The very human business of 3sixteen
"We care about our employees and we care about doing right by others"
If you’re a fashion designer and you dream of being fabulously rich and famous, there’s a simple roadmap to follow. You pump out bigger and bigger mountains of trendy gimmicks, while burning through overworked and badly paid employees and hope that one day someone comes along and buys your brand for a big pile of money.
If you’re in the lucky 0.1% of designers who make it, you’ll be very rich. Behind you will be a trail of burned out employees and unloved clothes.
That’s not the only way to do it, though. Some people dream of nurturing a long-lasting business built on awesome clothes that people love and a team of well-paid, happy employees (you can guess which one I think is cooler).
3sixteen is a menswear brand founded in 2003 by Andrew Chen and Johan Lam. They make reliable, unfussy clothes that dip in and out of military and workwear themes, the kind of thing that will be familiar to anyone who’s been into streetwear for more than a few years. The quality-to-price ratio is outstanding — you’ll be paying around $250 for a pair of jeans made with Japanese denim that you’ll wear forever. They don’t shout about it, or even mention it anywhere, but it’s a naturally sustainable way of making clothes — forget all the trends and just make something that’s going to be worn a lot.
3sixteen has taken a long, slow and steady path to growth, without major investment or a parent company. And more importantly, their team stays with them — Wesley Scott, 3sixteen’s lead designer who was also on our call, has been working for Andrew and Johan for over ten years.
I’m drawn to brands who have a very clear set of values (like Mfpen’s smart use of leftover fabric and Ganni’s game-changing approach to carbon emissions) and wanted to find out more about 3sixteen because it seems like the kind of business that has a very clearly defined philosophy. I was surprised to hear that Andrew and Johan never set out to build a quote-unquote values based business, but that it was something that just manifested itself after years and years of hustling from collection to collection.
Here’s what happened when I caught up with Andrew, Johan and Wes over a Zoom a few weeks back.
How are you guys doing pre-pandemic versus post-pandemic? Have you grown since then?
Andrew: Yeah, 2020 was our only down year.
Amazing.
Andrew: We very thankfully bounced back pretty well, but we're small. When you're small I feel like it's easier to, well, I don't know, nothing's easy, but it’s kind of easier to grow than if you're putting up like 30 mil, 40 mil a year. But I dunno, it's not easy to do anything right now. So I should just say that we're thankful.
2020 was difficult because we had trouble making stuff, getting stuff in the country and shipping stuff around — as everybody did. But as things started to get a little better in 2021, plenty of people were staying at home shopping. And so we got to capitalize off of that and springboard into a couple of really good growth years.
And I guess what we're seeing across the industry is a hangover from that period — some people got maybe a little bit too big, and now we're seeing a contraction.
Johan: I think people took the trajectory and patterns of behavior from those couple of years and thought that it was going to continue and it just didn't. People don't buy NFTs anymore. The entire world is not on their computer shopping at the same time.
It's pretty naive to think that when there's a once in a generation pandemic, that the shopping habits that happen then are going to carry on forever as if that's the new normal.
Johan: But a lot of people followed that.
Andrew, you mentioned that everything is hard now. What's hard? Tell me your woes.
Andrew: I guess I was trying to be level headed about the growth that we are experiencing. We try to do it carefully. When we say we're up every year besides 2020, that is something to be really proud of, but at the same time, we routinely leave money on the table because we're very risk averse.
Johan and I always talk about how we want to grow this company so that our team can have a real future here. And part of that is selling more clothes and being more profitable. But the other part of it is ensuring that there is a company that is around in the next five to 10 years. I guess if we were backed by some fund or venture capital, the decisions they would ask us to make don't really fall in line with the way that we like to grow. When we test new styles, we're so tight on it that it takes a while for us to ramp up to meet the demand that usually accompanies something that hits. When we make certain things, not everything we make sells out. Not everything any brand makes sells out, but when it sells out, customers get really riled up and say, why don't you make more? The reality is we just don't know how much people want and we'd rather make less and ensure that there's nothing sitting around than to take a wild swing. And there's so much stuff on our website that you can buy if you want. You just want the one thing that everyone else wanted at that moment. But that’s a whole other conversation — the way people shop.
Johan: We have two parts of the collection and each is run a little bit differently and both of them allow for us to stay as lean as possible and to try to move through product as quickly as possible because the thing that kills brands fastest is sitting on inventory that they can't move. So we have our core collection, which is jeans, t-shirts, hoodies, and these are things that we are restocking constantly. They're evergreen, they're not seasonal.
And so having that core collection helps to take a lot of the guesswork out of the business for both us and for our retailers and makes things easier for retailers because as a boutique, you have to be right 50% of the time every single time you buy or else your store is going to go out of business. So you have to really be on it. You have to really understand what your customers want. You have to have a little crystal ball and see what the future is going to be.
It seems like for you guys it’s very much a marathon, not a sprint.
Wesley: That is the main thing that differs from the way Andrew and Johan think about business compared to anyone else I know who works in the industry. It's very incremental and sometimes in the short term it’s to our detriment, but in the long term it’s why we're able to keep doing what we do. We're not just hopping on something quickly, grabbing as much cash from it as we can and doing that in perpetuity.
