Invent a Cool Clothing Site, Now Leave the Country—Fan Bi, Blank Label, and The Case for the “Founders Visa”
Twenty-two-year-old Fan Bi is the mastermind behind Blank Label, an online clothier where fashion-conscious young men can use sophisticated “configurator” software to design their own dress shirts from a variety of fabrics and collar, cuff, and pocket styles. Tailors in Shanghai assemble shirts from the designs and ship the finished articles back to the U.S., all for under $100 per shirt. His Boston-based startup is part of a “mass customization” movement that could alter the economics of the fashion industry, empower clothing buyers, and give rise to a new generation of e-commerce success stories.
Too bad, then, that the young entrepreneur is about to be kicked out of the United States.
Bi is a citizen of Australia and a student at the University of New South Wales in Sydney who has spent the last year in a study-abroad program at Babson College in Wellesley, MA. He says that even before his fourth month at Babson, he had fallen in love with the high-energy entrepreneurial culture at the institution (and around Boston in general) and had decided, like most of his Babson peers, to start a business. Blank Label went live on October 31. But now that the startup founder’s studies are ending, his student visa is about to expire—meaning, come January 4, he’ll have to get on a plane for Sydney.
When I first talked with Bi back in October, there was still some prospect that his visa would be extended. That fell through. Speaking with him again yesterday, I didn’t hear anger in his voice about having to leave, just disappointment. “I’m not screaming and saying ‘This is ridiculous’ or ‘This is absurd,’” Bi says. “This is far bigger than myself; I’m one of the fortunate ones.”
But Sydney, he confesses, just doesn’t have the kind of startup culture where, he now realizes, he will thrive best. Even in Canada—to which Bi is considering emigrating, so he can be closer to the rest of his team here in Boston—he wouldn’t be surrounded every day by a community of successful serial entrepreneurs and investors who could offer him guidance, feedback, and support (not to mention employees and capital), he says.
At bottom, there really is something absurd about banishing a promising entrepreneur like Bi, who could be building his ideas into a valuable business right here in Boston—creating jobs and aiding the region’s, and the nation’s, economic recovery. That’s why there’s so much talk these days about the idea of a startup visa, a new class of immigration document that would allow graduating students and other non-U.S. citizens who become startup founders to stay in the country indefinitely.
Brad Feld, the co-founder of Boulder, CO, venture firm Foundry Group and startup incubator TechStars, has been blogging for months about the need for what he calls a “founders visa,” picking up on an idea from Y Combinator’s Paul Graham. In October, Feld published a first-hand-account by an anonymous foreign-born student entrepreneur who said he was dreading his departure from Babson; Bi now acknowledges that he was the post’s author.
“Being in Boston…I mourn the fact my visa expires in December, the conclusion of my studies,” Bi wrote. “Why is it so good here? How is it so different to back home? It’s not about the number of venture dollars, or the size of the business plan competitions, it’s not even the size of the market. It’s about an intangible in the ether. It’s about culture. For a first-time, young entrepreneur, environment is so fundamentally key. The couple of web tech, social media, or general startup networking events I go to every week act as shots in the arm. I always come back that much more energetic; that much more inspired.”
The inspiration for Blank Label, Bi says, came when his parents, who emigrated from China to Australia and run a successful grocery business, visited Shanghai in mid-2008. The city is home to a bustling garment district. “I thought maybe there would be a way to send information to a supplier in China and have them hit me back with some products,” Bi says. “So my parents spent a couple of days there exploring and testing out different suppliers.”
Bi had spent some time doing investment research for a firm in London, a hub of “bespoke” (Brit for custom) clothing design, and he says “I couldn’t get the idea of custom clothing out of my mind.” His parents’ tests had shown that it was possible to buy custom men’s shirts from individual tailors in Shanghai at prices far below what customers might pay in shops on Newbury Street or Madison Avenue. The problem—and the opportunity—was that there was no easy way for men to order custom shirts online, and no easy way to get these orders to the right people in China. By mid-2009, Bi says, “I’d felt the Boston environment of high-energy, super-passionate companies, and entrepreneurship as a lifestyle really started to energize me. I said, ‘This is what I want to pursue.’”
To build a real business around the idea, Bi realized he’d need a Web 2.0-style website with some pretty sophisticated graphical tools. So he recruited a technical co-founder, a Web strategist, and a designer, and funded the development of the site out of his savings from a brief stint at an investment bank in Sydney. The four entrepreneurs worked through the summer and fall, and turned on their beta website the day after Halloween.
