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Millionaire in a T-shirt
The secret to success according to Dov Charney, co-owner of LA-based American Apparel, third largest t-shirt manufacturer in the US -- and the highest paying.Globes
November 16, 2004
In the heart of the ancient Greek city of Cyrene a disciple of Socrates, Aristippus, gave birth to the concept of Hedonism. Aristippus believed that among all human values, pleasure reigns supreme. It's been over 2000 years since his death, and although none of his literature has been recovered, it's arguable his spirit has been re-inhabited.
Meet Dov Charney, co-owner of the Los Angeles-based clothing company American Apparel, who after an hour-long conversation makes you reconsider any pre-conceived notions on reincarnation. Take the following Charney verbal gem, "What's important to me is that everybody is experiencing pleasure. That's what I'm into." With a moustache spanning the entire width of his face, Charney looks nothing like your typical CEO of a company set to gross $140 million dollars this year.
Charney's wiry body moves energetically around his office while discussing the ethos of American Apparel, which opened six years ago in downtown Los Angeles--long before the neighborhood became a chic cultural mecca. "The idea of American Apparel is about making sure that everyone feels as positive as possible. Workers, designers, customers, investors, landlords, suppliers."
To see the manifestations of Charney's pleasure principles, all one has to do is walk around the 370,000 square foot LA factory and headquarters, or in one of his 19 newly opened boutiques, or as he calls them, "community stores". From the factory's permanent presence of five massage therapists, who provide complimentary rubdowns for nearly 2,300 employees, to subsidized health care, organic lunches, yoga classes, and free English classes, the workers of American Apparel receive constant attention.
When American Apparel was launched in 1997, Charney made a concerted effort to get to know his workers. "I started learning about their lives-- how much money they were making, maybe drinking a beer with them, going to their homes," he explains. According to Charney these extracurricular experiences helped him understand the rewards he could generate from creating the perfect atmosphere for the company and his workers. "My purpose is to give people a lifestyle beyond their expectations."
The concept for American Apparel was conceived in 1995 on the beaches of Florida, and like many of Charney's memories, it is associated with the woman he was dating at the time. "I had a very beautiful girlfriend from Argentina, who I met on Ocean Drive. She was wearing a lot of French stuff. I thought like, 'Wow, what if I started making this high-end, more sexy t-shirt?' Don't forget there wasn't a critical mass of young people in the mid-90's. Boomers were the game."
Charney picks up the pace as he explains; "There is a critical mass of young people right now. Ten years ago they were like 14, 15-- it was a kids market. It takes you till your mid-20's to arrive to 'This is what I am. This is my sexuality. This is how I want to dress'. Now there is an enormous amount of young people in the market. I started to recognize it, but I don't think the large corporations were onto it. I started to make t-shirts that many dismissed as too tight, too sexy, or too form fitting. People said I was missing the market."
Charney had the foresight to tap into this niche market--or what he likes to call the 'power generation'--the moment the youth of the 90's became a recognizable consumer demographic. "There is a shift in the mainstream because the young kids are going to take over. Not only is there a population bulge of young people, but they're also collaborating with some Generation X people. This is the 'power generation'."
Indeed, one look around any American Apparel store or catalogue, and two dominant images tend to stick out--the "Sweatshop Free" motto and the sexually provocative advertisements of half-naked shop girls lazing about in the brand's clothes. As Charney explains, "Sweatshop Free" is more of a meaningful afterthought than company motto. "We were always making sexy t-shirts before 'Sweatshop Free', so it's been a weird thing to combine sex and social responsibility," he says. "There are those within the Boomer generation that find sexual clothing, or sexual photography, sometimes involves the objectification of women. They ask how is this socially responsible? I say to you, young people don't see things like that."
