Industry: Social Impact Fashion
Founding Student Name(s): Umar Belal, NYU Stern’s Fashion & Luxury MBA, Class of 2020
Brief Description of Solution: ONE432 is a social impact brand that shares 50% of net profits with artisans and funding education initiatives in Pakistan. We bring an unprecedented amount of transparency through our proprietary ONE432 tracker app, which allows consumers to trace their money in real time on our website. Our first product was the ONE432 “Jutti”, a reimagination of a 400-year-old South Asian shoe which is symmetrical (without a discernible right or left foot). This feature along with its distinctive open mid-foot design sets it apart from any shoe on the market and immediately grabs people’s attention. During COVID, we made a pivot and launched a “Lounge Essentials” collection that consists of Tees, Hoodies and Home Slippers. ONE432 incorporates sustainable materials as much as possible such as recycled cotton, dead-stock leather, denim waste and natural rubber soles. Our ultimate goal is to revolutionize how the fashion industry links impact from consumers to the communities that create it.
Funding Dollars: Bootstrapped
What led you to launch this venture? My family has a long history in the textile sector in Pakistan; my father was one of the pioneers of the knitted sportswear garments industry in Punjab. His factory closed down in the early 2000’s, but I had developed a love for making products. Following that drive, I started my own stitching unit in Lahore in my early 20’s and over the next four years grew it to a more than $2M company. During that time, I saw my financial reality change but many of the workers on my stitching floor were still living paycheck-to-paycheck. My brother, Ammar, was finishing his MFA degree at Parsons at the time. We were catching up during a summer break and started discussing the structure of the fashion industry and how money is distributed down the value chain. We both brought perspectives from each end, one from design and the other from manufacturing.
As a designer, my brother’s skill set could command hundreds if not thousands of dollars, whereas a worker on the factory floor is fighting for cents. We took it upon ourselves to come up with a different business model that could leverage design as well as manufacturing under one roof and pass that value to our community.
What has been your biggest accomplishment so far with venture? We had no prior experience in making shoes and we were attempting to redesign a product that had remained the same for centuries. Developing a brand-new sole, building a supply chain in an unfamiliar product category, and training artisans to have a brand-new skill was very challenging. At the same time, we were defying preconceptions of a Pakistani-made product as a cheap commodity. A lot of work went into product testing to ensure durability and comfort, but a lot of work also went into the design and branding of the company. It was imperative for ONE432 to look, feel, and talk like a world-class brand to justify the price point and create the margins to share 50% of our profits.
Creating the ONE432 funds tracker was also a very rewarding journey. The way money travels down the supply chain in the fashion industry is very opaque and confusing. We wanted to go a step further from 3rd- party certifications which don’t mean much to the end consumer. Our solution was to create an app that logged the portion of profits shared from every sale in real time. This meant that both the consumer as well as the artisans and our partner schools could verify how much money was allocated to them on our website.
How has your MBA program helped you further this startup venture? Moving from Pakistan to New York was an invaluable experience on a personal level as well as for ONE432. There is no substitute for the energy and the drive that you feel by being in one of the world’s cultural and financial epicenters. The Stern MBA experience provided a phenomenal community of professors and students to vet our assumptions, discuss strategies, and get fresh perspectives every step of the way.
The entrepreneurial network and infrastructure at NYU Stern has also been a huge boost for the company. We were accepted into the flagship accelerator at NYU Stern, The $300K Entrepreneurs Challenge, which we deferred to participate in to 2021 because of COVID. We were also selected in the Stern Venture Fellowship (SVF) for the summer of 2020. The SVF gives us access to $15,000 in grants to attempt new initiatives and a tremendous amount of exposure. More importantly, the program pairs us with a dream team of coaches who are industry leaders and provides us a structure over 12 weeks that keeps us focused on achieving our milestones while giving us the flexibility to be creative.
