Dominic Mcvey Is Building A Global Firm And Wants To Share The Wealth

The UK-based millionaire wants to upend the country’s apparel industry’s ownership model by awarding shares to key management and factory workers at Hela Clothing

Dominic McVey was barely into his teens when he spent a whole day arguing with a customs officer at Heathrow Airport that five collapsible scooters from the US he had come to collect should not be classified as commercial imports. The youngster did not have the cash for the higher duty, so he pestered the customs officer the whole day that the scooters were actually toys and should be taxed accordingly. The officer held his ground for most of the day, but finally relented just to get rid of the pesky kid.

A few years later, at 15, McVey, whose father and mother worked at the Royal Shakespeare Company, made his first million Sterling Pounds importing and reselling scooters in the UK. At 18, the Londoner was honored by Her Majesty Queen Elizabeth with the title ‘A Pioneer for Britain in Entrepreneurship’.

Today, at 31, the millionaire hasn’t lost any of that tenacity. He wants to make his pet investment, Sri Lankan clothing maker Hela, the Tesla of the global garment industry. The East Londoner’s hunger to succeed is tempered by his desire to share his wealth with those who help him make it—a result of the deep impression left by his parents’ struggle to pay his school fees. When his father began selling his music instruments to pay the school fees, McVey dropped out of school to make money so he could help his parents.

He was his own financier, accountant, and customs and tax consultant. As an entrepreneur, McVey realised early on that he needed to become an expert in so many areas to get things done. As his business grew and he ventured into newer areas, he soon realised that he couldn’t do everything by himself. He needed other people to help his business grow.

Hela aims to upend the Sri Lankan apparel industry’s family controlled ownership model. In 2015, McVey offered share options to attract senior leadership like Dian Gomes.

McVey relinquished the chairman’s seat for Gomes, but provides leadership as a director. He now wants to create opportunities for even Hela factory workers to earn shares in the company.

McVey invested in Hela in 2013 only to realise that the company was making losses. By attracting key talent in 2015 with the share options and scaling Hela, revenue has grown to about $250 million. The share options, mergers and a planned IPO will dilute the stakes of existing investors, a bet McVey is willing to take so the company grows fast.

None of the other big garment manufacturers have gone public here. They are the biggest drivers of export and none of them are public. It’s crazy! Let’s get some money into the hands of the people and make a change possible.

He wants Hela to be different. Traditionally, buyers have told Sri Lankan apparel companies what clothing to make. McVey is investing in resources and talent so Hela can tell its buyers what needs to be made, he told Echelon, discussing Hela’s strategy in the fast-paced industry. The company is vying to latch on to a ‘fast fashion’ boom. Fast fashion has been around for some time, but brands like H&M, Zara, Peacocks, Primark and Topshop are driving a recent boom.

Apparel companies need to be able to optimise their supply chains and deliver affordable clothing quickly no sooner fashion houses release their designs on the catwalk.

Excerpts of the interview are as follows:

You already diluted your shares in Hela Clothing to create share options to attract key management and talent, which makes good sense. But now you’re thinking of rewarding more employees including factory workers; why?
It is a travesty that so many large Sri Lankan companies haven’t gone public or created reward schemes for the thousands of people who made their business successes possible. I feel ashamed that so few people control the world’s wealth, and we want to change that. We want as many people as possible to get behind Hela and benefit from the wealth it creates.

How does this fit into the greater scheme of things? How will it benefit Hela?
The success of Hela is not down to a single person, but every person in the company. And when you get to the size we are in today, your rely more on your workforce. There is only so much I can do as a director. A lot of it is in their hands. So why should they not benefit? Hela is a $250 million company. What’s it to us if employees can generate millions of dollars for themselves as well?

You’re sitting in a room with stakeholders and it’s not that boss-and-worker mentality anymore. We are all in it together. This makes a huge difference.

We need more talent. It is an issue. Like turnover, absenteeism is a big issue in Sri Lanka. Absenteeism costs the industry millions of dollars each year.

