Wouldn’t it be cool if there was a better built backpack that cost the same? The beginning of Herschel. How to feel established from day one?

Dave Young:

Welcome to The Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I’m Stephen’s sidekick and business partner Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.

[BWS Ad]

Dave Young:

Welcome back to The Empire Builders Podcast. Dave Young here alongside Stephen Semple, as he usually does. Just before we start the countdown to record, he asked me if I’d heard of today’s topic, which is Herschel what?

Stephen Semple:

It’s called the Herschel Supply Company.

Dave Young:

Herschel Supply Company. They make backpacks. When you said backpacks, I immediately thought of the JanSport backpack that every kid in junior high ever owned. Business world seems to have in the last 20 years. Like the Swiss Army or whatever. There’s a brand that you see those a lot, you see. There’s some other brands, but I’ve not heard of this one.

Stephen Semple:

So first of all, warm them to my heart because they’re a Canadian company.

Dave Young:

Oh, well, there we go. I’m guessing these are high-end backpacks that only really successful people can afford like you.

Stephen Semple:

They are, and I don’t have one.

Dave Young:

Oh, well, never mind.

Stephen Semple:

But they are a really nice backpack and they are very high quality. And in fact, they were one of the companies that really led this charge in terms of backpacks becoming higher quality and higher design. And they were started in 2009, and today they’re sold in 9,000 locations around the world.

Dave Young:

That’s a lot of locations.

Stephen Semple:

Yeah. They are a massive success. And they were started by two brothers, Jamie and Lyndon Cormack. And again, as I like to point out, Canadians, and if you saw their backpacks, what’s really interesting is if you saw them and took a look at it, given the way the logo is and the design and whatnot, you would feel like it was a really old company, not a company from 2009. And that was by design. That was very much intentional. They built this old and established feeling purposely. They both worked in apparel, and one of the things that they noticed was there was a gap in the marketplace. There were no stylish backpacks, and college students were using them and people were going to work with them, and there was nothing stylish. And today they also do duffels and suitcases and wallets and things along that line.

And how they came up with the name was an old prairie town near where they grew up in Saskatchewan, Herschel, this little town. And they would visit it as kids, and literally 18 people lived in this little town, and it was down in this little valley and it had this nice little hockey rink in curling rink and an old school that had been turned into a little local museum. And so they actually went and hung out there as kids. So Jamie moved away to Canmore and worked in mountaineering school, and he wanted to be a mountain guide. He studied this for four years. It takes a long time to be a mountain guide. And at one point his boss pulls him aside and says, “I’m not hiring you back.” And he goes, “Well, why not?” He goes, “You’re too young, you’re too smart. I want you to be one of the people in the back of the helicopter coming up here on weekends, not working in the front.”

Dave Young:

Wow. Okay.

Stephen Semple:

So he went back to the city, to school part-time and was doing graphics while working in a skateboard shop. And so he started a local skateboard magazine called Sequence, and he did it for about four years. And then he went on to work for K2 and Ride, which are two big snowboarding ski companies. And the brother Lyndon took an extended trip to Australia after high school and worked in a cycle shop. And then when he came back to Canada he worked for Vans, the apparel.

Dave Young:

Wow, okay.

Stephen Semple:

Shoe company and whatnot. They were really close. They talked most days, and they would always have these conversations. Wouldn’t it be cool conversations with what they call it? Wouldn’t it be cool to have this? Wouldn’t it be cool to have that? They bat around all these ideas, and one of the things they kept finding is they love these ideas that had this combination of city and nature. And the bag business kept coming up, because this was part of what they used every day, and most bags were too busy, but they found there was too much going on. And they looked to Japan, where Japan had these simple, high-quality bags that could be easily dressed up and dressed down. And he had a brand from Japan called Porter, and it was simple, pared down, High-quality, pretty expensive. So the goal was fewer features, higher quality, same price, as the bags out today. They were talking about this, and then they set a goal. They’re going to found this company in 2009. They weren’t going to quit their jobs, they’re going to just dip their toe in. But what they saw was how brands… And this is what their big inspiration was, how brands like Vans went from sports to fashion, because you remember Vans started off as a skateboarding shoe, and then it pivoted into being more than that.

So they wanted to build their bags on the same idea, the same aesthetic, while creating a story at the same time. And they looked to the past and modernizing is what drove them. So they actually start off with creating this brand vision that they wanted to have a story around, right out of the gate, which I found amazing. And what they envisioned was this little town of Herschel. If there was a store in Herschel back in the old days, it would’ve sold useful goods to the farming community. And so imagine a sign outside swinging in the wind, along the side of a little dirt road on a little side street, the supply shop, the general store. This is what actually inspired the creating of the brand, was that idea, that was what they had in their mind. So they were looking out in the marketplace and there was lots of backpacks out there, and one of the things they realized was a backpack is kind of a unique purchase because there is sentimental value when you own one.

