NEW YORK (FOX 5 NY) - What can you do with $3 million in cash in 35 plastic bags in the back seat of a Land Cruiser in the middle of the Gobi Desert in Mongolia? Purchase 40 tons of cashmere from nomadic herders and create your own business.
That's how Matt Scanlan built Naadam, a New York City-based cashmere startup that works with Mongolian herders. Scanlan calls the business "millennial capitalism," a term he coined to describe businesses that have both profitable and non-profit components.
His goal is to disrupt the cashmere industry by providing better-quality sweaters and better prices, while also supporting the herders back in Mongolia.
Scanlan and his business partner Diederick Rijsemus drove on dirt roads in Mongolia for 20 hours straight, going through mountain passes and wide open plains until they finally reached a group of herders. They had no idea where they were or what time it was, but they got to work.
Scanlan and Rijsemus spent three weeks talking amongst the goats, figuring out how to create a business that would benefit everyone involved. The herders needed medical care for their families and their goats and fair wages for their cashmere. Scanlan and Rijsemus realized they could do both.
Scanlan says they could effectively outbid the rest of the marketplace while still providing profitability to the people they were working with, and then on top of it, be sure the herders stayed there because they had healthy animals and healthy product through a non-profit piece of the business.
Then it came time to raise money, something they did through a combination of friends and family, a $100,000 Kickstarter campaign, and most recently, fundraising.
Scanlan says they needed to raise $1.2 million to launch the business and break even after 2 years. They raised $750,000 and still reached their goal of breaking even after 2 years, even though they were underfunded, which he calls amazing.
Naadam is still raising money today, but in the meantime they're selling cashmere yarn wholesale and cashmere sweaters both at boutiques and direct-to-consumer on their website.
They also recently launched a subscription service. Sign up, pay $500, and get three different sweaters in three different colors. Naadam will send one to you every month.
Scanlan swears his sweaters are the best out there. He says no other area on earth is producing cashmere of this staple length and this micron all at once in a pure white cashmere, which is then shipped to Italy and spun into high-quality yarn.
Meanwhile, medical supplies are also being shipped to Mongolia to help the herders whose cashmere keeps Naadam going.
Scanlan says they've already inoculated 250,000 goats for 1,000 families of herders in a region that's about the size of Rhode Island. They've saved each family $1,200, which is about 25 percent of their income. This June, Scanlan plans to go back to Mongolia and help the herders with breeding.
So where does the name come from? Naadam is a Mongolian festival that celebrates the heritage of the nomadic herder. Scanlan says they picked the name because they'd like the brand to celebrate those herders as well.