How I Started $3.6M New Zealand Fashion Brand I Love Ugly
Hello! Who are you and what business did you start?
My name is Valentin Ozich. I'm the Founder and Creative Director of the men's premium streetwear brand; I Love Ugly.
I started the company in 2008 out of my bedroom with zero experience in business or fashion. I studied Graphic Design and was pretty good at art, but my greatest strength is my ability to manifest whatever was going on in my mind into something tangible. This was how I Love Ugly was born.
Despite being based in Auckland, New Zealand I had ambitions to create a global brand but had no idea how I was going to do it. I felt that being from New Zealand and so isolated from the rest of the world would give us something unique to offer and become an advantage.
I identified there was a gap in the market for high quality, premium streetwear catered to men at an affordable price and sold primarily online. After having a clear path of which part of the market to hit I was relentless, especially since I became an unexpected father at 22 years of age with only 3 weeks to prepare, I had no choice but to succeed.
I was never afraid to experiment and cast the net wide early on, but at the same time, I had a clear sense of direction for what I wanted to create. After a few product failures, I began having some successes and things began to get going quite quickly with a few hit products that were launched innovatively through social media.
Some of these products have gone to sell upwards of 50,000 units/pieces globally and are still some of the strongest sellers today. To this day, I still have the goal of I Love Ugly becoming the best online menswear brand in the world. I Love Ugly is over 10 years old and feels like it’s just getting started.
Despite a few setbacks along the way and despite my lack of skills when I first started out, I believe we are back on the path to hit that goal and are proof that with a bold dream, ambition and hard work anybody has the potential to turn an idea that began out of your bedroom into a multi-million dollar business.
What's your backstory and how did you come up with the idea?
I began I Love Ugly as a clothing brand in 2008. Prior to that, it was a magazine interviewing artists that I found on MySpace.
I knew nothing about clothing, but I could see what the silhouettes and designs looked like in my head.
I quickly found out there was little money to be made in magazines and for some reason felt clothing would be an interesting space to play in, and I Love Ugly would be a very intriguing name for a fashion brand. Although I studied Graphic Design, I knew nothing about clothing, but I could see what the silhouettes and design looked like in my head, plus I was a pretty good illustrator and had graphics ready to be printed on T-Shirts. I had no interest to learn how to sew, as I knew it would slow me down while I was growing the business. Instead, I went out and looked for someone that could, and discovered the art of delegating. Most people think that when you start out you need to know how to make the product, but it's not necessarily true. I believe it’s more important to have a vision of what you want and learn how to get other people to make it.
Since my partner and I now had a daughter and I was fresh out of university, I had to be the breadwinner and fast. I couldn’t find work in design due to my lack of experience and being 2008, right when the global financial crisis hit, jobs were scarce. So in order to survive, I began working at a bank. As soul-destroying as this was, it gave me the motivation and clarity to figure out exactly what I don’t want to do in life. I quickly figured that it was better, to be honest with yourself and chase your dream even if it meant temporary pain and a lack of money than to work in a comfortable job that you hate. This realization is what fueled me when I would often be working until 2-3am putting swing tags on garments, emailing wholesale accounts and figuring out the next steps of the business.
I often have people asking me for my advice on how to start their business or how to figure out which product to make or how to find time to start a business. My answer is to just start. I truly think people don’t need any more motivation, advice, knowledge or market research they just need to start, but the product out there and see how the market responds. At the end of the day, the market is going to be your best and quickest teacher.
Take us through the process of designing, prototyping, and manufacturing your first product.
When I first began things were messy. I would print my designs on T-Shirts purchased from a blank apparel company. This was to get a feel for what the customer wanted without committing to big minimums. This printing was all done in New Zealand. People liked the designs and were requesting garments that weren't just T-Shirts.
To this day, I still attend every photoshoot we do and have for the last 10 years.
