are baked into domestic law in

1:26:38

a way that if you make it

1:26:40

somewhere else like Bangladesh or China,

1:26:43

there are nowhere near the levels of protections for

1:26:45

those brands. No matter what green washing may be

1:26:47

coming from those brands, there's nowhere near the level

1:26:49

of protections there. So to

1:26:51

lead with values that they Instagram about

1:26:53

to apply those into actual supply chain

1:26:55

decisions, that's one group. The

1:26:57

retailers, particularly the big retailers out

1:27:00

there, have a huge role to

1:27:02

play between whether they're

1:27:04

going to be helpful in this regard or

1:27:06

not. And then the

1:27:08

third are policymakers. If you

1:27:11

think about, let's just pick

1:27:13

an example, car fuel efficiency. We

1:27:16

make decisions to say we're going to ratchet up fuel

1:27:18

economy standards over time. Our

1:27:22

policymakers could easily be doing a similar thing

1:27:24

with constraining a little bit

1:27:26

where we allow our brands to

1:27:28

manufacture based on some criteria that

1:27:30

we can agree on, like human

1:27:32

rights records, living wage, environmental standards.

1:27:35

We do a really inadequate job to do

1:27:37

that. But I think those are the three

1:27:39

most important ones probably in this order, probably

1:27:41

policymakers number one, probably retailers

1:27:44

number two and brands number three. And then consumers

1:27:46

I think are fourth in the least important because

1:27:48

I think consumers got to act rationally and they

1:27:50

should. Byard, when you think

1:27:52

about the journey that you've been on and where

1:27:54

the brand is today, and

1:27:57

its future, where it's heading, how much?

1:27:59

much of where you got to today?

1:28:01

Do you attribute it to the hard

1:28:03

work and the grind and how much

1:28:07

do you think has to do with getting lucky,

1:28:09

you know, people being interested in craft made

1:28:12

goods and, you know, meeting

1:28:15

Miguel and just what do

1:28:17

you attribute your success to? Yeah, I

1:28:19

mean, it's a good question. I think

1:28:22

it took me a long time to realize this guy. I

1:28:24

think you and I have talked about this off

1:28:26

the air that it took me, you know, into

1:28:29

my 50s to realize the importance of affiliating within

1:28:31

working with people that I'd like to think of

1:28:33

good values. And so I think

1:28:35

that that's mattered a lot because I've surrounded myself

1:28:37

thankfully rather a bunch of people that want to

1:28:39

have an impact that have a

1:28:41

sort of nonpartisan patriotism in them.

1:28:44

And so I think that's helped. It's kind of

1:28:46

got me into an ecosystem of people that are

1:28:49

good and they're trying. But I boy,

1:28:52

do I attribute a lot to luck, you

1:28:54

know, meeting Paige Ashby or having

1:28:56

Farhad write that article or having you introduce

1:28:58

me to Miguel or whatever it might be.

1:29:01

Those are just hard not to contribute

1:29:03

those to lucky to be

1:29:05

at the right place in the right time. Hard work

1:29:08

helps. You know, all those other things help. Great product

1:29:10

helps. But, you know, luck, I

1:29:12

think anyone that tells you otherwise is lying. I think

1:29:14

luck plays such an important role in any company's

1:29:17

success. That's

1:29:20

Bayard Winthrop, founder and CEO

1:29:22

of American Giant. And

1:29:24

by the way, if Bayard's name sounds a little

1:29:26

familiar like you might have heard it in a

1:29:29

history book somewhere, well, that's

1:29:31

because he's actually a descendant of

1:29:33

John Winthrop, the first governor of

1:29:36

the Massachusetts Bay Colony. Hey,

1:29:39

thanks so much for listening to the show

1:29:41

this week. Please make sure to click the

1:29:43

follow button on your podcast app so you

1:29:45

never miss a new episode of the show.

1:29:47

And don't forget to sign up for my

1:29:50

free newsletter at guyroz.com. This episode was produced

1:29:52

by J.C. Howard with music composed by Remptina

1:29:54

Rablue. It was edited by

1:29:56

Casey Herman with research help from Catherine

1:29:58

Cipher. Our audio and

1:30:00

engineer was Robert Rodriguez. Our production

1:30:02

staff also includes Niva Grant, Alex

1:30:05

Chung, John Isabella, Elaine Coates, Kerry

1:30:07

Thompson, Chris Messini, Carla Estevez, and

1:30:09

Sam Paulson. I'm Guy Roz

1:30:11

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