Suitsupply: Fokke de Jong

27:11I practiced as long as I could to, you know, have almost the same handwriting as the unit where it was store written in, and I just penciled store in my unit. And then I went back to the municipality and said, but guys, what do you mean on these blueprints it says store? I said, oh, oh, okay. Oh, we didn't know. That was it. That was it. You would basically just handwrite store in there. And you're like, guys, you missed it. It is here. It says store. And they're like, oh, okay, all right. Exactly. It just seems crazy. They just wanted to get rid of the problem, right? They had complaining people.

27:49that were probably sympathetic of what we were doing, but just needed an argument of getting rid of the problem. I didn't know how to solve this problem other than that. And I never heard anything of them ever since. When we come back in just a moment, FOCA takes Suit Supply Global, decides to move production out of Italy, and in the process, almost destroys the business. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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32:36Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2001, and Suitsupply has been in business for a year. And it's doing pretty well. In fact, Foca just made under 10 million euros in revenue just selling suits in one store and online. And then, in 2002, Boca decides to take on an investment from a larger Dutch fashion brand. I thought at the time it was going to be beneficial for us to be part of a bigger business and that was public and, you know, we could learn something there. But it also, the other side was that I didn't give away any governance, right? So it was still, you know, fully in control.

33:21Yeah. And basically their incentive was, You know, they needed to affiliate them with something that was online so that they could tell the markets, hey, guys, we have a strategy of online. And, you know, we're also looking at online and this is the business that we've invested some money in. You know, at the end of the day, we were not part of that business, but sort of, you know, next to or, you know, could tap into some of the resources. I don't know if that was really that helpful, to be honest. Because these were just really Dutch fashion brands, right? Right. Very Dutch-focused. What I wonder, though, is they put in about 200 ,000 euros in 2002.

34:00But your business, your revenue was like 8 to 10 million around that point time. So why do you think you needed that money? It doesn't sound like, it sounds like you had enough, I mean, if you're, I mean, I guess your margins were pretty thin. Margins were thin and you needed, you know, I needed the 200, 300 ,000. I don't know the exact number here anymore, right? but it was some in that ballpark. Plus, it was a credit line, right? My business was growing at the time, but I still had to pre-finance all the fabrics, all the stuff. You had to pay for it in advance. Yeah. I mean, I was not. You couldn't order it and then pay 30 or 60 days later?

34:3930 or 60 days, no. They were not giving me that credit yet. And the thing is, you buy your fabrics, then you have to send them to your factories. They have to produce it, then they have to send it to your stores. I mean, that whole process has your cash tied up before you way longer than if you were just, you know, a business that buys wholesale. Yeah. All right. So what now that you had this cash, this line of credit and this cash, what was the plan? I mean, was it to just start to build like another 10 stores in the Netherlands? Yeah. I mean, that's the moment when, you know, the obvious thing was to expand and open more stores.

35:22And I didn't have still a lot of cash. So I really went from, you know, this crazy location into other cities, but still doing the same thing almost. And finding spots that were, you know, interesting that I could create some kind of an experience in. And it was easy for customers to go to. but still keeping our occupancy cost low. So you were not going to the high street, the main street in the towns where it was more expensive to the lease is more expensive. You were going like on the outskirts of town. Outskirts or whatever, inside the town, but then not on main on main. Yeah. My customers were coming for, you know, the quality of the product, the fact that it was an attainable price point, and they were getting a great service.

36:06So why would I now then go by the standard playbook of how everybody was building a fashion brand, even though I knew the guys that put some money in was like, no, no, no, you have to go there and there, and this is how you build a brand. I was like, no, not really, because I can build a brand based on quality of product, based on quality of service, and just figure out to be more efficient so I can actually maintain that proposition. And how did people, I mean, obviously you did not have a huge advertising or marketing budget, as you open the stores, like what would make them go in there? Was it mainly word of mouth?

36:44Like you have some guy wearing a suit and somebody would say, hey, where'd you get that suit? It's really nice. He'd say, guess what? It was like 200 euros. I got it from this store called Suit Supply. Is that how people would find out? It's more or less. Yeah. They talk about it. It becomes part of the conversation. That is the most important advertising you can get. If you don't have that, forget about it. you're never going to be able to buy against that. So you were really, I mean, you had to be super efficient to squeeze profit because you were getting the fabric. It was being made in that factory.

37:18At that time, it was made in the same factory that you had originally bought the suits from still? No, I think we've expanded our factory base by then. By then. Okay, I got it. So you were, and you had these suits coming in from Italy. and I'm trying to figure out like, because you were getting attention in Holland. You were getting press attention. There was buzz around this business. And I think by like 2003, you had, I think, at least three stores in the country, right? Probably a little more, yeah. About eight, nine stores. Eight or nine stores, okay. Something like that. And so I know we mentioned this a little bit, but I'm curious about the competition, particularly in the Netherlands, because I think a lot of people outside of, you know, probably don't realize this, but in every European country, there are multiple brands that really just kind of remain inside the country, right?

