Ratio Clothing

ration clothing eric powell
How did Ratio Clothing get started?
Ratio Clothing started for a number of reasons, but like most entrepreneurs, I was trying to fix a problem that I had personally. I’m tall (6’4″), fairly thin, and consistently have problems finding something that fits off-the-rack. I’m always between sizes and “neck and sleeve” sizing in dress shirts rarely ends up in a decent fit for me. I had custom clothing made in the past, but I wasn’t crazy about the quality or the options, at least at a price point I was comfortable with. There were some early online folks working that time, but they left a lot to be desired in the style department. Secondarily, my issues finding clothes that fit weren’t limited to things I’d wear to the office or “dress” clothes. I cared just as much about having a great-fitting OCBD or casual plaid shirt as I did about the dress shirts I wore to the office. I found it increasingly frustrating to go to a place like J.Crew, find something I really like, and have fit issues on every size. There’s no point buying a piece of clothing if it doesn’t fit and you’re not going to be comfortable in it. Around 2009, I started toying with the idea of starting something. I had two main goals:

1. Offer an edited selection of stylish dress and casual shirts. ration clothing

2. Make it insanely easy to buy a custom shirt that fit.

Have you always been the entrepreneurial type?

Definitely. I was one of those “lemonade stand as soon as I could walk and talk” kids. My first “real” business was a landscaping company in high school. I couldn’t drive yet, so I enlisted my older neighbors to go in on a truck and equipment and we created a fairly successful landscaping company in our area. Mostly, I just liked to stay busy though. By my senior year in high school, I had three jobs. I had the lawncare company, I worked part-time at Abercrombie for the discount, and I was a developer for a .com startup.
You were in the technical world before Ratio. How was the transition into fashion?
That’s right. I’ve been programming since I was in grade school on an old Apple IIe and really got into programming and making Websites when I was in high school. But, I’ve always been into clothes. Because of the businesses and jobs in high school, I had a little more disposable income than the average high school kid and I spent pretty much all of it on clothes. It was a way for me to stand out a bit, and I have always liked to be put together and well-dressed. My friends will joke that they’ve never seen me in a T-shirt outside of the gym, which is not an exaggeration. I had never really considered fashion as a career, but as I grew frustrated with the sizing available at traditional retailers, I just started to think “I could solve this.” I knew my technical background would help tremendously and because I cared about clothes and fit immensely, it was just a matter of learning the intricacies of the industry and how it works.
ration clothingWhen did say to yourself I need to make my side hustle my career?
It definitely started as a side hustle, and that’s a route I’d recommend for most people unless you’re straight out of college and can afford to live in a crappy house with 6 guys and eat Ramen for a few years. For me, we knew for a good year that the plan was to go full-time, so my wife and I planned accordingly and saved as much as we could. She works, which helps, and eased the transition a bit, but it’s definitely a bit of a scary moment. I went from a “good” job making a very comfortable living to the great unknown. It was fun, but exhilarating. There wasn’t a particular moment that me or the business were ready; we just set a date and stuck with it.
With the rise of “Made in America” do you think American manufacturing will ever get back to what it used to be?
Yes and no. I do think the U.S. will have (and is having) a manufacturing renaissance, but it’s not going to be like the old days. We’re never going to compete directly on cost with low wage, low skill manufacturing centers. But, for certain types of manufacturing, we can thrive. To use our business as an example, we can afford to spend more on labor since our labor requires quite a bit of training and skill and because we put more money into the actual product (and have lower margins).
In typical apparel retail, for every dollar you spend at retail only about 15-20 cents go to the actual labor and materials it took to make the product. The rest is added cost and overhead that comes from design, transport, profit, merchandising, et cetera. Because we sell direct and run very lean, we mark up our product far less than competitors and put more money towards the things that matter to our customers—quality materials and construction. When you buy a Ratio shirt, over half of the retail cost goes to labor and materials which is unheard of in this business. It also makes people think we’re a bit crazy, but we can be profitable at this level and it just seems unfair to mark things up as much as other brands do.
So, I think American manufacturing will find success in areas where high skill, complex labor is required. Unfortunately, most of the jobs that are now in China and elsewhere are not coming back, but we’ll figure out a new way forward—we always do.
Also, I think it’s important to note that “Made in the U.S.A.” is not just about patriotism or those kind of things. While “Made in America” is having a moment, especially in menswear, in the long run American-made products have to be just as good or better and competitive on price. We choose to manufacture here because it gives us more control. We’re control freaks, and we like to be really close to the process. That wouldn’t be possible if we made our shirts in Malaysia.
How long did it take you to become profitable and when did you decide to leave your 9 to 5 and dive 100% into Ratio?
We were cash flow positive almost immediately. A big part of that is because we run really lean. On the backend, we’re pretty technically advanced and I’m a technical guy by trade, so we have great automated systems that allow us to focus on two things: really high quality shirts and amazing customer service. Everything we do is geared towards that. I decided to take the leap and leave my 9-to-5 after we had completed a few rounds of private sales to friends, family, and that sort of thing. I’m still not sure if I made the right decision to leave when I did. Looking back, it may have been better for the company to take the dive earlier, but that’s impossible to know in retrospect. I think ultimately that kind of decision depends on the business model and type of business.
ratio clothing eric powell
In a recent interview you spoke briefly about “Minimum Viable Product” and “launch early and iterate” philosophy, can you go more in-depth about this?
This is big in the tech world (read The Lean Startup for an in-depth look), but I think it applies to pretty much any business. Basically, until you are selling or delivering a product to real customers, everything you think you know about your business is a guess. You only learn by trying new things and evolving your business based on how customers respond to things. So, a M.V.P. is basically just a way to get something in front of customers and moving from there. For us, it’s custom shirts. For Everlane, it was a T-shirt. Even though I believe in this philosophy, I still built more features than were really needed to launch and launched later that we could have. It’s a natural tendency to want to build everything and perfect it before showing it to the public and you really have to fight that urge.
What are three of the most valuable lessons/tips learned while starting/running Ratio?
Good question, though I’m sure my answer will change depending on the day you ask me.
1. Get in front of customers as early and as cheaply as humanly possible and learn from them. You aren’t a company until you’re in front of customers and every plan you write goes out the window once you do.
2. Don’t write a business plan (unless you need to raise money from outside investors and even then a pitch deck is usually enough). This is related to number 1, but I think business plans are often “fake work” in that they don’t really accomplish anything. Just start building something. Conversely, you do need to educate yourself about the business you’re going into. I learned everything about shirtmaking and the fashion business while I was starting Ratio, but I tried to do that alongside actually building product. (That is the one good side effect of writing a B-plan is that it kind of forces you to do your industry homework.) 3. Unless you’ve already proven yourself as a successful entrepreneur and know you can easily raise outside capital, do something you can fund yourself at least to prove the concept. Raising money sucks and it takes time away from building something. I spent a long time trying (unsuccessfully) to raise money for another business and Ratio was partially born out of the frustration from that process. I was so beaten down by the process that I said to myself, “F*ck it—I’m doing something I can do on my own,” and I did.
Next steps for Ratio? How do you plan on expanding?
We’ve got a to-do list a mile long, but a lot of the things we’re doing now are foundational: systems, processes, et cetera that we can scale on. We’re focused on building our shirt business (and learning how to grow it), but our long-term vision does include a lot beyond just shirts. The big thing is we’re just trying to learn and experiment and find things that work. We’ll try some things that work and others that don’t, but that’s kind of the fun part of the process. Overall, we’re guided by a pretty simple vision: we want to dress our customers in American-made custom clothes, seven days a week.

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Corey Knight

Founder of A&H Group.