Spinning a yarn

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In 2012 Matt Scanlan was working as an analyst at a private equity firm and wanted something different. He made a break for Mongolia, where he met nomadic goat herders who produce cashmere — and inspired the launch of Naadam, a maker and seller of cashmere fashions. Scanlan teamed up with Diederik Rijsemus, an economist by education, to disrupt the “cashmere cartel” and build a more sustainable supply chain for the benefit of both people and planet.’Naadam buys fiber directly from Mongolian herders — offering double what previous buyers had paid — and invests in breeding and vaccination programs with nonprofits for healthier goats and sustainable grazing practices. The fiber is spun into yarn in Italy, where Scanlan and his team make sure the process uses clean energy to eliminate deleterious downstream effects and reduce its carbon footprint. Naadam delivers wallet-friendly luxury — the “essential $75 sweater” is available for men and women in nearly a dozen colors — while its $320 blanket is made with a kilo of cashmere.

The company recently opened stores in New York City that pay homage to the Gobi Desert, where the cashmere is sourced. In the stores, customers can use a virtual reality headset to experience not only where the materials are made but the people who made them.

What’s Naadam’s backstory?

I was working hard but didn’t love what I was doing. I felt, ultimately, I was only going to be successful if I was passionate about what I was doing. I decided to travel and ended up in Mongolia. I more or less got stranded in the Gobi Desert living with a family of nomadic herders. This family raised goats, and those goats produced cashmere.

Is that when you decided to disrupt the cashmere industry?

It took me awhile to really understand the socio-implications of animal husbandry on a macro-industry scale. But my time in Mongolia was transformative and for the first time in my life I recognized how seamless the human experience is across geographical and cultural differences — that we share the universalities of the human condition.

From there I began working for a nonprofit that made investments into the sustainable value development of the herding communities — that is to say, livestock insurance and veterinary care along with breeding and grazing programs. We believed the programs would have an impact on the value of the fiber sold. Even though the animals were healthier, no one was paying more for healthier fibers, which are longer and cleaner.

Why was that?

Traders fixed prices and kept them artificially low to make more money. They bought low and sold high to brokers who traded the material as a commodity to mills and manufacturers in Italy and China. We decided to buy the material ourselves, but instead of paying what other traders were paying, we would pay double the price. That effectively cut out other traders so we could pay the herders what they deserved.

We also recognized the best way to profit from this transaction was to produce yarns ourselves, sell the yarns to manufacturer partners and then sell the finished product under a brand name that could share our value system with customers all over the world.

Can you share more about Naadam’s value system?

The better we do as Naadam, the more support we can give the herding communities. It doesn’t need to be more complicated; it just needs to be real. It’s not exactly idealist; it’s just practical.

As millennials, we’re not following a trendline; we’re just doing things we want other companies to do. We know if we can get people to try our product, they’re going to love it, so we really doubled down on storytelling, which connects our mission and passion with our value proposition. We know that once people understand our story, they will share it with other people. We just want to ignite that fire.

From a business perspective, the value of our direct-sourcing model is that we have transparency into the variations of quality that predict good product and bad product. We sort onsite in the Gobi Desert and then continue to segment the material multiple times throughout the material production and knitwear manufacturing process. Ultimately, we match materials to their end use. We only purchase fibers that are 16 microns and below, because they provide a consistently soft-hand feel. We only purchase fibers that are between 39 and 42 mm — this reduces pilling and lets us produce worsted and semi-worsted yarns.

Our products are meant to be incredibly soft — much softer than average — and generally hold up a lot better. They do pill a bit, but that’s very normal, and we work to educate customers on how to care for the product. Cashmere is a very wearable product, as long as you know what to do with it. We focus on core styles that never go out of style that you want in every color. We want to make things you can live in every day and represent something essential to your lifestyle.

Did you bring the same sustainability ethos to your bricks-and-mortar stores?

We did. We looked for sustainable materials and then worked to bring the Gobi Desert to life. We wanted to transport people to the place where their product comes from. We did that through grass floors and cashmere fiber.

In our Bleecker Street location, the centerpiece is a giant cashmere “cloud” that you can stick your head into and use the virtual reality headset inside it to transport you into the Gobi Desert, where you are introduced to the family we stayed with there. We used Bobby Redd, a New York design agency, to design and build the stores. They did an amazing job interpreting the brand story and extending our value proposition in a physical format.

We got to play with themes across the different store locations as well. The Prince Street location in SoHo is a single-SKU store — it has one sweater in 10 colors only and every sweater costs $75 and is 100 percent cashmere. We have a monogramming bar where you can get anything you purchase monogrammed.

What’s next?

Things move quickly here and not everything is on schedule. I can say we’re excited about expanding our store footprint which will take us to San Francisco and potentially Chicago and Los Angeles. We like the idea of opening two stores per city, one being the $75-sweater store and the other a more immersive, full-collection experience.

This month we’re launching our “Silky-Soft Summer Cashmere,” a new blend of product that is super soft and silky but made for all-season use. It’s perfect for summer and spring and an ideal item to merchandise and style across multiple colorways. It will open the product opportunities to our large community of loyal brand followers and customers.

Janet Groeber has covered all aspects of the retail industry for more than 20 years. Her reporting has appeared in AdWeek and DDI Magazine, among others.

MATT SCANLAN
CEO and co-founder
Naadam
New York City

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