Hi everyone my name is Francesca Romana Rinaldi. I teach fashion management at Bocconi university, and I'm also Director of the Master in Brand and Business Management at Milano Fashion Institute where I also direct the short course New Sustainable Fashion. So we are here today in this MOOC lecture to talk about managing a fashion startup in responsible innovation. We're going to talk about the growth of sustainability in the fashion industry, the relevance of traceability and circularity in the fashion industry, and we're also talking about how to manage a fashion startup together with two guest speakers, so I'm glad to introduce now: Daniel Tocca, who is the CEO and co-founder of Re-Bello And also Matteo Ward From Wrad. He is also co-founder and CEO. So welcome to Bocconi, and I’m really glad to have you here. So Daniel, tell us a little bit about you. TOCCA: Yes, I am Daniel Tocca and I was born in Balzano, Italy and I've been studying at Rotterdam School of Management Entrepreneurship, and after that I started to work in a big multinational company. The most important moment was when I quit my job and after one month I was traveling in my car through the whole of Europe to sell the sustainable dream, which now is Re-Bello. OK, great and Matteo you graduated at Bocconi and what happened after? MATTEO: Yah, so I graduated here in international economics and I entered the fashion industry right away. I was working for a big corporation that was opening branches all over Europe and that's when I started year after year to gradually uncover the true cost of fashion, and the moment I realized that what I was doing wasn’t really matching with my personal purpose that's when I also quit my job and I co-founded Wrad to try and do our best to catalyze change in the industry. FRANCESCA: All right thank you. The fashion industry is one of the largest industries in the world, is also a global industry with a global supply chain. Unfortunately the fashion industry is also the second most polluting industry after oil. Just to give you an example of the sustainability related to the industry and the fact that it should be more sustainable toward the environment, we can say that related to the cotton fiber, one of the most important fibers that we have in the industry, that in order to make a pair of jeans, which means more or less 1 kilo of cotton, we need up to 20,000 liters of water. Also in order to cultivate cotton there are many chemicals and pesticides that are used on the field. This causes health issues, health problems to the people that cultivate the cotton and also the big issue of the reduction affecting the biodiversity of the fields. This of course, has many consequences on the long term. Let’s consider instead the effects, the impacts, on the society. There have been many disasters in the last years related to the fashion industry. The biggest and most well known, unfortunately, is the Rana Plaza disaster that happened on April 24, 2013. That day in Bangladesh more than 1100 people died in less than 90 seconds because of a collapse of a building, because of a lack of attention, because of a lack of safety of the employees, those were subcontractors working on the fashion industry for the biggest mass market retailers and fast fashion retailers as well. So things like this should not happen any more in the future. And this is the reason why we need to search for a more sustainable industry and fight for a more sustainable fashion industry. Many companies, many startups decided to create their business model based on sustainability and they decided to base their business model on a multi-stakeholder approach, so being more sustainable to the environment, more sustainable towards the society, more sustainable towards the territory and giving back to art and culture, communicating to the stakeholders through the media as well and not just respecting laws, but trying to also go beyond the standard, trying to reach better standards, creating also partnership with other players and other sometimes also competitors of the industry. We tried to sum up this new approach with a managerial model that we published in a book “The Responsible Fashion Company” that was published in 2014 by Greenleaf publishing. Daniel, how did the Re-Bello experience begin? DANIEL: So I was inspired by a professor at University who told us to start immediately after our studies, so immediately as soon as we finished, our opportunity cost was very low of course and he inspired us to start immediately and that was actually what I did. I started working for a big company but I realized immediately it was not exactly what I wanted to do and so I started to pursue my dream of sustainability and sustainable fashion. FRANCISCO: and what is Re-Bello’s mission, can you share it with us? DANIEL: The mission is to combine nice contemporary clothing, so a nice design, with sustainability, so each garment of Re-Bello is done in a fair way so the production is done in a fair way, and it’s also to combine it with a nice design because many times we know that sustainable fashion is not as beautiful design. So the mission is to combine this and we do it in research and development projects with universities or with our partner producers - we try to find out new garments and we try to find garments that have a very low impact on the nature in general. FRANCISCO: So integrating ethics and aesthetics. DANIEL: Ethics and aesthetics. A nice objective. So Matteo, tell us a little bit about Wrad as well. MATTEO: So Wrad is an innovative start up with its own technological program and brand today which operating on three symbiotic levels of action: education, innovation and then liberation through design. It was co-founded with Silvia Giovanardi and Victor Santiago in 2015. The three of us had different career paths, but all of us in the fashion industry. We just realized that the cost of what we were doing was so high, and nobody really knew about the true impact of clothing; there was a huge information asymmetry, and that's why we looked at ourselves and were like ‘what can we do’? We have to raise awareness somehow so that we invested everything in education; we started traveling from city to city around Europe, from school to school; activated an educational forum which we're excited to