A few weeks later, the simple mention of my interview with Charney sparked many a conversation among young friends about the first time they had a peek at an American Apparel catalogue. One friend remembered getting the sexually charged catalogue thrown at him by his roommate while blaring, "Dude, check this out. I just cancelled my subscription to Playboy." However, unlike Playboy, it's hard to detect any primping or make-up being used on the photograph's subjects. Charney is proud of his model/celebrity-free ad campaign, "We take pictures of real kids. I see the women I photograph as real, beautiful women."
For Charney maintaining such realness also extends to his 'Sweatshop Free' ethos, which he considers as much a by-product of social consciousness as of logistics. During the early days of the company, he was subcontracting 10% of his work to a factory in Mexico. Though the costs were slightly cheaper, he wasn't able to inspect the product as often as he liked. On one of his weekly trips down south Charney had an epiphany, "I came to realize it was a waste of time, because all the inconveniences, and all the errors, and all my time I was expending to deal with this factory, was taking my eye off my regular business of designing and manufacturing great t-shirts." Shortly thereafter he moved all of his production into his current Los Angeles factory and stopped using subcontractors all together. American Apparel is now the third largest t-shirt manufacturer in the United States, behind mega-brands Hanes and Fruit of the Loom. More impressively, perhaps, American Apparel is the highest paying.
Depending on the make of the product, American Apparel sewing teams operate with the goal of keeping the workers at their machines. Workers are paid by the piece, and for every garment they complete they have a chance to make more money. "By keeping them at the machine I'm giving them the opportunity to be more successful," explains Marty Bailey, American Apparel's chief operations officer. "The average pay is $12 an hour, but I have people making between $16-18 dollars an hour. That's because with each garment they make, we're giving them the opportunity to be successful."
Ironically, all of these rewards were not obtained through unionization, despite efforts made by local unions to bring American Apparel into the fold. Around this time last year, for instance, a spokesman for Union of Needletrades, Industrial and Textile Employees (UNITE) revealed they had "launched a full campaign for workers at American Apparel." While UNITE argues their initiative was launched at the behest of American Apparel workers, Charney insists his employees were conned. "In order for union elections to take place, 30% of the workers have to sign cards," he explains. "Not even close to 30% of the workers were interested. The unions were using schemes to get the employees to sign. They were insisting there was an intimidation campaign on our part for them not to join."
The reaction against this unionization effort climaxed last year when hundreds of American Apparel employees staged a protest against UNITE. "This was the first time in American history that industrial workers demonstrated against the union," Charney asserts. "The unions were enraged that we were a success without their involvement and support," he says proudly. "The workers didn't want a union because they're being treated with respect and dignity. We were a victory for the union, but we arrived at this conclusion on our own terms. They were enraged--it was politically embarrassing."
Just then Charney's mood takes a dramatic shift from the altruistic to the realistic. "It ain't easy to be me. I am playing to win. I want to make a lot of money, but not for me. I need money to do things because I think you can change the world through business." Believing that jobs are the answer to peace, he insists that no matter where American Apparel stores open in the world, they will always pay their workers American-styled wages. "We believe in a new American imperialism. We are American imperialists who believe in life, liberty, property, and the pursuit of happiness for every man worldwide, including prisoners in Guantanamo."
Charney is currently in the process of opening a store in Israel, one he hopes will be a means to bridging political divides. "What's exciting about Israel for American Apparel is that we can do business differently. And that we can employ young people from all walks of life, from all kinds of religious and ethnic backgrounds, and make it work right away."
Just before leaving, Charney asks if I had visited any American Apparel community stores. I told him of my trip to the Sunset Boulevard store where I had an interesting encounter with the Mexican-American manager, Spring. She described the first time she met Charney, "It was at a party, which he was also thrown out of." As she folded t-shirts, she explained how she became an American Apparel employee. "His assistant approached me. Then Dov took test shots. He's seductive and persistent. It was hard to say no." Charney admits it was Spring's idea to set up a booth on L.A's famous Venice boardwalk and sell American Apparel products. "Thirty million dollars of business in nine months," he proudly declares. "And it started with a girl I met at a party on a Sunday afternoon. That's American Apparel."
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