How Ethika Stayed Hip And Got Underwear Sales to Hop - Orange County Business Journal (2022)

There are a lot of easier ways to make money than starting an apparel brand, according to Ethika Inc. Chief Executive Matt Cook, who joined the underwear manufacturer in 2012, little more than a decade after its founding.

“When I first heard about Ethika from (founder) Malcolm McCassy, I was captivated by the number of athletes, influencers, and celebrities who were wearing the product, but the brand had virtually no infrastructure or capital to grow,” Cook said in an email. “So, I figured with some money and a credit line, along with my existing business infrastructure, it would be easy to take the product to retail and grow the brand quickly.

“This obviously didn’t end up being the case, and I was quickly humbled by the difficulty of the apparel industry. It has taken a lot of hard work and strategy to get the brand to the level it’s at now.”

Today, Ethika employs about 100 at its new, 46,178-square-foot headquarters in Lake Forest, and another 225 at its factory in China—a big stretch from the brand’s humble beginnings in McCassy’s garage. Its products, ranging in price from $15 to $25 and recognizable by a prominent waistband, are sold at Tillys, Zumiez, DTLR, Footaction and Active Ride Shop—and about 100 specialty accounts across the country. Annual sales have shot up to an estimated $30 million, though Cook declined to provide specifics.

“We’ve been seeing 240% growth per year for several years now,” he said, adding that “a majority of our revenue comes from our direct to consumer business generated off ourethika.comwebsite.”

Cook’s an entrepreneur who never worked for anyone but himself since high school and has “parlayed one business into the next over the years.”

He said, “I’ve done everything from owning a hair salon to real estate investing, promotional advertising, technology, internet marketing, and now the brand business. Ethika has consumed so much of my time over the last four years that this is my only focus, and with our growth plans, I think it will be for the foreseeable future.”

He invested about $2 million in the company in 2014, according to documents filed with the Securities and Exchange Commission. The capital enabled the brand to overhaul its supply chain, distribution channels and e-commerce strategy, and expand lifestyle, performance and premium offerings for men.

“What worked well for us was initially focusing on one product, and putting our marketing efforts into our brand ambassadors and music program proved to be very successful,” Cook said. “Music inspires everything and connects with everyone in some form, so we were able to broaden our reach.”

Last year the brand released the “RGB Mixtape” of original music and a signature underwear collection designed by popular hip-hop artists Meek Mill, Dave East, Kid Ink, Chevy Woods, Casey Veggies, Jahlil Beats, Ace Hood and others. Its brand ambassadors also include soccer superstar Dani Alves, motorsports icon Valentino Rossi and Golden State Warrior and Santa Margarita Catholic High School alum Klay Thompson.

“We are currently building a state-of-the-art basketball training facility and music studio here in Orange County,” said Vice President of Marketing Danny Evans. “We want to allow our athletes and artists to be involved in the brand as much as possible.”

Ethika also expanded offerings in 2015 to include kids’ and women’s underwear.

“The women’s line for us was unchartered territory, and we were quite worried about launching,” Cook said. “It took us 18 months from start to finish to develop a set of tops and bottoms that we felt could be worn by different types of women. We chose more expensive fabrics, paid a lot of attention to every detail, and kept optimizing the fits until we were confident they would be received well by our customers. Women like options, and this line has proven to be a lot more difficult than the men’s and boy’s product lines, but we have definitely seen a lot of success with our women’s products.”

Debutante

To mark the occasion, Ethika staged the ad campaign photo shoot “in the middle of the 405 freeway,” Evans said, adding that his team has “always been focused on creating experiences that haven’t really been done before to spark some sort of ‘how did they do that’ reaction.”

Or a ‘why now?’ reaction. Ethika staged that I-405 shoot (page 1 top) on a Friday afternoon. Accounts of the incident noted a few blocked drivers getting out to take photos, many more staying inside to lay on their horns. But no arrests. Ethika was starting to roll.

Evans joined the brand in 2009 after messaging McCassy via MySpace, saying, “I would work for free and do anything to be a part of his brand.” Eight months later, the two launched the website and continued working out of Malcolm’s garage for the next three years.

“I always had a vision Ethika would be where it is at today, and much more,” Evans said. “The potential for this is nowhere close to being reached. Malcolm is still a partner in the business, but has not been involved in the day-to-day side for a few years now.”

He also recruited Chris Wilkerson, now vice president of finance.

“Danny asked me to come to Malcolm’s garage to help him pack underwear,” Wilkerson said. “I had little knowledge of what Danny and Malcolm were creating, and once I got more familiar with the brand, I really liked what they were trying to do. I vividly remember having a conversation with Danny about how cool it would be to finish my college degree, get my CPA and work experience, and eventually work with Ethika. That’s exactly what happened—Matt Cook reached out to me in 2014 to come help him handle the finance function of the business.”

Ethika moved in 2012 to Cook’s office in San Clemente, and now competes with former neighbor Stance Inc., which launched its underwear line in 2016.

“The underwear category is very difficult,” Cook said. “There is a steep learning curve in almost every aspect of the business, from the fit itself to knowing how best to market product. We actually didn’t see any change in our business when others entered the space. We were the first mover in the category in about 98% of all our current retail accounts, and this has proven to be a huge advantage as others come in and try to compete. I suspect that will change over time, and many of the newcomers will start to take some of the market share, but our longer-term vision and strategy should help us mitigate some of that risk.”

Ethika’s longer-term vision includes international expansion and a flagship store.

“We have had very few sales outside of the US,” Cook said. “The international opportunity is something that is definitely on our radar; we’re just trying to figure out what our strategy should be … We do have one distributor in New Zealand, but no other territory. We are slowly building our product offering with some additional basic items—socks, blank tee shirts, etc.—and I think we will continue to do that. There has been a lot of discussion aboutmoving into our own retail space, but we honestly have no experience in that area and are nervous about the unknowns. I suspect that sometime in the next few years we will have a flagship retail location and test the waters.”

For those daunted by Cook’s journey with Ethika, he had something else to add.

“Nothing of value comes easy. Be passionate about whatever it is you’re doing.”

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