Veeral Rathod, Co-Founder of J.Hilburn is interviewed by J.Michael Palka a 34 year MLM veteran and Public Relations specialist.
The finest clothing made is a person’s skin, but, of course, society demands something more than this.
Of course, we all know that when Mark Twain goes on to say that “Clothes make the man,” he is really addressing society’s image of the man. The Founders of J. Hilburn, an inspired men’s clothing company, are counting on it. Veeral Rathod and Hil Davis know that “society demands something more than this.” Hil and Veeral also address the important issue of getting the most bang for the buck. Out of this union, their vision of providing custom-made shirts and clothing, inspired from concepts of the luxury European market, is the founding basis of the creation of J. Hilburn.
Unique in its philosophy of providing excellent custom clothing, companioned with personal service, and providing pricing without all the markups, is the heartbeat of the company. Innovative in its approach also is their direct-marketing concept, while maintaining quality.
Conversation with Veeral Rathod, Founder and CEO of J. Hilburn- in his own words:
2 January 2014
J.Michael: Veeral, what I would like you to do now is to tell us the story about J. Hilburn; where you were when you and Hil first got the idea; whether you had partners; the challenges you faced as you started up; and about this direct-market approach.
Veeral: Sure, I will start at the beginning when we formed J. Hilburn in January of 2007. Of course, the concept started forming when we first identified the need for premium clothing at decent prices. Hil and I both had careers in investment banking. Being in this world, we well understood the need to look groomed and to be well-dressed. As investment bankers, we also were very aware of the prohibitive mark-ups and spiraling costs. We decided to come out of the financial services world to make J. Hilburn a reality.
J.Michael: So, the bottom-line concept? Describe the premise of J. Hilburn and how you were going to do this.
Veeral: We wanted to attempt to be able to compress the supply chain for luxury apparel, while keeping prices real. We found an opportunity when we looked at the luxury apparel world. We saw that designer brands, particularly European, price points had gotten extremely expensive. This issue was further exaggerated when the U.S. economy saw a major run up in consumer demand between 2001 and 2007.
We then began to uncover what drove a lot of that pricing up. We came to the conclusion that pricing was led by heavy mark-ups. Since it was not necessarily that clothing manufacturing cost more money to produce luxury goods, we realized it was the retailer marking up their products more than they had ever before. After the retailer did this, wholesalers would mark the products up further, followed by the retailer marking them up again. This means that you, as a consumer, might be paying anywhere from 10 to 12 times what it costs to make a product. Basically, most of that money was going to profit, and to help pay for the marketing of these retailers.
J.Michael: When and how did the direct marketing concept come about?
Veeral: There were three main triggers to this concept. Hil was reading a book about Warren Buffet at the time. One of the chapters is dedicated to the buyout of the Pampered Chef and pointed out 4 main problems that need to be resolved. That was the story that really opened our eyes to the Direct Selling world. We saw that by using a Direct-Selling model instead of a traditional store model, or an e-commerce model, we could build a new highly disruptive retail apparel brand of our own. By using the Direct Selling method it would allow us to solve these 3 key things that I see as problems in the market right now.
1. We would be able to work directly with the client, thereby bypassing wholesalers, stores, and websites. We (our Stylists) will interact directly with the clients. By conducting business this way, we would have much less of a markup compared to a product purchased at a major department store.
2. We also know that clothing is a very difficult product to sell on-line only and back when we started the company, the buzz was to sell things on-line as it is cheaper to run an e-commerce business. That, in fact, is not true. It is very expensive. E-commerce is more expensive to run due to shipping costs, customer acquisitions, returns and complaints, and other hidden costs. We take a faceless, heartless, personal service-less service and make it human and personal. Our Stylists interact directly with the client. The product is tactile, like, touch, feel, fit- the things that really matter when you are buying clothing compared to when you are buying a computer or book on-line.
3. This third big thing is that men typically DO NOT LIKE SHOPPING IN THE FIRST PLACE! Most men do not even like going to the mall and even more importantly, when they do get there, most guys have no idea what to buy.
J.Michael: Tell us more about these Stylists. What exactly is their function?
Veeral: A cornerstone of our product philosophy is that most of our clothing is custom fit. How do we assure that issue? Stylists! So now you have a person that you can actually interact with, to help you through the process of what to wear and how it is going to look. The Stylist schedules an appointment to meet you in person. They bring fabric samples; take your measurements to ensure that we get you into a better fit. The Stylist then delivers you garments that fit better than anything you could find in a store. It is up-front and personal service – and with better price points!
J.Michael: So, the success depends on building strong, trusted relationships by the Stylists. Right?
Veeral: Our Stylists are the very core of our business. Our clients are getting the attention they deserve, the best product possible, and at the best prices. Yes, it is the Stylist who is making it more convenient, who is taking their client’s measurements that will provide custom fit, and who gets to know his/her client. It becomes a personal relationship of convenience and trust.