What founder or entrepreneur inspired you to start your own entrepreneurial journey? How did he or she prove motivational to you? Both of my parents were entrepreneurs. Growing up, every conversation around the dinner table was an exercise on problem-solving about strategy or management issues. Without knowing it, you learn so much, and it makes you want to enter the fray yourself. They always challenged the status quo in their endeavors and pushed to change the world even when it seemed unlikely. This environment also equips you to handle risk and forms your appetite to take chances in a very different way. My father was a paraglider, which for a son, is a pretty nerve-wracking sport to see your dad participate in. However, he derived many parallels from his paragliding to his entrepreneurial journey.
“Make sure all the equipment is secure and the wind is right, but at some point, you have to make an assessment and jump off the ledge!”
Which MBA class has been most valuable in building your startup and what was the biggest lesson you gained from it? There were so many great classes that I had the privilege to attend. Considering where the retail industry is heading, I made sure I took a slew of Business Analytics courses. Stern has a brilliant set of professors such as Claudia Perlich, who teaches Data Mining, and Xiao Lui, who teaches Data Driven Decision Models, that made navigating a completely new field very approachable. The standout class for me personally was the Retail Strategy and Analytics course under Jack Hanlon. As an educator, Jack is probably one of the best I have ever had. He has a natural charisma; his love for teaching and passion for retail comes through in every class. After completing his course, I developed a habit of trying to quantify the expected result of any initiative to weigh the pros and cons in a more concrete manner. The final project I submitted for the class in December 2019 heavily influenced ONE432’s initial strategy and targets for 2020 before COVID happened.
How did the pandemic impact your startup plans?
2020 was gearing up to be a big year. We never had the funds to make a concerted online marketing push, so our sales from our online channel were always moderate. In contrast, we had always seen an extraordinary response whenever we did a physical activation event such as pop-ups because we were able to interact with customers on a personal level and they got the chance to try our products. We had put a lot of effort in the first quarter of 2020 in scheduling a host of events across the US and developing new wholesale partners starting from March. All that effort came crashing down very suddenly as the country came to grips with the pandemic. This put us in dire straits, where we had to reassess everything very quickly. It is in that moment we decided to do something bold and develop the “Lounge Essentials Collection”. Our objective was two-fold:
- Make our customers stay at home as comfortable and stylish as possible
- Create products that gave each artisan an opportunity to showcase their craft
Successfully pivoting into garments and slippers with our Lounge Essentials collection during COVID really demonstrated the creativity, flexibility and resolve of our company. Within 45 days, the ONE432 team was able to design, source and train our artisans to produce a completely new set of products. Without any paid advertising, we generated more revenue from our online channel than in any previous period.
What is your long-term goal with your startup? Our vision for ONE432 is to ultimately prove that there is a different and more equitable path for companies working in the fashion industry. It is one of the main reasons we decided not to be a non-profit business. Our success will be measured first by changing the lives of the artisans we employ and embarking on more ambitious education initiatives. The bigger picture is to push the fashion industry to adopt more responsible practices and distribute their profits more equitably.
The Global Apparel & Footwear Industry is estimated to be worth over one trillion Euros employing over 300M people according to the Boston Consulting Group. In some key Asian production countries, 34% of the total employment comes from the manufacturing sector. Over 50% of workers are not paid the minimum wages in countries like India or the Philippines, while in Pakistan 87% of women and 27% of men are paid below minimum wage. It is important to note that minimum wages in these countries are often half of what can be considered a living wage. BCG estimates that by setting wages at 120% of minimum wage, while still not sufficient to attain livable wage levels, would still contribute $5 billion to the global economy. While a simple $1.35 extra could double the wages of those producing t-shirts that retail for $25 each.
Knowing how small improvements can radically change the lives of millions makes this reality extremely frustrating. Presently, we are working hard to fine-tune the ONE432 tracking app, and our vision is to make it available for other companies to adopt. We do not expect everybody to give 50% of their profits, but as shown before, even incremental increases will be transformative. ONE432 aims to shift the transparency and traceability paradigm of the fashion industry to democratize its sharing of profits.
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