38:09Or maybe just in like the region, or maybe only in Europe. And, you know, it would be like if in the US, every state had like, 20 different fashion brands that were only in North Carolina, or, you know, only in Alabama. And there are some, there's a little bit of that, but not really that much of it, right? Right. So at the time, were the competitors in the Netherlands, were they disparaging what you were doing? I mean, were they because I think you were even sued by a competitor. I don't know if I'm pronouncing it right, but it's O-G-E-R. Ogre is how I pronounce it. And they sued you because they didn't like one of the advertisements.

38:46You had mentioned like, you know, their name and one of your advertisements. And it basically said, hey, if you're looking for our shop, just go to Ogre and turn left and then turn right. and you'll buy our shop. No, the phrase was like that. He was constantly trashing our, you know, we were trashing our business a little bit. Ogre was? Yeah, Ogre was. Is it pronounced Ogre? Ogre, yeah. Ogre, okay, forgive me. But they were like, I don't know, what's the equivalent? The most premium luxury store in Holland. And at that time, we opened a second store and we opened a store in Amsterdam, in the city.

39:16But it was sort of, you know, in that area, but not in the main, on Main Street, around the corner a little bit, et cetera. And then we had an ad that says, for a beautiful suit, you go to Auger, and then you take a left and a right. Basically, just a route to go to our store. And it was sort of a little bit of a pawn, and we're joking. It was a little tongue-in-cheek. And he went for it. He started suing us on that ad. He is Auger? Yeah, and I still have to thank him for it because it gave us a lot of momentum and a lot of publicity. So that store took a huge jump. So you've got 2004 or 2005.

40:00You're really still in the Netherlands in Holland. When did you decide to move outside of Holland and open a store in the next country? I think that was one of the things I think I've waited for a little too long. I think 2008, 2009, I started with the first store in Belgium and then in London. Yeah. And London was an interesting example because... Very expensive to do business there. Extremely expensive. And it's the lion's den from Suding, right? Savile Row, right. Savile Row. I mean, you're basically going to London and saying, hey, we can undercut their prices and offer the same quality. Yeah.

40:42So I wanted to open a store in Savile Row. So, and funny thing with Savile Row was actually that that store was designed, designated by the Crown of London that could only have traditional English tailors there. On Savile Row. On Savile Row. So we were trying to get locations, but we were getting, yeah, but you guys are not traditional English. So we went, took a side street and opened a store there. and then my PR, brainstorming about PR and said, you know, we're going to bolt you on the location on a bed and you're going to sleep in there and we have all these alarm clocks and then we bring in the press and we're going to wake up several row, right?

41:22We're going to be this whole new kid on the block. Wait, sorry. You literally brought a bed in there with a bunch of alarm clocks around you to attract... We bolted the bed on the outside of the building, like 10 meters high, you know, was also like, you know, really scary. A bed on the outside of the building, 10 meters above the ground, and you had alarm clocks around it, and you slept in that bed, and this was to attract media attention? Yeah, it was sort of the PR stunt, right? This was going to be your PR stunt. I got you. We have like 100 or 1 ,000 alarm clocks hung up on there, and they were all going to ring at the same time, and we bring the press.

41:57And you were going to be in the bed? Yeah. I mean, I was spending a few hours in the morning in that bed. the press came, all the alarm clocks went off. And the idea was, let's just do this stunt and we'll attract attention at least. Yeah, you know, we got this Amsterdam stunt where Mr. Orger sort of bite. So let's see if we can, you know, stir up some trouble. All right. And nothing happened. You didn't have any customers? We didn't have any customers. I mean, it was horrific. And nobody fell for it. So wait, wait. So you were in this bed and like no one, like you're just looking down at the ground and there's like four people milling about?

42:35There's four people, like pathetic. I think it was not, there was not going to hit the main news. So then I started hiring actors to be in the store to sort of browse around and sort of, we had some dynamic happening because it was really. You just hired people like to come and pretend. Yeah, to play a customer. To show that your store was busy. The show was busy. It was something happening. Yeah. It was very, very slowly picking up, picking up piece by piece by piece. I think it was a hard market to crack. How long did it take? I think it took about two years. Two years? You know, 2009, 10, it started to happen.

43:16People realized that, you know, this was a really good product for an interesting price. And what we also did, I think back then, we put our tailor in the front of the store, right? And so it was actually, you know, there were people working and sewing and doing stuff. A tailor was sewing right in the front of the store. Yeah. And so people passed by and said, okay, you know, what's going on here? It was a little theater. You know, the store got busier and busier and busier. And it was doing a few million, then, you know, five, six, seven, eight. It was a gradual process. So we slowly built a reputation.

43:52I mean, there was a key difference, which was on Savile Row, you go in, they would fit you. The tailor would, you know, depending on the store, the tailor would then or the tailors would start manufacturing your suit on site in that store. You guys, in 2006, about two years before, moved your manufacturing to China from Italy, where you were still sourcing your fabrics from, but no longer making the suits in Italy. Tell me why you moved the manufacturing to China in 2006. Well, what happened is, you know, at the time in Europe is that manufacturing got, you know, more and more and more scarce.

