From Student Entrepreneur to a $15 Million Revenue Ultralight Business: Stephanie Madesh, CEO of Kalon Clothing (Part 5)

Sramana Mitra: You were finding all these levers at the right moment. Timing is really hard to get, but when you get it right, it works really well. What kind of revenue level were you at in 2015?

Stephanie Madesh: We would have been at $3.5 million.

Sramana Mitra: How many people now?

Stephanie Madesh: 12 employees.

Sramana Mitra: All in San Francisco still?

Stephanie Madesh: In 2015, we moved to south San Francisco because we had to get more space.

Sramana Mitra: If you need to warehouse, south San Francisco is a better place. What happens next?

Stephanie Madesh: 2015 is when we started to get more loans. We did friends and family loans. We renewed a business loan. That’s when we started to grow in private labels. It’s so easy when you buy from someone else. You can buy as you need. When you manufacture, you’re trying to turn the inventory in six months. Then you have to wait for three months to produce it. We needed those loans to make the jump. 2015 to 2016 was when we dropped other labels and increased our manufacturing.

Sramana Mitra: Let’s talk a bit about the financing strategy. You mentioned that you started taking bank loans. What year was that?

Stephanie Madesh: It was a $30,000 loan in 2011. In 2016, we couldn’t do traditional banking. We could do the one that we had originally taken back. 

Sramana Mitra: Were you not familiar with services like OnDeck and Kabbage?

Stephanie Madesh: I don’t think I knew much about them back then. By 2017, we switched to those models just because they’re less messier than friends and family loans. We were piecing together friends and family loans to get to that next level. We couldn’t pay it back in six months because now we’re manufacturing. The lead times on Kabbage was six months originally. We needed a two-year loan or a one-and-a-half-year loan in order to get us through. That’s why we turned to the friends and family loan.

Sramana Mitra: What is the total extent of friends and family loans that you had to get before you were able to get back to more commercial providers?

Stephanie Madesh: We started out with $600,000 in friends and family to make the jump. 

Sramana Mitra: What other major strategic moves happened in that period?

Stephanie Madesh: At this point, we totally dropped our print-on-demand. It was down to 5% of our revenue. We switched to private labeling. In order for us to have more than three items in our catalog, we have private labeled items from LA. We switched our people from print-on-demand to private label. We made that switch around 2017. Eventually, by 2018, we had dropped all third-party brands.

Sramana Mitra: Under the 100% private label business, what categories were your focus?

Stephanie Madesh: Our main category was underwear. We had a big push for more sizes. The LA brands are awesome, but in 2016, they were only going up to large. We started crossing over to panties and men’s boxer briefs. 

Sramana Mitra: Talk more about the off-size business. That was also something I learned from the industry. They mostly stay in the standard sizes. They don’t go into the extremes of the plus and petite ranges. It sounds like you understood that there was a gap in that space. Could you talk more about that?

Stephanie Madesh: Definitely. Right away, when you’re going to buy from these other brands and you’re asking for extra-large, nobody had it. People were squeezing themselves into large. LA had this whole junior-sizing thing which was crazy. You’re literally missing 60% of the market. 60% of the shoppers aren’t provided an option. There’s none. The plus arena was still underserved.

This segment is part 5 in the series : From Student Entrepreneur to a $15 Million Revenue Ultralight Business: Stephanie Madesh, CEO of Kalon Clothing
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