The client puts a lot of trust in the hands of that Stylist to just say “tell me what to wear.” In addition, the Stylist is making appointments more convenient for the client by meeting in his office or home. No more malls or department stores! For example, if the customer is a lawyer, he can be in court half the week and, when not there, in his office. As the Stylist begins to understand their client and his needs, he/she can address other apparel ideas for aspects in that client’s life, such as, business casual, business dress, when going out socially, or when he dresses down on the weekends. As a result the Stylist ultimately eliminates the stress a guy faces when going through the process of shopping for clothing.
On a deeper personal level, I think what we have really come to understand is that there is a bigger trend evolving in apparel right now, which is that men are starting to pay closer attention to how they present themselves in a way that guys have not done for probably 20 or 30 years. The age of tennis shoes and T-shirts as a main staple is over for professional men. So, we are riding that trend, and we believe the biggest block is that most guys do not really know how to educate themselves on what to do. The generation of men, according to our research, that needs the most help is professional men between 30 and 50 years old. Rule-of-thumb, of course. The Stylist steps in here… in the position of a trusted friend, clothing mentor and a professional Personal Stylist. It is the best of all worlds brought to your door. No…literally IN your door!
J.Michael: Expound on the dynamics of how you started J. Hilburn and how it was funded.
Veeral: We initially started with some friends and family investors that helped us get off the ground. Then over the years, we brought in some very significant venture capital investors that are based in Silicon Valley. Battery Ventures and Bridge Scale Partners bought in early on our hybrid model of consumer retail and service along with doing business OUTSIDE THE BRICK AND MORTAR FOUR WALLS OF STORES.
These investors saw a lot of opportunities where technology can help enable our Stylist to empower our customers to find a better way to shop and buy, and they really liked that concept.
We also have another major investor and contributor who is a strategic investor, as they are one of the largest apparel suppliers in the world. They believe (as do we) that the world is going towards personalization and custom fit. As such, in addition to this important outlook and being a major supplier to JHILBURN, they are now equity partners. The main thing our strong group of investors has in common is the shared commitment of doing two things:
1. Being able to change the retail industry and doing it in a much better way that helps us create an enhanced customer-value proposition and experience than anyone else.
2. They also believe in the entrepreneurial opportunity that we are offering to our Stylists.
Exhibited in our international conferences and events, our investors present their understanding of how powerful and important this team of Stylists is as our Direct Sellers. They are also willing to invest in the right tools, resources, and training to make sure that our opportunity is really special. A well-trained Stylist who is passionate and excited, in turn has a very positive impact on our customers.
As mentioned, our Stylists are the heartbeat, soul, and backbone of J. Hilburn.
J.Michael: How is being a Stylist compared to being a store clerk or another direct selling business?
Veeral: Where do I begin? No walls, no punching time clocks, freedom, more money, independence… we can go on. I think what makes us particularly unique is that we always track how we are doing versus other direct-selling companies. Two points I am particularly proud of:
1. Our attrition rate is significantly lower than most direct-selling companies. Basically, our annual turnover is 20-30 percent compared to a lot of direct-selling companies who experience turnover rates of 80 percent and higher.
2. Our business really is a Consumer Business. Meaning, that our Stylists do not have to buy the inventory; they really do not have to spend any of their own money except for basic business materials in which we charge them our cost.
J.Michael: How much income can a Stylist expect to make?
Veeral: Our average sales per Stylist are about $20,000.00 a year. By all accounts, most direct-selling companies’ average sale per distributor is closer to $1,000.00 to $2,000.00 a year. So ours is about ten times higher. What that really lets us do is meet our goal at J. Hilburn. Our experience is geared towards a certain demographic…certain expectations from and for the customer. Our customer is the guy who is typically shopping at Nordstrom or Brook’s Brothers, which means we need to have a very well trained and qualified Stylist. We put a lot of resources into training, and it is very important that we also protect our Brand. We know that the consumer’s perception of us, our Brand, is controlled by the Stylist. We do have about 20 Stylists who make over $250,000 a year.
J.Michael: What were J. Hilburn’s biggest challenges?
Veeral: Our biggest challenge during our first few years was to be able to consistently deliver a great product on time and make sure each unit is custom made. It was an issue of establishing and maintaining quality control. We had to make sure it was done correctly. The reason that was such a challenge is because the apparel world is not built for custom-made; instead mass production is the main operating procedure. Apparel manufacturers are built on bulk orders. It is built for bulk orders from the big brand names, like Ralph Lauren making 100,000 blue oxford shirts. With J. Hilburn, it is just the opposite – every single shirt is made uniquely for each individual. So being able to re-gear for singular items to be produced out of that supply chain was quite a challenge. We have done this and two things have resulted:
1. Currently we are selling more custom shirts than anyone else in the world. Right now, we are doing about 15,000 custom shirts in any given month. Because our history of accomplishing these figures, our manufacturing partner is making more custom shirts for J. Hilburn, and in fact, more custom shirts in general than anyone else. Building that supply chain has really helped our manufacturer establish and support their companies without the need of bulk orders.
