Lawrence Lenihan thinks the future of the $3-trillion fashion industry is not so much about data as it is about “really, really talented designers.”
According to the Duke engineering alum and Wharton MBA degree holder, who cut his teeth in apparel retail on an IBM assignment to Macy’s, as it stands today apparel brands can’t get out from under their production issues, and mass manufacturing largely is the culprit. Too much product saddles a company with debt and crushes profits, and too little means missing out on sales—and opens the door for competitors to knock off what was your good idea in the first place.
Plus, dealing in the mega-volumes required by Asian factories poses a challenge to designers trying to eke out a place in the world, not to mention the environmental disaster created by fast-fashion’s unrelenting pace. “The industry is crushing the little guy,” Lenihan told Sourcing Journal.
That’s why the seasoned executive and New York University adjunct professor, who founded early stage tech venture firm Pequot Capital Management in 1996, gathered longtime friends Joe Ferrara, whose eponymous manufacturing company produced Ralph Lauren’s Purple label, and Christian Gheorghe, a former SAP CTO and SVP, to serve as partners, co-CEOs and co-founders for Resonance NYC, a company whose full stack model for designing and producing apparel fulfills specific demand without creating excess “product that ends up in the garbage dump.”
For all the talk about creating product close to the customer, supply chains have yet to undergo radical transformation but Lenihan is betting that Resonance can be a force for change. He also thinks customization will dictate how a lot of product is made in the future. As he puts it, “why make something in a size L when you can make a size Lawrence?”
Garments, he continued, should be made to demand, which he differentiates from the “on demand” concept making in-roads in fashion. Producing in reaction to demand requires an element of prediction. For example, if you’ve received a certain number of orders in a certain amount of time, it stands to reason—and by “reason,” Lenihan means “algorithms” and “confidence intervals”—that a similar pattern of demand will continue. So why not produce double the amount of orders you’ve received as a way to get ahead of expected demand?
“This changes the supply chain and how you run your business,” Lenihan said, noting that on demand manufacturing does play a role in his vision of future production. Right now a brand should not be “closing the books on the spring 2019 season” but thinking about what to sell for Halloween, he added.
Resonance innovates on two fronts: the software, systems and engineering side that helps designers bring their creations to life, and in the manufacturing facility itself. Looking for a place in the same time zone and less than a four-hour flight away, Ferrara, the manufacturing expert, decided on a location in the Dominican Republic. Resonance built its “massive” factory there from the ground up and packed it with “machines the size of train cars,” Lenihan said. Resonance pays workers—no one is subcontracted—above the country’s living wage, and provides opportunities for ambitious types to grow their earnings, he added. The more skills they have, “the more they’re worth to us,” Lenihan explained.
Inside the factory, everything’s been tuned to minimize production’s environmental impact. Resonance’s machinery and systems use just a “fraction” of the water and dye that traditional production does, though Lenihan said the goal is to achieve zero water impact by the middle of 2019 and transition from creating a “tiny” amount of waste to fully recycling every discardable output.
Resonance sources 43 different fabrics from 15 vendors in countries including India, Pakistan, Peru, China and Turkey, using harvestable materials exclusively—“no skins” and nothing petroleum-based, Lenihan pointed out. “How do you create with as little impact as possible?” he added.
The company employs digital printers and offers synthetic trims, like sequins, and plans to bring embroidery machinery online in the coming year. There are other limitations as well; the factory can execute cut-and-sew knits but not full-garment knitting, Lenihan explained. “If you want to make something fuzzy, we’re not your guys.”
Those confines haven’t stopped seven brands and designers, including Project Runway season two runner-up Daniel Vosovic, from signing on with Resonance. Lenihan said the company takes a 50 percent stake in each brand so that “we’re equal partners with our creators.”
Because Resonance’s magic stems from executing one-offs and limited batches for its small cadre of designers, a lot of work goes into ensuring all of the factory machines can easily churn out a purple dress, followed by green pants and then a red shirt, for example—all in rapid succession. Lenihan talked of engineering the garments so that workers can easily assemble dozens of pattern pieces; in fact, the company’s applied for a patent that covers specific marker language that guides employees working with placed prints.
It’s one of the five patents Resonance has applied for, in addition to the 10 applications still to be filed, Lenihan said, and they center around the manufacturing challenges that come with producing one garment that oftentimes is customized for one specific individual. Covering design, fit, pattern making, customization and garment verification, the patents give Resonance “blocking IP,” or intellectual property, Lenihan explained, an important weapon in a world in which Amazon already has patents for on-demand manufacturing under its belt.
“I think Amazon is going to be one of our biggest competitors here,” the co-CEO said, adding that he’s “not concerned” about what the tech innovator might do in the space.
That lack of concern could stem from the resources Resonance has been pouring into the “full stack, integrated approach” to its systems and software. It’s built an end-to-end platform comprising ERP, PLM, commerce and marketing, everything partner brands need to run their businesses in real time. As they were getting Resonance off the ground, Lenihan said Gheorghe laid out his vision for how software would be built in the future and reversed the typical Silicon Valley development script: create the platform, then the user experience, and finally the business logic.
“We iterate on development functionality probably twice a week,” Lenihan said. “We are always learning.”
Much of Resonance’s technical infrastructure is behaviorally based and employs an artificial intelligence engine that observes the “contracted relationships” between the “machine entities” (manufacturing machines) or the “human entities” (designers and workers) or “logical entities” (such as algorithms). The goal, said Lenihan, is to automate, optimize and move faster.
“It’s a pretty radical way of doing things,” he added. To accelerate its learning curve, Resonance runs each of its brand partners differently to determine which approaches work best.
Ultimately, Resonance wants to wind down all of this testing and iterating and perfect the technology so it can be licensed to clients. Lenihan said he expects to sign the first customer next year, and also is “actively planning” to build a second manufacturing facility in the U.S. Resonance needs a location that’s reasonably wet so there’s a good source of water for wet-processing garments, close to cheap power sources and in an area with high jobless populations, Lenihan explained, to illustrate that’s it possible to create employment in an industry some have written off. The Rust Belt of upstate New York is squarely in Lenihan’s sights, and he said the goal is to “get there in 2020.”
Though Resonance doesn’t have any PhD’s among its engineers and technical staff, Lenihan said the company will focus on finding terminal-degree talent as it moves into new areas like garment simulation and material development. Lenihan describes a long-term goal of creating private fabrics as “an incredible proprietary advantage.”
That long-term thinking is part of what sets Resonance apart from the crowd, said Lenihan, who will be speaking about the role of venture capital in nurturing early-stage fashion startups at next month‘s inaugural ReMode conference, which itself aims to equip a fashion industry in transition with the tools and knowledge to succeed tomorrow.
Of Resonance’s reimagined approach to apparel creation, Lenihan noted, “This is not a factory, this is a lab.”