Brief
Nau (Maori for "Welcome! Come in") is a new outdoor-clothing company filled with former executives from Nike, Patagonia, Adidas-Solomon, and Cole Haan. The members of the Nau team share conviction that, in addition to generating profit, companies have an equal responsibility to create positive social and environmental change. "We're challenging the nature of capitalism," says Nau's CEO, Chris Van Dyke.
In the typical outdoor company, it takes 18 months to come out with a new line -- one that involves 20-30% of the line carrying through from one season to the next, perhaps one or two completely new fabrics, and existing relationships, fit blocks, and patterns. Consider that in a year, Nau has had to create a brand, develop its own retail concept and distribution strategy, and establish a full product line—all from scratch. It created not one, but four collections (each with 100 to 150 separate styles); devise completely new fabrics; and develop product and vendor relationships (with no credit history, no brand, and the most exacting standards).
Nau's garments are unique in that they bear no external logo. "There are a lot of logos out there, and we felt the world didn't need another one," said Nau Board Chair and investor Stephen Gomez, also the former general manager for Nike's global apparel business, who grew the division from $600 million to $3 billion between 1992 to 1998. Nau’s first collection, ranging from $32 boxers to the $248 "urbane jacket," has won glowing praise from Men's Vogue and Rock & Ice alike.
As of today Nau has four retail stores, 92 people, $24 million raised in capital, and four clothing collections in various stages of production. The business plan projects $11 million in revenue this year, growing to $260 million and 150 stores by 2010.
The most interesting moment is how Nau designed a disruptive business from the ground up. It started with a retail concept that combines the efficiencies of the Web with the intimacy of the boutique.
Customers can buy its products outright in a store or use a store as a fitting room and then order them online, using an in-store terminal "Webfront". Buyers using the "Webfront" option will get free delivery and a 10% discount. Encouraging its customers to use "Webfront" Nau is reducing its in-store inventory, and slashing operating expenses.
Nau hopes the self-service machines will allow the company to hire fewer staffers. Add to that the fact that the outfit will be selling directly to consumers, not through a third-party retail channel, and you can see why Van Dyke expects to achieve 72% gross margins, compared to 45% to 60% margins for other apparel retailers.
Culture
Nau pledges 5% of sales to charitable organizations dedicated to solving big-ticket environmental and humanitarian problems (the philanthropic gold standard today is 1% of sales; the average among all corporations is 0.47%). In the situation of choice between huge amount of these organizations Nau is giving decision in the hands of its customers. At the point of sale, shoppers are presented with a menu of "Partners for Change" and asked where they'd like their 5% to go.
Nau is not just interested in giving back to organizations that do good, it is committed to being good. Jil Zilligen, its vice president, and her team have engaged the broader organization in approaching every aspect of Nau's operations with a sustainability and social-justice filter -- from how the company designs, sources, produces, and distributes clothing to Webfront and home-office design to training (every employee undergoes sustainability training and signs a personal "sustainability pledge").
"You'll hear the word 'sustainability' around here a lot," Ian Yolles, Nau's vice president of Marketing, says. "At a certain point, we stumbled on the question, What would sustainable marketing look like? And it stumped us. We haven't completely figured it out yet, but at the core is storytelling. There are all kinds of interesting, authentic stories embedded in our people, their passions, the ideas behind the company, and a wider, emerging community of people who reflect the same ethos."
Yolles and crew have created a range of mechanisms and venues for that storytelling, from the Nau blog, The Thought Kitchen; to The Collective (a Web archive of documentary-style video storytelling showcasing Nau's heroes); to the Partners for Change Web pages; to the stores themselves, which are hosting a series of salonlike evenings featuring local storytellers, including alpinist/writer/photographer Topher Donahue in Boulder and bike evangelist/blogger/citizen activist Jonathan Maus in Portland.
Leadership
Nau founder Eric Reynolds, an accomplished mountaineer and one of the original founders of outdoor-gear maker Marmot, spent years incubating the idea of a direct outdoor-clothing company and the Webfront concept. In the summer of 2003, he "had an epiphany" around how those ideas connected up with a much bigger idea about what he calls the "for benefit" corporation, an entity that operates for the benefit of its shareholders, its employees, the environment, the communities it operates in, and the wider world, equally.
Reynolds registered his fledgling company in his home state of Colorado as UTW (which stands for "unf--k the world") and promptly set out to recruit a team to help breathe life into those ideas. (He stepped down as chairman in early 2006.) The first recruit was Mark Galbraith, a former top designer for Patagonia. For all of the lofty ideas behind Nau, Reynolds realized that "unless we have kick-ass, gorgeous, appealing stuff, none of this would matter."
"We started with a clean whiteboard," says Van Dyke. "We believed every single operational element in our business was an opportunity to turn traditional business notions inside out, integrating environmental, social, and economic factors. Nau represents a new form of activism: business activism."
That doesn't mean Nau intends to pander for legitimacy. "One of our greatest goals is that a significant number of people really hate us," Van Dyke continues. "That's just perfect. You try to please everybody and you end up being nothing. The sign of a really powerful brand is one that is loved and embraced and equally hated. The deeper you pound your stake into the sand about your values, the more of both the love and the hate you're going to generate. That's what makes it exciting."
Background Links:
Olga Kharif, Retail 2.0, BusinessWeek, January 2007
Peter Yang, Leap Of Faith, Fast Company, June 2007
The time is "Nau" for new concept in retail, SNEWS, July 8, 2006
Robin J. Moody, Nau readies debut, Portland Business Journal, August 4, 2006
Michael Burnham, A new era in apparel starts nau, Sustainable Industries, February 8, 2006
