Lesson #1: Succeed Through Innovation Not Exploitation

American Apparel is about much more than clothes or at least Charney hopes so. In creating the company of his dreams, Charney wanted to make sure that it stood for something, that it was selling a message along with its products. That message is that a company does not have to be exploitive in order to turn a profit.

Most of the workers who line the floor of Charney’s 800,000 square foot factory are immigrants. Each of them earn a salary of $8 an hour, as well as a by the piece bonus in order to encourage productivity. With bonuses, the average American Apparel worker takes home $12.75 an hour. “We designed the rate in such a way that the average person should be able to make $100 a day, that’s our target,” says Charney. “We want to pay more than the prevailing wages in Los Angeles, because we want to have the happiest work force we can have.”

Charney calls the difference between earning $9 and $12 an hour a “total lifestyle change.” He wants his company to be a part of making that change happen. “I have the highest-paid apparel workers in the world,” he boasts. To that end, Charney also offers subsidized lunches, health care benefits, free English classes, and on-site massage therapists to his workers. He is also planning to give away 500 shares of the company to each and every employee.

But Charney is not just about making his workers happy. Indeed, he is in it to make money. He just happens to believe that his way of doing things is the most efficient. “What I’m going to prove, and I’m going to embarrass the entire fucking establishment, is that sweatshops are more expensive in the end than vertically integrated manufacturing in Canada or the U.S,” he says. “You see, those prisons in China are inefficient and the opportunity cost of offshore production is huge, because you can’t respond to market demands as quickly.”

Indeed, Charney plays down reports that he is a social entrepreneur, in business solely to do good. “Look, I’m not that ethical, but you don’t have to be the most ethical person to know that slavery was wrong,” he says. “What I’m talking about is the exploitation of human potential instead of the exploitation of humanity. I’m saying you don’t have to fuck the Third World up the ass, or the shareholders, or the consumers, or the Canadian and American workers, to do business.”

Charney’s focus extends beyond his workers. He also concerns his company with environmental sustainability. Currently, at least 20 percent of the cotton it uses is organic, and Charney wants that quota to reach 80 percent in the near future. He insists on recycling fabric scraps, and has also installed a solar electric system on his factory roof. He hopes that this will bring his electricity bill down by at least 20 percent.

“Commerce is the key driver toward societal change,” he says. “If everyone that produces the goods the world consumes starts concerning themselves with sustainable, low-impact practices, the world will change.”

As American Apparel CEO, Charney also refuses to give himself a large salary, taking less than $100,000 out of the business annually for expenses. He lives in a modest house in the same neighbourhood as many of his workers. “If you’re Enron, and everyone is getting fucked up the ass, you’re doing something wrong,” he says. “You’re not a good entrepreneur, you’re just a fucking Soprano parasite.”



Lesson #1: Succeed Through Innovation Not Exploitation

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