How to build a 20 million dollar company with Facebook

lolly_wolly_doodle_logoVia the WSJ comes word that children’s wear manufacturer Lolly Wolly Doodle, got a round of funding to the tune of $20,000,000 -that’s right, 20 million dollars. For a moderately priced children’s wear company that started in 2009 out of someone’s garage, that’s not too shabby. So what are they doing and how did they do it?

From what I can tell, they followed a playbook similar to what I’ve outlined on this site for years. If you want the quick start guide applicable to a grassroots start up, you can see these entries that explain how to turn cloth into cash:
How to start a homebased handmade sewing business
How to start a homebased handmade sewing business pt.2
How to start a homebased handmade sewing business pt.3

Which is not to suggest that their journey has not been without its problems. In fact, the company has an F rating at the Better Business Bureau. Still, they must be doing something right to have picked up 20 million in funding so what might those things be? Here are a few obvious conclusions:

  • Quick delivery
  • No inventory
  • Customization
  • Competitive pricing

…all of which are only possible because they make their own products. It is because the company has good bones that an investor is interested in resolving LWD’s growth problems. If this is something that interests you, it helps to have the right kind of problems, one of which shouldn’t be demand for your products. But anyway.

The WSJ article conveniently segues into my favorite topic, namely that you need to start manufacturing yourself. Period. You can only turn orders quickly, customize it and eliminate inventory if you’re making your own stuff by pre-selling it first. So that’s how they do it on Facebook. They make a sample, post it and take orders which they then deliver in 2-4 weeks. That is still a significantly longer lag time than other companies I’ve consulted with but 2-4 weeks is an order of magnitude faster than traditional manufacturers who have their production done by sewing contractors overseas. Or even domestic production but that can still take months. Offshore is worse because timelines are often a year or more out.

If the success of Lolly Wolly Doodle is something you’d aspire to attain, you can do this yourself as I’ve been saying since 2005, over 8 long years ago. For those in the US, making your own stuff is the only way you’ll have an edge over anybody else because there aren’t enough sewing contract facilities to take everyone’s work.  Don’t be in too much of a hurry to thoughtfully ponder the reasons you should start your own sewing factory (pt.2).

I think the conversations we should be having are about how to train sewing operators, what to pay them, how to go about setting up your factory, how to know what kind of equipment you need -which again, are all topics I’ve written of before but there doesn’t seem to be much interest in it. Or rather, not as much as I’d like. I’ve also written on many of those subjects and I decided against peppering the preceding sentence with all manner of hyperlinks because it then becomes cognitively overwhelming, you’ll go away and then how will anything positive happen?  If you do want more information, you can follow the links in this entry to those other posts which have links to those related subject areas. And yeah I know, you’ll be reading from here to next week which I think is a good thing. Most people who start companies like this fail because there is a lot of homework and often, it’s not the homework one wanted to do. Unfortunately, you rarely get to pick so you take the good with the bad. No business of any kind, can be self sustaining if its owners are lazy or sissies.


*Here is an indirectly related question that people should be asking themselves: why is this company so attractive to investors? Perhaps it has something to do with who sells the most [at market] and why (see also pt.2).  A post I wrote on selling your company (along with links therein) would also be helpful. Not that you want to sell before you get started but it helps to know what buyers find attractive.

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