Building a global business around a merino T-shirt

Icebreaker founder and Otago alumnus Jeremy Moon.

Q&A with Icebreaker founder Jeremy Moon MNZM

Just a couple of years after graduating with his Master of Commerce at Otago in 1994, Jeremy Moon set up the world-leading merino clothing company Icebreaker. We talk to him about what he learnt at Otago, his approach to building a business, and how he came up with the idea of T-shirts made of merino.

What are some of the lasting influences from your time at Otago?

My best friends are still people that I met at Otago, so I loved that aspect. I had very stimulating teachers, particularly in Consumer Behaviour and Strategy, and they’re areas that probably best set me up to start my own businesses. David Buisson, the Head of Marketing at the time was a very charismatic and motivating guy.

The reason I did a master’s was because I loved it so much, I didn’t want to leave - three years was a taste not a complete meal.

Any particular highlights of student life?

I started in Unicol, and co-wrote the capping show the first three years, just as a fun creative project. I then moved into a flat with 12 people on George Street which was brilliant. I knew how to code computers, so I wrote a programme to pair people up to cook and do the dishes, two people on cooking, two to do the dishes. It didn’t occur to me to have a cleaning roster.

Did you follow a particular marketing approach to create an international brand?

The thrill of entrepreneurship, of which marketing is central, is being able to find a gap in the market and then be empowered to understand the step of how to build a business behind that.

That central thesis of marketing is to start off with the consumer and understand their motivations, so it’s effectively a social science and then with those insights everything is built after that.

The brand is an emotional connection, a way of expressing what the company is about. The product is a reflection of your understanding of the customer’s motivation, the purpose of the business is to be making a difference. The culture of the business really flows from the purpose the brand and the product.

When you’ve got a consumer-first mindset, the whole business ends up being built based on that hierarchy. And you have a very different type of company, a very exciting company, usually a high-growth company, because you’ll outperform your competitors.

It appealed to me because I was struggling to find consumer brands that I admired from New Zealand and the case studies weren’t of New Zealand brands, they were usually American. So I was always intrigued by the question how do you actually build an international brand from New Zealand?

There was a dialogue in the 90s which went something like ‘we should be shipping the furniture not the logs, we should be selling the cuts of meat not the carcasses’. Everyone was talking about value-added but they keys to unlocking the value-added for New Zealand, especially our agricultural base, was starting with the consumer-first mindset.

The tradition of New Zealand tends to be that when you get a great idea you build a factory, but then wonder why it’s hard to sell it. Then you have to use price as your weapon and then suddenly you’re the same as most other people, so that was certainly a prevailing tradition and I was excited to find a way through that, by starting with the consumer, and the market first, and finding others to make it.

You established your now-global merino clothing brand Icebreaker shortly after finishing your degree, what led you to that particular product?

My master’s was effectively a research degree and I was interested in consumer behaviour, so I worked for two years for a market research company doing both qualitative and quantitative research, but I always wanted to start my own business.

I met an American girl who stayed with me in Wellington and she did a tour of the South Island and said ‘I’ve met this farmer, you have to meet him’. I said why would I want to meet a farmer, she says trust me and I met him and he threw me a T-shirt that he’d made out of merino and I put it on and I thought ‘wow, you know, could this be it?’

I remember wearing it to bed that night, and it kept me warm. I wore it under my suit when I went to the research company, when I went mountain biking after work and I’d wear it out at night. It was like this new friend and I thought man ‘this is it’.

So it really set me on this journey to write a plan, raise some capital, build a strong brand and story, learn how to design products, learn how to build a supply chain and ultimately build an international brand from it, which was true to my original quest of how you build an international brand from New Zealand.

Were you confident about the brand from the start?

To be honest I was always confident. I thought this idea is so good because when I did the research it basically said everything was synthetic, and consumers had been tricked into thinking synthetics were technology, when really part of the success of Icebreaker was relabelling synthetics as plastic, as opposed to technology. They lost their gloss when people realised that polypropylene and polyester and all these fibres are just extruded plastic with chemicals on them.

So people were shocked. They didn’t like wool, so I couldn’t call it wool because wool was heavy and itchy, and I said ‘what if there was this product that could do all the things that synthetics do, but it was natural and high performance and can have the unique qualities of wool, like regulating temperature and staying warm?’ That’s why we didn’t use the word wool, we just used the word merino.

