Startup Clothing Company Blank Label's Shanghai Adventure
The management team of custom dress-shirt startup Blank Label always had trouble getting together in one place. When they first formed Blank Label last year, the three partners lived in different parts of Boston and had just one car among them. Australian founder and chief executive officer Fan Bi, 22, was in a one-year exchange program at Babson College; marketing chief Danny Wong, 19, attended rival Bentley University across town; and graphic designer Alec Harrison, 23, lived with his parents north of town. But they made it work for nearly a year, mostly staying in touch over the Internet, by phone, and via instant messages.
Then a bigger challenge loomed: Bi’s student visa was about to expire, and he had to leave the United States just months into Blank Label’s start. The trio wondered how they would stay connected as a team with Bi in another country -- especially when they needed to keep expenses low in their fledgling company.
Their solution? In June, they rented a three-room apartment and office in which they currently all live and work.
In Shanghai, China.
“In the early 2000s, you would have had three guys go out to Silicon Valley and work out of a garage,” Bi says. “In 2010, we have three guys moving to Shanghai and bootstrapping, and starting a company here.” Indeed, Blank Label is taking starting a business to a new realm unimaginable not long ago -- but one that startups, wherever they are, may want to take note of.
Choosing China
Packing up and moving to China made sense for the Blank Label team, as the company owed much of its budding success to its relationships with Asian garment makers. In addition, both Bi and Wong are of Chinese descent, and the move would give them a chance to reconnect with their roots. Above all, the trio would save a bundle on living costs.
Bi arrived first, visiting the city in January to meet with fabric suppliers and factory owners. He had easy entrée because though he’s an Australian citizen, his grandmother and one of his uncles live in Shanghai, where he was born.
He immediately saw the advantages of meeting more fabric vendors, routinely observing factory operations firsthand, and getting to know local workers better. So Bi flew back to the States to talk up the Shanghai move to Harrison and Wong. In early June, the trio boarded a plane for China together.
Living on the Cheap
Living comfortably, if in close quarters, on about $700 a month apiece, the three young entrepreneurs quickly got to work attracting more orders and improving Blank Label’s profit margins. The partners hired an experienced quality assurance manager and an operations manager to correct production and shipping problems, enabling Blank Label to slash the production error rate from 40 percent to 3 percent, and its late-delivery rate from 75 percent to 5 percent. The improvements mean less waste, happier customers, and more new-customer referrals.
As head of fulfillment, and the only one of the trio who speaks the necessary Mandarin Chinese, Bi is the busiest team member in China. Since his arrival in January, he has replaced the company’s shirt suppliers twice. He hired a local retail consultant to help the company find its current vendor. The consultant helped Blank Label locate a supplier with both the capacity to handle Blank Label’s 900 (and rising) monthly orders and a commitment to custom quality.
For his part, Harrison’s close proximity to the factory enables him to get new designs in front of online customers faster. He can zip out to the factory -- just a 40-minute subway ride away -- shoot new products, and post new illustrations on the company website all in one day.
Then there’s the efficiency that comes from being able to collaborate instantly on ideas rather than waiting for another team member to wake up halfway around the world. “We’re leveraging the togetherness,” says Wong. “We sit with our desks in a triangle, and it’s so much easier to talk instead of shooting e-mails back and forth.”
Outside of the work grind, the men’s Shanghai lifestyle includes eating $2 skewered meat from street vendors, hitting nightspots before wee-hour work shifts, and working out at a hot, mosquito-ridden local gym. Being three young guys in Shanghai can be distracting, as well as inspiring.
The partners stand out in their neighborhood, which is home to mostly laborers and students. There are few non-Chinese residents, and the group’s American habits have drawn attention.
“I like to run, and nobody runs here,” says Harrison. “I get so many stares.”
Staying On
The trio considers the Shanghai experiment such a success that Bi and Wong plan to extend their stay to at least a year. Harrison returns to the United States at the end of September, but is mulling a possible move to nearby Hong Kong.
A fourth Blank Label equity partner isn’t part of the company’s Shanghai adventure: media-shy chief technology officer Zeeshan Muhammed, 30. The Shanghai team stays in touch with him via online-collaboration software.
So far, the company is pulling in sales in the low six figures, Bi says, and is at breakeven. The founders only draw a small stipend from Blank Label, but thanks in part to living cheaply in Shanghai, they’ve been able to put off raising money.
“The great benefit is we’re able to bootstrap more,” Bi says. “There’s also definitely been a lot of personal development, just learning to appreciate cultural differences.”
The next decision, a year or two down the line, Bi says, is whether to seek venture capital, which might be easier from a U.S. base. If not, Blank Label may continue its Shanghai adventure indefinitely.
Business reporter Carol Tice contributes to several national and regional business publications.
