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