Heresy and harmony at Hiut Denim
When David Hieatt founded Hiut Denim in 2011, he produced an unusual document. A “user manual” for shareholders. Twenty-three points explained why the company was set up and how it would be run.
- “We make jeans. We will only ever make jeans. So no bobble caps. No sweatshirts. No mugs. No perfumes.
- We will only ever make jeans in Cardigan (a small town on the west coast of Wales, population 4,000). This town is our ‘why’ we are in business.
- No votes for outside shareholders.
- We won’t pay a dividend. We will keep re-investing … plus 19 others …“
David recognised how unorthodox this was. “When you tell investors that they are not going to see returns for 10 years and they are not going to have any voting rights, most sane investors walk away.”
But many didn’t. They invested …
They invested in a business making jeans by hand; far away from target markets; on a mission to re-create 400 textile industry jobs in Cardigan; with high labour costs; taking on giants like Levis, Wrangler and Diesel.
They also invested in a business that prefers to grow, according to David: “the slow, hard, stupid way, not the scale-up way”. The analogy he uses is: “When a tree grows slowly in a really cold climate, it gets strong.”
Six years on, investors’ “insanity” appears to be paying off. Hiut is growing the top line at around 50% per year, is profitable, has outgrown it’s first factory, and built an international brand punching way above it’s weight. It has been profiled by CNN, the BBC and GQ and recently got a big boost when Meghan Markle was spotted wearing Hiut jeans.
And the ride for investors might just be picking up speed.
Growing the slow, hard stupid way doesn’t look like it will be plan-A forever. David says: “Maybe in a year’s time, we might go and push a few more buttons. We are capable (of rivalling Levis and Diesel), even though we are very far away from that right now, we can get there.”
Conventional exit routes for investors also appear unlikely. When quizzed about a post-founder era, David doesn’t talk about selling to a larger competitor or listing the business, he talks about exploring decentralised ownership: “Can we get ‘the town’ to own the company at some point?”
Exploring this further with David only highlights the unusual, and harmonic, founder-investor relationship: “As Perrier can only make water in Vergèze … Hiut can only make jeans in Cardigan. That’s a difficult thing for shareholders to agree to. But they have actually said it’s mandatory.”