The indiana jones of the cashmere trade

 

In just three short years Naadam co-founder Matt Scanlan has gone from Mongolian desert wanderer to cashmere industry’s eco warrior. Here he sits down with Mission to spill the beans on swilling goat milk vodka, driving through the Gobi desert with $2m in cash and setting up an NGO.

MISSION.  What does the word Naadam mean?

MATT  Naadam is the name of a festival in Mongolia where nomadic herders come.

into the city and compete in a series of games played over a week. It’s a celebration of Mongolia’s culture and heritage. We chose that name  because from a brand standpoint what we were trying to do from the earliest stage was celebrate the people and the place.

MISSION  What took you to Mongolia?

MATT.  It was a backpacking trip.  I just finished working at a venture capital firm here in New York City. I walked in on Friday and quit, and a week later I got roped into this trip to Mongolia with one of our co-founders who was studying abroad in  Beijing. He said: ‘Mongolia is just a really beautiful place, I’m going to take a week off and go explore. You have nothing to do, why don’t you come?’ So I did and we ended up in Ulaanbaatar [laughs]

MISSION.  Tell me about your Indiana Jones moment.

MATT  The two of us arrived in Mongolia, not knowing anyone or what we were there to do, and we met a journalist who was writing a story on the cashmere trade. He invited us along to an interview he was doing with another two guys. We hit it off so well that they invited us to meet their family who live in the countryside. We met them early the next morning and they took us of riding into the Gobi desert. After about 20 hours the car broke down, in the middle of the Gobi desert. We waited for a couple more hours until six guys on motorcycles showed up, picked us up and drove deeper into the desert. Eventually, we reach a ger, which is like a yurt – it’s where a nomadic herder lives. They don’t have electricity, they oftentimes have no running water.

Dash  greeted us when we arrive at this ger. It was four in the morning and we were drinking goat’s milk vodka with him all night. Goat’s milk vodka is fermented goat milk which then goes through some sort of distilling process. It was pretty disgusting.

MISSION. But you still drank it?

MATT   Yeah well it’s polite to. Dietrich, on of our co-founders, ended up getting smashed.  I actually just pretended to drink it. I remember the story very well.  When we woke up in the morning we said, well this has been nice, thanks for this cool journey, then, we find out that the folks that brought us out there were staying for a month and we were either finding our own way home or staying for a month too. So we stayed. Over the course of those four weeks we learned a lot about nomadic herders and we kind of integrated ourselves into their life, herding goats and eating goat meat.

MISSION  So you learned a lot about goats?

MATT We started asking a lot of questions because this way of life is very volatile with a an extreme climate – 40 degrees below with harsh winds, and massive snowfalls.  This is one of the least densely populated places in the world. It’s very, very remote and it didn’t make sense how people survive out there.

MISSION  How was the communication between you?

MATT  Bad! That’s how I got stuck there for four weeks, but there was one guy who spoke English and so he became our translator. We were able to ask questions and get answers and from what we understood, it seemed there was no stability there. So when we left, we came up with an idea to partner with the guys that took us out there to start a small NGO.

We realized that their livelihood is pretty much based on the health of their animals. So  if there are high mortality rates, they make less money. The NGO that we launched was really built on a platform of micro-economic development, but instead of a micro-economic loan structure where you make small loans and people pay you back, we didn’t expect any return. We were really exploring how to have a social impact. We wanted to work around economics, around actually making people money and seeing a community change. Within a year and a half we made two trips and put in about $100,000 -$110 000 dollars raised from friends and family, but there was really no impact and we didn’t understand why. We had a spreadsheet, everything was supposed to work but that wasn’t the case.

MISSION  So what was going on?

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MATT We took a third trip and discovered that the cashmere traders at the auction where the cashmere price is determined are totally corrupt. They all get together with the local government to fix the price around $20 per kilo. So everyone gets $20 dollars, while the traders take their margin and sell it somewhere else for $40.. The herder gets ripped off because the value of his material is worth way more and there’s these middle men that are making all the money. We realised then that’s that why our non-profit work wasn’t working because no matter how good we try to make the material no one’s ever going to pay more for it. So, we decided, let’s be the traders ourselves, let’s rig the system but let’s rig it in the favor of the herders so.

MISSION  Did they trust you?

MATT They did, yeah. All we had in the beginning was their trust and, so we said why not go back and pay $30 instead of $20? But let’s never re-sell it. We’re not going sell it to a broker – we’ll just go directly to the mill and mill our own yarn. We’ll have our own yarn company and we’ll produce our own sweaters.

MISSION   Were you ever into cashmere?

MATT  No.

MISSION  Did you know anything about fashion?

