Allen Stephenson and Jim Twining of Southern Tide

October 27, 2011

By Alan Cooper
Publisher, MidlandsBiz, UpstateBizSC, LowcountryBizSC
October 26, 2011

Southern Tide was started in 2005 by then 23 year old Greenville native, Allen Stephenson. In March of 2007, Southern Tide shipped their first Skipjack Polo.  In early 2008, Jim Twining partnered with Allen.  In 2011, Inc. magazine named Southern Tide as the 73rd fastest growing company in America.

UpstateBizSC:
Why did you decide to go into the apparel business and start Southern Tide?

Allen Stephenson:
My grandfather was involved in the textile business in Greenville, but other than that, I had no previous exposure to the industry when I was growing up.  My mother, Diane, liked to sew and made clothes for uswhen we were young; she actually taught me about sewing.  But myinterests were always more geared towards science, mechanics, andphysics.  I was a tinkerer, the kind of kid who built radios andflashlights, and I even restored an old Jeep.  I was planning onbecoming a doctor when I entered college.

The turning point for me was a trip to Italy for six months where I was exposed to a new world, a different pace of life, and surrounded by great architecture and fashion.  When I came back from Italy, I decided to embark on this sort of crazy experiment to figure out how textiles work and to build the world’s best polo shirt.  I always loved polo shirts in college; in fact, my closet was full of them.  I was very close to graduating when I came up with the design of the shirt and decided to start a business.

Everyone I met tried to convince me to go back to school.  Their reaction was: You want to make clothing?

UpstateBizSC:
What process did you use for coming up with the perfect polo shirt?

Allen Stephenson:
My science background came in to play, because I made this big chart and used it to analyze 25 different features of polo shirts.   I looked at whether a shirt shrank too much, how the buttons were made, whether the emblems caused any  discomfort, how long they were, how the collars held up, etc.   As I filled in the chart, patterns started to emerge.  I called it the Frankenstein method, pulling different elementsthat I liked from all the various shirts.  Each detail takenindividually might not add up to a lot, but as a whole – the tinydetails in a shirt give it a special value.  That is how I came up with the Skipjack polo.

title=Jim Twining:
There are literally hundreds of comments on our website attesting to the fact that customers love the fit and feel of the skipjack polo. Some people think Allen just found a standard polo shirt and came up withan emblem for it. As you can see, the process was quite involved andtook over 1 year.  Even though Allen is not trained as an engineer, hethinks like one.  His scientific approach to coming up with theperfect polo shirt has carried over into the design of virtually every new product that we design. Hence the phrase, Built with a Purposethat we often use.

UpstateBizSC:
Is there a story behind the emblem?

title=Allen Stephenson:
Our logo is the Skipjack, an open ocean fish that comes from the tuna family.  I grew up fishing a lot so I was familiar with the ocean and different types of fish.  I knew I had to come up with an emblem that would make an impact and reflect well on the look and feel of the shirt.  One, day, when I was down at the beach, I drew this skipjack tuna by hand.  The actual Skipjack is longer, but I liked the attitude of the fish – laid back, sporty, compact, with a pleasing shape.  That is what we want our clothes to be like.  So it stuck.

UpstateBizSC:
After you came up with the design, how did you get the shirts manufactured and what channels did you use to make some sales?

Allen Stephenson:
Not having any experience in the industry, we had no idea how to get the shirts produced or even who was going to buy them.  Dianne jumped in and helped me figure navigate this phase of the company’sdevelopment. We asked a lot of questions and followed our instincts.  In order to produce a shirt exactly the way we wanted, we needed tocreate a blueprint.  Yarn, dye, pattern, labels, collar type, thread,buttons etc. – everything had to be exactly the way we wanted.  All inall, we spent about a year in an interactive process with potential manufacturers before we were ready to move forward and order our first batch of shirts.

We ordered some different sizes and colors and then one day, an 18-wheeler showed up with our first order – -which included hundreds of boxes.  There was no loading dock, so we  unloaded the whole truck one box at a time. Then I took some shirts into a local independentclothing store and asked if they would carry them. After considerableanalysis, they said yes.  I remember being incredibly nervous walkingin to that first store.  I also remember being incredibly nervous whenthey called up and told us they needed more!   So now what do we do? It was then that we learned  how to create an invoice.

UpstateBizSC:

How did you finance that first order?

