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On the Edge
Five Maverick Ceos
The Counselor
Michelle Bell
March 2002

There's something you should know right from the get-go about the five people who personify our definition of "maverick" — visionary, willing to take risks (and to fail), always challenging, never complacent: They're not normal. At least normal in the sense of traditional, businesslike and by-the-book. These five people — four men, one woman; two suppliers and three distributors — don't even own the book, nor do they care to borrow anyone else's. Cut from the same mold as trailblazers like Southwest Airlines' now-retired founder, CEO, and enigmatic rulebreaker-in-residence for 35 years, Herb Kelleher, these five upstarts have steered their start-ups with one guiding principle: No nonsense — No boundaries — No fear.

There are three things that Dov Charney does exceptionally well and with great enthusiasm: 1) generate buzz and hype for his LA-based apparel company; 2) champion the rights and promote the well-being of his workforce; 3) wax poetic about himself any chance he gets. That last one, while amusing, isn't the reason we consider him a maverick. The ways he's chosen to handle his business in regard to the first two are what makes him so unusual.

It's hard to believe that only three years ago very few people in this industry had ever heard of American Apparel. But in a relatively short amount of time, Charney and his $25 million company have raised their profile considerably, scoring write-ups in numerous publications covering the apparel and promotional products industries, not to mention two magazines you may have heard of — TIME and The New Yorker.

Dov's a master at setting off a PR landslide, whether it be through his edgy catalogs featuring young, sexy women and street chic photography, or the fact that he flies these young women to trade shows and has them hand out catalogs while dressed in baby doll Ts and jeans — and sometimes even more revealing items from the American Apparel line. Does it work? If you were at the ASI Orlando show or PPAI's Dallas show and saw the throngs of people waiting to get into the booth with the funky music blaring, you would already know the answer.

And Charney — who does everything from designing the clothes to selecting the fabric to taking the photos and laying out the catalog — is the one who bounces around the booth and whose frenetic energy is only exceeded by his patter, which never stops. His director of marketing, Jin Kang, shakes her head and rolls her eyes behind him as he's performing for yet another group of people who've come to the booth. When asked how she handles him, Kang says the best thing is for her to be on the road selling and promoting the company, and for Charney to be at the factory where he can run around in his creative playground and be the crazy, creative genius he is. She says being his "voice of reason" isn't easy. "It's tantamount to trying to make a wild boar sit down and roll over, or play dead."

But she also offers that he's an amazing boss who cares about his employees and his company more than anyone she's ever known. He agrees. "Nobody loves their company like I love it, and I think I'll become the most important T-shirt maker in the world," says Charney with absolute seriousness, resolve and not a hint of modesty.

And that's largely what makes Charney one of the most enigmatic CEOs we've encountered — his unbridled passion for the rights of his 350+ workers [as of April 2004, the company has 1,500 employees]. He's positioned himself as a Che Guevara of sorts (if Che Guevara consumed way too much caffeine and had an attention span problem) — a revolutionary in capitalist clothing. He has the optimism and enthusiasm of an activist without the caginess of a politician, and he says exactly what's on his mind — trust us, his diplomacy skills will never be compared to Kofi Annan's.

"The state of the U.S. apparel industry and the world apparel industry looks like Apartheid, " says Charney. "American Apparel plans to expose this and be a catalyst in the creation of a regime whereby we're worker-friendly. The challenge to business leaders is to create business models that are efficient, exciting and not based on exploitation."

Take Charney's unusual method for finding employees, one that would make any traditionally-trained H.R. person shudder: "I love to hire people I meet at a restaurant, retail store or party," he says. "When someone's energy seems right, I want them on my team. I look for people's strengths and leverage them."

He stresses that one of the main reasons 100% of American Apparel's products are made inhouse is because he needs that interaction with his employees. "We've discontinued manufacturing in Mexico because we feel it's exploitative," Charney continues. "We also no longer sub-contract any sewing work in Los Angeles, because we want to be in control of the way the workers who handle our product are treated."

It's the betterment of apparel workers — his and the industry's in general — that is one of Charney's biggest crusades. At American Apparel, the average factory worker makes $8.00 per hour - that's $1.25 more than California's minimum wage and a bonanza compared to the 70 cents per hour that some of the powerhouse T-shirt makers pay their employees [actual wage as of Jan. 2004: $12.50/hour]. Charney says he wholeheartedly supports California raising the minimum wage, and while it's definitely a challenge in this shaky economy, it's inspiring American Apparel to manufacture and market its products more efficiently.

And Charney doesn't just take care of his employees monetarily. Many are migrant workers from Mexico, Central America and Asia, and consequently don't speak English that well, if at all. Under his direction and vision, services offered to employees include: free yoga classes; a visiting masseuse; English language courses; medical referrals courtesy of a health van staffed with registered nurses that comes to the company every Monday to assist with healthcare needs; immigration assistance; and a medical insurance program (in which American Apparel absorbs half the cost). Charney's goal is to have 90% of his staff and their families insured by June, and an in-house daycare facility and across-the-board wage increase are in the works.

But big-picture issues ultimately creep back into the conversation. Charney says he believes in challenging the garment industry as a whole, in the sense that he wants to prove off-shore production is a flawed concept. "I think that production should be in close proximity to the design, sales and administrative departments of a company," he maintains. "Production should also be situated within the principal targeted market. The truth is that the apparel industry has not advanced production through technology like other industries, because the industry has had access to cheap unskilled labor."

In the end, however, it comes down to people. Part of Charney's philosophy is to provide young people (the average age of his workforce is 26), with an exciting place to work, and he believes that the energy of open-mindedness he fosters is what's really driving his company.

"The bottom line is that American Apparel is making money and flourishing while not exploiting our workforce," Charney says. "Our sales are up 60% over last year thus far, and we anticipate a very strong year. We want to provide the world with an economic, political and social model that promotes a quality product which is valuable and is also consistent with the values of man — human rights for everyone."

Looks like idealism is alive and well and living (profitably) in Los Angeles, California.