44:33People with the skill set were getting older, leaving factories. Young people didn't want to work in these factories anymore. And the skill set of making something really nice was slowly disappearing. The amount of people that were able to do it were getting smaller and smaller. And the amount of product that we were needing was getting bigger and bigger. So, you know, we had to find a solution. And I was reading the annual report of Xenia at the time. Which is obviously one of the big premier luxury brands. Yeah. Suit brands, yeah. Suit brands. And they were, you know, expanding into China. And they bought a joint venture into a Chinese garment manufacturer, suit manufacturer, in a town called Wenzhou.

45:16And I was like, oh, that's interesting. If they were also doing that, then there must be a certain level of, you know, high-end quality there. So I'm calling this factory. You know, I got the number and nobody picks up the phone or nobody speaks English in that factory, of course. And so I'm thinking, okay, it's Christmas at that moment. And I'm like, okay, I have nothing to do because everything's closed here in Europe anyway. You know what? I'll just take the plane and go to China and go to knock on the door of this factory. How much time is it going to cost me? A few days. And this is the time in China where, you know, it's not like now.

45:55Everything is fancy and nice airports. You land in Shanghai. You take a taxi for six hours. You come into this village where there's hardly any street lighting. And there's one international hotel in the town. I still remember the Victoria Hotel. And I check in there. And in the morning, I'm sitting at the breakfast. There's only one European person there. And it's an Italian guy. And I'm thinking, okay, this Italian guy is probably part of the Zenia group. Otherwise, why would there be any Italian here? And so I introduced myself. And this was Tosco. And Tosco was complaining about, yeah, I'm just being put here with Zenia because we bought this factory.

46:38And now I have to, you know, produce. Because also part of our agreement in this joint venture is that we supply a certain amount of production capacity. And I went into that factory with him and he gave me a tour. I was amazed. This was, you know, something I'm like, I've never seen so much quality and so much detail before. It was probably one of the best factories I've ever seen, better than anything I've seen in Italy. These were two brothers that founded this, you know, from a very young age. And they had just one thing in mind. You know, they were completely fanatic about it. They wanted to make the best suit in the world.

47:22And you looked at all the Italians, looked at all the brands. And their pattern making, their quality, their level was fantastic. And Xenia figured that out. That's why they bought a joint venture in that. Wow. So I thought I struck oil, right? I came back from that trip. I'm like, guys, we found the best factory in the world. Now our product can be so much better. And by the way, we can probably also make a little bit more margin on it. That was not the main driver. But still, it was going to be more efficient. and we have enough production capacity there. The guys want to work with us because we're actually solving a problem for them because they needed some extra food for the line.

48:06Yeah. For the production line. Because Xenia, it wasn't enough to just make Xenia suits. They had to make all kinds of suits. They made all kinds of suits. The stars seemed to align perfectly. So I thought, you know, guys, we're going to move to China, everything for the next season to China. Boom. But then, of course, we didn't figure out all the logistic parts. And the fabric got stuck at customs for a month. Then this factory, we weren't used in working for international clients yet. So they made it in the wrong model because there was stuff going wrong in translation. Then they had to send it out, and it was stuck in customs again.

48:46And there was so much stuff that needed to, you know, iron out from a logistic perspective. So everything was, you know, the quality was great. The craftsmanship was great. But everything else around it, it was a nightmare. I almost tanked the business with it. You almost tanked the business by moving it to China? In the beginning, yeah. Because if we would have been out of product for two months, you know, where are we going to get revenue? So what did you do? How did you resolve that? I had to run the business here, and then I flew back almost every weekend. To China? To China. And be in the factory, just, you know, pushing and...

49:23You're going to China multiple times a month? Oh, yeah. Yeah. I went on the plane five, six hours, and then started to push and get things done and be there. And then I got somebody internally that, you know, was just out of university and working for us in the store. And, you know, I said, guy, just come with me. Why don't you stay here and just, you know, the only thing you have to do is make sure that these fabrics that are here are actually going into production, you know, and call me if there's anything going wrong. Yeah. And, you know, this guy stayed there and stayed there and slowly actually helped us build up our whole production office in China.

50:03You know, you learn Chinese in half a year. This was a Dutch guy? He's a Dutch guy, 19 years old. But he was a handy, smart guy, you know, great pusher. And I just needed to have, I needed also somebody that was crazy enough to stay there, right? That didn't have a, you know, a family or, you know, was tied into Europe. So I just needed a smart guy to sort of oversee. Yeah. All right. So you've got now, you work out the kinks. It's going to take you about two years, and you've got your person on site there in China making sure that they're making it to your specifications. But the quality is good.

