Ed Elson (2:46)

Yeah.

Michael Berkowitz (2:47)

And the way I dressed was, was a part of that. I've discussed this a bunch of times that you know a lot of who you are, you're not in control of your height, certain aspects of how you look, but your clothing you are in control of. And I always felt that I should dress in a way that would make people respect me and take what I say seriously. And what happened was I would come in from outside of the city into midtown Manhattan and my nice coats weren't warm and my warm coats weren't nice. So that was the problem that I had that I always felt, you know, in the, in the workforce, I wasn't putting on my best by the way I was dressed. When it came to fall and winter, I was like coming to meetings and trying to quickly hide my coat behind my back so people wouldn't see me or check it in before we would get into a restaurant or something like that. And so the cock start to turn. Maybe, maybe, you know, I need to find something that was where it first started. I just want to find something that looked nice that I felt. I wasn't a suit and tie guy, but I wanted to look presentable, not something that was big and puffy and with branding you could see from the moon. I wanted something that looked presentable and also would keep me warm and dry. And that's how the idea started.

Ed Elson (3:57)

So you're, you're working on Wall Street. How old are you at this point?

Michael Berkowitz (4:00)

Ooh, early 20s, early 20s, early to mid-20s already.

Ed Elson (4:04)

And then you decide, okay, this coat thing is more interesting or it's more fulfilling or why do you leave the world of Wall street where I assume you're getting paid a lot of money and you're kind of rubbing elbows with the monsters of the universe. And then you decide, okay, I'm going to go start a coat company, right.

Michael Berkowitz (4:21)

So it doesn't all happen overnight. First that struggle looking and not finding something that kept on getting higher and higher. And then actually a close friend of mine who we used to commute in a lot together. His mother in law is a very well known fashion designer who actually subsequently has become a real mentor of mine. And he would know about brands I never heard of. You know, his mom was selling to Sachs and to Neiman's and a lot of the great places and he would tell me about things that I never heard of. And, and I asked him, you know, I'm looking for a Coat that's. That's nice that I'm proud to be wearing, but also keep me warm and dry. And he leaned in and he put his hand on me. He goes, dude, when you find one, get one for me too. So that started to get me thinking, this is a guy who knows more than I do about the various different brands. And there was no brand that came to mind, you know, like, for so many other performance. Plus, fashion needs anything from a Lululemon to an Under Armour through, you know, a Villaquin for. For bathing suits. Like, who. Who's the guy who's taking care of business professionals who need, like, nice looking, good quality outerwear? And that's when I start to realize, okay, if there's no brand that's really cornering the space, there might be an item here and there that's a step in the right direction, but there's no brand that this guy and other people would answer is, go get yourself one of these.

Ed Elson (5:35)

Yes.

Michael Berkowitz (5:35)

That's when I realized, okay, maybe it's not about a product here, but there's a whole brand that could brand itself around, you know, luxury performance, wool and cashmere.

Ed Elson (5:44)

When I think about what are the staples of outerwear, especially in New York and especially in business, it's like the barber jacket. I mean, everyone talks about the barber jacket, but as you say, that's your full jacket. That's not really heavy enough. And then I guess the other jacket that absolutely just took over, but I feel like is kind of going out of fashion is the Canada Goose, which, as you say, you got the big giant logo on the arm. I remember several years ago when that was like the ultimate flex. If you had the Canada Goose badge. I assume it's not really the case anymore, but you realize this and you decide to quit your job. Or do you start working on this on the side while you're working your job? How do you actually exit out of commodities trading and get into this?

Michael Berkowitz (6:33)

I did not quit my job right away. Just off an idea. Yeah. I. I first tested it out. I made some samples.

Ed Elson (6:40)

Yeah.

Michael Berkowitz (6:40)

And I actually took my nights and weekends in my very busy schedule to go around to specialty shops across the northeast corridor, so Boston, down to D.C. and literally played the role of a traveling salesperson with a suitcase with a couple of samples and showed these stores, and these were stores that were selling Barber, let's say, on the. On the lower end, up through Zhenya and Brunel Cuccinelli on the. On the higher end, and show them the idea and the Nicest thing was I never really had to explain what we were trying to accomplish. They all right away nodded their head when I said the problem. And they're like, yeah, we know. It's, it's, it's that Canada goose warmth in something that looks much more professional and clean and small and fitted. And so when they started buying units and they started selling them without me there, they put it on their floors, they placed orders and they put on their floors. And whether we were on the higher price point or right smack in the middle or even on the lower end, they, they sold really well and was when they started to place orders for the next fall, winter. That's when I, that's when I quit my job and lined up some investment.

Ed Elson (7:41)

What is it like actually starting a business where you're making, you're making things, you're making these coats, you're creating these materials. Like you don't have any experience in fashion, I assume at this point. How do you, how did you figure that out?

Michael Berkowitz (7:57)

That was probably one of the hardest things and I think for any entrepreneur who's trying to get in the world of making stuff, when you come in as an outsider, the factories that you would want to work with don't want to work with you. And the ones that are hungry to work with you, there's probably a red flag there. Like, well, you know, so how do you get in?

Ed Elson (8:12)

What would those red flags be if a factory said, oh yeah, we really want to work with you. What's, what is a potential?

Michael Berkowitz (8:17)

Why are they so hungry for your business? You're a no name. They should be super busy and turning you away. It's like you want to go to the, the country club that doesn't let you in type of thing. You know, you want to get into the best quality, especially in our world where it's all about quality.

Ed Elson (8:30)

Yes.

Michael Berkowitz (8:30)

And we were making things in Italy and Italy is a very closed off place for, for new manufacturing. And a lot of the business has been there for generations after generations after generation. So they're not as excited about a new guy coming in with an idea. They want continuity. So in this case, it was really all about convincing the people. We wanted to get with the best quality places, both on the raw materials and the actual manufacturing, that we are there for real. And, you know, our relationships grew as we started ordering more and paying for everything on time and going through all the trials and tribulations of life and covids and all this, you know, fast forwarding years later. But it took Time to really develop that. But we had to really strategically think about how to penetrate because there might have been an item that we wanted, we knew that existed. But it's hard to just get it. It's not. You can't just place an order on Amazon for performance cashmere. You know, you have to be able to figure out how to get there. And in some cases, it might meant mean going to dinners with some of these older founders or owners of companies and talking to them for a while about their grandkids and their hip replacement surgery or whatever it is, but building the relationship and then getting access to some of these harder to find raw materials.

