The secret to Cactus’ success
Iam heading out pheasant shooting this weekend, so as I write this week’s column I am pulling together my gear. We will be hunting a lot of rough cover, with California thistle and blackberry; so decent boots and trousers are crucial.
While I am normally a tweedy kind of guy, if it is rough cover my go-to kit is a pair of iconic Dreadnought trousers made by Christchurch company Cactus Outdoors. I paid about $300 for them about six years ago and, I hate to say, it was money well spent. Describing them as being built like a brick outhouse does not even begin to do them justice. They literally will stand up in a corner without anyone wearing them.
Made out of impenetrable 12-ounce C-Canvas, the Cactus trousers are guaranteed to outlast any other trousers, fullstop.
Certainly, mine are still going strong.
Cactus Outdoor has been in the news a bit lately as it bought out Albion Clothing a few weeks ago.
From the outside it feels a comfortable combination of two square peg companies. Neither are mass market consumer brands.
Cactus makes serious outdoor kit for technical applications like alpine guides and skifield technicians. It was formed by digital trouble-maker Ben Kepes and a couple of others in the early 1990s and are a bit of a cult brand among the hip and iconoclastic.
Albion manufactures bulk
garments for the defence force, fire service and police. Again pretty serious kit but in this case with functionality around things like fire protection and abrasion resistance. The company has been around now for 42 years and has 80 staff.
Cactus majority shareholder Kepes said Cactus wants to make Albion the foundation for a strong manufacturing facility that will attract other clothing brands to return to New Zealand.
This has been painted as an uncommon example of ‘‘buy New Zealand made’’ but there’s actually more to it.
Cactus is leveraging a couple of global trends here – the rise of product provenance and a diminishing cost difference for goods made in China and similarly cheap labour countries.
Just as the ‘‘right to repair’’ consumer movement has become a major force, the right for consumers to know the provenance of their purchases has come of age.
This ranges from the rise and rise of farmers markets where you buy your spuds from the person who grew them, to lush cosmetics which have the name and photo of the maker on the bottle.
So growing a company where the provenance of manufacture and the philosophy behind it is the linchpin of the brand, is commercially smart. Particularly if the number of people who are able to pay a provenance premium are increasing.
That is not to say that people are being paid more but rather there is a diminishing difference between the cost of manufacturing locally and getting it done in China.
Slowly but surely China’s costs and those of the countries around it are creeping up.
This is being driven by the growth of the middle class in previously low-cost economies; along with increased pressure on these economies to internalise the social and environmental impacts of their manufacturing.
In other words, they are becoming global grown-ups.
As that cost difference reduces, the number of people that are prepared pay for provenance increases.
So long as this delta continues to reduce then is likely to see more localised production and less distributed manufacturing.
Another part to the Cactus success story that now sees it in acquisition mode is bootstrapping, and specifically the role it has played in giving it control over its own destiny.
While these days most startups seem fixated on scoring pre-seed, seed plus and series investment funding rounds to enable their growth; bootstrapping takes a very different approach.
Bootstrapping means shunning outside investment and instead relying on your own savings and revenue to operate and expand.
It takes its name from the oldfashioned mantra of pulling oneself up by the bootstraps when the going gets tough, and that is what Cactus has done.
Typically bootstrapping approaches include tapping your own savings; mortgaging your house; using credit cards; and paying founders modestly, if at all.
I am not certain which of these approaches Cactus used but the fact it has had the same three shareholders for more than 20 years means whatever combination it used, it has worked.
Like the construction of my Dreadnought trousers, bootstrapping as a business approach is basic not complicated.
It just takes discipline, zealous implementation and a belief in the mission.
With the latest Cactus success story I would like to think more startups will give it a go, rather than get distracted with raising capital.