50:43You're happy with the end product. I mean, it sounds like these Chinese tailors are like artisans, like the kind of artisans that might have been in Europe 30, 40 years ago. Yeah, they were phenomenal. I mean, and they still are. I mean, their pride of being part of that business and making this product. And, you know, if the head pattern designer wanted to explain something to the team or the whole factory floor, it was silent. They were all sitting around him and listening in awe. I find it extremely impressive to see. I mean, everybody that discounts Chinese production, you know, I don't think know what they're talking about in a lot of cases.

51:26You had, so you had Italian fabrics being shipped to China. That's still your model today. And then basically they were cut. The fabric was cut and the material and the pieces, those cut pieces were sewn into suits in China. Yes. So now you've got this operation going. Now let's go back to London. In London, you've got the store off Savile Row, but there probably still was in 2008, 2009, a kind of a snobbiness or snootiness about something made in China, a suit made in China. that some people wouldn't find that to be quality, a quality suit. You want it made in Italy or, you know, made in London, even though the manufacturing base in those countries are very low, very small today.

52:10How did you convince people that your suits were, you know, a high quality product? Because the price point was lower. So already there, you know, the sort of the psychology around that is like, well, if it's so cheap, it must not be good. It started as, in London, unlike other stores we opened, it was more of like a drip-drip effect, right? There were a few people that came in that were surprised about the actual product and the actual quality that we're bringing for the price point. And I call it the Heineken effect. We have a beer brand here in Holland. It's called Heineken. And for us here, that is sort of, you know, it's a great beer.

52:48But it's just beer, right? Yeah. Whereas in, you know, any club in the world. Other countries, it's a premium beer. It's a very premium beer. Yeah. Yeah. That's a good analogy. So the first customers that you're getting are customers that are a little curious, right? They might not be the conformity-driven people that are snobby and that they're just shopping on Savile Row. oh, I'm not going to get a customer maybe that, you know, wants to have this, at that moment, this big brand name and say, okay, about the, I don't know, the$5 ,000 Zenya suit or whatever. But you get the customers in the beginning, hey, you know, this is interesting.

53:29These guys are doing something new. That helped us in London a lot because on one hand, you had these stores that had all this craftsmanship and so on. But you also had a lot of customers that actually knew good product. Yeah. The same as in Italy, the same. You know, you get people that feel, say, hey, this feels like good fabric, and they fit it on and say, hey, this actually really feels good. So they, I think at the end of the day in London, the customer gave us the credibility. I think by 2010, you had 32 stores, and I think that was in three countries. So between Belgium, Holland, London, maybe you had one or two other countries, still mainly Western, all in Western Europe.

54:12So you decide, and it makes sense, because if you really want to scale your brand, if you want to be a global brand, you've got to be in the United States. And so you knew probably already by 2009, 10, that you were going to eventually get to the U.S., that that was part of your plan, I'm assuming. Yeah, it was the biggest market. Everybody wants to be in the U.S. because it's such a buying power. Of course, it's also an aspirational thing, right? You want to make it there and not just be a European brand. But it was also, you know, everybody was saying it's the hardest market to go into. The U.S.

54:54consumer market is so competitive. There's a lot of red tape down there. You know, I think the amount of warnings that I got for going into the U.S. was almost endless. But I was going there every now and then and looking around. And, you know, I thought what we're doing is not really here. And I think at that moment also I felt that the market in the U.S. was ripe for it. Just getting it done seemed so hard, right? Yeah. And so expensive. I mean, New York was, you know, London was expensive. But going into New York was a completely different ballgame. And presumably New York was going to be your first location for obvious reasons.

55:35It's the fashion capital of the United States. And also, you could argue it's a suit capital of the U.S. because there's so many people in finance and law in New York, men, who wear suits to work. Yeah, New York is the obvious location. But also the most expensive. Most expensive, most competitive. I could say, well, you know, I'm just trying to get my feet wet here. I didn't even know if we were actually going to be successful in the U.S., right? I just wanted to get started. sort of get a little bit of experience, see how many of all these warnings that people were giving me were actually true.

56:13And I remember at some point, I was walking through Soho and finding locations. And at some point, I was looking up because I forgot about being on the ground floor, too expensive. It was cost millions in rent a year. I was never going to be able to do that. Millions in rent a year for one store? For one store. That was sort of the ballpark, 1.52 million a year. For a lease. and you would have to sign probably a five, ten-year lease. Yeah, five years and put guarantees behind it and all that kind of stuff. So we're doing okay, but it was not like we were not able to do that. And so at some point I see this little handwritten piece of paper in a window on the second floor.

56:55It says for a lease. And, you know, I go up there. There's this sort of furniture store on the second floor and it's a little messy. And I called his number. And the guy, landlord of that building, yeah, no problem,$250 ,000. And this landlord was very happy to give me a year lease with a six-month break. And if I couldn't make it after six months, I could happily walk away,$250 ,000. So, okay, all right. And it was not a shitty space. It was actually a nice spot, beautiful high ceilings, you know, something that could, on the corner of Mercer and Brooms, it was actually a typical Soho loft space of 4 ,000 square feet.

