Made to Measure: J.Hilburn Gives Direct Selling Some Style
Still, bigger problems remained. When the first customers started receiving shirts, many didn't fit properly. It turned out that the reps were measuring a customer's neck, chest, waist, and arms, but the factory was custom making only the collar. Davis and Rathod hadn't adequately vetted their supplier.
Things got even worse in late 2007, when the company switched to a different factory and product turnaround time went from the promised four to six weeks to eight to 12 weeks or even longer. And shirts were showing up 3 inches too short and had to be sent back and redone. "We had a five-minute conversation and decided to say to customers, 'If a properly fitting shirt doesn't land in four weeks, you get a free shirt,' " Davis says. "It ended up costing me $75,000."
Davis and Rathod decided to move back to the original factory and iron out the problems, but by the time they had worked through the backlog of orders, it was September 2008, a year and a half into the life of the company. Davis estimates he lost 50 percent of his early customers as a result of all the production issues. Except for a friends-and-family round of financing, he had funded the company's launch on his own. He had not paid himself any salary, and he had $100,000 in credit card debt. The bank foreclosed on his house, and he moved his family--he now had twins--into an apartment.
"I remember sitting up one night thinking, What have I done? Was I so arrogant that I didn't get it? Did I miss something in the model? It's an incredibly humbling experience. I couldn't talk to anybody. Holly was like, 'You have these girls now, and you're not spending any time with them!' But it's so hard to look someone in the eye and know that you're fundamentally failing them. I was used to being a provider, and now I couldn't write a goddamn grocery check."
It was around this time that Davis got an offer to return to Wall Street for what's called a 3-by-3 contract--three years, $3 million. "I knew that every year I stayed out of equity research, I became less valuable," he says. "So if I passed up this job opportunity, it might never happen again."
But he swallowed hard and turned it down. A couple of months later, J.Hilburn closed its first round of venture capital financing, with a million-dollar investment led by the firm Battery Ventures.
"Wooooooo! Woooooooooooooo!" The style consultants are screaming again. It's the morning after the fashion show, and the Cosmopolitan's ballroom has been transformed into a cavernous auditorium with a stage flanked by giant video screens that beam the onstage action all the way to the back rows.
So far, much of what I have seen of Conference has felt as much like a motivational self-help seminar as it has a professional convention. There was the Million Dollar Achievers session, in which a few longtime sales reps who have made hundreds of thousands of dollars told stories of their personal struggles and triumphs and exhorted the audience to "believe." There were a few early-morning sessions about menswear trends (pants: brighter and tighter) and selling tactics.
And now things take a different turn as Rathod bounds out to center stage to heavy applause and introduces the company's new iPad app, the J.Hilburn Style Kit, which is available only to style consultants as a sales tool and includes a full catalog, a mix-and-match function for building outfits and whole wardrobes, and real-time inventory information, so they don't make a sale on a ready-to-wear item that's out of stock. For every past customer, it also includes a purchase history and measurements. Watching the demo, the reps in the audience ooh and aah about how much easier their jobs promise to get (no more paperwork! no more inventory snafus!), but that's only part of the appeal to Davis and Rathod. The app represents one of the company's first big steps toward realizing an ambitious data-driven strategy for the future.
"Just think about all the data we have," Davis says to me that evening. "We know fit preference, we know measurements, color preference, where you live. And now think of all the ways we'll be able to mine that data. Nobody has all this. Nobody." He's right. Amazon, Zappos, J.Crew, Nordstrom...it's hard to think of a company that has the level of detail about its apparel customers that J.Hilburn does, especially when it comes to measurements, because the company is not just logging whether someone's a size Large but actually recording precisely how large, in all the key places.