From here I wanted to expand into other garments and found a seamstress/ patternmaker and explained what I wanted and started by using an existing pair of pants as a starting block. She came back with a sample, and they weren't quite right. We went back and forth around 10 times to get the right fit. Once it was right, I had to find a manufacturer that would produce low minimums and also give us credit terms (because I only had a few thousand dollars at the time, I couldn’t afford any upfront payments). I think I may have only produced 20 or 30 pairs of pants for the first run. I ended up finding this manufacturer on Google, and they also happened to be local which made it easier to communicate and get a feel for how the production process works from start to finish. They were hesitant with my small orders, but I sold them my dream and pretty soon they were on board with the idea. I learned that when you start out not everybody is going to be on board with your idea. Even friends and family members will make you second guess yourself just because they had a failed business or knew someone that did. You got to learn to ignore the naysayers and realize that rarely will you be criticized by someone who is doing more than you. You will only be criticized by someone doing less, or nothing at all.
Once I sold these pants, I repeated the same process with other garments. Some worked, some didn’t. I kept production in New Zealand for the first 3-4 years until I felt comfortable with who my market was and when my volume began increasing. I also think this is a good idea for other startup brands. Although the margins are going to be significantly smaller producing locally compared to producing in China, you get to de-risk your business, experiment with low minimums, learn the process and of course receive market validation. The last thing you want to do as a start-up brand is to go offshore because it's cheaper, sink a lot of money into it (because it will all be upfront payment) and be stuck with 100s or 1000s of units of a particular style that you can’t sell because no one wants it and nobody even knows of your brand.
Describe the process of launching the business.
I was very fortunate growing up in the era when social media was still in its infancy. A lot of other brands were run by people a lot older than me meaning social media was still a little foreign to them. Since I had no money, and couldn’t afford conventional advertising through magazines etc social media was my go-to. Very early on I figured the importance of developing a personality for the brand and made sure this personality shines through in our marketing. I used Facebook and Tumblr as my primary platforms in the early days and spent a lot of money boosting our posts to get our message and product in front of as many people as I could afford as I knew that the masses would quickly cotton on. *Please note I funded this whole process from a few thousand dollars I had from savings, selling the product, living a frugal life and reinvesting everything back into the business.
The next step was creating a website. Once again, online shopping was in its infancy which is crazy to think being only 10 years ago. The first website didn’t have an online shop built-in, it was simply a brand promotion page with our lookbook and other information for people to learn more about us.
After the rise of Facebook, I figured an online store was imperative as that would be the most effective way of driving traffic to the site. That was quickly built and money slowly started to trickle in. Things started to gain a little traction until I reached a point where I had to decide whether I was going to fully commit to the brand, or just do it part-time while working for somebody else. To be honest it was an easy decision. I quit my job and focused on the brand full time. From there, things started progressing very quickly, although it was still very challenging, I became addicted to figuring things out. That was one of my first lessons about the power of focus and how it can quickly transform things.
The most challenging part, in the beginning, was managing the cash and inventory. I would say numbers weren’t my forte and because of that, it was what was stressing me out the most. I couldn’t see the scoreboard of what was going on in the business. With fashion and any other inventory business, it's imperative to have tight grips on your inventory and most importantly having tight management of your cash flow. Most people don’t realize how closely linked these two are. If you make a bad inventory decision today, it's going to affect your cash flow 6 months down the track, and the last thing you want to do is discount your products to get a cash injection and devalue your brand at the same time. There are so many different moving parts in this business, you’re paying deposits 6 months in advance, balances of the current season, plus you will be at different stages of 5 different seasons. I needed to upskill myself in this quickly if I wanted to survive.
I knew that in order to make this brand a success I would need help with the numbers, inventory management and getting the business operations in order so I could focus on what I was good at which is the product, the marketing and growing the business. I would recommend immediately getting someone who is savvy in these 2 areas if it's not your forte, once you start the business or at any point during the business. Don’t be cheap, you cannot afford without these people. Having this person in control creates a dashboard of whether or not you progressing forward or going backward which you can look at and make high-quality decisions as an owner. Most fashion brands that go out of business lack strong management in those two areas because they are run by creatives who believe they can design their way out of any problem. Big mistake.