Ed Elson (9:39)

Yeah. The luxury space is. Is an interesting space to be starting a company because it's so dominated by all of these legacy brands. I mean, that's part of what makes luxury luxury. The idea that these brands have been around for generations, I think about, you know, Hermes and Louis Vuitton, and I, I guess those are really the two companies that seem to own the space is lvmh, and you got Hermes and then you kind of got everyone else. To what extent do those companies dominate in luxury? I mean, if you're an upstart and you're trying to. You're trying to get in the game, are they boxing you out? Is it more difficult in luxury than it is in other sectors to really get your foot in the door?

Michael Berkowitz (10:20)

It's definitely harder, yeah. And you, you. You said it exactly right, that most luxury brands are legacy brands. In many cases, they didn't even start out luxury. You have brands like Burberry that really started out as trench coats out in the trenches, you know, in. In fighting and became luxury only. And very often the luxury association takes decades. What we were trying to do is everyone was telling us it's impossible, and they were right that it's hard, but it's not impossible. We were trying to say that for the problem we're trying to solve, you actually need to be an outsider, that the people that were really entrenched in the world of fashion didn't understand the problem. You needed someone who actually works out on Wall street, whether it be New York, London, Paris, Zurich or Beijing, to be in that work, professional place, to know what was missing, what was the void, and to come in. And I did have understanding of fashion. I always liked nice things, so I had a little appreciation for fabrics and things like that. So. But you. It was definitely hard, but it was because it was hard and it was because we were coming as outsiders that we were actually able to achieve what we wanted to achieve. And we were thinking about things a different way, and we actually struggled. We were very lucky that the factory that we started working with to develop our real core collection, the head designer we worked with out of Italy was half Norwegian, half Italian. He worked for Laura Piano for 14 years, and he spent, like, half his year in Norway. Outside understanding the culture that we were trying to really bring from, like, this whole idea of Scandinavian outdoor living and that there's no such thing as bad weather, there's just bad clothing. So he understood the idea of having better neck protection and better pockets and, you know, closures and thinking about the performance, but was also really entrenched in. In the world of luxury fabrics and luxury fashion. So when we met and we started talking about our concept, you know, he ran with it, he understood it, and we were lucky to be able to then get some access to, you know, other manufacturing and resources from there.

Ed Elson (12:19)

When you think about being in that position where you're trying to break into this new world, you're trying to establish these relationships with manufacturers, with factories, with distributors, what would you say are the takeaways from what you got right? You were trying to get your foot in the door. You did it successfully. You're now distributing your coats around the world for someone else, for another founder who's out there, and they're trying to just make that first step, trying to establish that relationship. What are some things you think that you got right that allowed you to be successful in that?

Michael Berkowitz (12:50)

Even though when you're first starting, you're on a budget, there is no cutting corners when it comes to quality.

Ed Elson (12:55)

Yeah.

Michael Berkowitz (12:56)

And especially, again, if anyone is going into any sort of luxury space, whether it's our industry of fashion, whether it's the food industry or any other consumer. Good. Show everyone on both ends, on the manufacturing side and on the selling side, that your quality is just amazing. So that anyone who touches what you're doing, they're wowed by it. And then when it comes to the selling side, even if you don't have the legacy brand name yet, that they're comfortable selling your product and that the customers come back with, you know, an incredible feedback that they're bringing other customers to their stores to buy this, you know, item, whatever it is, that that's gold and that's will get, you know, that will open up so many doors when people see that you're actually bringing them something special. So understanding you, you have to be budget conscious, but not when it comes to the quality of your Product. You might even have to overpay to first get it. And then you'll bring it down once you start scaling and you start showing them that you're ordering larger quantities. And that's when you'll be able to bring your prices down from your cost side. Do that later. Right now, just make sure the product's amazing.

Ed Elson (13:52)

So you figure out the distribution, you. You figure out the manufacturing, you're making the coats. At this point, the next question is, okay, how do we convince customers to buy these things? How did you do that? What was your story that you were pitching to customers?

Michael Berkowitz (14:06)

Whenever we had an opportunity to say what we were doing and what problem we were solving, we were in a very good place. I remember early on we were at a trade show, and before the trade show would begin, there was a breakfast underneath the building in this conference room area that would be for all these stores across the world, that we'd hear presentations from new brands. And I was the new kid on the block. So I spoke last week, and the brands before me, I would say honestly, were not that impressive in terms of their problem that they were solving. I remember there was one brand that said, they're making very comfortable shorts. And the guy sitting in front of me goes, I didn't know uncomfortable shorts was a problem. And there was a couple of things like that. So when I got up, I wore one of my coats, and again, everyone was anxious to leave. I was the last guy to speak, and everyone's anxious to get to their appointments. And I show up with real New York energy. I just start clapping my hands, waking everyone up, and I say, how does my coat look? Does it look nice? You know, Yeah. I flashed them open and showed them. The whole thing was lined with down. And I said, by the way, this is cashmere on the outside, fully downlined and waterproof. I got a standing ovation from everyone in the room, which is something that's probably never happens in that type of setting. But it's not because, you know of the theatrics. It was because everyone felt like, okay, that is a real problem. We have customers coming and asking us for stuff that solves this problem. And we're letting them leave empty handed because there was nothing on the floor that really solved their problem. So we were wr orders right then and there from stores are saying, we. I already know which customer, you know, he came in last week, was asking for something like this. How quickly can you get it from me? So that was the starting point, just, you know, being very, very clear. About the problem we're solving and then everyone's nodding their heads and like, we get it.

