Stephen-Pres/CEO: August 2007 Archives

I am new to the blog concept, so please bear with me as I learn the ropes.

As you might have guessed, I am not a sewer, although I do think I have a very good eye for color and design. So I can't share my sewing tips and tricks with you.

I thought you might find it interesting to hear how we got to where we are today. It is a pretty classic American entrepreneurial story. In early 1993, I started a company called Phoenix Textiles. We were what is referred to as a "fabric jobber". We bought season-end closeouts from some of the largest clothing manufacturers in the US, brought them into our warehouse, and then tried to resell them to small apparel manufacturers around the US. For a while it was a pretty good business. We had 6-8 employess and did a couple of million in sales. By the mid-late 90s, I could see we were going to be in trouble. Most of our customers, the small apparel manufacturers were either going out of business or moving their production off-shore. Virtually all of our suppliers were moving their production off-shore. It was not a pretty picture and things started to go from bad to worse.

By 1998, I could tell that Phoenix Textiles was no longer a viable business, so I decided to go out of business. I let go all of our emplyees except for our warehouse manager, one warehouse worker and myself, all of whom would be needed to liquidate the business. The problem was, we had a big warehouse full of fabric and no customers to buy it. It became impossible to go out of business because we could not get rid of the fabric. It was a very dark and depressing time. Out of pure desparation, I came up with the idea of trying to liquidate the fabric on the internet to the public (even though we had never sold to the public before). I built a VERY rudimentary web site one Friday afternoon. I priced all of the fabric at $1.00 a yard, even though in almost all cases we had paid much more than that for it. I went home for the weekend, thinking this was a really bad idea.

When we came in on Monday, we discovered that about 50 people from all around the country had placed orders. While that was exciting at first, we quickly realized, we had no cutting tables, no shipping labels, no boxes to ship in, and we had no clue what we were doing. Nonetheless, we set out to try to fill the orders. Greg, our warehouse manager, and I cut and folded fabric all day and at the end of that day, we had successfully shipped 8 orders. I knew then that we were in trouble. I called a temp agency and the next day we had a couple of helpers, some scissors I bought at JoAnn, and some overstock boxes we found at a dealer in downtown Atlanta. The challenge was that, during the prior day and evening, another 50 or so orders were placed. I won't bore you with every painful detail, but this comedy of errors kept up for several days while we ran around trying to increase our capacity to fill orders. Don't forget, even though we were getting orders, everything was $1.00 yard, which didn't really cover the cost of the temporary labor, much less the fabric, the rent, etc. But we were committed to going out of business and this seemed like the only way we could get rid of the inventory.

We kept things going like I described for about 3-4 weeks. Then my parents came into town to visit and they were fascinated by what we were doing. I explained to them that, while it was fascinating, at $1.00 yard, there was no way to make money. My dad said, "why not try to sell some items for $1.99 and see what happens." So we did that and orders continued to roll in (now we were up to 70-80 orders a day). A few weeks later, we added some items at $2.99 yard, and still the orders kept coming. (Remember, we were still just selling our apparel fabric closeouts; no cotton prints, no home dec). This kept up for about 6 more weeks, when finally I told our staff (still mostly temps) that we were not going out of business at all, we were going into the retail fabric business on the Internet.

There is a lot more to the story, but I think I will save that for future editions. In coming chats (or maybe I should call them blogs) I will talk about:

1) hiring Laurie Hill (now Laurie Eady)

2) trying unsuccessfully to raise venture capital

3) unintentionally inventing the email broadcast approach to marketing

4) Kristl coming on board and changing the face of our entire merchandising strategy

5) Some of the funny (and not so funny) stories that have happened to us along the way

6) Some of values I have learned along the way.

That's all for now. Best regards, Stephen