I was on the hunt for this person. I had a friend who I had met at my previous job, who was crafty with numbers, systems and understood what I was trying to do for the scale the business was at. I asked him to come on board, but could only afford to pay him a few 100 dollars a week and if it worked out and he proved himself, he could potentially buy into the business. A year later he bought in. 12 months after that we made our first million and became one of New Zealand’s fastest-growing businesses (based off percentage growth) and the rest was history.
Since launch, what has worked to attract and retain customers?
Authenticity. If you go around chasing every trend and only focused on yourself and money, you’re going to lose very quickly. There have been many times where we have been tempted to do this but stayed true. Sure we sacrificed sales, but we kept our integrity, played the long game and people saw and appreciated that, and really began emotionally investing in the brand.
We rang customers asking them questions about what they liked and didn’t like about the brand, it was old school but it worked.
The #1 reason we attracted customers was that we were so focused on making the best product possible, BUT on the same token, didn't do it for us, we figured what people didn’t have in their lives and made it for them. We rang customers asking them questions about what they liked and didn’t like about the brand, it was old school but it worked. Pretty quickly we developed a wealth of information that was the foundation of who we are today. People wanted quality, detail, consistency, a point of difference and options at a fair price. It was our job to interpret this information, go over and beyond what they expected and create a product they needed and we succeeded. As Henry Ford said “if I asked what the people wanted they would have asked for a faster horse” so we always made sure we had a point of difference to other brands in the market.
We focused a lot on building our mail database as it would mean we would become less exposed to the volatility of social media, which is what happened when Facebook became less popular. We built this list through competitions and email pop-ups, giving them exclusive access to content and early releases, which no one was doing at the time.
I was a big believer in multiple brand touchpoints. So whenever people got on with their lives, I Love Ugly would be there interacting with them. Not selling them stuff, but creating value, thorough how-to guides, hacks on how to become a better person, curated music playlists and even how to dress as an example. People began seeing us as more than just a clothing brand and more of a lifestyle brand that they needed in their lives to become a better version of themselves. We have created many campaigns around this, with our most notable being a campaign called: GENERATIONS. Where we had old people dressed in I Love Ugly talking about their regrets & young people dressed in I Love Ugly talking about their dreams. The whole message was to never give up on who you want to become.
To this day, this is still our strategy, and we are soon about to enter the auditory market by launching our Podcast called: The I Love Ugly Audio Show. The whole idea is to give massive value. I interview top performers in an array of different industries, fashion, politics, health, sports, music, comedy and break down the tools and tactics they use to succeed so other people can replicate. As well as this it will be recordings of our brand meetings and me doing random rants about certain topics.
Not everything that matters can be measured and people too often get caught up in the science and analytics of growth and ignore the art, because it can't be measured. At the end of the day, if you hear a podcast of someone you like or see an ad, or even receive a mailer, you often just jump straight onto google. So it's important as a brand, that you are constantly making noise and constantly giving your audience huge value. You can't go wrong with that.
One of the how-to guides we often release to help people become better versions of themselves.
Image from our campaign titled: GENERATIONS.
How are you doing today and what does the future look like?
Things are great, but can always be better. We have stripped away the noise by cutting all our distributors (because of low margin, strain on our financial model and cash and the attention it required), 95% of our wholesalers went away because we didn't offer credit terms and because we began releasing closer to the season, plus we cut a few of our own stores to focus primarily online. It was a bold move, but the best decision I made.
For the last 2 and ½ years we have focused on 1 thing, customer retention. Its human tendency to get caught up in the exciting things like growth, acquisition and new customers. That's the most obvious answer on how to grow a business, but usually, the most obvious answer isn’t the right answer. Usually, companies focus on the acquisition with no focus on keeping the customers they have. They are more often than not, taking there existing customers for granted. Now I’m not saying growth is bad, I’m just saying there are smarter ways to do it, which can also seem counterintuitive.