This is the backpack you took to Europe. This is the backpack I had in university. Do you remember when? Right? You never remember the shoes, but you remember the pack, which increases the value of the purchase in their mind. So in 2009, backpacks are starting to get trendy again, and they’re actually trying to solve the problem for themselves, finding a nice backpack. So they modeled how sneaker companies looked at things and did things. Shoe companies create segments, and they do collaborations with artists, and they have people who are passionate for sneakers, and the bag business was no part of this. Most bags at the time, they were sold at the same place you bought the school gear. You go and you would get your notebooks and your pens and your backpack. It was where you bought stationery, but you weren’t buying your sneakers there that you’re going to wear back to school.

So again, they look to Japan for ideas and they start getting these bags from Japan, taking them apart and sketching it out. This was their biggest weakness. They had no idea how to make stuff. They never did anything in the manufacturing side.

Dave Young:

I mean, sure, but there are people that know how, you just have to find them.

Stephen Semple:

Well, right. And so one of the things they did do is they take these bags apart and they created these ideas and they sent out lots of requests. They sent all these requests to have somebody make some samples of the bag, and they got no response. Then one day they Googled how to make backpacks, and they found a bunch of other manufacturers reached out to them. Now at this point, they’re starting to run out of cash. And their oldest brother who works in the investment business, he was a commodities trader for JP Morgan invested a bunch of money with them. And they bootstrap, they had no office, no salary, and what they decided they were going to do was start with five items.

So they finally found somebody who would make these five items, and they promised that they would be together when the sample arrived. So the sample arrived. One of them was living in one town, another was living in another town. They drove, met the side of the road. It was almost like mafia hit, a couple of guys meet side of the road, they take stuff out of the trunk, open it up, and the bags were terrible. Absolutely terrible. The quality was there, but the shape was wrong. And so Jamie realized what he needed to do was go to China and visit the factory. This was the only way they were going to get this fixed, because they had a deadline. There was a trade show coming up in New York City in the spring of 2010, and they’re only two to three months away, and they wanted to have something for this trade show. So Jamie flies to China, and the owner of the facility is the only person who can speak English.

And he’s only going to be there for a week, and Jamie’s there for a month. So Jamie ends up doing a lot of this design where he speaks English and no one else does, and he’s trying to coordinate with these pattern makers and things along that lines. But anyway, they get it done and they have one sample of each of their things to display at this trade show, and it’s the first ever agenda trade show, and it’s held at the Chelsea Art Museum. And it’s actually the perfect vibe for them, because the Chelsea Art Museum has all these old floors and all this other stuff, and the booths are separated by stacks of pallets, is how they separate the booths. And that actually ended up with more than five items. They have 13 items to display, and they were the first to show up, and they just basically had a hockey bag full of samples.

And they show up, and the racks in the booth are for apparel, not bags. There’s no racks or shelves. And they ask around, “Are there any racks or shelves we can use?” There are none. But what Jamie notices is there’s a pile of pallets off to the side. So they run out and they get tools and they take the pallets apart and they actually make displays. And again, for their aesthetic, Herschel Supply Company, old school, it’s now stuff now hung on pallets, that actually was perfect and meant to be. They stood back and they went, “We couldn’t have thought of anything better.”

Dave Young:

If we had, we’d have paid thousands of dollars for somebody to create this rustic looking thing out of pallets.

Stephen Semple:

But they were like, “This was so meant to be. It was just perfect.” Now, one of the things that a lot of people do when it comes to trade shows is try to book appointments ahead of time. They didn’t do that. They said, “You know what? People are busy. If our display’s really good and our stuff’s really interesting, as people are walking by, they’ll come in.” And that’s what happened. People will be walking by and they did the double take. They really stood out. And Urban Outfitter were one of the first to do anything with them. The stuff looked cool and they loved the story. They loved the whole Herschel Supply story.

Dave Young:

Hey, Steve, I want to interrupt us. Can I interrupt ourselves?

Stephen Semple:

Well look, it’s your podcast too. You could do what you want to do.

Dave Young:

Here’s the thing. This is where we would normally play that really cool, highly produced ad that our buddy Mick’s voice’s in, and Gary has done some of them.

Stephen Semple:

Don’t forget Matthew Barron.

Dave Young:

And Matthew.

Stephen Semple:

He’ll be hurt. He’d be hurt if we forgot his name.