57:42And later I found out why this was a handwritten piece of paper and why this guy gave me this deal, because he apparently was the landlord from hell and there was no legit broker that actually wanted to work with this guy anymore in the whole state of New York. When we come back in just a moment, that landlord tries to stop suit supply from opening in New York. And Foka learns how an infusion of cash actually slows his company's momentum. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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1:00:07Framer is where ideas go live start to finish. Ready to design, iterate, and publish all in one tool? Start creating for free at framer.com slash design and use code built for a free month of Framer Pro. That's framer.com slash design and use promo code built framer.com slash design promo code built rules and restrictions may apply hey welcome back to how i built this i'm guy raz so it's 2011 and foca has decided to open a suit supply store in soho in new york he's drawing up plans and getting ready to build out the store. And then what happens was our, actually one of these moments that, you know, you do a lot of hard work and sometimes you get lucky.

1:01:02There was a piece in the Wall Street Journal that did a blind test on suiting. And we got out of that contest with a headline that a$600 suit supply suit was better or just as good as a$3 ,600 Armani. That was the review they wrote after they ordered some stuff online we were not even open yet they just ordered okay we were or we were just shipping already stuffed online to the u.s and they just did a comparison and that that's pretty great i mean what a lucky and fortuitous piece of media to get it was phenomenal right and at that moment you know our website blew up and i'm like okay we got to capture this momentum we got we can't wait until we have all the permits done and because it's going to take two months to get a permit even and you know the design zone for all the store we got to open this store now if we want to keep this going so we did a quick design had furniture made and shipped in a plane all the lighting has to be done and walls had to be placed in you know something had to be done to that store because it was a mess so we found probably you know some kind of contractor but it was probably the equivalent of the Sopranos that wanted to do it without permits.

1:02:18So I opened the store. It's almost done. I mean, this is a dream. We're doing an opening. We have all kinds of press coming. I think 600, 700 people on the guest list. Some really important people for the industry that we were able to get on the back of the Wall Street Journal article. This was the moment. right and so two days before opening i get a call from this landlord and say her and your herd you gonna open tomorrow i said yeah yeah yeah we're all done i mean uh you know big opening yeah you're still i don't have your permit closed out so that's not gonna happen and i'm like shit of course you know thought i had everything done and this guy well i said don't worry about it you know all the permits are getting done.

1:03:08Our architect is working on, according to him, self-certified job. Some phrasing I heard along the line. And it's going to be done. And I said, well, if you can have a way, because it's not something that you can do, figure it out with my lawyer. Here's his number. Called his lawyer. He says, well, I'm going to go on a holiday today, so it's not going to happen. I'm like, okay, we need to find a solution. So I called his landlord back. I say, okay, I'm going to give you$150 ,000 as a deposit for me to open tomorrow and for you to allow me to do that. And if I close out the permits in two months, fine, you give me the money back.

1:03:49And otherwise, you know, it's yours. This guy was having the badest reputation you could ever imagine. And he tells me, well, how are you going to put that in contract? I said, I'm not going to put it in contract. I'm going to trust you. I don't think anybody would have said that to him in a long, long time. So, you know, he said, well, okay. I'm thinking I'm never going to get this$150 ,000 back. But, okay, at least I'm going to have my opening and I'm going to keep my momentum, which is way more important right now. Well, at the end of the day, we had our opening. We had a lot of people come in.

1:04:28It was fantastic. And the guy actually gave me my money back after three months. You returned the money when you got the permits. You returned it. But it was essential for us to do it. I mean, if you talk about momentum, and that store was packed from the first moment. And we had the first floor, and then it was too small. And we got the second floor and the third floor and the fourth floor. And I think now it's six floors. When you, I mean, one of the things that you were doing from the beginning was having tailors in the stores. And this is like, this is not, you know, it's not like a retail shop where you just have like, college students who are trained for, you know, a couple days, and then they're selling on the floor.

1:05:09This is like a highly skilled job. So what were you doing to make sure that you had, like, were you putting your tailors through a training program, you know, before they even sat in the shop? And presumably they were already qualified tailors, I imagine. Yeah, there's, you know, finding quality staff and training them is the hardest part there is. And, you know, in the beginning we were bringing people from Europe and training them and the tailors. But also especially, you know, our style experts on the store floor. these are two different jobs in our business, right? Somebody is selling it and pinning it, they're doing the measurements, and somebody is doing the actual work of doing the alterations and doing the suing if it's a ready-to-wear suit that needs to be altered.

1:05:54Now, both jobs need a lot of training. Of course, you have in a city like New York, you have tailors. So we were able to find them and train them into how we want to do the work. We have a relentless high-end training program where we bring everybody to our one-week onboarding program. When you finish that, you're brought into a store and you're paired with what we call a style expert. And you're getting, for two months, more and more and more in knowing all the details about style, about measurements, and everything about the business. We don't spend the money on advertising. We spend the money on training our people.

