Shannon Lohr, CEO of fashion start-up consultancy Factory45, on building brand transparency and the number one mistake new brands tend to make.

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The following is a transcript of the Bold Brands podcast presented by Bold Metrics and hosted by Jeff Mergy that focuses on innovation and technology in the apparel e-commerce space. We speak with founders and CEOs about their challenges and how they use technology to grow and scale their brands. You can check us out here, or wherever you listen to your podcasts.

This episode shares insight from founder and CEO of Factory45 Shannon Lohr. Factory45 is, as she describes it, the online business school that takes sustainable fashion brands from their idea all the way through launch. Along with her many titles, Shannon is also a Wall Street Journal “Woman of Note” and discusses how apparel brands can increase supply chain transparency through sourcing, localization and storytelling, as well as what exactly the future of fashion entails.

Shannon: Thanks for having me, Jeff.

Jeff: So, give us a little background about yourself and how you really came to this idea of starting up this new kind of business school for sustainable fashion brands.

Shannon: Like many entrepreneurial stories; ideas, products and services come from your own needs. Back in 2010, I was starting my own sustainable fashion brand, and it was extremely hard to break into the industry. I couldn’t get manufacturers to talk to us, couldn’t get suppliers to respond to our emails, and couldn’t figure out what was what. Especially when you set out to do something in a “sustainable way” keeping in mind people and planet, it creates a whole other layer of complication. And long story short, we ended up launching our brands through the highest-funded fashion project in Kickstarter history at the time. We were featured in The New York Times, in the Wall Street Journal, and it was this amazing first entrepreneurial project and journey. It made me realize that it should be easier to start a fashion brand in a sustainable way from the start. So that’s what led me to create Factory45. Back in 2014 was the pilot program.

Jeff: That’s great. And how many people have gone through the program over the years?

Shannon: By now, it’s been around 500.

Jeff: That’s awesome. Globally? Or just mostly in the US?

Shannon: Yeah, globally. It’s funny when I think back in 2014, I just took 10 people. It was just 10 entrepreneurs and me. And it was all in the US. And now we’re in 2022 grown quite a bit and working with global brands.

Jeff: How many people are on your team at Factory 45?

Shannon: Oh, it’s so funny you asked because we’re just about to do like an Instagram introducing everyone again. There is myself, my creative director, my Director of Operations, my Director of Enrollment, I have a Content Manager, podcast manager, and client tech support. And then we have our 10 alumni mentors who work with everyone who comes through the program. They’re all people who have graduated from Factory45 and launched their brands through Factory45. And now are running the brands and have come back into the program to mentor the current group of entrepreneurs.

Jeff: Okay, so take the audience through the process. Let’s pretend I am starting my own fashion brand. What does it look like to get started with Factory45? And kind of how does the process work from start to launch?

Shannon: Yeah, so I think that our approach is a little bit unconventional and that we really approach starting a passion brand from maybe how you would think of like starting a tech company. When you think about the lowest barrier to entry, testing the market, identifying your unique selling position, and really starting lean. I think that we often think of the fashion industry as you need a celebrity endorsement, you need all these influencers, you need all the press, you need millions of dollars. And that’s just really not the case. For us, we focus on conceptualizing the idea, identifying a target market customer and a niche customer, a problem that you’re solving. That’s the important thing. Again, people think that fashions are just so like fluffy and superficial. But really, you can go into this and should go into this — identifying a problem you’re solving for your customer. And then fast forward through branding and marketing and product development and finding your factory. We go through all that. And then we eventually launch through pre-selling, which I believe is the number one launch strategy for bootstraps fashion startupst. So that they can test the market and they can reduce their own risk. And essentially, have their customers finance their first production run for them by having money in the bank, and having customers waiting for their product.

Jeff: Do you do that through like your own platform of pre-selling? Or is that like through like one of the ones that are major ones that are out there?

Shannon: No, but that’s a good idea. It’s a good spin-off business. No, we teach. So we teach three main methods, the most probably well-known is pre-selling through crowdfunding, like Kickstarter, then the other option was pre-selling through your own e-commerce site like Shopify. And then the third option is a little bit newer, and that is the virtual pop-up method that we are teaching on Instagram.

Jeff: Alright, so you kind of mark Factory45 as this school for sustainable fashion brands. Talk about that word sustainable, you know, when combined with fashion, and why does that matter? And what does that mean to you guys at Factory45?

Shannon: Yeah, it’s one of those kind of nuanced words, but one of those things that has become this blanket statement. I always tell my entrepreneurs, there is no such thing as perfectly sustainable. Anytime you’re making something new has an impact. Our goal is to reduce that impact as much as possible without sacrificing the fit, durability, the longevity, and the functionality of the product itself. Because you can have the most sustainable product in the world, but if it doesn’t fit your customer, or if your customer can’t wear it, or use it, and it sits in their closet, it’s not sustainable at all. So that’s really what we focus on is where can we implement elements of sustainability into the business model from the beginning, and then into the supply chain in a way that is really not even a marketing method, it’s not like a marketing strategy, or even your first marketing message. It’s a coherent part of the business model.

Jeff: Got it, makes sense. You guys are helping your founders going through the program stay ahead of those trends? You know, it seems like there’s technologies changing all the time around sustainability. How are you guys staying on top of that, and then transferring that knowledge to the founders in your program?