Ask yourself this question; imagine how big my business would be today if I kept every single customer that has ever bought with me? Most businesses would be enormous if this was the case. This question startled me and made me realise that before we go off acquiring we need to make sure we are keeping the customers we already have. The last 2 and ½ years were spent, fixing our systems, our customer service, getting rid of the people that didn’t fit within our culture and mission and just doubling down on serving our customers better. Retention became our key metric which we obsessed about. As a result, our business began growing sustainably, people were happy and became raving fans. We now have a solid foundation to build off, so now as we begin the acquisition stage again, these new customers are going to be having the best experience possible and won’t want to leave while the customers we have will also be thinking the same thing.
Through starting the business, have you learned anything particularly helpful or advantageous?
Absolutely. I’m a huge believer that no matter how bad the situation, you got to always look for the lesson, as there is always a lesson. One of the biggest mistakes I made was ignoring profits and being obsessed with growth at the expense of everything else. We grew from 0 to just under $10,000,000 in just under 7 years. We had a flagship store in LA, Melbourne, Sydney, and 4 Flagship stores in New Zealand plus a big license deal on the cards in South Korea. We had 7 global distributors with over 200 accounts stocking our product globally, and an online store that was only going from strength to strength. Despite all of this we didn’t have our basics in place, and the rug was slowly being pulled from underneath us without us realizing it. We were so focused on looking impressive, we lost sight of what was most important. Big mistake. In 2015 we made over $1,000,000 net profit (before tax). In 2016, we lost $1,000,000. I lost my house, my car, had to shut down stores, get rid of our distributors, cancel brand license deals and had the bank give us a 7-day notice to pay back all outstanding debts otherwise they would foreclose us.
As a result of this, I had to buy out my business partner who didn’t want to carry on. Liquidators were calling me to say that I had to liquidate the business and declare for personal bankruptcy and that I was acting recklessly as a Director, the staff was quitting, everything was diabolical.
Fortunately for me, I had spent the last 3 years working on my mindset and psychology and had the tools and mental toughness to endure this challenge. I'm not going to lie it was the toughest, most gruelling, embarrassing and humiliating time of my life and was ashamed to have put my wife and 3 kids through this. I was broke and we had to move into a 2 bedroom granny flat for 18 months while I sorted this thing out.
I decided to take my own advice and looked for the lesson in the situation. I did some intense reflecting and learned that I needed to be patient and do things right, rather than fast. Looking rich isn’t the same as being rich. There was no rush, it's better to create something that's small and strong, than big and fat that is one mistake away from going bankrupt. I learned to know my numbers better than I can design products. I learnt that it's better to hire an experienced merchandise planner than it is a fancy New York PR Showroom. I learnt that growing a business isn’t just about your skills and abilities, but the culture you cultivate and the people you bring into the team. Most importantly I learned that no matter what happens, never let go of your dreams. I’m nothing special but managed to turn around this brand that was deemed bankrupt and everybody calling me a failure into something pretty special today.
Regardless of what happened, and how hard it was, I wouldn’t wish for anything different as it’s made me the man and businessman I am today. Although the brand isn’t generating the same revenue as we were in 2015, we are more profitable, we are growing around 20 - 25% a year, the team culture is amazing, and the quality of work we are producing is fulfilling and we are on track to being significantly stronger than we were a few years ago.
What are the main platform/tools do you use for your business?
- Website: Shopify
- Email: Klaviyo
- Social: Instagram, IGTV, Facebook, and LinkedIn(Just starting here)
- Podcast (coming soon)
- Accounting: Xero
- Purchase Orders / Inventory Management: Cin7
What have been the most influential books, podcasts, or other resources?
I have spent a lot of money and time on personal development and self-education. In fact, before I began reading business books and worked on my mind, was when I had the majority of my problems.