1:06:32And we also follow the progress very carefully. We believe our store teams, we always say, are marketing teams. I mean, I'm wondering, how do you retain those people? Like, for example, I'm in the Bay Area. So if I want to go to the San Francisco store, I can set up an appointment. I can go meet with a stylist or a tailor or whatever, and there's an on-site tailor. And we're now, especially in the U.S. and probably in Europe, retail shops are having a hard time not just finding people to work in those stores, but retaining people. So if you're investing all this money in training, how do you keep people?

1:07:09I mean, they could get trained and then take off after a few months or a year, and then you've sunk all that money in training. Yeah. I think the most important thing is first your selection of people. You know, you got to like your job. If you ask somebody at Apple, why do you work at Apple? Right. They're not going to say, well, how great their benefit packages and what the remuneration they say you know i like to work here because i like the technology i like the product i want to be a programmer at some point or a product designer or you know they resonate with the product that's the same in our business if you you would want to work with us if you like to dress and style people and make them go out of the door to look good that's where you get your energy from and then it's about having a path for people a career path for them.

1:08:00So we have what we call the sun and the moon path in our business, where the sun and the moon are both very important, and it makes sure that we have life on earth. We would freeze to death at night, or we wouldn't have the tides. There would not be a life on earth. So we're very clear about, you know, you want a moon career, you want a sun career. The moon path is, The mantra of the moon path is so we can only have eyes for our customers. And these are all jobs that make sure that, you know, everything works, that stuff is organized and stuff is managed and the roster is there and the product is in the store.

1:08:42So that the other part of the business can focus on only one thing is styling customers and getting people into the door and creating attraction. and there we have very specific career paths that are I think new or different than other retailers. You can become a style expert in training other people but you can also become what we call a key opinion leader where we train you in how to represent the brand on social media or outside of the store where you basically become sort of a, I would say a mini influencer but with a very big difference that you're able to book an appointment with you on the spot on your Instagram.

1:09:26So your style advisors have their own Instagram pages and have built their own followings? They've built their own following. They've built their own Instagram pages. We work with them to create content. We train them on how to do this. So we build these career paths that are very, one is more operational and one is more creative in creating attraction with customers and creating looks and style. And that leads into the one path leads, you know, you could say at the end in a CEO, and the other path leads into a brand director position as, you know, in the top of the pyramid almost. So to your point, what does retention mean?

1:10:08Retention means that, you know, you have to figure out how you can create growth for these people So they also have a feeling that it's worthwhile for them to stay with your business. Fulker, we had a couple weeks ago on the show, we had Michael Kors, the fashion designer, who turned his talent into one of the biggest fashion brands in the world. It's certainly one of the top 50 in$8,$9 billion business. And he very consciously set out to do that, to become like a Tommy Helfiger or a Calvin Klein brand. And one of the ways he did that was by making sure his products were available everywhere. Your products are only available in suit supply stores.

1:10:48But I have to imagine that in the past and probably even now, there have been people who've come to you and said, hey, open a suit supply, you know, a little shoplet inside of, you know, Gallery Lafayette or open a suit supply inside of Liberty or open one inside of, you know, Bloomingdale's and also sell suit supply stuff to department stores. And you'll be much bigger if you do that. You'll be a much bigger brand. What's been your reason for not doing that? Well, you could do that. You probably get some money. And it's very different for different products, right? I think Michael Kors is very successful in the accessory business and handbags.

1:11:30Yes, sure. And if you look at that business, the thing from a service perspective that you have to do is make sure you have a nice product and you have somebody in the store that gets you the right handbag from the back of the house and sells it to you. The problem with our product is, and the problem with our business, is it is, and I would say the Goldman Sachs of retail. It's so execution-intensive to do it right. You go to our store because you have a dinner, a date, an important event, a meeting, a celebration, whatever. Something that is important for you. So this person that is going to help you, you've got to have trust with.

1:12:11This person has to develop some kind of relationship with you. Then they have to do all the pinning right, the measurements right. Then we have to alter it, or even if it's a custom-made suit, make it for you. And it has to come back on time, and then we have to fit it again. So this is a very high-touch service model that is almost intangible connected to the product itself. If I try to separate the two of them, it's going to give me a little short-term success. But in the long term, I don't believe that I can separate the two from them and be a very successful brand over a longer period of time.

1:12:50But it's always going to limit your scalability, right? If you are only in suits of... I'm not saying this is a criticism. I actually like that because you can control quality. But it is going to limit how big you can be. I don't know if it actually limits scalability. what it does do it underpins sustainability I think with doing that we can protect the brand we can protect what actually drives us and what drives us as a brand so you know they always say I go to my stores every six months I'm not saying all the stores but probably 80 % of them and of course we celebrate everybody's success but everybody has to name two things that we can do better.

1:13:39Now, they always tell me, you cannot do that when you have 500 stores. I said, okay, well, you know, I'll figure that out when I have 500 stores, but I'm pretty sure that the only way to get there in our model is to make sure that we keep control of execution and excellence because otherwise I have to change my model, I think. I have to start, if I just put a product in a department store, why would somebody buy our product and not something else? The only way of doing that is then start spending a huge amount of money on advertising. You bought out those guys who originally were original investors who had, I think, a third of the company.

