What Mark Dwight Learned From Previous Business Ventures

Sumi Das: At 8:30 every weekday morning the lights, engines and sewing machines at Rickshaw Bags are turned on. Each bag is made to order which means 0 inventory. Female: They can pick the outside fabric, they pick the inside fabric, they can pick whatever binding they want. Sumi Das: A business model that sets Rickshaw Bags apart from its competitors. Rickshaw Bags is less than three years old but founder Mark Dwight is neither new to bags or business. He's the former CEO of successful bag brand Tim Buck Two. You left a bag company to start this bag company so tell us what you're doing differently this time around, how you've improved on the previous business? Mark Dwight: Ok well I had some great experiences in the previous business but what I learned is that whether you're in accessories or apparel or footwear any of these fashion businesses that there's something the business model is the same all the time. You try forecasting what people are going to buy next season, you go make a bunch of product, you bring it in, you put it in your warehouse and at the end of the season you have a bunch of leftover because you never forecast just right and so once you have that left over you have to take it out to the market and sell it at a discount. So you're out trying to sell your new stuff at full price and discounters are selling your stuff at you know at half off. Sumi Das: Dwight chose to stay clear of the inventory guess work with Rickshaw. Mark Dwight: The idea here was to build everything to order and so we don't build anything until we have an order for it. What you see in the boxes behind here at components for building bags not finished bags. Sumi Das: Rickshaw designs their bags so they can be quickly assembled in their San Francisco factory either from scratch or from sub assemblies. You can personalize a bag by bringing your own fabric or chose from their vast collection. From 100% recycled beverage bottles to high performance sail cloth used by racing boats. Mark Dwight: Some of the products that are complicated like this computer bag we've pre made some of the components so there is what we call a chassis that has all of the zipper details and pockets. Yeah, you know all the labor intensive things and so we make that as a chassis. We actually outsource the making of the chassis. We design it, we have someone else build it and then we keep chassis in stock and so when someone orders a bag they're defining its personality by the fabric and the binding color that they chose. Sumi Das: Another benefit of keeping supplies limited is low front end investment. Mark Dwight: One of the big problems in the fashion business is you need a lot of capital up front so if you ever talk to someone who's about to go into the business they're trying to think about where can I find the capital to buy my first inventory and you know you have to buy every color, every size and every style in some minimum quantity and often times those quantities are quite high. I have much less inventory. My inventory is flexible and there's 0 risks in that inventory. If this chassis doesn't sell this season I'll be using this chassis for 10 years. This could be right on market right now. Just get a yard of each fabric. Sumi Das: As confident as Dwight is about his operations model these haven't been the best of times to start a new business. Your company is not all that old it's still a young company and really the recession has been going on for pretty much half of your lifetime as a business so how has that really affected you? Mark Dwight: The most immediate affect has been that our business our original business plan has not panned out so I would say our growth has been about half of what we expected. The good news is we're tiny so it's a great time to be a small company. Sumi Das: Business doesn't always go as planned but Dwight projects a profitable future. Mark Dwight: Based on my past experience I have an idea for sort of how big this business can be and still feel like it's a brand that people can really get behind. I think the sweet spot in this business is anywhere from $5 to 15 million so we have a plan to get to somewhere between $5 and $10 million dollars in 5 years and so maybe we tell that story— Sumi Das: Dwight manages and scales his company based on the philosophy he calls top line, bottom line, story line. Mark Dwight: Top line is revenue. Is anyone buying what you're selling? Bottom line is profitability. Are you making any money doing it? But the middle is what I call the story line and you will repeatedly hear lots of stories woven into what we're doing here and how we're doing it and that is about brand. And it's really the story line that creates what we call goodwill and so if we are looking at building a premium business and building our brand we want stories, story lines that help improve our evaluation beyond simply top line and bottom line. Sumi Das: For BNET I'm Sumi Das.