Ed Elson (15:49)

There's the utility side to it, which is always important for any business, any company. You need to prove there is a problem. We are solving the problem. This is the use case, which sounds like you were very clear about. But when it comes to luxury, there's, there's another piece to it which is like, it's actually not all about solving a problem. It's about a feeling. It's about something that makes you feel special, dignified. And these aren't necessarily use cases. There's a je ne sais quoi about luxury. So how do you do that as a startup? How do you build a brand that demonstrates aspiration, that demonstrates luxury, that shows people this is something that you want to aspire to and that you want to pay a lot of money for?

Michael Berkowitz (16:39)

What happened was, is that originally through word of mouth, the Coke kept on getting on people that would evoke that kind of emotion. So. And it kept on spreading from that was dominoing. So when we started being the main provider to a lot of the guys going to Davos, whether you like those people or don't like those people, people looked at them as being the real influential movers and shakers in the whole business world and the richest of the rich people that could buy whatever they wanted. And when stories were coming out and the New York Times did a whole piece called this is the coat to wear at the Davos and more and more people were wearing it in places like that. And then we got into different shows that really needed our products. So then you start to have that association where I want to be like those people and that's what those people are wearing. That's when it continued to explod that way and have that luxury emotion. And we always wanted from, from day one that it's not just a coat. It is an emotion that when you put on one of our products, whether a coat, a blazer, anything, it should make your, your shoulders broader, that you go into the meeting more confident in yourself, that you go into the date more confident. For guys and girls, we now do a lot of women's. That's our fastest growing area. So it's not just about staying warm and dry. It's about you're looking forward, you're looking on your weather app and saying, okay, in two days it's going to be chilly enough. I can't wait to wear that. That, that's luxury. When you're looking forward to doing it. And, and especially you're excited to be seen in it. That. That changed everything.

Ed Elson (18:05)

Yeah. Now it is the, the Wall street coat and it is, as you say, the Davos coat. And I think another big moment for the company is when it got a shout out in succession.

Michael Berkowitz (18:16)

Yeah.

Ed Elson (18:18)

Where I forget which one. One of the Roys says, you know, I left my Norwegian wool in there. How does that all happen at once? I mean, what are you thinking when you see all of these guys going, all of these head honchos of all of these banks, the people who you were originally trying to impress when you were a commodities trader and you're just trying to be accepted on Wall street, suddenly all of these guys are wearing your product. How did it get to that point? Why did they start wearing the product? And how did you feel when you saw that?

Michael Berkowitz (18:50)

So felt great. It's very, very gratifying. And I would say even more gratifying for when they buy their first is when they buy their second, third and fourth. And when you have, we have this one very, very famous billionaire here from the New York area who he might be number one for the most personal shopping. We just calculated up to 52 units. And that's even more than what I have now. He doesn't keep all them for himself. He gives them away for a lot of them. End of year gifts to a lot of his important clients. So it feels great because then you know that they really like it. They've tested out and they continue to come back. And that's, you know, what every entrepreneur wants to feel that whatever they're creating really is, is great in terms of really how to get there again, come back to make something really special. You know, that it's unique. One thing that I think that is an amazing aspect of marketing is if you do solve a problem and people have whatever it is that you made, they want to talk about it. It makes them feel good that they found something, especially if they're one of the earlier ones to have it. That's something that comes up at dinner tables and parties. They want to show it off. And when someone hangs up their coat at a friend's dinner party and they take it off and say, oh, this is nice. They don't just say, thank you. They say, oh, well, I happen to get this. And you do know, you know, whatever it does. And you would have this free marketing of people telling other people and then people coming to. When I. We opened our Fifth Avenue store, people come in and say, I did dinner at so&so's last night. And I gotta get this. Yes. So I think that there is something special that people like to talk about when they have something special. Like the joke used to be, how do you know when someone has a new iPhone? They tell you. Yeah, so like, and now that's not even, you know, so. So, you know, that's such a common thing. If someone has something more special, they feel special when they have it and they will talk about it.

Ed Elson (20:32)

So would you say that that is your. Your main marketing strategy is letting the customer do the marketing for you? They put on the coat, they talk about it to their friends. How do you get your brand out there? What is your marketing approach?

Michael Berkowitz (20:46)

Yeah, that's definitely a big part of it. I mean, even some of the various different partnerships we've done, we don't really pay. Classic influencers. We were very lucky that Liquidity, if you ever heard of him, is great. You know, this was when he was still anonymous and he came into our store and someone told me, he's like, I think that's liquidity. And my office is upstairs. So I came down and he was there with a couple of buddies to buy coats. And, you know, I told him, hey, I'll give you something free if you, you know, do a little shout out. So he did something where he, at the time, he had to hold his.

Ed Elson (21:15)

Baseball cap down just for the listeners. Liquidity is. Is this meme account that. That absolutely exploded on Wall Street. Former Wall street banker, I believe, turned memer. And he's sort of the biggest finfluencer in the Wall street game. Sorry, continue.

Michael Berkowitz (21:31)

Yeah, no, he's the guy that if you are at the equivalent of like the water cooler at Goldman Sachs, and it used to be people saying, did you see last night's game? Now people are saying, did you see his post? And everyone's talking about it. So, like, he ended up buying more pieces also. But like, he, he's great. And he took a picture of himself in Norwegian wool with the name behind it, but he blocked his face at the time with his baseball cap down and just wrote something like, love my Norwegian will code. And, you know, within minutes we had 120,000 people to our site. Wow. So, yeah, so the more organic, the more authentic, the better.

Ed Elson (22:09)

Yeah.

Michael Berkowitz (22:10)

And I think a lot of customers are seeing that, you know, anyone could just pay for someone to wear something, but if there's actually a connection, if someone's really wearing it when they're not paid to be wearing it because they really like it, that gets out Actually, we were very lucky. Patrick Dempsey was shooting something in the area and they had to stop production because he was too cold and he needed to dress nicely for that part. And their stylist came and they bought like four coats from us because they wanted to just make sure they couldn't allow another day to go by without shooting. And when pictures came out of him wearing it and the story came out that he stopped production until he got his Norwegian wool again, that wasn't that we didn't pay for it. We didn't know that that was going to happen. The authenticity certainly helps a lot.