Dave Young:

No, they’re fabulous. But I thought, well, part of doing a campaign is you change it up every now and then and do a little bit different. And I thought maybe you and I could do the ad.

Stephen Semple:

Okay, well, let’s do it.

Dave Young:

Basically, this is the reason we’re doing The Empire Builders Podcast is so that we can share stories of business owners and hopefully the audience that likes The Empire Builders Podcast is a bunch of business owners. That’s sort of the plan.

Stephen Semple:

That’s the hope.

Dave Young:

We have a special offer for business owners. It doesn’t cost anything, and it’s fun for us, and it’s fun for you. We promise it’ll be fun, and it’s just basically contact us and spend 90 minutes with us.

Stephen Semple:

Here’s how it works. Just give a little bit of background, reach out. You can book the session online. Go to The Empire Builders Podcast and go to get started. And right online, you can book it, so nice and easy that way. You’ll receive an email with a scorecard and a questionnaire. So you just got to take a little bit of time to fill that out and get it to us. And what that allows us to do is instead of it being this typical, “Hey, we’re great. Hey, we’re wonderful. Here’s our ads. You should hire us.” It actually allows us to do some research so we can show up prepared and give you the business owner who contacts us some solid advice for free.

I don’t like sales. I’d much rather do that than be the sales guy. And here’s my attitude. We give you great advice, and it’s something you think you can apply and helps your business, maybe then you’ll want to go to the next step and hire us. And even if not, go and apply those things and grow your business. The more people do that, just better off we all are.

Dave Young:

This questionnaire that you’re going to give them. Again, remember, this 90-minute session is not about us. It’s about you and your business.

Stephen Semple:

Correct.

Dave Young:

So that’s why we need to know a little bit about you and your business so that we don’t make it about us. We want to make it about you.

Stephen Semple:

And it means the first 30 minutes, we’re not asking the basic low-ball questions. You’ve already given us the answers to those things. We can just get right at it. So take us up on it, man.

Dave Young:

Contact information is at our website. You’ll find us. You’ll find us. Let’s get back to the story.

Stephen Semple:

All right, back to the story. So at the trade show, they established a bunch of connections and followed up and sales would come later. GQ Magazine was there, and they asked for a bag to be shot in the studio, and it ended up being the cover gift on their bag. Nordstrom’s gave them a call. When they arrived at Nordstrom’s, first things Nordstrom said is, “Well, we don’t sell backpacks.” And they said, “We’re here to change that.” That was their reply. They didn’t back down from, “We’re here to change that.” And they got an order of Nordstrom’s. Today is one of their largest customers, and they’re the only bag in Nordstrom’s. Plus it had this huge halo effect. We’re in Nordstrom’s, right? Because Nordstrom’s itself is a top brand. Urban Outfitters. Cool brands go there. So they had this great start, and between Nordstrom’s and Urban Outfitters, they got orders for 4,000 pieces.

But here’s the problem. Minimum order for manufacturing is 7,000 pieces. It worked out, because they ordered 7,000 pieces and there were reorders right away. So it’s the middle of 2010. They had brought some people into the business, because what they wanted to do was create a new season. Because here’s the thing that they discovered, backpacks were still just being sold at back to school time, Christmas time. So they wanted to create a new season, and they wanted it to feel familiar, and they ended up selling like 8,000 bags in the first year. And what they also figured out is they were really good at the front end and really terrible at the logistics, and that’s what they need to get help with. 2011 comes along, they both quit their day jobs. And again, the challenge is to get bags to be more than one season, more than back to school.

And it took them time to convince retailers to stock other than just back to school. Then they ended up going over to Europe. They attended a trade show in Germany, but then when things really took off for them was they hit Oprah’s list.

Dave Young:

Oh, there you go.

Stephen Semple:

They got on the list, and the bags sold out. They didn’t realize that they were on Oprah’s list and they didn’t realize things sold out. And what they didn’t realize is they also didn’t have out an ability to have people buy things when it’s sold out, until somebody reached out to them and said, “Hey, dude, you’re on the Oprah’s list. I clicked on the link and there’s just now a broken link. It just says sold out.” So they ended up reconfiguring the things that they could take back orders and stuff, but they also went through a challenge, when COVID hit, was a real challenge for them because guess what? Backpacks weren’t needed. People weren’t going to the office, people weren’t going to school, people weren’t traveling.

Here’s where I really admire them, is a lot of businesses we know when they hit a time like that, we even see it with seasonal businesses like, oh, it’s slow, and they lose their minds. And what they decide to do, but it was time to regroup and rethink. They said, “This is not going to last forever, so what do we need to do?” And one of the things that they realized when they thought about the future was they needed to make their bags more sustainable, sustainable fabrics, sustainable manufacturing techniques, and that was going to be really important to their future. So they started during COVID, using that time to move to more sustainable manufacturing techniques. And today, 95% of the materials go into the bags and the bags themselves are made in a sustainable manner.