MATT No, I still don’t…

MISSION  Well that was a ballsy move there…[laughter]

MATT  I mean, yeah! So the next step was convincing someone to give us enough money to go buy everything because the only way you can work in these types of trade systems is with cash. All the trust in the world wouldn’t have mattered if I didn’t have the cash with me. So we got a $2m loan…

MISSION   You started big…

MATT  Well we had to because we needed to show that we were serious, and we needed to control that market. We need to be able to buy so much mohair that we could set the price at $31, then the other traders  have to follow suit. We would also go rig the auctions and pay off the mayor to keep the price at $31, forcing all those other traders to pay $30 and $31.  And then they mark it up to $50 and still sell it so that’s fine with us. So now we’ve gotten really rare beautiful material at about half the cost of everyone else while giving 50% more to the herders. The amount of money that we’re putting back into the community with our trade practices is way more money than we could ever hope to give through our non-profit. It has a much bigger impact.

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MISSION  How did you decide upon the mill?

MATT  We knew we wanted to produce yarn in Italy just because of the history they have of milling luxury materials. There’s something unique about Italy, the moisture in the air, the water usage. We knew we wanted to be in this region called Biella we also knew we wanted the yarns were entirely ethical and environmental so that means no toxic chemical usage, that meant fresh water usage, clean energy usage. We ended up looking at a certification, a cradle to cradle certification.

MISSION  What does that actually mean?

MATT Well we have almost zero ecological impact on the environment, no toxic chemicals are used anywhere in our yarns. It is the only environmentally certified cashmere yarn in the world, it’s also the most luxurious yarn you can produce in the world. Only one mill out of 12 we visited wanted to work with us and that was Botto Giuseppe a 140-year-old family run mill. We struck a partnership and the next year I went to Mongolia and I bought 60 tons of cashmere, I carried about $2m cash into the Gobi desert. That’s 65lb of money! I put it in the back seat of the Landcruiser, we drove out there and we bought pretty much everything we could get our hands on, we trucked it back to U.B. in 20 tractor trailers – it took 36 hours to drive back.

MISSION  Did you feel safe with all that money?

MATT  Yeah, I did actually. People always ask that: ‘Oh did you have guns and...’. No because Mongolia is not like that. Other parts of the world where we’re going to start sourcing material will be like that and if enough people write about what we are doing I’ll probably have to eventually have protection when I go to Mongolia, but regardless I never felt ever in danger.

MISSION  Why is it important to be ethical and conscious now?

MATT  I think in the next 10 years the consumer, for reasons they don’t necessarily

understand, is going to want a product to be ethical. They are aware of global warming and cleaning up the environment but they are also very price conscious, they love luxury but won’t pay luxury prices, this is only going to help Naadam moving forward.

MISSION  They want affordable luxury?

MATT  Exactly, that’s what they are going to expect.. For us, it’s got to be sustainable and environmental, it’s got to be, luxury and it’s got to be affordable. If we can do all those things what we end up creating is a company that changes the perception of what sustainability means so that sustainability means affordability and luxury rather than sustainability means you pay a premium for it –  that doesn’t make any sense to me.

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MISSION  When did you start the company?

MATT The company really started about two and a half to three years ago but in the past year we just grew very very quickly. The business took off on us. I think we tapped into something very primal, with the connection between sustainability and quality, luxury and price. Now we just have to build on all of that. I want to build a big company not because the bigger it gets the more money we can give back and the more impact we can have on the perception of what sustainability should mean to the consumer.

MISSION What impact have you had on the herders and the system?

MATT It’s incredible. When we went back to Mongolia, we launched a veterinary program through theGobi Revival Fund, we inoculated 250,000 goats for a thousand herders, we inoculated them four times over the course of three months. And everywhere we went, we hired local communities to work for us, so that alone has impacted the quality of the material dramatically. Villages now have irrigation systems, that means trees are growing in the desert, and there’s a well in the town so there’s fresh water. Schools now have books.

MISSION  That must be very satisfying.

MATT I think it is, kind of. I just feel we have such a long way to go. Enough is never enough, we’ve just shown that it can work.

MISSION  So what do you want to do next?

MATT There is a ton of people in Mongolia we can support but more importantly there are other markets and other materials around the world that suffer from the same thing. Our next big jump is going to be Peru, where we would hope to work with vicunya and alpaca, where we can make it much more sustainable. But violence is an issue in Peru, so that that makes it much more difficult. I think we have to be very strategic because I don’t think we can change 400 years overnight.

MISSION  Is there a Peruvian Indiana Jones moment in your future?

MATT  Inevitably we have to take risks to grow the company. The trips I’ve taken there are just as extreme in terms of the living conditions. The non-profit system that does work in this region requires veterinary programs and  breeding practices. I showed up to talk to them about, ‘What are you getting paid? How are you transporting your material? Who’s buying in? and they’re saying, ‘Can you give us money right now?’  and I’m saying ‘No I can’t give you money right now’ but they were so conscious of getting ripped off that they didn’t trust me for a second. I was saying no no, I’m going to buy you clippers and sheers and generators, we’ll get some teaching in this region...

MISSION  So you are taking the non-profit route again?

MATT  That’s how we do everything. It’s how we’ll do everything. It’s our DNA.

By Mark Connolly