1:14:22You bought them out in 2015. So now back to being essentially the majority shareholder at that point, or did you own 100 % of the company at that point? Yeah. Wow. Okay. Around that year, your worldwide revenue was about$200 million, and you were growing. What I'm wondering about is you're in a business that is, it's a high-end product. Your margins are very, very thin because you're trying to offer a competitively priced product. So how were you able to squeeze out more efficiency to make more money from this? Like, what were your options? I think at the time, if I look at the business itself, we were in actually too many countries.

1:15:12We opened our business in the U.S., but also we were in Germany. We were in Italy. Our business is inherently inefficient because we're in so many different places. But don't you have to expand? I mean, isn't your only option at that point to expand, expand, expand because your margins were so thin? No. I mean, yeah, you have to expand. But you also have to be careful of how to expand and what you do. Rates were extremely low. Capital markets were flooded with cash. You could borrow a lot of money. It was cheap. Cheap to borrow money. So you were able to expand by, obviously, with these low rates.

1:15:53But you're saying the expansion was not – because I would think – I mean, I think by 2020, before the pandemic, you had 135 stores. Today it's 150. But you're saying that was not a good strategy? Yeah, it's a good strategy. No, definitely a good strategy. But what I said is, okay, when those rates were so low and money was abundant, you could suddenly, from a constantly cash-strapped business, we raised a lot of debt and suddenly we had a lot of cash. Yeah. I've never had, let's say, just a$50 million sitting on the bank account. Yeah. And as an entrepreneur, you have endless ideas, right? You always think, you know, I can do this and I can do that and then I can do that.

1:16:37And naturally, that's always circumvented by, you know, not having enough money to do them all. So this changed. So then I opened, you know, for, okay, let's go full throttle. We open, you know, we did a year where we opened, I think, 10 or 12 stores in the US when we only had 10 or 12. Then, you know, at the same point, we started, you know, figuring out and opening a women's line and it was few women's stores and we did too much. And instead of gaining a lot of momentum and gaining scale, what happens is that your execution starts to suffer. Your momentum starts to slow. And this big snowball that was rolling out of the mountain and accumulating a lot of that stops.

1:17:22and then you have to spend a few years of pushing it back in momentum again. I guess for you that sort of breaking point for a lot of businesses would have been the beginning of the pandemic, March of 2020, right? Because, I mean, you have at that point 135 stores. You've got the women's line. And all of a sudden, I mean, still, you were doing a lot of business online. I think about a third of your business already at that point was online or maybe more. But without the shops, I mean, that's your identity. That's the customer relationship, right? And you had to shut most of them down temporarily.

1:18:05And nobody – it's great to be online, but if everybody's sitting at home, nobody needs our stuff. Nobody is needing, you know, shirts, suits, whatever. By then, we've expanded our collection into way more stuff than just suits, right? We were in the more elevated casual part of stuff. But it's all product that you need if you go out, if you're social, if you're going on a nice date or a nice event. Those were not happening. So for us, business was just cratering. Your sales fell initially about 40 % in that year. Tell me about what you were thinking. Because here you've got a business. You started 20 years before that.

1:18:48It was just up, up, up and up and up and up every year, growth, growth, growth, growth, up and up. And then, bam, you've got this calamitous year. So the question is, you're in the middle of a pandemic and you're thinking, holy crap, no one's going to be buying suits. That's the conventional wisdom, right? And so, you know, it would make sense to start thinking, well, maybe we should go into athleisure wear. And there are examples of brands that really broadly expanded. Did you ever entertain anything like that? No. What we thought about is, you know, what does the new suit look like? Yeah. Is, you know, people still want to have looks, right?

1:19:27And it's just going to get a lot harder for them because before it was a blue suit and a white shirt. And now it's suddenly, you know, trousers, chinos, slip-ons. White sneakers. White sneakers or slip-ons or whatever, five pair of different styles of shoes. And then you can pair them with a polo or a crew neck or a shirt. and then it's a jacket. The amount of options to go into this elevated sort of replacement of that moment, of that dress moment, is suddenly endless. So we invented Look Builder where you could easily build your own looks. It's on the website. It's a feature on the website where you go quickly.

1:20:04Yeah, it's a feature. It's super cool, by the way. It's in a model, and you could just put on different clothes on this model. and you know the output of that technology would help us to create if you're shopping a certain item online we could also immediately show you five different ways of wearing that item and actually be able to shop that look and then we came out of the pandemic and we were doing all that kind of stuff and then on top of that a lot of people suddenly wanted to dress up and wear suits for all kinds of reasons so we were selling a ton of suits and on top of that our whole elevated casual and how we invented that was also extremely successful.

1:20:44You know, I'm curious about the financial side, which is you still own 100 % of the company today, right? Yeah. And so I am sure that you get approached or have been approached by investors or private equity or venture folks who are like, look, we want to buy a chunk of this business. We will, you know, I mean, Michael Kors did this in 2004 or five, where, you know, some investors came in, bought a part of his business, but then helped him scale it, right, to a much bigger place. Your business obviously is big, 150 locations, but would you consider it? Would you say, you know what, I'll bring on partners with big wallets, take some money off the table for me, and then we can use that money to fuel the growth of suit supply even further.