Is that for you guys more about just the economics of building a fashion brand or is there a very specific vision of you guys wanting to build something with longevity?
Johan: I think it comes down to this — as owners, what do you want out of your brand? Because that informs every decision that you make. If you're in it to get rich, to grow it as quickly as possible and then to sell in a couple of years or get LVMH to come in and buy it or whatever, then that informs every single decision that you make. If your goal is longevity, then that informs your decision the other way.
So sometimes that means that customers are a little displeased with us because we don't have enough products for them. And sometimes for us internally it's like, oh, we definitely could have sold a lot more of that one thing, but you live to see another day. You survive long enough to be able to make that style again and they can get it in a few months time. We're just not greedy people in terms of what we want out of our lives. We don't need to drive fancy cars or have mansions or fly private jets or whatever. We're content. And that allows us to make decisions that are best for the company and not an immediate money grab.
Is this something that you guys decided from day one when you sat down and decided to do the brand? Did you know that you wanted to do it this way?
Andrew: I don't think you can think that big. When we started, we were just making tees and we were like, we hope somebody buys 'em. And when we started selling to people who weren't our friends and family were like, okay, that's step one. That's cool. Then I remember the conversation that Johan and I had where we're like, let's get into these five stores in the US. And then from there on it was just like, can we make something that can pay Johan's super meager salary coming out of college? And then three months before I had my first kid, it was like, can the company now sustain a salary for me?
In survival mode you're not really thinking too much about values. And as time went on, we were able to shape the values when the resources grew. Some of these things coalesced and formed as we went without us sitting down and saying like, this is where we want to go. I count myself very fortunate that Johan and I understand each other and are on the same page. Coming from streetwear, there were so many brands that we came up with that had a good thing going on, but the partners couldn't see eye to eye. So yeah, this was definitely not a day one thing because I don't think that we knew where it would go. There was no business plan, there was no roadmap at the time.
We wouldn't be here if Johann didn't see the importance of making a raw denim jean in 2006, 2007. We wouldn't be here if Self Edge didn't pick up our denim. And quite honestly, I don't know if we would be here in our current iteration had we not made the decision to open up a New York store. The shop has in so many ways changed the trajectory of the brand and brought so many new customers in. But imagine how we were feeling sitting at home in April 2020 with the store under construction and we're like, what do we do now?
That kind of thing can bankrupt brands.
Andrew: Especially when you're our size. It may not have bankrupted us, but we would probably have to lay off most of the team and Johan would go back to packing boxes in his garage and we would just find a way to exist until something else happened or whatever. But thankfully the NY store has not only broken even, but it opened a lot of opportunities for us. So there's a lot of things along the way that we have to be pretty grateful about. There's definitely not a day one thing where we discussed these sorts of values for the brand or how we were going to run it.
Johan: We didn't even know to talk about those things. It's very true to who Andrew and I are as people personality wise — our values are very similar. We didn't grow up with much. We didn't grow up needing or wanting a lot. And so especially in those early years when you see your peers from streetwear brands getting rich and driving Ferraris, a certain personality may decide that needs to be us, or why can't that be us? And then you make decisions to chase after that.
You guys seem very uncompromising about quality — but you never sat down and said quality is an absolutely vital issue for us?
Johan: I don't think we've ever said those words explicitly.
It looks like it from the outside!
Johan: We have similar high standards of what we are willing to put out with the 3sixteen name on it. We would be embarrassed if we put something out that was not to our standard. We got an early pair of black jeans in and the hems were done really poorly. I don't think they used the right stitch. It was just something that we couldn't bear to put out to market. So I de-stitched and re-hemmed every single pair before they went out to market, probably a hundred pairs. It took me two or three days. We want to put out something that we would want to buy ourselves, that we would want to own ourselves. It has to meet our standards.
It's funny, I'm not sure if the customer thinks this, but from my perspective as someone that works in the industry, it seems like you guys have a very, very specific strategy, or a manifesto or a philosophy, where you've sat down and said, this is what the brand does, this is what the brand doesn't do. You're not doing sneaker collabs, you don't have 10 stores. You're not throwing out a huge pile of $50 logo T-shirts every season. That's not where the direction that you guys have gone. From the outside, it seems that you guys are deciding to say no to things and that's a big part of what the business is about. It’s interesting to hear that this is just something that’s organically manifesting itself.
Andrew: It's the stuff that the three of us sit around talking about when we're looking at a new collection. It's the super casual conversations that Wes and I have over lunch. We'll just talk about why something did well and why we think that the customer resonated with it — and if there could be something underneath that’s important to them beyond the garment itself.
Wesley: I went to business school for my undergrad, and everything we did there was growth at the expense of everything else and I was always the person getting in arguments in every class. I was like, this doesn't seem right. But yeah, even yesterday Andrew and I were talking about how we could pump out hundreds of pairs of boots and maybe we'd sell 'em all. Maybe that would be great, but if we are left holding the bag on that, then that could bottom out a whole season's worth of profits for us. Some people would see that as an extremely inefficient way to run a business, not maximizing our profits in the short term.