It was about finding the gap and making us different from the competitors and building an interesting and evocative way of telling the brand story, and then building a company around that.

Did it take off immediately?

It didn’t go well for four years. It was very slow and I kept on saying to myself this will work if I don’t screw it up, because I knew the idea was really good. I got in amazing directors to help me because I didn’t know what I was doing, I raised capital because I didn’t have any money and we invested in creating a product that was really different and looked beautiful.

Then after about seven years the business really started to hum. I was about 25 when we launched so I had no idea really what I was doing, it took me five years to even understand how a company worked. But after about five to seven years we were really motoring and then the business would double every couple of years from that point on.

What were the main things you wanted to achieve with Icebreaker?

I had three objectives, firstly to build an international brand from NZ, secondly to offer our customers a natural choice, in an age of synthetics and thirdly I wanted to have an impact on the outdoor industry because we were the only people doing merino. We were the first in the world to do a merino layering system.

The reason ultimately I sold it to VF Corporation [in 2018] was for two reasons, firstly I’d achieved those objectives, I’d been doing it for over 20 years, secondly they owned a lot of outdoor brands such as North Face and Timberland and they wanted to use the ideas to apply natural technology to their other brands, and I thought wow what an amazing opportunity to scale the idea and have more impact, which goes back to the purpose of the business. Everything aligned and the time was right.

How did you come up with the idea for your petfood company Animals Like Us?

I went fishing and played with my children for two years, then thought OK, I was open to new ideas. My amazing creative director at Icebreaker Robert Achten called and said ‘I’ve just been in China you should see what’s happening over there with the petfood industry, it’s so innovative, the market’s grown like crazy’.

When there’s big shifts in consumer behaviour, there’s always a big opportunity because the needs of the people are changing faster than the brands, so traditional brands become redundant quickly in a high-change market. So even though neither of us had made food before, I had two dogs and he has three and we love our dogs, so we thought great this would be fun.

We are taking a New Zealand product, in this case meat rather than wool, and adding value to it to build an international brand. We’ve set up Animals Like Us across New Zealand, Australia and now we’re building a United States team, which is our main future focus.

What we discovered was about 50 per cent of dogs in the US were overweight or obese and we found the majority of them were eating a very high-carb diet, because that was the cheapest way to do it. We were very interested in how to make a very high-protein diet and we discovered that 99.6 per cent of DNA of dogs comes from wolves, and when wolves used to kill their herbivores the first thing they ate was all the organs and then they got their vegetable matter and fibre from eating the stomach contents, because dogs are omnivores not carnivores.

So we freeze-dried organs, kidney and heart and liver and tripe, all the stuff that dogs go crazy for, which is super-high nutrition. Then we mixed that with a high-protein meat-based biscuit and we freeze dried it so it’s all dried and you can put it on the shelf. We created a new category, making raw food easy for people. The brand is called Animals Like Us because they’re like us, they need to eat well, they need to be part of a family and they need good exercise.

What’s it like starting a business today compared to when you established Icebreaker?

While it’s different starting a business 25 years after the first one, the core principles are the same.

I didn’t have any entrepreneurial role models in the 90s, because no-one was even talking about it except for unreachable gurus like Richard Branson. But now it’s become admirable, aspirational, so a lot more people are having a crack at it, so you get more innovation, but you also get more people who have tried and failed.

But often people get it right on their second or third try and investors are very tolerant of that, because it’s not about whether you get it right the first time, it’s about how quickly you learn and how you build strength and muscle through the failures that we all have in business.

Do you have any advice for students looking to set up their own business?

My message is that building a company is a process. It starts with a spark but effectively looks like a waterfall, a hierarchy if you want, starting with purpose, and trickling down into brand and product, and then culture and operations. When you design purpose, brand, product, and culture synchronised against your understanding of consumer behaviour, then you’re off to a great start.

It’s very difficult to build a successful company that doesn’t have a strong identity. Often people focus on product but really it’s the relationship between the product, the brand and why the company exists, and then from that you can build the rest of the company. If you do it in that order you build a consumer-first business and your product is much more likely to succeed because it’s based on consumer insights rather than copying what everyone else is doing.

I guess the challenge I’d give the Business School is how to keep the content relevant because the needs of employers are changing and AI is changing everything. The opportunity for Otago is to be the most market-relevant course, to have a consumer-first mindset, and to help the students meet the future needs of society.