He's well known for his smalls, but entrepreneur Clyde Davenport says his latest venture has the potential to be mammoth.
The Melburnian, who left his advertising job in the late '80s to follow a dream of creating his own business, still has his surname on undies around Australia, despite selling the company he built from scratch, Davenport, for $15.3 million in 2003.
Boxer shorts to precision sports
Clyde Davenport started business in the world of boxer shorts but now runs sportswear brand 2XU.
But these days the 57-year-old is more concerned with technical sportswear company 2XU ("two times you"), which he says has the potential to become a billion-dollar operation.
He started the business in 2005 with former world triathlon champion Jamie Hunt and Aidan Clarke.
"The 2XU thing happened a little bit by accident in a sense," says Davenport. "I was approached by two young Kiwi guys to start a brand. They had good ideas and I liked what they had to say."
Aimed primarily at elite athletes, 2XU is best known for its compression tights, which it supplies to athletes at the Australian Institute of Sport. Davenport says the tights help blood circulation, flush lactates, provide stability for muscles and aid in recovery.
In seven years, 2XU, based in Hawthorn, Melbourne, has become a global success, exporting 70 per cent of its products to more than 42 countries.
"We're a niche. Australia is not big enough for the niche we're in," says Davenport.
"Our biggest market is the US. That's probably more the size of the opportunity. We do really well in Scandinavia for the size of the population. We're in a number of countries in Europe and a number of countries in Asia."
When starting their business, Davenport and his co-founders felt Australia was famous for its sporting achievements and surfing, but not for any world-beating sportswear label.
"Our aim was to be Australia's first truly global sportswear brand," he says.
Using triathlon as a "wedge" to enter the elite sportswear market, 2XU has since expanded its product offering to other sports and its efforts are paying off with 25 per cent growth year-on-year.
Almost 12 months ago, 2XU sold close to 30 per cent of the business to the private equity arm of investment bank Lazard. A key reason, Davenport says, was to increase its global networking opportunities.
Back to the beginning
Long before the idea of 2XU had taken shape, Davenport was making a name for himself in the competitive underwear industry.
Leaving his advertising job in the late '80s, about the same time his first child was due, Davenport agreed with his wife Debbie to take 12 months off and have a crack at starting his own business.
"When I started Davenport, my wife and I had savings of $100,000," he says. "I remember in the early days going to China. I had a little office in Bouverie Street in Carlton. I'd leave for two weeks in China and put the answering machine on and come back to three messages."
The entrepreneur saw an opportunity in creating sleepwear that wasn't "dull and boring".
That idea didn't really take off, but with a few fabric offcuts Davenport decided to have some boxer shorts made.
He knew boxers had become popular in Europe and the US, and predicted the trend would continue in Australia.
"When we first started the boxer-short business, boxer shorts represented something like 1 per cent of total underwear and we had the majority share," says Davenport.
"Unfortunately, 1 per cent of not much is still not much, but within a few years it grew to about 20 per cent and we still had about 70 or 80 per cent market share, so we were very fortunate.
"We had glow in the dark, we had musical boxer shorts, we had all the character designs, Disney and Warner Bros ... things like South Park."
Davenport says he came within about six weeks of throwing in the towel, but the boxer-short sales saved him.
'No for now'
Knowing he needed to keep adapting, he decided to vie for the Australian and New Zealand distribution rights for the biggest underwear brand in the world at the time, Calvin Klein. His first attempt was met with a resolute "no".
"I just took 'no' for 'no for now'. I went the following year and they said no again. I went back the following year and I got the licence."
Davenport says that victory changed big retailers' perceptions of his business - from one that sold goofy boxer shorts to a serious operation.
After 15 years, he and his wife decided it was time to sell.
"I didn't seem to be able to find any general manager or senior management that I could hand over to, and I was just getting sick of it," he says.
"If you lose that passion about something, in my view it's time to get out."
While his name will now forever be associated the brand, Davenport says he would do things differently if he had his time again.
"In hindsight ... I would have never called it my surname, because I was never a designer. I thought I was more a stylist or a creative businessman rather than the traditional designer."
What it really takes
Like other entrepreneurs, Davenport says the only sure thing in business is change.
"Where you start never seems to be where you finish. I started in sleepwear but I would have gone broke if I had stayed in sleepwear."
With his underwear company, the businessman decided to stick to the market he knew best - Australia.
With 2XU, it's a global strategy, which comes with the problem of more competitors, with enormous marketing budgets.
"If we're going to be successful, we can't compete the way our larger competitors compete because they will smash us," Davenport says.
'We can get some of the up-and-coming athletes, we can get some of the bright new stars. We have to be very clever, very tactical."
2XU's number one priority is making sure its product is right, followed by value for money, distribution and advertising and promotion.
In a major win, US mega chain Dick's Sporting Goods is trialling 2XU products in 170 of its more than 500 stores.
Davenport says 2XU will turn over about $55 million this year, but that's just a drop in the ocean.
"If we're truly going to be one of the global brands in this category, we look to $500 million to a billion dollars because that's the scale. If you take a brand like Adidas, I think they're about $14 billion. Nike are $25 to $30 billion," he says.
"The scale we're looking at is probably going from where we are to 200 [million] to 500 [million] and up to a billion dollars."
Clyde Davenport's five tips for entrepreneurs
1. It starts with an idea. I think you have to think hard whether that idea is scalable.
2. You have to be passionate about it and you have to be persistent because it's not going to be smooth sailing all the way. So if you get a no, it's no for now, it's not no for ever.
3. Keep it simple, don't try to overcomplicate things.
4. Just have a go, don't procrastinate.
5. Don't mistake delegation with abdication. It's fine to delegate, because you can't do everything. But once you delegate you can't abdicate.
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