Startup Designers Stitch Together New Business Models

Vosovic on Project Runway in 2004

Photograph by Barbara Nitke/Bravo via Everett Collection

Vosovic on Project Runway in 2004

When Daniel Vosovic became the runner-up on the second season of Project Runway in 2006, he had women across the U.S. interested in his clothes. What the designer, then 24, didn’t have: a company to make or sell them.

New York Fashion Week brings to mind the glittery excess of runway shows and celebrity parties. But for every star designer, there are countless striving entrepreneurs facing the dollars-and-cents decisions of any business owner in a competitive industry. Vosovic and a handful of other fashion entrepreneurs gathered on Monday at a panel sponsored by American Express (AXP) to promote small fashion brands.

Vosovic spent years preparing to start his label, which he launched in February 2010. The Michigan-born child of a secretary and a mechanic, he sought advice from his family’s financial planner to create the business and line up a lawyer, accountant, and a handful of investors. He’s a member of a new incubator run by the Council of Fashion Designers of America and says his startup status makes him nimble in the marketplace. After his first two seasons, Vosovic lowered prices to appeal to those who balked at the highest designer-level price tags. “The fact that I’m a small ship allows me to shift and navigate faster than those big labels,” he says.

The panel took place at Milk Studios in Manhattan. Milk’s co-founder, Mazdack Rassi, started putting on his own Fashion Week events five years ago with upstart designers as a kind of counterprogramming to the big shows. “It was a temporary idea,” he says. “Then we realized that we needed to continue this because it became a kind of incubator.”

Young designers like Vosovic have sidestepped the established fashion supply chain that relies on retail buyers choosing new collections off the runway. Depending on big retailers alone, Rassi says, means “every six months you risk the company to go bankrupt.” Instead, a growing number of designers sell through independent boutiques and online stores, building their followings on the Web. “There’s certainly young brands that have larger Twitter followings than the big stores that are carrying them,” he says.

Sales at smaller apparel retailers have grown more quickly than the sector as a whole for the last three quarters, according to spending data compiled by AmEx. That’s good news for designers like Juliana Cho, who started selling her label, Annelore, out of a 400-square-foot storefront in the West Village in 2002. Two years ago she opened a second boutique in Tribeca.

Cho and Vosovic both manufacture their clothes in New York—a more expensive choice than overseas factories but necessary for the quality they want, Cho says. She has a group of “grandmas in their 80s” in Brooklyn who construct her hand-knit sweaters. She tells young designers to skip the flashy parties and focus on making great clothes. “If you don’t have a good product, this business weeds you out,” she says.

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