Many know the story of how Steve Jobs was fired from Apple, how the company struggled after he left, and how he came back as a savor and took apple to new heights. This story is about a slightly similar story, but in the fashion business. It involves a very interesting founder Dov Charney, who founded American Apparel before being fired from the company. As i am writing this post it seams Dov have filed for bankruptcy.
Jobs was forced out of Apple in 1985 after a long power struggle with the company’s board and its then-CEO John Sculley. That same year, Jobs took a few Apple employees with him to found NeXT, a computer platform development company that specialized in computers for higher-education and business markets.
Dov is a Canadian entrepreneur (born in 1969), clothing manufacturer and founder of American Apparel which was one of the largest garment manufacturers in the United States. Following his departure from American Apparel, Charney subsequently founded Los Angeles Apparel.
American Apparel Inc. is a former brick-and-mortar stores operator based in Los Angeles, California. Founded by Dov Charney in 1989, it was a vertically integrated company that ranked as one of the largest apparel manufacturers and marketers in North America.
The company filed twice for bankruptcy, in 2015 and 2016. In January 2017, American Apparel laid off 2,400 Southern California workers and started the process of shutting down company factories and closing its 110 stores.
A billion dollar company? then the founder was fired.
The story of Dov is an interesting one. The businessman was able to create a cult like following around him, he operated like a cult leader and his early employees were like in a cult. It is reported that for his second company he was letting a lot of employees live with him in his mansion / company HQ. This cult like mentality is a copy from the startup copybook, it is what gives much potential to technology startups.
Dov was working 24/7 on American Apparel, which he considered his child. And the company was growing fast, with brick-and-mortar stores popping up everywhere … until when Dov was fired. After Dov firing the company started to struggle, and eventually filed for bankruptcy to end up now just an online store brand.
How did Dov do it, and what went wrong?
Dov had a couple manipulation tactics up his sleeves.
I- Made in America: The Canadian businessman made profit by taking advantage of the made in american sense of patriotism, it allowed him somehow to cast competitors as non American, and present his brand as the true American brand.
II- NO sweatshops (locally made): One of Dave’s selling point for his businesses was selling a story that the garments are produced locally, no sweatshops … The question would be how can he still be competitive : The answer a lot of low wages to undocumented workers. (till immigration probe forced them to let go 1500+ worker)
III- Dedication: As i mentioned previously, Dov managed to create a culture of total dedication. He was dedicated to this company and managed to get people around him to do the same.
What went wrong ?
Dov used his power as a boss to promote a lot of young women into key or important positions in the company, some employees were even complaining of a lack of meritocracy. Later sexual abuse accusations give the idea that he took advantage of his leadership role to abuse many women. Dov is also believed to have had consensual relationship with dozens of women working for him. The sexual abuse accusations, made it harder for the company to get credit from lenders.
Dov made himself very central in the structure of the company, thus when he was later fired, the company struggled to fill the place he left.
Unlike Steve’s story, this story has a lot of reason why the founder should be fired, but this still does not removes the fact that the business often fails without the founder.