September 16, 2014

Parag Jhaveri: Using Kickstarter to Raise $20,000 from Pre-Customers

When starting a clothing business a few years ago, you would have to spend tens of thousands of dollars to produce clothes you weren’t sure anyone would actually buy. Or try to figure out the right mix of sizes and colors you’d need to produce out of the gate. And you still stood a good chance of either making too many, or not enough to meet the demand. Either way you could be costing yourself big money before knowing if you can really be successful.

Our guest this week is Parag Jhaveri, Co-Founder of premium shirt manufacturer, Hucklebury. Parag shares with us how he and his partner were able to start the company by using Kickstarter to raise $20,000 from backers/”pre-customers” before having to manufacture a single shirt.

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using kickstarter to raiseSmall Business Trends: Can you tell us a bit about your personal background, and Hucklebury?

Parag:  I have a bachelor’s in engineering, and masters in engineering. I’m also pursuing my MBA at the moment.

I spent most of my childhood seeing my business-minded mother operate two garment factories of 75 people, to design, manufacture and export scarves, chiffons, shorts and shirts  to brands like Marks and Spencer, Calvin Klein and a lot of other major brands all around the world.

She did that entire business the traditional way, 15 years ago. I’m trying to take it to the online world and use technology and data. That’s how I got started with Hucklebury, trying to solve two major problems. One is, men like to wear clothes that fit and are affordable, but can’t find them easily. Second is bringing back manufacturing to the U.S.

Small Business Trends: Can you explain how you’re going about redefining it, and how crowdsourcing plays a role?

Parag: The business model that we are using is quite innovative and unique in this sense. We are crowdsourcing fashion. So, let’s say you are a brand that wants to launch a shoe company and you’re a great designer. But you have no idea how many shoes to design and what color. Our platform will help you launch your clothing brand, or your shoe brand, and take pre-orders.

After pre-orders are taken, where customers are committing to pay beforehand,  it will go into production and be manufactured. So you don’t make them and realize you’ve made too many or too little and then they are discounted, or you’re scrambling to make more . We’re trying to solve this inventory issue of supply and demand. That’s how the crowdsourcing model will work.

Small Business Trends: Can you tell us how you’re using Kickstarter to do that?

Parag: Right now on Kickstarter, what we are doing is launching our own brand, Hucklebury, on their platform to launch shirts. We are trying to make better-fitting shirts, using premium-quality fabrics used by brands like Armani and Versace, that typically costs $200 and upwards, sometimes even $500.

What we’re trying to do is use the same fabric, supplied by the same mills to these brands, but make it in the U.S. We offer 365-day guarantee for quality and workmanship, and offer it at a one-third price than these brands are. So it’s much more accessible to the average consumer than some of these brands would be.

Small Business Trends: How have things like Kickstarter changed the way you view creating a business?

Parag: Kickstarter is a great platform where your business is applicable, because they do have certain categories where you cannot list your product. It is a great platform to take on a test drive, whether your product or idea is in demand, or not. Not only can you get customer validation, but in order to have a successful campaign, you do have to do a lot of marketing and PR. Either by yourself, or if you have the money, hire somebody.

Small Business Trends: Can you talk about the promotional aspects of a business model like this?

Parag: Let’s say you were launching on Kickstarter, two or three weeks out from now. What you should do is start marketing about your platform two or three weeks before you are about to launch.

If you’re launching a toy product, figure out all the writers in the U.S. that have written about toy products and make an Excel spreadsheet. Then check out who you know personally. LinkedIn is a great way to find out if you know anybody personally, or you’re closely connected. Seek to get introductions. Introductions take a lot of time, so the earlier you can, the better off you are. Because not everyone responds promptly.

Get your story right. That is the key ingredient in order for you to be written or your company to be written about anywhere. Getting your story pitch right, before even you reach out, is really important. Have a clear message on what you’re trying to do, how you’re trying to solve it, and why you’re solution is better.

Those are the steps for news outlets. There are bloggers who write about toy products, so reaching out to them or even giving some samples of your products early on can help. Do YouTube videos if your product is applicable to that.

Doing all this in a systematic manner helps. The most important thing is you need some feeders initially. So make sure to tell your friends and family before-hand what you’re up to, and ask for their help to initially feed it.

If your campaign is not successful in the first few days, or it’s not being well-pledged, the community may consider it dead-in-the-water. It follows a herd-mentality. If your campaign is successful, others follow. If it’s not, then others may not follow.

Small Business Trends: So do they want an American-made product? 

Parag: We believe manufacturing in the U.S. is of high quality. In the past few years, manufacturing has moved overseas, but we think it’s time to bring it back to U.S. We want to play a small role in that. The way we are trying to do that is to source all of our materials within the U.S., rather than going overseas using domestic suppliers that may have been affected by the economy.

Our products are made out of a clothes store near Washington D.C. This particular factory makes clothes for brands like Nordstrom’s, Sacks Fifth Avenue and major retailers. But they had been affected by the economy. Where they were working five days a week and had around 40, 50 employees, they’ve had to cut back to four days a week and almost half of their employees.

We want to help the community by bringing them back to full capacity. The way we are doing it is, we are able to sell around 1,000 shirts and create employment for one person. That’s really important for us, bringing back manufacturing to U.S. and supporting the community, at large.

Small Business Trends: You had set a target for $20,000 on the Kickstarter campaign that you guys have. If you weren’t able to hit that number, what would that have cost you? From a business perspective compared to traditional manufacturing?

Parag: If weren’t able to hit the goal after the campaign was completed, it would be a few thousand dollars.

Shooting for the video can cost anywhere from $500 to $3,000 or $4,000, depending upon who you hire. Taking pictures has its own costs as well. The content and everything, we put together ourselves. Getting samples made also can cost you a few hundred dollars.

All in all, it can be anywhere from $1,000, $2,000 or $3,000. Obviously, we try to keep our costs as low as we can. But these are the basic costs you have to keep in mind.

Small Business Trends: So you’re spending a fraction of normal costs to see if this idea works. If it doesn’t, you’re freed up and you have more resources to try other ideas.

Parag: Absolutely. This is a fraction of the cost compared to traditional business, which is definitely labor-intensive as well as resource-intensive.

Small Business Trends: Where can people learn more about Hucklebury and get shirts?

Parag: Right now, we are taking orders on our Hucklebury Kickstarter page. You can see our video or learn about our story and back us. We are offering a $200 shirt for one-third the price that is made in the U.S. and we are backing it with a 365-day guarantee, like no one else in the industry.




This interview on using Kickstarter to raise money is part of the One on One interview series with thought-provoking entrepreneurs, authors and experts in business today. This transcript has been edited for publication. To hear audio of the full interview, click on the player above. 

4 Comments ▼

Brent Leary


Brent Leary Brent Leary is a Partner at CRM Essentials and organizer of the Social Business Atlanta conference. Brent serves on the advisory board of The University of Toronto CRM Center of Excellence, writes the Social CRM column for Inc.com's technology site, and blogs at Brent's Social CRM Blog.

4 Reactions

  1. Brent,

    An interesting interview. I always think that crowdfunding (and crowdsourcing, in general) will help small businesses – a lot.

    In raising capital, pre-orders are the best kind of capital, IMO – it literally means that you are starting your business with nothing down, 100% backed with OPM (other people’s money) – which means your ROI is infinite.

    • Thanks for checking out the conversation Ivan. I think we’ll see more of this approach in the future, but only the startups offering real value with the ability to use the platforms to tell compelling stories will benefit.

      Thanks again!
      Brent

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