Ed Elson (22:52)

There's something in there about sort of honing in on these micro cultures. I mean, stay with me here. But the idea that you are, on the one hand, showing to the distributors. I understand the game of luxury. I understand this is a very specific game. And you want to partner with me because I know all the details. And then on the other side of it, you have this memer who walks into your store, and I would bet you that you know the store manager at Laura Piana, if liquidity, this random meme account on Wall street walked in, they wouldn't know, nor would they really give a fuck about the idea that this meme account has walked into the store. And there's something about the idea that you knew that there was this niche cultural moment that you could tap into here, because this is the Wall street guy. I've been on Wall Street. I know this problem, this very, very specific problem. And so you tapped into this micro culture on Wall street, which grew into, okay, now this is the Wall street coat grew into. Now this is the Davos coat. Then it's this. The fans of succession are hearing about this company. And it's all a very specific part of the market, which is kind of high finance New York culture. Talk a little bit more about how you tapped into that and how important that culture is to growing your brand.

Michael Berkowitz (24:20)

Our culture is way beyond just the New York finance. It would be any business professional who cares about how they look. And at least for now, most of what we make is chilly ish weather and above. It doesn't have to be freezing. But we're doing a lot of stuff that has some sort of warmth aspect to it. Even our rainwear, which has grown a lot. And I think that for all the respect that I have for the luxury brands and customers have, there's also a recognition that they're very stubborn. They do things the way they've done for the last hundred years, for better and for Worse. And sometimes again, you have to open up your ideas a little bit differently and say that there's a huge market that's being left behind and there's a lot of reasons why they ended up that way. And I think that when you're in a specific fashion culture that's designing with your windows closed, you're just trying to design in a vacuum. You end up forgetting about certain basic needs. And at the end of the day, our philosophy is that, that our coats and our products are not just for runways in Milan. They're actually meant to be worn in New York, Chicago, Boston, San Francisco, and really worn, you know, in real life. So our design approach is very relatable, very understandable, and it's something that I think some people would find a little bit they turned off by some of the luxury brands that don't appreciate. There have been a lot of things, you know, I remember like stretch originally, a lot of the luxury brands sort of poo pooed that like stretches for Walmart, for just like the guy who is the fat couch potato stretches in.

Ed Elson (25:47)

Like the material is stretchy.

Michael Berkowitz (25:49)

Correct. And you know, now they've understood that being comfortable is luxurious.

Ed Elson (25:53)

Right.

Michael Berkowitz (25:54)

And you know, our billionaires who are buying our stuff want to wear jeans that have 5% elastane in them and are super comfortable. You can run a marathon in them and wearing super, super soft, stretch, pure cashmere sweaters, not wearing something that's stiff and rigid and uncomfortable. So they were a little bit slow to that. You know, even in the car industry, I'm a big car fan. Four wheel drive, all wheel drive was something that the luxury car brands are like, oh, that's for the American brands and maybe the Japanese brands. And now you see 4x4 Bentleys, you're seeing Maseratis and Porsche. And they're all doing that because at the end of the day, even if you're the wealthiest person, you still might have to drive in bad weather. You still like to be comfortable and have the performance aspect. Performance is luxury.

Ed Elson (26:35)

Right.

Michael Berkowitz (26:35)

So I think they've always been slow to understand that. And since we have said that the two worlds are not contradictory, the softest luxury cashmere vicuna with stretch and waterproof is not a contradiction. It belongs together. Yeah, that certainly helped. And I think that now coming back to how to resonate with that world, I think that, you know, again, everything I just said, they're, they're going to be listening and nodding their heads and be like, we want both. We don't have to choose between the two we don't want to have to have our comfortable high performance code and then our nice looking thing like why can't we have both come together just like you have your, your 4x4, you know, Range Rover with the nicest, you know, Napa leather. But it could also go off road here if anything. Most people don't drive off road the way the commercial show, but people do walk, you know, and it starts raining or snowing. So I think they totally get it. And I think there was an appreciation for our story, where we came from.

Ed Elson (27:28)

We'll be right back.

Michael Berkowitz (27:30)

Foreign.

Ed Elson (27:41)

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Michael Berkowitz (28:51)

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Ed Elson (29:52)

An agenda that will freeze the rents for more than 2 million rent stabilized tenants, make buses fast and free and deliver universal childcare across our city.

Michael Berkowitz (30:03)

I'm a little skeptical about how he's going to get everything done. I think that's what a lot of people are promised so many times.

Ed Elson (30:08)

I think free buses, housing and all that.

Michael Berkowitz (30:13)

Promises, promises. Can this new kind of politics succeed? Or is this Bom Donny's high point the days before he gets into office? On this episode of Today Explained from Vox, we sit down with New York City's mayor elect and ask him directly, is he for real? That's this week on Today Explained.

Ed Elson (30:39)

We're back with first time founders. Your brand is all part of the quiet luxury trend that has been growing over the past few years. Quiet luxury meaning no big flashy brands, no big logos. We talked about the Canada Goose badge on the arm. That would be the opposite, loud luxury. I found this trend interesting because I mean, one thing that I think was really positive about loud luxury from a business perspective is that it is basically free branding. I mean free advertising, I should say. I mean everyone who's wearing your clothes, if you have the logo big and bold and everyone's seeing it, they're basically a walking billboard. And I've always thought that that is kind of a marketing and advertising hack that you can just have your customers literally wearing your brand around and projecting to the world, you should buy this brand. I'd be interested to hear how you have taken up quiet luxury, why quiet luxury is the future and your thoughts on why it's perhaps more difficult to be a quiet luxury brand versus a loud luxury brand.