Shannon: Yeah it’s challenging. You think about when everyone was so excited about recycled polyester and that was like the new thing. We were taking water bottles out of landfills and making them into fabric. And now we know that when you wash that recycled polyester, it sheds microplastics into the ocean. And actually, there aren’t really enough water bottles to supply all of the recycled. So it’s a combination of keeping up with the trends, the facts, the knowledge, adapting the program, the whole first module — we have an overview of sustainability. And I talked about that. And that’s something that really needs to be constantly updated and edited, as you said because things are just technology, everything is constantly changing. But luckily, we have a pretty good team in place to keep things up to date.

Jeff: Got it. Another thing that’s going on in the fashion industry today is digitization and there’s a lot of talk about the metaverse and web three, and even more and more companies using 3D design to design products. Do you guys do anything in those realms to help your founders with that new trend that’s ongoing?

Shannon: 3D design for sure. That’s something that I brought in experts who run agencies that are doing digitization and 3D design and sort of teaching on that. And I think that in particular is a great way to reduce waste in the product development phase, because we’re just getting closer to your perfect sample in a way that doesn’t waste fabric and all of that. But in terms of like Metaverse, all the other things — no, not yet. I mean, I’m sure it will come if I stay in the game long enough. But for now, we’re keeping things pretty, pretty down to earth and clean.

Jeff: Back to the 3D design part, have you noticed that has really helped your companies deal with fit and making sure their products are gonna fit correctly before they actually get a prototype?

Shannon: I think it does. I think that it really helps cut down the rounds of samples you have to do. I think that no matter what you need to have a physical sample, you need to have a fit model still, you need to be like testing the products durability in real-time, you can’t do that on paper or on a computer. But in terms of getting into that final sample quicker, without so many rounds of edits, I do think that helps speed up the process.

Jeff: You also have this site called Market45. I’d love for you to tell the audience a little bit about that and explain that concept.

Shannon: Yeah, Market45 is our ethical fashion marketplace where we sell only brands that have launched and graduated from Factory 45. Not all of the brands that have launched are on there, but a good portion are on there in different categories from men’s to women’s to accessories.

Jeff: How many brands are selling through there would you say?

Shannon: Good questions, I have actually no idea at this point. It’s like somewhere maybe like 30 to 50 right now.

Jeff: Kind of brand recognition through that site as like one of the perks of going through the program.

Shannon: Yes, that’s a huge part of it. We don’t look at Market45 necessarily as a revenue driver. For us, it’s more to help the brands get exposure and to promote them. It’s also just an affiliate commission. We’re not like drop shipping or anything like that. So Market 45, when you click on a brand, it sends them over to that brand’s website.

Jeff: Very cool. I’ll definitely check that out. You mentioned earlier that you’ve had over 500 entrepreneurs kind of go through the program — you’ve had to see a lot of failures, a lot of successes. If you had to kind of sum up the number one mistake you think new, sustainable fashion entrepreneurs make, what would you say that is?

Shannon: Not building an audience before you launch. I think there’s this misconception, and I don’t know where it came from. Like, there’s this idea, especially with, Kickstarter, there’s this idea that you just put up a Kickstarter campaign, and then all these random strangers give you money. And that is not at all what I teach, or what my entrepreneurs do. They know, they have to drive the traffic to whatever pre-sales campaign that is, whether it is on Kickstarter, or is on Shopify. But knowing that, you are pre-selling a product, this is not a donation, this is not random strangers who feel bad for you and give you money. People are actually opening their wallets and saying “Yes, I’m watching what you’re creating and what you’re selling. Because I’ve followed your journey. I’ve been on your email list. I’ve watched your Instagram Stories. I’ve watched your YouTube videos, and I’ve listened to you on podcast interviews.” Like there’s so much of the brand-building and audience-building that needs to happen six months to a year in advance of ever selling the physical, actual product.

Jeff: So my next question was, what’s the most important step one must take before launching a fashion brand… but I think you just answered that as well. Right? Anything to add to that? I mean, what are some of the common themes you’ve seen with some of the brands, besides building the audience prior to launch, what are some of the more successful brands that have come out of Factory45? Like, what are some commonalities you see, between them?

Shannon: It’s really based on sort of that USP. You either need to appeal to an ideal target customer niche, like really niche down and figure out who your people are. And then also back to the problem solving. You know, thinking of yourself as not just a fashion brand, but a brand that is solving a problem for your customer. When I look back at the alumni who are successful or like we deem most successful, which obviously varies, but they’re the ones who eally got clear on that, and solved that specific problem to the right people. And often, entrepreneurs think they have to have it all figured out in the beginning and don’t realize those two things can evolve and they evolve by talking to your customer, even if they’re not your customer yet. By doing that market research, having those conversations, and not being afraid to ask the right questions. I think that the people who do that are the ones who definitely have a leg up when it comes time to launch.

Jeff: Very cool. Well, I definitely love what you guys are doing I think you’re solving a huge niche in the fashion industry helping entrepreneurs not only launch a brand but do it the right way and think about sustainability along that path. So it’s really cool. Thanks so much for joining the Bold Brands podcast.

Shannon: Yeah, thank you so much for having me.

Jeff: And to everyone out there; if you have an idea in the fashion industry, look up Factory 45. Check out their program. Thanks so much again for being on the show, Shannon, and we’ll talk to you soon. I’m sure.

Shannon: Okay, sounds good. Thanks, Jeff.

This was a transcription of Bold Brands podcast, which focuses on celebrating apparel brand’s innovations. If you liked what you read, please listen here, or wherever you listen to your podcasts. Check out Jeff Mergy, the host on both LinkedIn and Twitter, and follow Bold Metrics for further updates and innovations in the apparel industry.

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