Naadam, Best Known for Its Affordable Cashmere, Is Building a Mini DTC Empire
Matt Scanlan is the CEO of not just the brand he co-founded in 2015, but also of Thakoon and the upcoming Something Navy line.
What Matt Scanlan really wants is to make things people want to buy.
This is perhaps not a novel concept in retail, but it's one that fashion brands too often lose track of, producing $800 dresses that don't sell until the third markdown or skirts that only fit shoppers with runway-model proportions.
Scanlan has taken the opposite tack with Naadam, the direct-to-consumer cashmere label he co-founded and launched in 2015. He's built a profitable business selling affordable sweaters that are both high-quality and sustainably-produced. Last year, he added another two CEO titles to his workload: first with Thakoon (the latest endeavor by designer Thakoon Panichgul) and then with Something Navy (the forthcoming brand from powerhouse influencer Arielle Charnas). Today, Scanlan helms all three clothing brands, a feat he chalks up not to superhuman organizational skills but to his ability to distill each company to its essential function in the marketplace.
"At the end of the day, I think apparel is about product-market fit," he says. "I get that in the fashion industry, we really want to talk about the artistry — and I'm a total admirer of the artistry that comes through with great fashion brands — but at a certain point, it's engineering a product for a customer."
What this means is, no matter which brand he's working on, he'll be thinking about the same set of considerations: "If you know a lot about who that customer is and you have intuition on what they want to wear, how they want to wear it, how much they want to pay for it, where they want to buy it and how they want to buy it — all of those things can be passed along, regardless of whether you're selling a sweater, jeans or a ruffled top."
When Scanlan and Panichgul first began talking through the strategy for the relaunch of the designer's namesake line, they spent hours browsing the floors of Barneys New York, Intermix and Bergdorf Goodman — stores that a decade ago were some of Thakoon's key wholesale accounts. Back then, Panichgul had already checked most of the boxes on the '00s American fashion bucket list: dressing Michelle Obama, appearing on the pages of Anna Wintour's Vogue, collaborating with Target and Gap. But as consumer tastes shifted away from department stores and the high-end labels that filled their shelves, the designer had to rethink his business model, experimenting first with a see-now-buy-now concept before announcing in 2017 that he was putting the brand on hold. But two years prior, he had sold a controlling stake in Thakoon to Bright Fame Fashion, a Hong Kong-based investment firm run by Vivian Chou, the daughter of textile tycoon Silas Chou. This connection eventually led him to Scanlan.
The elder Chou's venture capital firm, Torch Capital, is an investor in Naadam, participating in the former's $16 million series A in 2018 and his firm Vanterra Capital invested in Something Navy's $10 million funding round last August. (Today, Naadam Inc. owns Thakoon and is a minority stakeholder in Something Navy.)
Following his hiatus, Panichgul recognized that he had to radically rethink his old pricing and distribution strategies — and that he needed someone who wasn't so entrenched in the traditional fashion world to do so. Scanlan, with his digital and direct-to-consumer experience, fit the bill.
The choice also made sense for the brand's investors: Scanlan had built Naadam from an entrepreneurial lark aimed at helping Mongolian goat-herders, into a rapidly-growing business in just a few years. He bolstered its growth with diversified revenue streams in DTC e-commerce, wholesale, physical retail and private-labeling for department stores and other retailers. In other words, Scanlan may have been the closest they were going to come to a sure bet in a CEO.
"Especially in today's retail and consumer environment, there is not a long list of people that are proven leaders at these companies," says Richie Siegel, founder and CEO of consumer consultancy Loose Threads. Retail executives with 20 or 30 years experience may have once been the safer choice, but if they've never built a digitally-native DTC brand from the ground up, they're now considered more of a risk.
Given Thakoon's history and Charnas' high profile, says Siegel, "you don't really want to mess that up. I think there's logic behind going to someone who has done it before. The question then, of course, is how many times can they do it? And can they continue to do it simultaneously?"
Since relaunching in September, Thakoon has dropped a handful of capsule collections, all focused on classic shapes and elevated staples priced between $75 for a ribbed tank and $275 for a silk floral dress. Of the customer he's designing for today, Panichgul says: "They still want great design, but they don't want the fuss anymore."
They also don't want to spend half their paycheck on a sweater. This is where Scanlan's attitude toward pricing is an asset: In the past, if Panichgul and his team fell in love with an expensive fabric, "We'd say, 'Oh, we'll make it work,'" he recalls. "But in the end, it doesn't work, because there are so many compromises that they add up." Now, he says, "We'll be in meetings where we all love a product, but then we look at the cost of goods on it and the retail price, and [Scanlan] will say, 'This doesn't make sense for me.'"
"I think when you're in the [fashion] industry for too long, you can start to lose your discipline and objectivity," says Siegel. "[Scanlan] is not going to be emotionally invested in certain colors or fabrics and just can look at it more objectively."