Michael Berkowitz (31:51)

So this must be like six, seven years ago. I was interviewed somewhere and they were just talking about how there's been a major trend to spend more on outerwear and that where people would try to find discounts and bargains in other places. Were spending a lot on outerwear. So I explained that, you know, for other areas of clothing, a sweater, let's say if it pills after a season or two, you might be okay with that. You know, if it looks good and you could get it for super cheap, great. But if a coat doesn't do what it's supposed to do already on day one, it's not keeping you warm and dry, then however cheap it is, it's not worth it because you're wasting your money. So people are realizing that and you're seeing a lot of customers that that even if they have tons of money, they will spend when it makes sense to spend, and they want value there. And when it doesn't make sense, they. They rather get a bargain. So the question was followed up with, what do I think about people spending a lot of money to get the logo on their sleeve?

Ed Elson (32:43)

Yeah.

Michael Berkowitz (32:44)

So I said, look, if you think it's a nice coat and you think it's good, get it. But if you're spending 1500, 2000 just for the logo, you'd be better off spending that money on therapy. And I know that that shocked them a little bit, but I explained, and if that's what you're doing, you really need to seek some therapy to get some confidence in who you are, and, you know, you're covering up for other issues. And that, again, those coats might be great. And if you're getting it for other reasons, fine. But if you're just wearing it to show off, it means you don't have confidence in who you are. You need to walk around the street and take someone else's story. And I think quiet luxury was here even before it became a trend that the media picked up and will always be a trend for people that are confident in themselves because they want to tell their own story. They want to walk into a room. Everyone wants to know about what they do for their career, what are they accomplishing in their personal lives, you know, to tell them. For them just to speak on behalf of some mega legacy brand that you know should be paying them to wear the coat, that's not as exciting, that means you have less to say about yourself. So I think for people who want to be perceived as confident and, you know, they have something interesting going on in their own lives. Tell your own story and let. Let it be again. The clothing should be beautiful, but it should complement who you are, not. Not some other brand. So I, I'm. I love quiet luxury. Always have. Even before we heard the term quiet luxury, the beautiful clothing should. Should be understated and speak for itself.

Ed Elson (34:09)

Do you think that is the reason why loud luxury? Maybe I'm wrong here, but I get the sense that loud luxury is going out of fashion, that you're seeing less of these giant logos on people's clothes anymore. Whereas I. I compare it to maybe like 10 years ago, where I feel like that was a huge thing. It was cool to have logos all over your clothes. Do you think that part of the reason that it is going out of fashion, if that is the case, is because of that? It's because People started to realize that if you have to wear a logo to present you know, who you are and show how cool or important you are or how rich you are, whatever it is, then that in itself is not cool.

Michael Berkowitz (34:54)

Yeah, I agree. It's an admission that you need someone else's help to feel cool. And I think that consumers also care a little bit more about stories now. I think people are reading about the history of brands more and what they stand for. And in many cases, people are buying fewer things but going deeper into those things that they're getting. And I think that all plays out out into that world as well, that getting something is super special.

Ed Elson (35:21)

Why are people more interested? I think that's right. They're more interested in understanding what the story of the brand is, how the materials were made. They want to understand who oftentimes they want to understand who are the people who are running this company, who is the founder of this company. What do you think that is all about?

Michael Berkowitz (35:38)

I would say it's a combination of information being more available. So it used to be, you know, not that long ago, before Internet was really the thing, and the hundreds and hundreds and thousands of years of people buying stuff, you didn't have it access. If the founder was many miles away, you didn't happen to know them, you wouldn't have that kind of information. Now with, with social and the Internet, you can find out the information. So if one brand is sharing that information, one's not, then you're more inclined to go with the one that has more of a story.

Ed Elson (36:03)

Yeah.

Michael Berkowitz (36:04)

And then I think the other thing is that because everything you do where it does say something about yourself and what your values and ethos are and you know who you want to be and how you're perceived. So when you're able to get more into it and you're able to understand it more, able to pick things that really reflect what. What you. And I think now people want that and people want something that's special. Everyone wants something special in their lives and, you know, consumer goods and if you're able to make it, that it really makes you, again, more comfortable, more confident, happy. And you want people to ask you about that. You don't want to just say, yeah, I got it on sale, you know, for this. But this is really special. Do you know what this is? People want that. So hence the interest in going with brands that have stories.

Ed Elson (36:45)

Right. How important has social media been to your strategy? I mean, my understanding is that if you want to launch a successful retail business today, like, you just have to be on social media. You have to be advertising on Instagram, TikTok. Maybe that's wrong. But to what extent is social media playing a part in your business strategy?

Michael Berkowitz (37:06)

That's a really interesting one because I didn't really grow up so much with social. Even though I'm not that old, I never really gravitated as much myself. And we have been successful in growing a lot these last few years through really not thinking about how to make things successful and social, just telling the basic things that we're already doing. So if we're doing some sort of charity partnership, tell the people about it. And, you know, starting to show a little bit more of the behind the scenes. We just put together a little video of behind the scenes, how some of our coats are made, and, like, showing the special machines we use to blow in feathers into these small little pouches. And I think that what we realized is that we don't have to think about this so, so hard in terms of being crazy out of the box, in terms of crazy, you know, campaigns. From a posting standpoint, just post what we're already doing, and there'll be people out there that are interested in it. And now we've even been posting a little bit more on LinkedIn because LinkedIn has become more of, like, a real social media place. And we'll even notice a lot of people come up to us and say, oh, we saw you just, you know, in traveling to this interesting place, and, you know, that was really cool.

Ed Elson (38:13)

Cool.

Michael Berkowitz (38:14)

And we see that people care about that. So we're making the effort just to share more of what we're already doing, which I'm a little bit of a private person, and we keep our stuff pretty private, but we have to go outside of our usual comfort zone there and share it, because people do want to see that. Our coats take, like, nine months to make. We have to let the fabrics rest for a month doing nothing, just so that the waterproof membrane bonds with the fabric. And like we were told, you got to tell people that people love, like, aged wines and aged, you know, finer spirits. People want a coat that knows that it wasn't sweatshop, know in and out, that, you know, this. This took almost a year to make.

Ed Elson (38:49)

Yes.

Michael Berkowitz (38:50)

So just sharing that people seem to.