Andrew: We have contemporaries that intentionally overproduced because their strategy is price windowing. They will make way more than they need, understanding that maybe 20% will sell at full price and then they depend on moving 40% of it now, maybe 30% of it at the 25% off sale. You're still making plenty of money there. When you're 50% off, you're still making money when you hit 70, 80%, now you break even. Your wholesale partners probably don't love it, but you really are milking every dollar out of it. But we don't even put our seasonal stuff on sale until a year later. Part of that is so that our wholesale accounts can have some time to move through their product. We don't have to compete with them on it. And part of it is that we don't have mountains and mountains of stuff we have to move in order to get money for the next production run.
With that kind of strategy, it must be quite hard when you decide to enter a new category like the running collection.
Andrew: Surprisingly, for that specific example, it was not hard because we have formed partnerships that we can lean on for certain things. That one was made at a factory that really, really goes to bat for us. He believes in what we do and he'll make super small quantities of it. That's why everything is pretty much sold out on our site. We had no delusions of people wanting to come to a fashion brand for running stuff right off the bat. We kept it super tight, and we put a lot of marketing dollars into it to show that we believed in it.
You guys are running what I would consider a sustainable business in terms of the commitment you guys have to quality and the amount that you're producing. But if you go back to 2008 when you made your first jean, sustainability wasn't even a word then. This wasn't something that anybody ever considered.
Johan: Without knowing what sustainability was, it was something that drew us to the idea of raw denim. The first pair of Japanese selvedge jeans I purchased was the most I ever spent on any single article of clothing. But it wasn't artificially expensive. It was expensive because it was hard to make. The quality was really good. You could wear it for a long time. And the idea is that it gets better over time.
There are very few things in our lives product wise where you buy it and it's supposed to get better over time. Everything else gets worse. Your computer gets slower, your iPhone scratches. But with raw denim, you don't have to baby it. You don't have to overly consider it. If you just live in it, it will get better and more beautiful with time.
That idea is so freeing and we try to apply it to the rest of the clothing that we make. You shouldn't be so precious with this stuff. If we do our jobs and we make it well, you can look at it a year down the line and have this thing in your closet that has become more beautiful because you've worn it so much.
It seems like you guys just have a very human way of approaching the brand. You talk about having long-term relationships with your suppliers. You talk about not wanting to sell bad products. It seems like a very human way of doing business.
Johan: These are things that customers don't see you ever hear about, but we try our darnedest to pay our factories on time. We've never missed payroll for our employees. We provide healthcare and retirement plans for all of them.
Andrew: The industry as a whole just churns, right? And people want to be in it so badly that they'll forego long-term ideals that they should be focused on. And then you're 10 years in and you haven't saved a dime.
I would love to know what your guys' vision for the business is. Where are you going? Or the alternate option is that where you're at is great and you're happy with it.
Andrew: Any competitiveness I have in this business for us to grow and to become more profitable is because I want our team to be able to stick around for as long as they want to. A lot of people made sacrifices to be here at this company. Obviously Johann and I have had to make big sacrifices as well. There are ways to make a lot of money in this industry, but it's kind of hitting the lotto for the most part. So for Wes during his time here, the people that he grew up with or the people that he went to school with, they've taken on all different manners of jobs and have apartments with riverfront views and stuff like that, but they have their detriments and their drawbacks too. And everybody who's here wants to be here. They've made sacrifices to be here, but I want to grow so that they can comfortably be here.
Wesley: It's funny you brought up the idea that the company is very human. I think that’s what's kept me here. I got into clothes through the community around it, and the idea of there being something more than just a shirt that looks nice or a pair of pants that feel good or whatever. So it was really exciting when I was younger and it was like, oh, this is cool. This is exactly what I've always wanted to do. But what has kept me around is that I feel taken care of and heard, and I feel like whenever I've really needed something or whatever, we as a company can figure it out. You start to feel like you're part of something greater than just making shirts and pants.
Johan, to finish up, what keeps you going?
Johan: At the core of it, I really love clothes. But I also very specifically love what we do at 3sixteen. We all see very clearly what this thing makes, what it stands for, and how we can keep that thing moving forward. In recent years we've talked about the possibility that maybe this is something that we could pass on to our kids. That's not a question that can be answered anytime soon. But we never would've been so audacious to even speak those words in the early years. But now it's not that crazy of a thought. And lastly, we are our own bosses and it gives us a lot of freedom, both with our personal life, but also we get to call the shots and run this company the way that we see fit. We are content people and we care about our employees and we care about doing right by others. And we feel that our relationships and how we treat people is just as important as the clothes that we make. Those are decisions that we discuss and we feel like are the right things to do, and then we do it. And that freedom and that autonomy is something that you cannot buy.
My dream growing up was to be an NBA player. You don't have that kind of freedom as an NBA player. You make way more money than I do, but you can get traded tomorrow. You have to be away from your family all year long. Some people dream of being the president of the United States, but you don't have the same type of freedom that Andrew and I have. It is a big part of what I value about what this company has given to me, and we also try to extend that as much as possible to our employees.
Awesome. Guys, this has been so good. I really appreciate your time.
the type of brand we'de like to see more of.
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