J. Hilburn: Learning lessons from starting a clothing business

In a New York Times article describing how custom clothier J. Hilburn is attempting to move into online sales without alienating its direct sales channel, founders Hil Davis and Veeral Rathod describe some of the mistakes they made when starting up:

[Before starting J. Hilburn,] Mr. Davis and Mr. Rathod knew nothing about the clothing industry. Armed with $650,000 from friends and family, the two opened with the help of four direct-sales representatives whom Mr. Davis's wife had known. While the first representatives found customers, the inexperience of the founders showed.

They chose their first factory, in China, because it had produced two high-quality samples and assured them it could produce more. But after J. Hilburn started ordering in quantity, things did not go so well, a problem worsened by time and language differences.

"We let two shirts be the proof of concept when one of us should have been over there," Mr. Davis said. "Our first 400 shirts came back wrong because we were the idiots who didn't get on a plane to watch over the factory."

They did visit their second factory before selecting it, only to have it fall behind on complicated orders. Each day, they later learned, the needle workers put the most difficult shirts back on the bottom of their pile, delaying delivery. After the partners announced that customers would get a free shirt for every four days an order was late, they received a standing ovation one day in a Dallas restaurant from customers who called them the "free-shirt guys."

They had fabric-buying problems as well; Italian mills were not accustomed to selling quantities as small as of 100 meters.

Mr. Rathod and Mr. Davis had to retrain their entire supply chain in an industry they did not know. Had they known then what they know now, Mr. Davis said, "we could have started this business for 40 cents on the dollar."

But they learned. Sales rose from $1 million in 2008 to $3.25 million in 2009 and $8 million in 2010, a year in which they sold 60,000 shirts (which start at $89). And they built their squad of style advisers to about 1,000 today from the original four.