The business was a mess. I was unorganized, frazzled and stressed all the time and didn’t know how to grow the company. I let setbacks ruin my day which hindered my ability to grow. I let the business consume me and didn’t invest any time into myself. One day, it felt like I hit rock bottom. I was depressed, frazzled and felt empty. I opened up this old book which I found in my house by Tony Robbins called Awaken The Giant Within. Boom, there was one sentence in there that got me hooked and awakened something within me. My life and business turned around from that day on. I worked harder on myself than I did on my business, and my business grew as a result of it. Once again, it seems counter intuitive but I can’t emphasize how true it is. To this day, I don’t understand why people don’t read, listen to audiobooks and podcasts to help grow their businesses when they know it will. There's so much information out there, it's impossible not to find the answer you’re looking for.
There was a period in 2017 when the business had to go through a big restructure. I sold my house to inject capital into the business and buy out my business partner. Although I didn’t have the money, I used a loan shark to borrow $15,000 for my wife and I to fly over to Australia to attend a 5-day Business Mastery and Personal Development Seminar. I must have got over a million-dollar return from that investment. Don’t let money be an excuse.
Best hardcover & audiobooks
- Tony Robbins; Awaken The Giant Within & Unlimited Power.
- Napolean Hill; Think & Grow Rich.
- James Allen; As A Man Thinketh.
- Claude Bristol; The Magic Of Believing.
- Keith Cunningham; The Road Less Stupid.
- Grant Cardone; The 10x Rule.
- Seth Godin; This Is Marketing & Purple Cow.
- James Clear; Atomic Habits.
- David Goggins; You Can’t Hurt Me.
- E-Myth Mastery, Michael Gerber.
- Ray Dalio; Principles.
- The I Love Ugly Audio Show https://www.iloveugly.co.nz/pages/podcast
- Tim Ferris Show.
- Joe Rogan.
- Gary Vee.
- London Real.
- Impact Theory.
- How I Built This.
- Ed Mylett Show.
- Tai Lopez Show.
- Tony Robbins Podcast.
Advice for other entrepreneurs who want to get started or are just starting out?
You got to realise that what you are getting into isn’t going to be easy. It can be a lonely ride sometimes. The self-doubt, the constant rejection and the feeling of quitting on a daily basis are common patterns with all entrepreneurs. Sure, you hear stories of people starting an app and a year later sells it for millions of dollars but you need to know the exception isn’t the rule. Make sure that what you are doing is coming from a different angle, you need to make sure you’re adding value to people's lives or making their lives easier in some shape or form. You need to play the long game and be very patient, as there's no exact formula of how long it’s going to take. Ask people for their honest opinion and get your emotions out of it. Hear it from a pragmatic point of view. You will be surprised by the answers and golden nuggets you will get if you ask people to be transparent and honest. Fall in love with your customers and meeting their needs, as opposed to falling in love with your product, as the last thing you want is a product you think is perfect but nobody else wants.
I would also like to stress that 20% of the success of your business is going to come from the quality of your product, service and business acumen and 80% from the psychology you have. If only I knew this when I started.
What I mean by this is you’re going to get stressed. You’re going to feel lost sometimes. You’re going to get frustrated. You’re going to lose money and sleep. People are going to disappoint you, laugh at you and talk behind your back. Factories are going to make mistakes, but you need to know in business and in life, that this is normal. You need to learn to anticipate that these things are going to happen rather than react and let them defeat you. I'm not saying these things to discourage you, I’m saying these things to make you stronger, and increase your chances of success by becoming more aware. When most people encounter these problems, they quit. Because it's easier and it’s the same thing to do. However, an entrepreneur pursuing his dreams and passions isn’t the norm. They see the world differently and don’t opt into a cookie-cutter existence. Embrace these qualities, as it’s a very special trait. When you do encounter problems, which you will, I hope this advice helps you to see the situation in a different light. As opposed to seeing it as a problem, try and see it as progress and try to find the seed of a new idea, a new opportunity or what to do differently next time around. If you can do this, nothing will get in your way. Good luck.
Are you looking to hire for certain positions right now?
Not at the moment but I’m always on the search for hungry, ambitious and skilled people. They don’t have to be based in New Zealand either. Get in touch.
Where can we go to learn more?
- Company: www.iloveugly.com
- Instagram: iloveugly
- Personal: instagram.com/valentinozich
If you have any questions or comments, drop a comment below!
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