Why is absenteeism so high?
Because the grass is greener on the other side? Who knows? Our facilities are fantastic: An airconditioned work floor, gyms, transport, discounted and free food, discounted shops. They even have their own credit cards that can be used on these facilities. Hela is one of the best places to work in, but absenteeism is an issue for the industry. We are short of skilled labour. I am told Sri Lanka is going to be a nation of skilled labour. I love the idea, but in reality, it is not there.

Sri Lankans are hardworking, they are skilled. I love everything about Sri Lanka. Sri Lanka is one of my homes. But I haven’t worked out why absenteeism is high. There is something that needs to change, particularly for those in low-income groups, but I don’t know what.

People who study overseas become the best in the world at what they do. But those in low-income groups don’t seem to be driven to do better for themselves. I don’t know why this is. There is something missing, and something needs to happen. Just look at how people drive on the road. That has to indicate something, right? It’s almost as if they are missing seeing something and we’ve got to open their eyes.

Encouraging people to share some part of this ownership might get them thinking more out of the box, not seeing it like just another job. We want to drive this change. None of the other big garment manufacturers have gone public here. They are the biggest drivers of export and none of them are public. It’s crazy! Let’s get some money into the hands of the people and make a change possible.

I think the biggest fear of the industry here is how Hela is changing how we work with our staff. As soon as Hela goes public, the others are seriously going to have to consider it too.

You go for a job interview and company A offers share options, rewarding hardwork. Company B offers a year-end bonus, but when you retire you don’t own anything. Where are you going to work? We are working on ways to get shares into the hands of our workers; it’s a complex new philosophy in Sri Lanka. We have to understand that most of our workers have never heard of shares, let alone the London Stock Exchange. They won’t know the value of holding shares in a company like Hela. So there is a lot to do in terms of planning to administer it, deciding what amount of shares becomes available, and how people become eligible. It’s a lot of work and it’s going to take time. And we’ve got to get it right.

There is no point if we give them shares only to have them turnaround and sell it without waiting for the value to grow further. We have to explain to them what it means to be a part of a company. This is not going to happen overnight. We will time all this when we take Hela public. What we do have is the drive and the  belief to try and make it happen.

When will you take Hela public?
I’ll let the markets decide that. We are being courted heavily by international markets. I do want to go public here in Sri Lanka, and then possibly a secondary listing in New York or London.

I’d like the government to allow us to list as a dollar company. It will make things a lot easier and help us attract foreign investors. One of our non-executive directors Bob Wigley is in dialogue with officials here. He has consulted for many governments, sharing his experiences as the former governor of the Bank of England. The Sri Lankan government is open and receptive to the concept, but ultimately it is their decision.

We are working on ways to get shares into the hands of our workers; it’s a complex new philosophy in Sri Lanka. We have to understand that most of our workers have never heard of shares, let alone the London Stock Exchange.

There is talk, I believe, that they will allow dollar listings here, and the government has had discussions with exchanges in Singapore and London, but I’m not aware of the details, so I can’t be certain.

Fast fashion has been around for a while, but we’ve seen a boom in recent years. What is Hela doing to capture a piece of the action?
In some respects, a lot of people are coming to Sri Lanka for fast fashion, looking for alternatives. Turkey is traditionally the fast fashion player for Europe, and still is with significant exports of around $15 billion, but they are getting expensive. So customers are coming here, encouraging Sri Lankans to look at fast fashion.

Traditionally, we’ve not had that push, and often it is the brand that leads Sri Lankan companies. I don’t think Sri Lanka went out there and said we’re going make this, we are going make that. We at Hela want to change that.

So what we are trying to do at Hela is to combine the benefits of customers coming here, but at the same time, go out and build the story further. If they are coming to Sri Lanka, how do we make sure they are coming to see Hela.

Our focus has to be on going out to the market, understanding that Sri Lanka can be a fast fashion destination, understanding that China and Turkey are too expensive, learning those skills, and making sure people get the best experience possible when they come to Sri Lanka. So we are trying to build those experiences.

There is a lot to be done. In certain areas, we excel beyond belief. When it comes to mills, they are not as good as they could be. They are certainly not as quick as we need them to be and they don’t necessarily have that fashion product. That is a challenge that cannot be overcome overnight. So we have to look at different ways to service fast fashion.