1:21:30Is that something that you would maybe do? Well, I mean, you know, we get these calls all the time, of course. And it's always nice to talk to people and sort of to learn about how they look at your business, right? I mean, you know, that's... But, you know, from a personal side, I'm happy to say that I made my dough and I, you know, I don't have to take money off the table, right? Yeah. And on the business side, I had these conversations many times. And I have to always say is that I ask myself, because it sounds great, right? But it's important to understand is why do you like your business?

1:22:14I like to be in control, have the freedom. And running this business takes so much energy. It's 16 hours a day. There's always something going on. You're still working that way even now, 23 years in, 16 hours a day? Oh, 100%. Seven days a week. Which I'm fine with, you know, if I have. But it's taking a lot of energy. And you're almost 50. I mean, not to say I'm two. You're not an old guy. But that's a long time to work that hard. Yeah, but, you know, I like to put my energy in there. And if you lose control or you have to really think about what it would mean if you changed that, If you would still be able to put the same amount of energy in there.

1:22:56I'm not saying we're never going to do it or we're never going to IPO the business. Or maybe at some point I think it's good for the business or it's a safer, you know, it's, I mean, I'm almost 50. You know, I'm going to, how much, maybe I'm going to do this in another 10 years. But it's also, you have to think about how we're going to bring the business into maybe a different, I don't want to say stratosphere or whatever you call it. But I want to be able to at least feel that I can attribute the same amount of energy to it every day. Okay. One of the things we haven't talked about, because it really isn't that much written about you, at least in English.

1:23:31And we do a lot of research on all our guests. So I just don't know much about your personal life. Do you have a family? Do you have children? Did you get married? I mean, were you able to do that and all of this work over the last 23 years? I have two kids with my ex-wife. I was never married, but my ex-partner in that regard. With all that travel and all that work, 16 hours a day, I mean, probably there were some personal sacrifices. I imagine you probably didn't get to spend as much time with your kids maybe as you would have liked. In the beginning when they were really babies and small, no, I didn't spend a lot of time with them.

1:24:15On the other hand, I very consciously spent a lot of one-on-one time on them when they got older. And I could do stuff with them and have experiences with them. I took them on traveling a lot with me. There are not a lot of kids that have been in so many countries, I think, before they were eight or nine. Your kids are adults now? They're older right now. My daughter is 19 and my son is 17. Either of them want to work for the business? And I think my son wants to be, and I think his only choice is also being an entrepreneur because he's so stubborn. So I don't know if he wants to work in this business.

1:24:57And my daughter is very into design and so could be, but if one of the two would want that, would be great. But I also have to say that I think the most fun of having a business is being able to build it yourself. So you would encourage them to start their own thing? I would encourage them more to start their own thing than, you know, to start managing my headaches. Yeah. You know, we've talked for a long time, and you've had a long time to reflect on your story and where you are today. And obviously, it's a really successful brand that you built. But when you think about this story, and I'm sure you haven't recounted it in such detail often in your life, how much of where you are today do you think is because of the hard work and the grind you put in?

1:25:48And how much do you think has to do with luck? I think most of it has to do because of the hard work and doing so much stuff all the time, all over the place. And you always think as an entrepreneur, you know, 10 years, I think someday it's going to be less and less. But, you know, it never gets less because you also start doing, you know, more and more stuff again. And because, you know, the luck, somebody always said, is with the hard working because, you know, then you also increase the chances of, you know, getting lucky every now and then. Right. If you sit on the couch and nothing happened, you're not going to get lucky.

1:26:28and also going against the grain a lot of times or following, you know, not the usual standard playbooks and not so much from any heritage. We want to be different because, you know, you didn't have a choice. You had to be different or you had to be creative to get to an end goal. Yeah. I think that's also the fun of it, right, at the end of the day. That's Foka De Jong, founder and CEO of Suit Supply. By the way, you remember how Foka would go into businesses and offer to improve the wardrobe of the workers? Well, Suit Supply still offers a corporate service and has helped outfit both male and female staff for brands like Four Seasons Hotels and Omega Watches.

1:27:17Hey, thanks so much for listening to the show this week. Please make sure to follow the show wherever you listen on any podcast app. Usually there's just a follow button right at the top so you don't miss any new episodes. And it is entirely free. If you want to contact our team, our email address is hibt at id.wondery.com. This episode was produced by J.C. Howard with music composed by Ramtin Arablui. It was edited by Casey Herman with research help from Sam Paulson. Our production staff also includes Neva Grant, Elaine Coates, Liz Metzger, John Isabella, Carrie Thompson, Alex Chung, Chris Messini, Carla Estevez, Sam Paulson, and Kira Joaquim.

1:27:58I'm Guy Raz, and you've been listening to How I Built This.

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