And what they found is coming out of COVID, that gave them yet another really huge lift, being able to talk about that.

Dave Young:

Sure. Well, that makes sense.

Stephen Semple:

And the interesting thing is post pandemic, they weren’t sure how that was going to work out with the fact that not as many people were returning the work, but what they actually discovered is hybrid work has actually been better for them because more stuff is being transported back and forth between home and work. So even if you’re only going in two days a week, you’re taking more of your office stuff home and you’re there’s more things being moved back to work.

So here’s what I found interesting about them. To me there was two really interesting lessons, and one is they scratched their own itch, their inspiration for this whole thing, the story, the aesthetic, the bag. He worked in mountaineering, they worked in sporting stuff, and they could never find a bag that they liked.

Dave Young:

Yeah. I think that’s such a key to this is when you see a hole in the market, you see that there’s something that you just can’t find that you really want. That’s the clue. Right? Unless you’re just some psycho that you want something that nobody else wants. But that’s usually not the case.

Stephen Semple:

It’s usually not the case. There’s somebody else out there who wants it. And then the next thing that they did I thought was interesting. Because we often talk about this, looking outside of your geography. They then started looking around the world at bags and discover, “Oh, isn’t it interesting?” In Japan, Japan has a bag like that. Now the size and whatnot of the Japanese bags don’t work for the North American market. Body sizes are different. The things we transport back and forth is different. But the whole aesthetic of this simple design, high quality was there. So they were able to look at that market and go, “Wow, here’s some ideas we can draw upon.” The other part I found interesting, I don’t see this in startups in terms of the startups I talk with. It seems like whenever anybody starts with the name of the company or the brand of the company or whatnot, they don’t start with this whole idea of how do I want it to feel.

That’s what I found so interesting. Right out the gate, they said, “We want it to have this old, established feel, like it’s something that you would buy in a small-town general store, that it’s a working bag.” And that it’s old and established and simple and high quality and all. To me, that was so interesting that that started, that established the name and established the look of the logo and established the story and all of that was there right out the gate. I find too often when companies are starting, they look at the brand, the brand’s about the product, not about how I want somebody to feel. And I thought that was so interesting.

Dave Young:

I think it’s a brilliant observation. They did so many things right, including, that? Right, to give some thought to it. Yes. It’s just something that a lot of entrepreneurs don’t think about, as you said, and there’s some really interesting choices you can make. It’s a fun exercise to do. And when you’re in the early stages, right, it’s not expensive to be able to say, okay, well, how about we go with this vibe? You can actually craft it that way.

Stephen Semple:

Well, and I even love that they thought about it as being, okay, if you were in this little town and there was a shop just off the road and there was a wooden sign outside the shop swinging in the wind, what would that look like?

Dave Young:

Yeah. What would it feel like when you walked in that store?

Stephen Semple:

And what type of bags would be hanging in that store if that store was around today? And that was a very, very big part of what drove a lot of their decisions, a lot of their decisions.

Dave Young:

And what fun to be able to do this with your brother.

Stephen Semple:

Yes. Yeah.

Dave Young:

This is almost like, “Hey, let’s just keep…” There’s an element of play involved. Yes. Especially when they’ve gone apart and taken some different career paths and then come back together for this. I think that’s a cool part of the story too.

Stephen Semple:

And it’s even fun that the brother who’s not involved in the business ended up investing in it. And they all talk about how he did very well in his investment. I’m sure he did. So that’s a fun part of it. But the other part that I also like is when pandemic hit, they took it as an opportunity to step back and rethink about the business and put themselves in the position that when the pandemic ended, they drove to new highs. There was a lot of things that I saw in this company and their stuff is nice. And they’re doing, look, they’re in 9,000 stores. They’re doing well.

Dave Young:

Well, as I evaluate my current need for a new backpack, they’re definitely now on the list why

Stephen Semple:

You should take a look at it.

Dave Young:

Absolutely. Thank you for bringing us the Herschel-

Stephen Semple:

Herschel Supply Company.

Dave Young:

Herschel Supply Company. Talk to you next time.

Stephen Semple:

All right, awesome. Thanks, David.

Dave Young: Thanks for listening to the podcast. Please share us. Subscribe on your favorite podcast app and leave us a big fat juicy five star rating and review. And if you have any questions about this or any other podcast episode, email to questions at theempirebuilderspodcast.com.