share, like today reaches around 5,000 students per semester. Our first forum was only with 35 students, so in the past two years it's been incredible to see how people are really connecting with the information that can give them the instruments really become activators of change in this sense. And what we realized is that by investing everything in education, at one point we were gradually creating, I don’t even know how, but we were gradually creating incentives to develop sustainable innovation. Incentives to create synergies with industry leaders in Italy to come to us and work with us to try to find some answers or some alternative paths to some of the problems of the status quo of fashion manufacturing today. So by doing so, in around 2016 and then through 2017 working with Perpetua and another company Italdenim. we registered a patent for a dying technique which is circular and innovative, and at that point that's where we decided that it was time to transition and to move a step forward and start really communicating this innovation, and start communicating that change is possible through design and through products. FRANCESCA: Traceability and circularity are the two most important trends of sustainable fashion. Any traceability project starts from a higher transparency. In order to be more transparent, you need to know what is behind the product, and what the companies need to do in order to be traceable, is to know very well their suppliers, they need to collect information on the suppliers, monitor the suppliers and at the end also build partnerships with them. So it is not easy, but it is possible. And once consumers know what is behind the product, they trust more the brand. And right now they’re actually asking for more information on what is behind the product, so for higher transparency and also higher traceability. Circularity is also another important trend. The traditional model is a linear model, a linear approach. We go from cradle to grave, we can say. So this means that companies source the products, then they produce, they market the product, and then the product is bought by the consumers when they enter the store, and that's the end of the story. Then the products become a problem, they become waste, and they go to the landfill. They need to be managed. A new model, the circular approach model that we can define as ‘cradle to cradle’ is a model that is solving this issue of having waste. The waste becomes new food, in order to start a new circle, so in this sense the companies need to manage also the end of the life cycle when the product becomes waste, they need to be recycled or upcycled. So once again the waste is not anymore a problem but it becomes a source for a new life cycle. Daniel, why did you decide to invest in traceability for Re-Bello’s products? DANIEL: In order to give to our client more authenticity behind the brand, in February 2017 we decided to create this program that if you put the code of a product that you bought or that you are interested in, so you put that code within our home page, you can get the whole traceability of one certain product. So for instance, one blazer or a T-shirt you can see, if you put the code, exactly where the yarn has been made, how the yarn has been made, who dyed the yarn, who made the confection, so the whole process, because it's very important for our client; they buy us because they like the products, certainly, but they buy us not only for that. They want to see and they want to know the authenticity of the brand, and we have to communicate that because we're doing it so we have to tell them, in an honest way, also what are the mistakes because production is not perfect yet, and the sustainability has to come to a next step in the next year, so our client wants to know exactly what we're doing right, and we have to communicate them also what is not perfect yet. Therefore we decided to make our product traceable in order to communicate better. FRANCESCA: OK. And are some of the products also circular? DANIEL: So we have been in contact recently with the Cradle to Cradle organization. There are some products which already would be circular; there are some products where they said, OK this product looks like being circular, of course it implies a cost having the Cradle to Cradle certificate, so in a startup you always have to manage very good the funds that you have, so we are in contact with them and we will see, but some products would have the potential to be Cradle to Cradle already. FRANCISCO: All right, thank you. And Matteo, let me ask you, do you believe that the consumers are already asking for a higher transparency, so is there a need, a request coming from the demand? MATTEO: A hundred percent. We realize when we go to schools but the moment I realized this was actually two years ago. It was one of our stores for the company I worked for before in Germany and I'll never forget, this little kid he was fifteen years old he came to the store, and he happened to ask a question we had never heard before. He pulled two T-shirts and he's like, ‘why does this one cost exactly like this one but this one has polyester and this is one hundred percent cotton, and one is made in South America the other is made in China?’ We were like, where does this kid come from, where does this question, this need come from? I knew where it was coming from, and that's the moment I realized that something was changing and I was changing and with me a lot of other people. There is this a huge generation, the generation Z, the millennials, I call them the truth-seekers, it's like an army of people who realize that with the right question they can really trigger change. And then when we look at Wrad, you know with our educational format, two years ago, I almost had to convince schools to let us in and talk to the students about the true cost of fashion. Today it's fantastic because the schools invite us. They ask us to go in and share this information with the students, or even if you look at the Fashion Revolution campaign, the #WhoMadeMyClothes hashtag has increased enormously in reach and impact. In 2015 it was used during Fashion Revolution Week by 55 million people; in 2016 it was already over 129, so it's more and more people asking brands, who made my clothes, where does