Allen Stephenson:
As with a lot of startups, financing came from family and friends.  I had saved up some money from my high school yard business, but that ran out in a flash.  I was very fortunate to have the support of my mother, Diane, at the early stages of the process.  She not only stepped inand helped financially, but she was also an amazing sounding board when it came to the design and color of the shirts.  It would have been impossible to do this without her support.

UpstateBizSC:
Jim, when did you join the company?

title=Jim Twining:
In 2005, we sold our mid-sized software company called Enterprise Computer Systems to a much larger company. I assisted with the transition, then left to do consulting and strategic planning for a wide range of companies.

In October  of 2007 , I received a call from a friend saying that they were putting together a board of advisors comprised of a handful of lawyers, CPA’s and business people  to help out this young man, Allen Stephenson,  who had come up with a cool polo shirt.  When I met with Allen and Dianne, I immediately liked the company and there was good chemistry between us.  We spent about 100 hours developing a strategic plan for Southern Tide, and I thought that was going to be the extent of my association with the company.

title=Allen Stephenson:
At that point, we knew that we needed help with the business, sales, and marketing side so Dianne and I asked Jim to become our partner and  CEO of the company.  He thought about it for a while and in early 2008, we formed a partnership between the two of us and started moving the company forward.

UpstateBizSC:
What did the strategic plan uncover?

title=Jim Twining:
The process started with a SWOT analysis and we determined that our strengths were a great product that was gaining momentum, the passion of the founders , the creative atmosphere, and a strong desire  to grow rapidly.   Our weaknesses were that we were constrained by a lack of capital; we had limited expertise in sourcing, , had no marketing plan, virtually no brand recognition, and we lacked of any real internal infrastructure.  The opportunity?  If we expanded the product line, raised capital, improved our business processes and systems, and developed a more focused sales and marketing machine,  we felt we could grow rapidly.  We went through a couple of rounds of formal capitalization of the company (and in return gave up a small amount of equity and executed on our strategic plan.

The plan included a deep evaluation of our values, our target market, our branding message, our short and long term goals and initiatives, and our KPI’s.

Beginning in 2008, we started a rapid geographical and product line expansion that  led to the  to design of  our pants and  shorts, button down sport shirts, , T-shirts, swimwear, denim,  sweaters, and  accessories – all designed by Allen and our incredible design team. Today, we have over 4,000 SKUs (stock keeping units), up from 300 four years ago.  We have expanded our distribution.  We are now in over 500 stores across the country, up from approximately 40 stores four years ago.

UpstateBizSC:
You mentioned that you started in local independent clothing stores.  Is that still your main sales channel?  Did other channels open up to sell Southern Tide clothes?

Jim Twining:
90% of our distribution is still through men’s specialty stores.  One of the challenges in this market is that in 1990, there were around 5,000 men’s clothing stores; today there are 1,400.  People who own independent clothing stores are very knowledgeable and passionate about the industry.  We deal with a large number of contacts in this sales channel, but it is a very personal, relationship based sale.

We also do a good niche resort business.  We are in eight, high-end golf clubs and resorts (the Greenville Country Club and The Cliffs, here locally for example).  Our growth potential includes continued penetration in these markets, as well as our online business which has grown rapidly. One of the key marketing strategies is that we actually share revenue from our web sales with our retail customers, which is unheard of in consumer products e-commerce.  This is something we do to recognize the fact that our independent retail customers are a key part of our brand building and rewarding them for online sales in their market creates a complimentary channel, rather than a competing channel.

title=Allen Stephenson:
The performance nature of our shirts and pants in terms of stretch and fit has also opened opportunities in outdoor stores.  One of our top five stores, in fact, is an outdoor store in Texas.

UpstateBizSC:
Can you buy Southern Tide in department stores?

title=Jim Twining:
No. It would be hard to maintain our brand image in a department store, so this is not one of our channels.   We may venture into high end department stores some day, but it is a channel that is not currently being pursued.   There is still plenty of growth opportunity in our current channels of distribution.   

UpstateBizSC:
Talk about the brand. How would you categorize it? High end?

title=Allen Stephenson:

For me, high end is Louis Vuitton, Gucci, etc.  That is not us.  We are a classic lifestyle brand.  We are not the least expensive polo shirt that you can buy, but when you factor in the fabric, the attention to detail, the construction, the durability and the consistentquality, we are value priced.  You can buy a cheap cotton polo shirtfor half the price, but after you have worn it eight times, it mightlose its shape and start to look old.

