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Jobs Watch: Nau is not the time to quit

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Ben Jacklet
Wednesday, October 21, 2009

You’ve probably heard the one about the Portland company that raised $35 million to set lofty new standards for business ethics and sustainability in the fashion industry, only to go down in flames a year after launching. What you might not know is that Nau is back.

I spent an hour and a half yesterday with Mark Galbraith, Nau’s general manager, an energetic veteran of the apparel industry who left a nice job at Patagonia to create something ambitious. It’s been a dizzying and at times terrifying ride, but he told me he has no regrets. “In retrospect what we tried to do was too big and too complex,” he said. “But we were following our ideals and our aspiration to do things better.”

We were sitting in the Lizard Lounge in the Pearl District, next door to the collaborative design studio where Nau does its thing. I noticed that the rack directly behind Galbraith, next to where a couple of hipsters were dinking a ping pong ball back and forth, featured new markdowns of 50% to 75% off. But Galbraith said sales this fall have been strong. He expects Nau to turn profitable over the next fiscal year.

That would be a heck of a comeback for a company left for dead in the spring of 2008, then purchased and re-launched just as the bottom fell out of the economy a year ago. People weren’t exactly rushing to buy $400 jackets online as the stock market fell off a cliff.

At its height, Nau had 60 people in Portland, with a five-year goal of 150 stores and $250 million in sales. Now the company is a wholly-owned subsidiary of Horny Toad of Santa Barbara, Calif., with 15 people in Portland designing the clothes and the website that sells them. Things clearly did not go as planned, yet Galbraith said the partnership with Horny Toad has developed into a “great collaboration… It’s not like we were bought out by some huge foreign company with no idea what we’re trying to do. We share a lot in common.”

Indeed, in spite of the dramatic failure of Nau’s initial launch, very little has changed in the 2.0 version. Galbraith is still talking about developing a whole “new genre of clothing.” The prices are still high, the commitment to sustainability still extreme. The factories are third-party certified, the fibers are either organic or recycled, and the cheap but toxic dyes are still banned. The only concession I was able to identify during my conversation with Galbraith was a decrease from 5% to 2% of proceeds going to charity. But 2% is nothing to scoff at; it's twice as big as Ben and Jerry’s commitment to "1 percent for peace."

With the benefit of hindsight, it is tempting to ridicule Nau’s Utopian attempt to re-create the apparel industry with borrowed money. But there is nothing wrong with having ideals and aspirations, and acting on them. The fact that Nau is back in business and angling towards profitability, in spite of all this company has been through, and without having compromised its integrity, tells you that the original idea was and is a good one. Next comes the hard part: turning a great idea into an economically sustainable businesses.

Ben Jacklet is the managing editor of Oregon Business.

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