We need to have those strategic conversations with customers because we can’t just take random orders. I can’t turn out a floral print tomorrow. But the Turkish can.

You send them something and they’ll have the sample ready in a few days. We need to slowly edge into that space. Sri Lanka is known for kids wear, sportswear and underwear, but fast fashion makes up a bulk of the $3 trillion global clothing industry. We need to get in on that.

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Dominic McVey is keen on factory workers getting an opportunity to own Hela Clothing shares (Source: Hela Clothing)

An issue we face, that I am trying to overcome with our staff, is making sure they are exposed. Making sure they are on High Street, they’re living and breathing downtown New York, the fashion districts in London, Tokyo, Korea, Australia or wherever it may be; making sure they see what the customer wants. The cultural interest in fashion in Sri Lanka is very different to fashion in London. Fashion forward people here are very different to the fashion forward people in London. I’m not saying one is better than the other, but Londoners are our customers, not the ladies and gents in Colombo. So what we feel works will not necessarily work well for our customers; we have to almost detach ourselves from society in Sri Lanka when it comes to fashion and tell ourselves everyday ‘would I go to M&S to buy that’, ‘would I go to F&F, or Zara’. We need to build that knowledge.

Is this why Hela recruited a data scientist?
A lot of people ask me why I have a ‘quants jock’, or a ‘doctor of data’, working at Hela. We want to know what’s going on. We want to be on the pulse, or ahead of the pulse. We want to be prescriptive. We want to prescribe the future. We don’t want to guess the future. We want to be prepared. We want our customers to be prepared. If I ask our customers to run [consumer data] off of me, they would say ‘we don’t have the team’ or ‘it will take several months’. So we do the job for them.

We understand better than anyone else the true areas of opportunities in the business of our customers; our interest is not just selling them clothes. Hela wants to sell (services) its solutions, its data, its technology, its big thinking, its entrepreneurship. And we are doing that extremely successfully.

Many garment manufacturers are doing what the Brits told them 30 years ago, and they are doing alright for themselves. I just don’t want to be told how to make garments. We need curve balls in this industry. The big three (Brandix, Hirdaramani and MAS) do a fantastic job of that, so it isn’t something unique to Hela.

I think Hela is probably the best environment if you are an entrepreneur, an innovator, an inventor, if you have good ideas and want to be a part of the pack that’s now blazing a trail. Then Hela is the place to be.

Because you will sit with me, you will travel with me, you will sit with Dian [Gomes], and you will get involved and understand what’s happening in the organisation from top to bottom.

We make decisions very quickly. All companies need to look at data, but we apply it slightly differently—the other guys may be doing it or thinking of doing it, but we don’t just talk about it, we crack on.

Can you elaborate on the innovations taking place at Hela?
We registered seven patents this year and one last year for wearable tech devices.

Let’s look at wearable tech. There have been major Sri Lankan players involved in wearable tech. What I’ve seen and what I am learning is that it’s not selling. I was at Intertek recently and the chief innovations officer of Ralph Lauren told me that the number one selling wearable tech device – and we are not talking about Fitbits or watches, this is clothing with tech imbedded – sold no more than 15,000 units. Millions of dollars have gone into development and they’ve sold only 15,000 units.

We are about to launch the largest wearable tech device to hit the market in the UK. Over a million pieces will go into stores. Hela is doing this, a Sri Lankan company. We’re small compared to others, but getting bigger quicker. I’m sure the guys sitting in labs in much bigger companies here and other countries may be asking ‘What does Hela know about innovation?’, ‘What does Hela know about tech?’ Well I’ll tell you what Hela knows: We know that we have the biggest-selling wearable tech device to launch in the market, and we are hoping to do this early next year.

Customers are coming here, encouraging Sri Lankans to look at fast fashion. Traditionally, we’ve not had that push, and often it is the brand that leads Sri Lankan companies, but I want to change that.

We are not trying to sell a garment at $600 to our customers. My customers want volume. They don’t want a $600 heart detector. I can’t discuss the tech right now. It’s not involved with sports, I can tell you that much.