my - you know, the stuff I wear, come from, I want to know, because I want to make sure that they really respect and amplify my identity and what I believe in. FRANCESCA: Amazing. Thank you. Managing a fashion startup is not easy. But managing a fashion startup in sustainable fashion it's even harder. Because you don't need to just think about profits, but you also need to think about the other two P's of the Three P Model: Profit, People and Planet. So you need to try to build a better balance with the people, and also to reduce the impact towards the environment. So Daniel, which are the financing options for a sustainable fashion startup? Business angels? Friends and family? Crowdfunding? Which are those options and what did you decide for Re-Bello? DANIEL: Yah. I suggest to start very small, so to get maybe also some own money if you have it, or some friends and family to understand really the business model, the business model that you want to apply, and if you want to put more focus or only focus on the social, or a mixed focus of the social and the business, so to understand very good what is your direction. As soon as the business model is clear, you can prove it for sure and after proving it, it's easier to get the first business angel to grow it a little bit more, and then to get to venture capital stage. FRANCESCA: OK, so in your case it was business angels, and then venture capital. DANIEL: Yeah in our case we quite soon proved that our business model could be correct. We started with a few T-shirts, it was a boom since immediately, and then we had the first business angels, and then we grew to venture capital stage, so we did the classical path. FRANCESCA: All right, thank you very much. And Matteo, you started really from involving one hundred percent the community. So you decided to create a community around the brand. How important is to start, for a fashion startup, to start from the creation of this community around the brand? MATTEO: I can’t talk for all fashion startups in general, obviously, each one has their own strategy and their own purpose. What I can tell you though, is that for Wrad it was really mandatory. From day one it was clear that we were not getting into the business of just selling clothes. We were getting into the business of creating innovative, sustainable clothes that can really speak to something. Can really speak to the values behind them, can really speak to the sustainable innovation intrinsic in them. Something completely different that people will want to wear to amplify their identity. And to be quite honest the first person that called Wrad and spoke to Wrad as a community and as an adjective wasn't me, it was Sylvia or Victor, it was one of our, you know, community members, who after a couple months reached out and said, ‘Hey I'm Wrad because… I don't know anything about fashion but this is why I'm Wrad. Is it OK if I say so?’ I'm like of course, dude! Like, that's awesome! That's exactly what we want and that has really allowed us to push our agenda forward. If you take G-PWDR for example, is this innovative product that we developed in two years that upcycles wasted graphite powder to create a new circular dying technique. We would have never ever been able to create that and arrive to that stage if it wasn't for the power of the community behind the brand that really raised a voice, really grasped the attention of different several industries in northern Italy in this case, that came to us, decided to invest in us, endorse the project, Perpetua was one, then the other one was Italdenim. And with them we were able to then come to the registration of a patent, which is just one small step forward in the, huge perspective of what sustainability means for fashion. There's an ethical social side, there's an environmental side, but it’s one step forward, and the community is what made it possible, and the community is what will make possible further advancements in this case. FRANCESCA: Thank you. To conclude, would you like to share your suggestions with consumers and also potential future entrepreneurs of sustainable fashion? Daniel? DANIEL: Yes, I think it's very important. Today we had a lesson of real sustainability. I think it's very important that revolution, in my opinion, will come from the small brands, because I think that revolution cannot be done by people who created the problem. It has to be done by new players, and so my suggestion to the consumer, to future entrepreneurs, is also to look a bit beyond what we see, because communication of course, is very difficult for small brands. The budget is very low, so try to find something that is unfound, and I don’t speak only for Re-Bello, there are many very nice examples out there and very nice styles also, because everyone has their own style and someone might not like one certain style and likes another, so go beyond what you see, and there is a whole very beautiful world of very nice startups, and go to search there for the future of this planet. FRANCESCA: Thank you Daniel. and Matteo what is your suggestion? MATTEO: Yeah I agree, I think the current crisis we’re in is our biggest opportunity for progress. There can’t be progress without crisis. There's - you know, fashion is in crisis today. And we have that - you know, it's exciting, because we have the opportunity actually to change things. The next cool thing in the history will be truly to know what's real, and who has the power to determine that? The market. People going beyond, as Daniel said. What we read, people trying to truly seek for the truth and amplify it, share it, use their voice as an instrument to catalyze change. And also for future entrepreneurs, focus on that, focus on the purpose. Nobody needs more product. Nobody needs that. Everybody needs though, to find a way to do things in a much better way. For our planet, for our people, it's really a necessity, we don't have an alternative. And that's why we need to work together as one for it. FRANCESCA: And let me say, you are really catalysts of change, both of you. Thank you very much for being with us today. Thank you Daniel, thank you Matteo, and thank you also, thank you to all of you, and we really hope you will have a great future, and good luck to all the future entrepreneurs of sustainable fashion.