Ed Elson (38:51)

Care about that reminds me of one of my favorite scenes in Mad Men, where I think they're doing an ad for. I think it's Lucky Strike, and they're trying to figure out what should the message be? And they're Trying to. There's the research coming out about the relationship between cigarettes and cancer, and they're trying to navigate all of that. And then Don Draper asks the guys, well, tell me about how you make the cigarettes. And they're like, well, first we take the tobacco, we put it in a tray, we toast it in the oven. And he goes, stop right there. And he's like, it's toasted. That's your message. And I love that, because, as you say, it's describing just a small little detail about the process by which these products are made that gives you an understanding and this feeling, oh, there's something different about this. There's something specific that they are offering me, which it sounds like that is kind of exact what you're going for as well.

Michael Berkowitz (39:46)

So funny. I've actually quoted that scene to my employees. And I remember even one of the things he's talked about, like, menthol Fresh, and, like, tell the people about it. And we take it for granted now afterwards. But when people first started telling those stories, it wasn't always being done. And I always forget that some of the things that we do which are super special, everyone else doesn't know about that. So, like, our design headquarters in Italy is actually a castle. It's super cool. It's one of these really old castles that is surrounded by vineyards, and it's such a beautiful area. You could see why they. They get distracted. And they take nine months to make a coat because, you know, they're finished by 5 o' clock every day. There's no one staying there after 5:01 because it's so beautiful. And they're all getting their. All their drinks and everything. But I remember someone from my team said, you know, show people it looks cool. I'm like, you know what?

Ed Elson (40:32)

You're right.

Michael Berkowitz (40:33)

They're like. Because most times, you know, people are designing things not in a castle in Tuscany.

Ed Elson (40:38)

Yes.

Michael Berkowitz (40:38)

And we know the process that it takes to make this and the painstaking process it takes to make every one of our pieces, but others don't show more of it and show the beauty of, you know, there's something to be said that you're made in a beautiful area in some small town in Tuscany, as opposed to just a sweatshop outside of, you know, Shanghai or Ho Chi Minh, whatever it is, and show that. So we're doing that.

Ed Elson (41:02)

Just go back to social media. There was a time when, I mean, first it was digital. I mean, my co host, Scott, used to consult for a lot of these luxury brands. And when the Internet was happening. A lot of these luxury brands said our, our product and our brand is too high end, that we don't want to really be associated with the Internet, we don't want to be advertising online. And then it gets to social media, it gets to Instagram and TikTok. And I would imagine that there were similar conversations happening where, you know, we are Louis Vuitton, we are Hermes, whatever your brand is, we're going to be on giant billboards in Times Square, we're not going to be on these little Instagram ads. When you're scrolling through your feed. I believe that is starting to change. But do you think about ad placement and the extent to which it might cheapen your brand? I mean, one of the things you have to do is you have to make sure that your brand is protected. That is your differentiator. I was wondering to what extent does the placement of your advertising and your marketing, if you're going on social media, do you worry about how that might cheapen the image?

Michael Berkowitz (42:14)

These are conversations we have all the time. And my overall viewpoint is, is that we always want to know what luxury thinks are the standards. But we will break that if we feel there's a need to. And we do. In the exact example you gave in other similar ones, that if they're luxury customers in a certain space, whether it be digital or physical, and they're doing their thing, whether, you know, commuting to work or you know, using their phones and that's where they're at, then by definition it is luxury because this is where they're at. And I don't care about, you know, standards that says that, oh, that's beneath us. You know, if we're able to communicate our story and we'll be in charge of our ads themselves and make sure that they have a luxury feel, we'll never go into areas that, you know, where the ads themselves feel feel inappropriate or cheesy or less than luxury. But if there's a place where luxury people are crowding around, get to them, communicate. That's part of the stubbornness that I see things differently. I know a lot of the other CEOs and other companies will sometimes say, well, it's just not what it's done. And sometimes you'd be like, well, maybe there's a reason to think that's not the smartest thing and we can do things a little bit different again. Part of our brand is, is, is nodding our hat to the way things have always been done, but part of us always will Shake things up a little bit. So we're not, we're not shy to go to certain areas of reaching luxury customers in a luxury way, even if it's not standardly done.

Ed Elson (43:41)

The other big piece of brand image when it comes to luxury is pricing, which I would imagine is one of the hardest things to figure out in this space. How did you figure out your pricing? What is your pricing strategy? How has that evolved and how will it change?

Michael Berkowitz (43:55)

Pricing is one of the hardest things. And what we try to do is work both on a bottom up and top down perspective. So bottom up is working with our costs and really understanding, you know, what's the break even, what do we have to start with that we know we absolutely can't go below this price point. We think about it in a way that one thing that again, some of the luxury guys have been offenders in the space is where they price things very high, but then they end up on sale. We really try to keep our price integrity strong where it shouldn't be, that you buy it at the beginning of the season and then two weeks later you see it significantly less somewhere else. So we try to keep that very controlled. We really try to make it that our price isn't artificially jacked up so that the 40% off is the real price we start at. What is the real price? Occasionally maybe at the end of the season there'll be something triple extra larges are available on sale from our showroom or something like that. That. But so keeping it steady is very, very important.

Ed Elson (44:55)

Why is that important? What is the problem with discounts and sales?

Michael Berkowitz (44:59)

Sales, a four letter word, you know, people, people are happy to spend, but they just don't want it to be that the guy next to them spends half the price. And you want to spend for what the real thing is that you want to spend because you know that the materials and the craftsmanship are very high. Not that they're, they're charging some crazy price so that they could give you a deal 40% off. People don't want those mindsets games and I don't want those mind games when I'm shopping. So you, you know that our coats are not cheap, but that you're getting something really special and that, you know, for the most part this is the, the real price. Prices go up every year as inflation and costs go up. But we also try to make it that there's an element of value in there as well that you don't feel like you're getting ripped off. You know, even, you know, the real estate that we have and the various different pop ups we do and we try to put the money mostly into the product and you see that we're not wasting money on other things. So when you're getting your box, you really feel that the coat is where the money's in, not all the other things that are detracting from the quality. But we're paying for all these other crazy things that brands will sometimes do and people appreciate that. So we would be on the middle to slightly higher luxe level. But there's some other brands that have just gone super crazy expensive. And I think that's something else that I see. One of our competitors has a coat now for 75,000 and there are people who buy that. But you know, when I was working commodities, I, I wasn't going to show up to, to work wearing one of those coats. And even people who could afford it, there are a lot of people that feel that that's, that's crazy. And so the well priced, normal luxury is where we're at.