2. We struggled a lot with our technological solutions. The reason for this is due to the huge number of technology platforms for direct-selling companies on a world-wide scale. There is also a whole world of e-commerce solutions available that no one has been able to put all the pieces together to support customized apparel. As a result, the way that any of these technological solutions are built, for instance a shopping cart, is a basic build for a basic product. These are set final products where you are just ordering a SKU and maybe a size and color. For us, every shirt is custom in every way. Every shirt begins with a select piece of Italian fabric, and then you have a complete variation on the sizes and measurements that can be selected. Then when you actually look at all the styling options that we offer you begin to see the complications that needed to be resolved.
J.Michael: Give us an example of the variations offered for custom shirts.
Veeral: Over and above the mentioned choices of fabrics and measurements, there are over 10 million variations that you can build into a shirt. Buttons, collar styles, cuff styles (some with options for cuff links), colors, the choices are endless. Each piece is different, so you can see the difficulty in fabrication. What we have learned is that by starting to build in-house and bringing on our own team is where we were able to see the most success. The challenge here is that this kind of manufacturing is not the most cost-effective. It is expensive in that it takes a lot longer to produce the final product to be delivered to the client.
Even the products that are made in bulk to be sold off-the-shelf have to contend with the process of expedient manufacturing to sale’s shelf. But, when you determine that the product you are selling, along with the service and experience you offer to the customer, it becomes apparent that this product cannot be purchased off-the-shelf. There is no comparison. Technological solutions continue to be a work-in-progress. As we continue to grow, however, I would say what is really going to help take J. Hilburn to the next level is to focus on our Brand and our Brand Experience.
J.Michael: Before you address Your Brand concept, tell us how some of your Stylists are able to make up in the $250,000 range.
Veeral: We currently have hundreds of Stylists now who are making essentially full-time incomes. What I really love about it is our Stylists are very engaged, so this is not a business where you just sit back and make money off of your down line, because they are buying things for themselves and close friends. No, the big money makers are out there in front of customers continuously. The added incentive is also that these customers become repeat customers, and then will refer the Stylist to others in their circle. These Stylists have assisted us in touching our customers.
Our big goal now is to really uncover what it is that we have been able to tap into that has helped men really like what we offer. Most men are too busy, too shy, to ask for advice. By developing a trusted relationship with the customer, the atmosphere is relaxed. Take five minutes, ask a few questions, and make recommendations to them; it is a huge service. J. Hilburn has created customer focus groups in order to offer continuing education and style advice.
J.Michael: Describe what you mean by J. Hilburn’s Own Brand. Is it product, or service, the Stylists, or all?
Veeral: It is all of those. The first piece of the Brand is the Product. However, the service provided by the Stylists is critical to the overall success of J. Hilburn. An important piece of information, or premise, regarding today’s market, is that fashion is at a point where it is very desire-driven. In general the whole world is going in the direction of the individual. It is about personalization, customization, and it is about the tailoring and unique experience. This is the grounding belief at J. Hilburn. The guts of the matter.
We have all lived through the world full of big business, mass production, extreme profits, corporate fat, and a world run on crazy. Today’s time is now retreating to the importance of the individual, small caring businesses, less greed, and doing business with someone who actually cares about us. This is that chance.
It is a lot less about walking through the mall and deciding what designer you like such as Brook’s Brothers or Ralph Lauren or Ted Baker, Armani or Venure or Burberry. It is more about who I am as a person. What is really meaningful or special about whom the J. Hilburn guy is . . . confident in himself, and, as an added bonus, the quality of his apparel. No matter what profession, the J. Hilburn man is also confident in the consistent quality of that apparel.
The J. Hilburn Brand is known for:
1. Quality of product
2. Customized style
3. Perfect fit
Our J. Hilburn man represents important presence without flash; stability without boring; casual attention to subtle details; international flair without pomp; consistency without static.
J.Michael: What are plans for the future of J. Hilburn?
Veeral: This is what I get excited about…thinking about the J. Hilburn Brand and what it represents. The J. Hilburn Brand will help us to know the emotional drivers for our clients. They want to be recognized without looking like a peacock. We are looking for consistency in quality, the service we offer through our Stylists, and delivering this Brand experience. At another cornerstone of our product philosophy is incredible material. We buy most of our raw materials out of Europe, primarily Italy, and then world-class construction. Because we sell it direct, it is at a better price to the consumer.
We have already proven that we can really build a high level of trust with customers, and currently have more than 3000 well-trained Stylists. We want consistency throughout the world. Thus far, we are going to continue to focus on men’s wear for several years. I think we have a huge opportunity to build an iconic men’s wear brand, and do it in a way like no one has done before. We will also stay focused on Direct Selling as it has proven to be a very powerful model. We invite people to join us, and present them with a viable way of improving the quality of their lives.
The opportunity that in following years, we might say how do we take these two concepts that we have built well, which is a very efficient supply chain along with this very strong relationship with customer, and expand into other categories we might move into as a J. Hilburn Brand.
I am really excited about what those opportunities are going to look like for us in the future.