The Foundr Podcast with Nathan Chan

How Aidan Clarke grew global brands 2XU and Saint by prioritizing product.

In a market saturated with quick, cheap fashion, building a high-quality, global apparel empire was not an easy feat—but in 13 short years, Aidan Clarke paved a way.

It took a lot of dedication, but Clarke was determined to make a game-changing clothing company. Clarke decided early on that he doesn’t care about how his apparel looks, as much as he cares about its quality, and that commitment has paid off in a big way.

His first and primary brand, 2XU, is based on the idea of making high-performance athletic wear, with a focus on unique, custom-engineered materials first. This approach and the resulting success would lead him to his second brand, Saint, which takes that same emphasis on materials and applies it to safety gear for motorcyclists.

The funny thing is, by focusing on high-end users and materials, Clarke’s companies ended up creating products that have much broader appeal than the initial target audiences, branching out into athleisure, workwear, and potentially even streetwear for skateboarders.

Through these two brands, Clarke has found a way to sell products that look good and perform well—and outfit consumers in over 60 countries.

From Door-to-Door Sales to 2 Worldwide Brands

Clarke got his first taste of the clothing business at just 18. As he was preparing for a school dance, he took a second glance at the neckties he and his friends were buying. A young entrepreneur’s mind started crunching numbers and realized that the fabric only cost $30 per meter, and each meter could make up to seven ties. Yet here he was shelling out almost $100 to purchase just one. “I thought, ‘Hang on, there’s a business here,’” Clarke recalls.

He decided to start making his own ties and selling them door-to-door to businesses in his home of Auckland, New Zealand.

Clarke’s entrepreneurial path didn’t continue in a perfectly linear fashion, a common theme we see among emerging founders. After graduation, he went to college and started a corporate career. His pushed his entrepreneurial passions to the back of his mind, but not for long.

“I ironically landed back in clothing,” Clarke says. “I’d grown up around seamstresses and saw the value-add of clothing.”

Clarke started his first apparel brand 2XU in Melbourne in 2005 and moved his family there soon after. He spent the following five years on a plane building 2XU into a multinational business reaching more than 60 countries.

Why Melbourne? Clarke and his team had received a significant amount of startup funding, and their investor was based in Melbourne. The Australian market for 2XU was also better than in New Zealand. “We spotted an opportunity. New Zealand had lots of local sports brands, but Australia ironically didn't,” Clarke says. “We wanted to take on the big boys.”

2XU started with audacious goals. Clarke and his team wanted 2XU to be uniquely performance-focused, so they spent the entire first year developing fabrics for their apparel, before creating their product. “You can either buy fabric or focus on quality,” Clarke says. “We said, ‘Hey, we want to change the fabric.’”

With millions in seed capital, they were able to spend ample time and resources on fabric development. Eventually, their warehouse became so full that they had to start selling their product.

Clarke and his team did wholesale and direct sales at the same time. While most clothing brands avoid direct sales so as to not compete with wholesalers, 2XU opened its first retail store to prove they could sell premium, expensive sportswear in Australia. “Selling at our own store motivated retailers to accept products,” Clarke says. “Having our own hero shop drove demand for wholesale.”

The team also visited both retail and special sports stores. Selling next to well-established international brands was difficult, but they pressed on. Their first major sale was to a now-closed triathlon store that purchased the entire 2XU line for over $3,500.

Another significant sale Clarke remembers was to Rebel Sport, a major retail chain in Australia and New Zealand. “Needless to say, we had a few drinks that night,” he says, laughing.

Clarke’s next step for expanding 2XU was finding ambassadors and distributors. But that wasn’t always easy. “Trusting someone with your brand is like a glorified babysitter,” Clarke says. “You have to find someone with the same passion to sell your story.”

He found that the best thing about distribution is how it taps into local knowledge and expertise. The 2XU team worked hard to find passionate brand ambassadors and people to accurately represent 2XU brand in each country. In doing so, they found mostly nontraditional distributors: athletes.

“It was a big risk, but passion is the right of way,” Clarke says. Over time, some distributors scaled with 2XU operations, and some were replaced by commercial operations.

In the following years, 2XU celebrated two major equity events. In 2011, a local company bought 30 percent of the company. Next, the capital arm of Louis Vuitton discovered the brand and bought in at 40 percent, a significant valuation for 2XU.

Since then, 2XU has scaled up and hired corporate CEOs to run the company. “The challenge we face, though, is how to still act like a small business…an underdog,” Clarke says. “We used to say, ‘By athletes, for athletes,’ but we can’t say that anymore.”

But at the end of the day, the 2XU product is “still sensational.” It’s been well-received at the professional and Olympics level and is very much considered a premium brand. In the United States, it’s worn by the NBA, NFL, and even Navy Seals.

In other places, 2XU apparel has become an athleisure staple. “You don’t have to be a world champion to still want quality,” Clarke says.

After getting 2XU settled, Clarke pulled back and spent a “non-executive year” focused on himself and his health. One day, while riding bikes with his co-founder, he came up with what would become his next big idea—a new form of safety apparel for motorcyclists.