While this may not paint the most romantic picture of a modern fashion brand, it does reflect the current state of the industry. Barneys is in the final throes of bankruptcy, its Madison Avenue flagship now a post-apocalyptic scene of barren shelves and "Everything Must Go!" signs. Opening Ceremony is closing all its stores within the year. Many of Thakoon's contemporaries — celebrated designers like Zac Posen, Doo-Ri Chung and Derek Lam — have either closed up shop or pivoted away from luxury. And while competition is fierce at every level, it's especially tough for mid-price retail, the segment the brand is now up against.
Here, Something Navy, at least, may have a leg up. While the brand doesn't launch in its current form until April, Charnas has already proven she can convert her 1.3 million Instagram followers into customers. She originally launched Something Navy with Nordstrom in September 2018, crashing the retailer's website on the first day and reportedly generating millions of dollars in sales within the first 24 hours. Now that the brand is striking out on its own, Charnas and Scanlan have scaled up the team from three people to more than 20, started construction on a New York City store, debuted a new logo and finalized designs for the e-commerce site — documenting the progress along the way on Something Navy's Instagram feed.
Beyond the simple fact of her reach, Charnas brings to the table vast troves of data about what her audience wants to buy. Her team can draw from Nordstrom sales, day-to-day feedback from fans on Instagram and engagement and revenue data from years of brand partnerships and affiliate programs — resources that might take another brand years to build.
Naadam, Thakoon and Something Navy now all live under the Naadam, Inc. umbrella, which has created certain operational efficiencies, in terms of setting up backend systems for finance, fulfillment and logistics, Scanlan says. Though for now, he's the biggest shared resource.
Other Naadam executives also work across the three brands to some extent, but for the most part, the teams don't overlap. "It's just better that way. It keeps people more focused," Scanlan says, cautioning that, like most things at a startup, this idea could change tomorrow. Most of his days now are spent hiring — and "what I've noticed is the people you hire are really incentivized by their brand mission," he explains. New employees come in loving either Naadam or Thakoon or Something Navy, "and there are some people that have an interest in jumping from thing to thing and like that flexibility. But I would say the larger commonality is that you want to work for your brand because [there's a sense of] ownership and shared values."
While Naadam (the brand) has successfully built a unique identity, Naadam Inc. (the parent company) is still finding its footing in this regard. The through line in its portfolio, according to Scanlan, is that each brand reflects some aspect of the current shifts in consumer behavior, whether that's conversations around sustainability, social media or lifestyle and product.
This may not have the same narrative thrust as Naadam's founding story — it's hard to compete with the image of trucking $2.5 million in cash across the Gobi desert to buy 100 tons of cashmere — but it's also true that not every parent company has to itself be a brand. After all, few people who work outside of fashion would likely recognize the name Capri Holdings Ltd., but most people know Michael Kors, Versace and Jimmy Choo.
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Among Naadam Inc.'s digitally-native peers, the idea of "brand platforms" has been gaining traction in recent years: Digital marketing agency Gin Lane relaunched last summer as Pattern, "a family of brands designed to help you enjoy daily life." Ro, the parent company of telemedicine startup Roman, expanded beyond Viagra and Rogaine with brands for women's health (Rory), smoking cessation (Zero) and Plenity (weight loss). And though we've yet to the acquisition bear fruit, Farfetch bought Off-White and Opening Ceremony owner New Guards Group in August with the stated goal of building "the brands of the future," and in April will start offering weekly drops of limited-edition merchandise developed by a team of its now in-house talent.
In all of these cases, the companies are able to share infrastructure on the backend in order to cut costs and scale more efficiently. Naadam Inc. seems to be taking parts of this model — sharing certain processes between brands while keeping them mostly independent — and adding the unusual feature of a shared CEO.
"I think it's a fascinating experiment and I think it's going to take some time to know if it really works," says Siegel. "I don't think we've really seen it done before like that. Which makes it even more interesting to watch."
For Scanlan's part, dividing his time between multiple brands seems to come naturally: "I love Nadaam and it fills so much of me, but I need to be thinking about a couple of things at once to feel invigorated," he says, pointing to Magic Hour, the seed-stage venture fund he co-founded in 2017 as another outcome of this habit.
The fund's portfolio includes comforter startup Buffy, zero-waste retailer Package Free and textile innovation firm Evrnu — all companies with "product-market fit, great branding, but a value system and a message that will help shape the way consumers think of sustainability," says Scanlan. With them, too, he's largely coming in and asking the same questions he asks of Thakoon and Something Navy: What experience does he have that he can draw from to help this other brand? What mistakes has he made that they can avoid?
"The reality is, it's the same thinking over and over again," he says. "I'm just simply reconnecting those dots over and over again with slight nuances in each situation. But that's the real fun part. I love that."
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