Let's [not] make a deal! (And other tales of small business ownership)

 (Originally posted on Kickstarter)

Feb 28 2014

PH Alums --

Hope you all have had a great February so far. Below, you'll find a production update, a story, and a surprise about the future at the very bottom.

As always, feel free to email us (alumni@penancehall.com), message us on Facebook (https://www.facebook.com/penance.hall) or the Twitter (@Penance_Hall), or right here on Kickstarter if you want to get in touch.

- Josh and the Penance Hall team

Production Update 

We finally received our funds from Kickstarter on Monday, ~10 days later than we had originally expected.  Kickstarter mentions a 7-10 day lag, but what we didn't know was that Kickstarter disburses funds to Amazon, who then disburses it to our bank. That was an unexpected major delay, given the positioning of the various bank holidays and weekends.  We are currently evaluating to see if this will impact our manufacturing and delivery schedule and will let you know soon if we are going to revise our delivery timetable.

We wire transferred (to save time) $7,000 to our wool supplier today as 50% down payment for our order of 1000lbs of 19.5 micron fine merino wool. The remaining $7000 is due once the wool is spun and shipped, hopefully early next week. Here is a bit of dialogue, a sort of "you're-not-in-Kansas-any-more" moment:

American Wool Supplier: "How do you want us to ship the wool to your dye house?"

Josh: "Can you use the FEDEX number we provided you a few months ago?"

AWS: "Well... we're talking about a shipping container's worth of wool, so I recommend you just go ahead and hire a truck."

Josh: "Ah... that makes sense" (Humbling moment #1).

A Story (or, "why Luxury means Luxury")

For those of you who have followed the few posts we have written on Medium (https://medium.com/@ShowYourTrue) you'll know that we have received a few inquiries about plugging our socks into various luxury product services.  To date, we have received invitations to include our socks in three "gift bags" for various major events - one of which was for the Grammys (for the low-low price of $5000). We have declined all offers, but once again I wanted to give you all some insight into why we created Penance Hall in the first place.  Today we were approached by a "high-end" luxury goods subscription service.  This company sends boxes to its "members" every month for $50.  The boxes contain an assortment of stuff assembled (surely, they would say "curated") by who-knows-who.  Anyway, they asked us if we wanted to... well, the email is just too good: 

"Hi team, I hope all is well! I wanted to touch base about a potential (crazy) partnership between our two companies. We're interested in featuring your socks in our October subscription box, which will go out to 10k tastemakers across the country, plus feature you in our editorial content that reaches millions more. a month We have been approached by various "sock subscription".

Their "crazy" proposal was: 10,000 pair of socks at $2 per pair.

I got back to them straight away (as those of you who have written may have seen, we aim for quick-turn emails if at all possible): we would love to supply them with $2 worth of our socks.  That would be about one toe's worth.

You see, when we say these are a luxury product, we mean it. $2 is what it costs for us to simply knit two socks together. Never mind buying the world's softest wool, dyeing it into amazing colors, buying specially-constructed nylon (more on this in a later post), packaging it in an amazing box, and so on. 

The unfortunate reality of the industry is that many companies have the kind of margins that would allow them to make this deal. In fact, we know for a fact that there are only a handful of sock companies out there that can't. Because we had the option of taking our production to Asia and making socks that looked like Penance Halls for less than $3 per pair (at low volume). We see our competition and know this is what they're doing. They're selling a product they know is made with cheap imported cotton, on cheap machines, with cheap dye, that will wear through in a few weeks or months, and they do it anyways, spending their profits on advertisements designed to build brand recognition without quality.

We started Penance Hall because we have seen the decline in the menswear industry over the past few years. Once brands become popular (or occasionally, go public) they often shift manufacturing abroad, trading profit for craftsmanship. Muffy Aldrich over at the Daily Prep does some decent math on the subject: http://www.muffyaldrich.com/2013/05/draft-of-preppy-companies-2013-for-peer.html. Our promise to you is that we will never cut quality to make a profit. Penance Hall is American Made. Our emblem is our word.

And now... the surprise.

Starting a company can sometimes lead to a certain kind of myopia. Over the course of the last few months I have had numerous people, both supporters and friends, ask about us doing different colors and color combinations.  The most requested color?  Black.

Especially for friends and backers working in corporate organizations, flashy socks can be a distraction.  And there is a time and place for everything. And we didn't want to make people chose between an awesome sock and a colorful sock.

Now for the myopia.

I brainstormed for days. How would we get black socks? Another $12,000 investment seemed out of the question, as was another iteration of fund-raising (or waiting for profits)... and then it hit me: just take out the orange. "It's so simple!" (Humbling moment #2). So: we will be making black socks.  And a few other color combinations as well.  Stay tuned for details; we will be publishing mock-ups of our color combinations in a few days.

We are currently working out details on what this will look like.  But suffice it to say we are considering lots of options as one additional "thank-you" to everybody for supporting the project.  Have any ideas? Leave them in the comments, or send them to us directly. We would love to hear from you.

Thanks again,

Josh and the Penance Hall team

Daniel WardChris Allen, and 17 more people like this update.

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