Bi says the Blank Label site is aimed at “young, independent, fashion-sensitive guys who are generationally unique in the sense that they use individual style as a currency.” (The “young” part is confirmed by the site’s decidedly un-PC cartoons of minimally clad women, with captions such as “I like the creative types.”) Blank Label’s configurator walks the customer through a four-step process that starts with choosing a fabric, then a particular style of collar, cuff, placket, back, shoulder, and pocket.
A placket, in case you’re as clueless about fashion as I am, is the double layer of cloth that holds a dress shirt’s buttons or button holes; like collars or cuffs, plackets can be made from a custom fabric that might be of a different color from the base fabric. Each such choice—Bi calls them “upsells”—adds a few dollars to a shirt’s base cost of $45. As the user chooses various styles, the configurator updates a computer-generated image of the custom shirt, as well as its cumulative price. Want a monogrammed inside collar? That’s $15. Want a shirt that’s green on the left side and blue on the right? Rock out—but it will cost you an extra $35.
The Blank Label home page shows a few models wearing their custom creations, and if you like their style, you can simply order their shirts. When I spoke with Bi before the site launched, he had no idea whether visitors would cotton to the configurator, or just go window-shopping. “One of our big business-model questions is, are our customers going to be leaders or followers?” he said at the time. “Are they going go through the six-minute process of designing their own shirt, or do they just want to see something designed by the community, more of a Threadless model, and maybe make a couple of tweaks?”
I asked him yesterday what he’s learning about that question, now that the site’s been online for six or seven weeks. The company is selling about two shirts a day so far, so “the sample size is still fairly limited,” Bi says. But already, the team has observed something very interesting: that it can turn followers into leaders just by tweaking its user interface. “For the first two weeks, our orders averaged about $52 per shirt. Then we pushed a new release of the site where instead of putting the free options at the top of the configurator, we put the upsells at the top and the free ones at the bottom. Just from that little tweak, people started designing their own products, and our average went up to $67 per shirt.”
You can bet that if some e-commerce developer at Amazon or L.L. Bean or came up with a design change that induced a 28 percent spending increase, they’d get a year’s salary in bonuses. But it’s all in a day’s work for Bi and his peers—who actually aren’t drawing salaries at all.
After an abortive attempt to raise venture capital last summer, Bi says the company is going to stay lean and self-funded for a while. “We wanted to raise money more for the self-validation and the security than because we really needed it,” he says. “We have zero overhead, we have no ad spend at the moment, and we make money on every shirt. We don’t want to have a high cash burn while there are still so many unanswered questions.”
Such as where Bi will end up. Right now, he’s thinking Montreal or Toronto—cities close enough to Boston that he could drive into town every couple of weeks to see his team and get re-energized. In these days of virtual organizations, having a remote CEO isn’t a showstopper for a startup. But it’s not optimal, either. Bi worries that he’ll feel isolated. “So much of my limited startup knowledge comes from talking to other people and hearing their insights about marketing and technology and raising money,” he says. “Going to Montreal, I am a little bit concerned that my perspectives will be limited.”
If local entrepreneurs and investors had their way, Bi would be able to stay right where he is. “I met Fan at Web Inno and really dig his business—and him,” says Shawn Broderick, executive director of the Boston version of the TechStars. “He was sharp, smart, thoughtful, and interesting.”
It’s silly to push such people out the door as soon as they’re done with their studies, Broderick says, especially in light of the statistics: some 47 percent of venture-backed startups in the United States were founded by immigrants, according to a 2006 study by the National Venture Capital Association. “Lots of companies and lots of jobs are created in the U.S. by individuals not born in the U.S.,” says Broderick. “We’re fools to allow them to leave after graduation.”
Broderick’s solution: “The INS should identify the fields of study that create companies and staple a visa to non-citizen students’ diplomas when they graduate in those fields.” But he complains that “our lawmakers are unable to get past fear-mongering and short-sightedness to really address the serious issues within immigration.”
But even though it could be a while before Fan Bi gets to return to the United States as anything other than a tourist, he’s not letting the situation slow down his company. He gave up the fight for a visa extension after he realized that dealing with immigration officials could become as all-consuming as seeking venture funding. The company just doesn’t have the time right now.
“We’re not the only ones who think that customization is an interesting space, and we’re not the only ones who can go to a developing country to find cheap sourcing contracts,” Bi says. “We need to define what we’re doing that’s really different and develop some sort of unfair advantage.”
With the shirt configurator, Blank Label may have found the beginnings of this advantage. Now it just needs to find its founder a nearby home.