I believe Hela will revolutionise the apparel industry, and I believe we will smash our targets. Many industries have changed, but apparel is yet to do so, and very much needs to. We are creating that change and leading the charge on the global stage. Just like Tesla has changed the car industry, Hela is already doing the same for clothing.

What’s the future of clothing in Sri Lanka?
Sri Lanka is strategically located in the Indian Ocean. It’s not strategically located next to New York. A lot of our products go to New York and London, so how do we get closer to our customers in the US? That’s happening in Mexico. Our facility in Mexico plays very well into our model of speed.

We feel the cheaper products, the products without value addition that you can make literally anywhere in the world, need to slowly migrate to Kenya and Ethiopia. Those big bulk runs when someone orders a million t-shirts, we don’t need Sri Lankans to do it—they are too skilled for that. We’ll have Kenya work on that. It will be a new product for them, so that they can build their skills up on the basic products.

In Sri Lanka, we need to bring in high-value garments, the clothing that require a longer time to produce, more technology, more thinking and that touch of expertise. There is an opportunity with that. Sri Lanka is getting bigger as a destination for lingerie, sportswear and active wear. Hirdaramani and Orit have good denim facilities here. Hela is not moving into denim, but these are examples of products that Sri Lanka can do more of. People are willing to pay a high price, and perhaps we can look at automating services.

Labour price pressure is building up, not just in Sri Lanka. It’s happening in China. China is a lot more expensive than Sri Lanka. Their industry is worth around $100 billion.

We shouldn’t be scared of labour price increases, but the customer needs to understand that it is going up. There is a small pool of cheap labour still available, but we will see price pressure in Kenya and Ethiopia eventually.

What this will do, in the long term, is that workers will price themselves out of the market. There will be huge unemployment and machines will be making the clothes. I can’t talk too much about what we are doing about automation at this stage, but we are not the only ones; I am sure Brandix and MAS are looking into this too.

Do you see new opportunities opening up in Sri Lanka that you would like to get involved in?
There is a lot of opportunity in Sri Lanka, but a lot of it is not being grasped yet. A lot of people are going for the easy opportunities like building hotels and apartment blocks. How are you going to fill these apartments? Now, I’m not against development and I believe the city needs investments to evolve, but there are so many apartments and who is going to buy them? Are you going to fill them with Chinese or Brits? How is the economy going to benefit? It will only benefit the people who built them.

We feel the cheaper products, the products without value addition that you can make literally anywhere in the world, need to slowly migrate to Kenya and Ethiopia. Those big bulk runs when someone orders a million t-shirts, we don’t need Sri Lankans to do it—they are too skilled for that.

Are we encouraging our businessmen and entrepreneurs to invest their money in the right areas? We have so many people building hotels because the government said there is going to be a tourism boom here, but SriLankan Airlines has cut half its flights to the tourist destination. We don’t have enough planes coming into the country, and the airport cannot cope with the capacity. So how are we going to fill these rooms? It’s the real basics here and we are pushing certain opportunities that aren’t necessarily finite.

There is a lot in the Sri Lankan culture that we could develop and sell better. It’s great to have Western brands, but there is so much we can build domestically. Don’t get carried away with the construction boom. My focus is mainly on Hela. We opened offices in New York and London this year, and offices and a factory in Nairobi. We are opening an office in LA, and we have operations in Mexico and a new site in Ethiopia.

Hopefully, we will get GSP Plus, and the government is on the right track. I know there was some frustration about the pace, but there is an element of having to reset, readjust, looking inwards and outwards trying to understand what we were doing right as a country and what we were doing wrong. You need to have patience. Things are now starting to pick up.

We see announcements of investment from Japan, China and the European Union. You got a new president and prime minister in place, and the world wants to understand before they do anything. We got to get our roads built and connect the country.

We want people to come here and feel proud to work with Sri Lanka. That’s not just for the benefit of Hela, but for the industry. When M&S first came here (decades ago), they worked with a few companies spending a few million dollars. Now they spend hundreds of millions of dollars in Sri Lanka with a number of manufacturers. So it’s in all our interest to bring those customers here. It is in no one’s best interest to take customers or business away from each other. But there is always a level of competition.