Ed Elson (46:37)

We'll be right back. We're back with first time founders. I think one of the big pluses of being a luxury brand is that there is a huge benefit to your margins. And that is if you can present through your brand and through the story that you're telling, a more aspirational story, it means that you can charge higher prices and yes, sometimes your costs are higher because you're getting better materials and more quality materials. And this isn't just in fashion, this is in literally every industry. Because of the story and the aspirational story that you're telling, customers are willing to spend more to be part of that story. It sounds like you are trying to keep things pretty affordable, which I assume is you have decent margins, but maybe they could be higher. And I could imagine that as the company grows, I mean, what we've seen with all of these other luxury brands is they will just push the prices up as high as possible and they will sell a $75,000 jacket and it works for the business. So I'm just wondering, how do you think about that from a strategy perspective? You do have an obligation to your shareholders to increase your margins, expand your margins, and at the same time, you don't want to charge ridiculous prices for these coats.

Michael Berkowitz (48:09)

So one of the things we also do is keep our quantities controlled. What destroys some of the other brands is that they flood the market and then they have all leftover inventory that then they have to mark down. So even though, yes, theoretically their MSRP has a very high margin, but what percentage are they selling at the MSRP and what percentage are they really just offloading for dirt cheap to these other discounters? And we're seeing a lot of brands, I won't say which one, but one of the major brands just lost 15% of their market value last week because one of the things that they were shown was that they were supposed to be super expensive. And here they were absolutely just dumping all this extra inventory. So what we do is we keep our. Every year we're growing and our quantities are certainly quite nice, but we're keeping our distribution controlled. They're not in every single store. You're not going to walk one block and see seven stores that are carrying it, plus their own boutiques and then having tons of inventory. At the end of the season, we end up getting a tremendous amount of pre orders. Things sell out early and then people are pre ordering it. So what that does is that it maintains our margins are healthy margins, but that means that those are real margins and a very high percentage of of the coats are being sold at those full prices. So it allows you again, not to play those games of theoretically very, very high margins. But only 20%, actually 10% get sold at those prices. And the FOMO is also a big part of the branding that people are buying in the summer already to prepare for the winter, knowing that it will sell out. So there are a lot of brands that are very controlled, obviously Rolex, Patek Philippe and Hermes with their bags. That's a very, very smart thing. You don't want to flood the market. It seems to be a good idea for year one because you get a bigger paycheck. But we have turned down a lot of distribution options knowing that they just buy big and then at the end of the season ends up who knows where. And it's our brand, we put everything into it. We want to know where every coat is, we want to know everything that's being controlled and that the customer appreciates that.

Ed Elson (50:03)

Yeah, the scarcity management is just essential. Looking ahead, what is the future for your company? You're selling these coats, you're having success. There's there. Are you now at a point where you're thinking, okay, what other products do we need to introduce? What does the future look like for you at this point?

Michael Berkowitz (50:20)

Sure. So on the product side, so firstly, women's has been a huge part of our growth. We only launched that about five years ago. And so there's a little catch up there because men's already we have lighter weight options, we have totally unlined options. We have rainwear, we have sports jackets, we have hats, baseball caps, we have bags. So there's more items that we want to make on the women's side and both for men's and women's. We're really not looking to be a brand that makes absolutely everything. I joke. I left the world of commodities. I'm not in commodities now. So you're not just going to see a pullover polo or V neck sweater. There always has to be an element of performance. So what we're trying to do is make it that if you're any sort of business, professional, again, whatever it is, real estate, finance, you could, a lawyer, anyone who needs to be out and be seen and, and you're exposed to some sort of fall winter weather that for most of those things you could come to Norwegian wool and find amazing options. So for instance, we have pants being worked on right now that are wear to work. They're like beautiful wool cashmere with lots of stretch, but are not joggers because a lot of people cannot wear joggers to work, but they feel like joggers. So, you know, trying to expand into other areas where we could take wool and cashmere and performance. Ify it for, you know, for our customer, you know, that's where we want that. It should be a one stop stop shop for all the different things that you feel aren't doing what they're supposed to do. If your white cotton T shirt is doing a perfect job, then we don't need to get involved in that. You know, no silk ties from us. You know, again, unless there is an element of performance, even with scarves, we haven't launched that yet because we feel like if our scars are just like the other scars on the market, there's no reason for us to get into it. We want to maintain our margins, be expensive and be great for what we are. So there's a lot of different products being developed right now that horizontally integrate us into those worlds. And then, you know, we've also been doing a lot of additional geographic acquiring, like getting into other places. So we're gonna have another setup in Paris this year. We've been doing a lot in Europe. We've done pop ups in Milan, pop ups in Paris, doing more in Paris and. And we're doing something now with Vienna. So this is very interesting. We're doing a couple of collaborations, but the collaborations we do again are not necessarily the way you would think from, I don't know, just Paying a celebrity to put their name on a pair of sneakers that they really have nothing to do with the collaborations. Like we have one that we're working on, which is another company that has incredibly specific, impressive expertise in something that we may not have as much and we have what they don't have. So we want to really work together to create. And you could see both signatures on it. It's not just one brand really making the other one, putting their label on it. And then we're working in one way on. On a luggage collaboration that is for. For like a piece. So those types of things, interesting product that's super lux, that solves problems and is. Is different. Let everyone else in the fashion world go their way with collaborations. We think about it a little differently.