The idea sounded simple, but as the duo dove into R&D, they realized creating this type of product would require a significant commitment. “It cost us a couple million dollars after a couple years,” Clarke says. This effort would go on to become Saint, Clarke’s second global clothing brand.

Their goal was to create a single-layer safety product—ensuring a flexible, comfortable riding experience—that wouldn’t rip or tear if someone fell off their motorcycle. The global “slide time” standard for the fabric on these products (which defines the amount of time that a fabric should withstand sliding across an abrasive surface, such as pavement, before it tears) is four seconds, and they’re routinely tested in facilities equipped with spinning disks of sandpaper that replicate sliding on the street.

Their first fabric lasted 3.67 seconds before ripping—just short of the standard but still much longer than any other single-layer fabric. After continual development, Clarke’s fabric now lasts almost six seconds.

This single idea helped Clarke and his brand break into work clothes and other tough lifestyle applications.

They’ve since patented their super-durable fabric, which involves a unique material spun into the yarn. “As for workwear, no one can do what we’ve done,” Clarke says. “It’s nice to have the IP protection.”

Premium Product > Price

Both of Clarke’s businesses, 2XU and Saint, lead with a premium product line. And there’s a reason for that. “People often lead with price,” Clarke says. “That’s a lazy way to sell. Product is king.”

Some clothing retailers also find themselves tempted to sell their products relying on aesthetics alone, but not Clarke. “Rather than being a fashion brand, I’d rather be an authentic motorcycle brand with tough products…that also look good,” he says about Saint.

Instead of encouraging people to “buy because it's cool," he always wants the dialogue to be, "buy because it's going to protect you."

Through both ventures, Clarke aimed to develop a high-quality product, as he believes that is his “greatest value proposition and strong positioning” against competitors. He believes that “if you have an amazing product, you're not selling—you're just recommending.”

Of course, selling your product is much easier when other people endorse it. In Clarke’s eyes, strong brands start with a great product or service, get their margins right so they’re profitable, and then create demand. “People think there’s a complexity to business, but there’s also a simplicity,” Clarke says.

How can you create this demand? Clarke relates it to a “chicken and egg” situation. If you create demand before you’re ready to supply and distribute your product, you risk wasting resources because you’re essentially creating demand for competitors. On the other hand, if you develop and supply your product before the demand is there, you risk wasting resources on product that never brings in revenue.

To build demand for your product, Clarke recommends doing so authentically. He and his team often attended sports events and spread the word about 2XU to one person at a time. Those early adopters and advocates would then tell friends. “It’s like a grassroots movement,” Clarke says.

By targeting their market and talking to those who are passionate about what they do, they got authentically involved with communities and built trust in 2XU from the ground up. The same can be done through social communities.

Clarke claims that social media, in fact, is a lot more directed. “The ability to target and generate demand is more focused than ever,” he says. “That’s what’s exciting about today.”

Clarke and his team have made other exciting changes over the years. When they started 2XU, they only had an informational website. They didn’t want to compete with wholesalers through ecommerce sales. Now, ecommerce is one of their biggest and most important channels.

Every business’s website is now the flagship store, at least to begin with, Clarke says. People form their judgments about your products very quickly, and you’ve got to have your website synchronized with the products you’re offering in the real world.

The Future of Saint and 2XU

Looking ahead, Clarke is excited for the futures of both 2XU and Saint. The brands are at different stages, but they both sell high-quality product and are both in growth mode, as Clarke calls it. His primary growth measure isn’t from a focus on sales numbers—it’s from a focus on communities.

“Saint is a rocketship about to take off,” Clarke says. “It’s five times tougher than standard workwear.” The brand has even had inquiries about street fashion and safety gear for skateboarders and other action sports.

As for 2XU, Clarke says that seeing more and more people discover the brand is exciting.

To other entrepreneurs, Clarke encourages “passion, tenacity, resilience, and a belief in yourself.” He highly encourages those in the clothing business to focus on quality. “Cheap fashion is too hard a place to play,” he says. “It’s not unique enough.”

When you have a unique space and unique selling proposition, you have a better chance of selling your product—or having it sell itself. Clarke is also adamant about using brand ambassadors to create a movement and conversation around your products or services.

“The tough thing about clothing is that scalability is hard,” Clarke says. Small businesses often buy too much stock, but Clarke encourages the opposite—pay more to make fewer units and sell them up.

In his opinion, it’s better to scale yourself up. Too much stock can put clothing brands in a hard place. Unlike the whiskey business, apparel product is worth less and less every year.

At the end of the day, Clarke reminds brands and entrepreneurs to prepare themselves for the road ahead. “It’s a tough game,” he says. “Just believe in yourself, be resilient, and keep pushing.”

Key Takeaways

  • His first job as a teenager selling ties door-to-door
  • Why he left his corporate career to start a business in 2005
  • All the leg work that went into developing a premium performance clothing brand
  • How the internet affected his business
  • On raising capital and how he used the funds
  • How he and his cofounder came up with the idea for the world’s strongest single-layer denim for motorcyclists
  • Why he focuses heavily on performance, not fashion
  • Advice for fellow entrepreneurs entering the apparel space
Direct download: FP245_Aidan_Clarke.mp3
Category:general -- posted at: 8:12am AEST