UpstateBizSC:

What do you think are the keys to your success thus far?  Do you have any advice for aspiring entrepreneurs?

title=Jim Twining:
First off I suggest that people find something they are passionate about. After all, starting a company really does require that live it and breathe it 7 days a week. You have to have a great product, build the the right team, the right capital structure, and great marketing. You have to have to have a plan. You have to decide on the destination and lay out the path, knowing that you will make adjustments as you go. When you combine that with a dedication to the original idea, faiththat it’s going to work, trust in the people around you, and knowingwho to ask to get some answers – good things can happen.

I spent the formative years of my professional career in the software business; Allen wanted to become a doctor.  Neither of us has any direct experience in the apparel business, but we see this as an advantage because we are not constrained by industry norms and practices.

I always stress the importance of writing things downs.  A well thought out plan that is nimble enough to be revised every 3-4 months asmarket conditions change, helps keep you focused.  Southern Tide hasvery specific goals in terms of revenue, personnel, products,distribution, expenses and sales.  We actually have 90 day, 1 year and 3 year objectives. We update it regularly. It never ends.

You have to watch your expenses closely.  Most of our business and marketing practices of today were born of necessity.  We always try and remember that we used to do without certain things – for instance when we first moved into our current offices we used doors as our desks. After 4 years we have never bought any new furniture – instead we have grown to 25 people and 6,500 square feet of offices by looking for used furniture. Much of it was actually free. The point is that we would always choose to put our capital into new products and people instead of ‘things’.  The memory of this approach helps us when we are thinking about spending money.

UpstateBizSC:
How did you market the company?  How do you spread the word in areas of the country that might not ever have heard of Southern Tide?

title=Allen Stephenson:
Initially our marketing was exclusively word-of-mouth.  We placed the shirts in high- end tourist locations such as Charleston, Hilton Head, and Savannah, and when people returned back home, they would tell their friends about Southern Tide.

Jim Twining:

As we started to grow, we came up with a more focused campaign to increase brand awareness. You may not see full page ads or 30 second spots on television, but the Skipjack was front and center at over 1,000 events this year:  tennis and golf tournaments, concerts, university events,  charity events, etc.  It’s a grassroots, guerilla marketing approach, and it has served us very well as we try to reach people in new markets.

When we engage spokespeople for the company, we try to align the brand with people from different walks of life who are respected in their areas of influence, regardless of whether they are famous or not.  One our spokespeople is a sprint kayaker, for example.  Not exactly a household sport. In other words, we are always open to new ways to expose a broader range of people to the brand. While we have over 300 official ambassadors and literally 2-3x that many unofficial ‘ambassadors’.

UpstateBizSC:
How did it feel to be included on the Inc 500 list ranking Southern Tide as one of the Fastest Growing Companies in the country?

title=Jim Twining:
We are very proud and humbled to be included on the Inc. 500 list of Fastest Growing Companies in the country.  Using our sales of $190,000 in 2007 as a base year, we have achieved several significant milestones.  We had $6.1M in revenue in 2010 and we will double that in 2011.  In terms of percentage increase in revenue, we are the 73rd fastest growing company overall, the 6th fastest growing consumer products company and the fastest growing apparel company in the country.  Going forward, our goal is to continue to grow revenues every year more than the previous year’s revenue growth.

UpstateBizSC:
Where are you at in terms of financing?  Are you considering new equity investors to spur growth?

Jim Twining:
At the moment, we are not looking for new capital.

UpstateBizSC:
What role do you see Southern Tide playing in the local business community?

Jim Twining:
We are proud to be a local employer and to play a part in bringing back at least some of the incredibly rich history of textile businesses to Greenville. While we still cannot manufacture in SC,  we recently calculated that over 75% of the economic benefit of our growth stays right here at home.  We have hired almost 20 people in 2010. We currently have 25 full-time employees and we will be adding to our team  as we continue to grow.   We also participate and support a wide range of charities in the upstate and love finding ways to give back to the community.

title=Allen Stephenson:
For me, it’s cool to see young people going to men’s clothing stores.  Today, we all dress more casually than 20 years ago, but there’s more to dressing well than just loading up at the local mall.  We enjoyplaying a part in teaching men, young and old, about the value oflearning how to dress. We enjoy the role we play in bringing this about and the specialty stores are the best vehicle we have found foraccomplishing this.