Executive Briefings

This Sweater Company Is Breaking a Cashmere Cartel

In 2012, Matt Scanlan, the founder and chief executive officer of Naadam Cashmere, was just a young New York University alumnus with an unsatisfying job at a venture capital firm. "After a couple years of working as an analyst - which is a pretty thankless job - I left," he says. "A week after I quit, I booked a flight" to Ulaanbaatar, the capital city of Mongolia, to visit a college friend who lived in the region. The two of them met a newspaper reporter who hailed from Scanlan's hometown of Westport, Conn., and soon happened to hit it off with a couple of the reporter's sources, nomadic goat herders."

This Sweater Company Is Breaking a Cashmere Cartel

Scanlan accepted the herders' invitation to visit the countryside with them in the spirit of someone joining a weekend camping trip. This was naive. "We ended up driving for 20 hours straight," Scanlan remembers of his off-road adventure. "I get stranded in the Gobi for a month sleeping on the floor of a ger [yurt] eating goat meat and marmot, which is a delicacy."

This was more than enough time to develop an appreciation for both the culture of the grassland — even if, to this day, Scanlan cannot point precisely to the place on the map that abruptly became his home. The local culture was rich — the name Naadam refers to a local athletic festival at Ulaanbaatar. The agriculture had charisma, too. "Goats have personalities," Scalan says. "If [herders] have a herd of 300, they know the name of each of them."

Initially moved to work with an nongovernmental organization to stimulate development in the region, Scanlan discovered that his attempts were undermined at trading season by cashmere traders who fixed prices on an unregulated market. "He’s the one that makes the biggest margin," Scanlan says of one of the traders. "We thought that's unfair — plus it was hurting the work that we were doing." His entrepreneurial solution was, effectively, to break up the cashmere cartel and to build a more conscientious supply chain.

In Mongolia, Naadam buys fiber directly from herders and works with not-for-profits to provide veterinary care to goats. In Italy, where the fiber is spun into yarn, the company ensures that the process involves no ecological damage by using clean energy and eliminating downstream effects. And on your back, where its crewnecks, hoodies, and T-shirts feel like a dream, it continues to offer a reminder of its values by way of the care tag. Eighty-five percent of dry cleaners "use a creepy toxic chemical called perc that's linked to respiratory issues," the tag reads, as a call to hand wash or use organic cleaners instead. "Yuk. Skip the standard dry cleaning."

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Scanlan accepted the herders' invitation to visit the countryside with them in the spirit of someone joining a weekend camping trip. This was naive. "We ended up driving for 20 hours straight," Scanlan remembers of his off-road adventure. "I get stranded in the Gobi for a month sleeping on the floor of a ger [yurt] eating goat meat and marmot, which is a delicacy."

This was more than enough time to develop an appreciation for both the culture of the grassland — even if, to this day, Scanlan cannot point precisely to the place on the map that abruptly became his home. The local culture was rich — the name Naadam refers to a local athletic festival at Ulaanbaatar. The agriculture had charisma, too. "Goats have personalities," Scalan says. "If [herders] have a herd of 300, they know the name of each of them."

Initially moved to work with an nongovernmental organization to stimulate development in the region, Scanlan discovered that his attempts were undermined at trading season by cashmere traders who fixed prices on an unregulated market. "He’s the one that makes the biggest margin," Scanlan says of one of the traders. "We thought that's unfair — plus it was hurting the work that we were doing." His entrepreneurial solution was, effectively, to break up the cashmere cartel and to build a more conscientious supply chain.

In Mongolia, Naadam buys fiber directly from herders and works with not-for-profits to provide veterinary care to goats. In Italy, where the fiber is spun into yarn, the company ensures that the process involves no ecological damage by using clean energy and eliminating downstream effects. And on your back, where its crewnecks, hoodies, and T-shirts feel like a dream, it continues to offer a reminder of its values by way of the care tag. Eighty-five percent of dry cleaners "use a creepy toxic chemical called perc that's linked to respiratory issues," the tag reads, as a call to hand wash or use organic cleaners instead. "Yuk. Skip the standard dry cleaning."

Read Full Article

This Sweater Company Is Breaking a Cashmere Cartel