There’s a piece in the paper today that I wrote about designer Joseph Altuzarra and Karen Altuzarra, his mother and CEO, and their impressive working relationship (I did a quick poll of friends and colleagues about how many people would want to work with THEIR mothers, and the number was pretty small), and in the course of our conversation something came up that didn’t make it into the story, but I thought worth passing on: Mrs Altuzarra is convinced (as is her son, pictured below with actress Kate Bosworth in one of his dresses), that the fact she didn’t know much about the fashion system when they launched really worked to their benefit, financially.
See, she didn’t know fashion, but she did know cash management (she had worked at JP Morgan for a long time previously), so she made two big changes to the way fashion companies normally do business:
1. She insisted they start with almost no fixed costs: for the first year they pretty much worked out of Joseph’s apartment, without an official showroom or PR firm (she says he called the magazines and she called the stores). Other than a few rails, they didn’t really invest in equipment, which meant if they had to liquidate quickly it would be a very simple process; and
2. When the stores actually arrived and started placing orders, she insisted they pay 50 per cent up front. She simply couldn’t believe that any industry would work the way fashion traditionally does, with payment on delivery, so the designer themselves has to fund their production costs up front. “It’s nuts,” she said. She also said, however, that when she made her requests, most stores were quite understanding and agreed. If you don’t ask, the implication was, you won’t get. And she wasn’t afraid to ask.
Oh – and one more thing: they said no to a lot of department stores who wanted to buy the fitst collection, because they knew they couldn’t deal with the order size. If they’d had a consultant or strategist hanging over their shoulder, said expert probably would have told them they had to say yes. (They launched in autumn 2008, when most fashion houses were clinging to every order they could get).
“It meant we had some control over our own growth,” Mrs Altuzarra said. Given they haven’t needed to seek any outside investment so far – they are growing organically, along the lines of brands Mr Altuzarra admires, like Dries Van Noten – what she didn’t know seems to have helped them. Ignorance isn’t just bliss; apparently, sometimes it’s good business.