Ed Elson (53:15)

Yeah, it is interesting, these collaborations, which was kind of a new thing maybe 10, 15 years ago, but sort of what you're describing is that they've become a little bit BS in a way where you can really see through them. When a celebrity shows up, it's like, oh, I'm wearing my new new Reeboks. That you were the new Travis Scott. I mean, even McDonald's, the Travis Scott McDonald's meal. I mean, there are, that there are. There's a sense in which these, these trends become so corporatized and, and you can feel the companies sort of squeezing money out of these things to a point where it does cheapen the collaboration and suddenly it doesn't feel special anymore. And it is interesting how it's like there's. If you want to present a brand that people believe in, you need to really be believing in these collaborations yourself. You need to have some reason as to why this specific brand or this specific partnership is important or resonates with us. And it cannot just be. We're going to make money here because this guy's a big deal.

Michael Berkowitz (54:16)

And I'm fine with the McDonald's doing something like that. I just think in the world of luxury, it should be at a higher level than that. And, and it shouldn't be just a cheap writing check type of situation. If you're collaborating, collaborate, work together. Like, I want to see that whatever the collaboration is, is there's two groups of people and using their brain power together and say, this is what we know, this is what you know. Let's make something transcendental together based on these two levels of expertise. When that happens, that's really cool and amazing. Again, when it's just paying someone to wear something for one year and then they're Getting paid by someone else to wear it the next year. I mean, should.

Ed Elson (54:49)

Silly. Yeah, absolutely. Well, you've been very generous with your time. Appreciate it. Just final question before we wrap up here. If you had any advice to any young entrepreneurs, I would say people who are working perhaps in the fashion industry or at least in the arts in general, what would your advice be and why?

Michael Berkowitz (55:09)

I think everything else that comes to mind are things that are obvious. You know, making sure your numbers add up and making sure that you're really solving a problem. I hear all the times, the uncomfortable short situation where people say, wasn't this ever a problem? And you're like, no, that wasn't. So make sure you're getting the honest answers on that. But if I were to give one, one piece of advice is actually customer service. I see all the time we get flooded with actual fan mail from people who bought and have worked with us, especially on the digital space. Because when you're buying something cheap on digital, you don't really care if it's exactly what you think. If you end up not returning it, okay, it's not that much money. Buying expensive things in store, but especially digitally, it's a scary thing to do. Even if you have the money, you just don't want to throw $2,000 out and buy something. You don't want to become a UPS distribution center in your house. So make sure to have amazing customer service. I think that's something people really crave. And like, I just. I just bought a pair of shoes and when it came, the color was wrong. So when I did a live chat with them and I asked them this question, it took like 30 minutes till they responded. And I just want to know what is the color, you know, that I'm looking for? Because I had them once before and they said, just order and if it's not right, return it. And I wrote back, I didn't need to wait 35 minutes just to be told, just try it, and if it's not right, return it. The people that were working for them and their customer service, I don't know if it was an AI bot or a real person, but the knowledge there wasn't there. Regardless, know your stuff. Make sure you have a team that knows your stuff, that's passionate about it. Make sure that every aspect of your customer service, when you're interacting with customers, has that luxury feel. I think people are so sick and tired of spending a lot and feeling like they're in a crappy store that you're like that. Like they're doing you a favor, you know, like, so I think that whatever customer, what consumer good you're in, make sure that the experience is a fun, easy, good experience, that they feel like when they're calling you, texting you, you know, live chatting you, that they're actually getting helpful experience. People love it. It's amazing. Like, if you just give someone the guidance on what size to get and it's really right, the amount of appreciation there is more than what people would expect. It's more than the, okay, I'm happy you got the right size and have to return it. It's a lot more than that. So go all out on good customer service and value that very, very greatly in terms of your business plan and how you're going to deal with it. Because you could have a great product, but if it's not communicated well to people who are buying it, and if it's not sold in a way that people enjoy, that process, again, it will be very limited.

Ed Elson (57:38)

My final question. What is the best example of customer service you've seen? And it could be something that you' done or something you've experienced, but I totally agree with you. I think customer service is so underrated. What is a moment where you're like, damn, that is great customer service.

Michael Berkowitz (57:54)

So a couple years back, we have a couple of people who are like our customer service managers who manage everyone else who takes care of customer service. And we were smaller back then. But an issue was brought to my attention that someone from, I remember it was Greenwich, Connecticut, had bought a customer coat with one request. They'd spoken to someone for a while, but they wanted to be a surprise for their husband for a Christmas gift. So they said, can you please hold onto it for like two or three days? Because if you ship it after that, I'll be home and I'll be able to put it aside. But if you ship it right away and it gets there, he's home and he's going to see it. Because it's before Christmas and things were super, super busy. The person who helped that and said, sure, didn't properly make sure to go to the warehouse and make sure it gets held up. And lo and behold, it got shipped. And the woman wrote that the husband loves it, great coat, but now she doesn't have a surprise for under the tree on Christmas Day. And this was brought to my attention. And I said, you know, we really dropped the ball on this. You know, he's going to love his coat. But their experience is going to. It left a sour taste in their mouth. I said, I looked at the conversation. They were deciding between two coats, two very different ones. I said, we're going to send the other one completely for free.

Ed Elson (59:05)

Yeah.

Michael Berkowitz (59:06)

And tell them that we're doing it and make sure you're coordinate this time and get it right that you know, come to them when she could get it. The husband was definitely not expecting a second coat.

Ed Elson (59:16)

Yeah.

Michael Berkowitz (59:16)

Loved how it's different and it solved her problem of giving a gift. But it just changed. It turned lemons into lemonade. We did mess up. We owned it. She spent all this time explaining what she needed from us and we, we didn't follow through. Now we gotta, you know, match that in the other direction and you know, just try to make it right. I think that's what people want. A real relationship. Relationship.

Ed Elson (59:35)

Real relationship. And the goodwill as well of the brand. Michael Berkowitz is the founder and CEO of Norwegian Wool. Michael, we really appreciate your time.

Michael Berkowitz (59:42)

My pleasure. Thanks so much.

Ed Elson (59:44)

Thank you. This episode was produced by Alison Weiss and engineered by Benjamin Spencer. Our research associates are Dan Shalon and Kristen o' Donoghue and our senior producer is Claire Miller. Thank you for listening to first time founders Prof. G Media. We we will see you next month with another founders story.