Jason Hairston knows his hunting gear. The first company he co-founded, Sitka, brought the high-tech materials found in specialist outdoor clothing to the camouflage set, a demographic historically overlooked by performance-sportswear brands.
But in 2010, he says, his CFO "sold the business out from under me," to Gore-Tex owner W.L. Gore and Associates. So Hairston started again, and in 2011 launched a new ultralight-outerwear company, Kuiu. It started off taking niche retail one step further, by selling its high-end gear to a specific set of customers: expedition-style hunters, who spend days outdoors. Less than five years later, his Dixon, California, startup has 32 full-time employees and 2015 sales of $30 million ($4.5 million profit).
This intense focus on one type of product has become a popular model for e-commerce startups: Witness the growth of direct-to-consumer specialists in mattresses (Casper) and razors (Dollar Shave Club, which Unilever is buying for $1 billion). Now Hairston is expanding his focus to a more mainstream audience, and what he's learned about turning a profit on niche products can help you refine your specialist strategy.
Specialization won't pay off if the underlying product doesn't improve on what's available. "I didn't want to cut corners on materials," says Hairston, whose line includes base layers and camouflage down jackets and backpacks. He spent months in Asia finding factories and sourcing materials, such as high-tech Toray fabrics from Japan; their yarns stretch without elastic, making them lighter and more water resistant. Hairston shares all of his sourcing--and his decision-making process--with customers, in part to justify what he charges. "By being transparent, you build a ton of trust," he says. "No one's perfect in business-building; sharing those challenges, and your mistakes, builds a personal connection. People like that."
Cut out middlemen
Since Kuiu's products cost a lot to make, Hairston embraced an increasingly popular e-commerce model: Instead of making "a jacket that costs me $100, and selling it for $200 to Cabela's, which sells it for $400 to the customer," he says, he cuts out the middle step. Kuiu produces a jacket for $150 and sells it directly to customers for $300. (Apparel companies like Everlane and Bonobos and outdoor brands Trew and Stio follow a similar model.) "Consumers are getting a product that costs less but is substantially better," Hairston says.
Eighteen months before Kuiu launched, Hairston became a blogger: "I started it to try to keep relevant; my fear was that people would forget who really built Sitka." His blog eventually got picked up by Bowsite, a popular forum for hunters, which brought him thousands of readers--and potential customers. Almost more important than the promotion was the feedback Hairston received from readers, inspiring new products. He initially assumed that most hunters would want only a larger backpack, for long trips--but then online readers requested a smaller daypack. Kuiu processed 2,800 preorders of the smaller packs, at $300 each. When his company went live, Hairston had to implement a rationing system to deal with product demand: "Those who subscribed to the blog first got to shop first," he says. "We did half a million dollars on day one and sold everything."
Jettison what's extraneous
Partly because of his Sitka experience, Hairston keeps Kuiu extremely lean. He has no board, and he outsources accounting, graphic design, PR, warehouse work--even his CFO position. "They can scale with us as we grow," Hairston says of his flexible work force. He pays more up front for these freelancers than he would for full-time staff, but argues it saves him money over time. "They do it better than I could train staff to do," Hairston says. "They've already figured it out, so we don't have to." The biggest indication that Kuiu's niche strategy has paid off: Though Kuiu has to date effectively ignored nonhunters as customers, they too are starting to shop. "Let early adopters spread the word for you," says Hairston, who's planning a "fitness line" in solid colors for next year. "A cult following is something you can use to build a long-term brand."