For Haim Dabah, a pioneer in apparel manufacturing and brand building, technology is his next frontier.
This story first appeared in the November 6, 2014 issue of WWD. Subscribe Today.
Dabah and his son Mac have formed HDS Capital to invest in tech startups. So far, they’ve invested in six, including Linc Global, Stylitics and Cosmic Cart. HDS also targets venture funds and “accelerator” companies that work to grow other companies. HDS has stakes in the Elevator Fund, an accelerator in Tel Aviv, and in two big venture funds, Greycroft Partners and Metamorphic Ventures.
“It’s a very unusual model,” said Dabah, who left his job at Global Brands Group a month ago for his career switch.
The entrepreneurial Dabah is known for his private-brand projects and for developing Gitano along with his brothers Ezra and Isaac, which peaked into a major denim label for the mass market in the Eighties. Dabah later founded Regatta USA which has developed labels for retailers including the Simply Vera by Vera Wang and Daisy Fuentes lines for Kohl’s and Ellen Tracy and Karl Lagerfeld for Macy’s. In 2007, Regatta was sold to LF USA, which earlier this year spun its Global Brands business, including Regatta, into a separate public company.
At HDS Capital, Mac Dabah scouts tech investments, does the initial screening and due diligence, and brings the concept to his father, who meets with the team to see if he can add value to the business. Deals also flow through the venture funds and recommendations by the founders of current investments.
“Data, along with satisfying consumers, is where the money is,” Mac Dabah said, describing the HDS investment strategy. “We like game-changing technology with those who have some experience and are visionary and passionate about what they do. Two of our lead investments, Linc and Stylitics, are data driven, and we like that space.”
“The key to investing is always the people,” added Haim Dabah. “You’ve got to like the people. I love helping young people make their ideas come to life. They need guidance, access and [industry] relationships to make their ideas come to life.
“Ideally, I like to invest with people on their second go-round. Even if the first venture was not successful, it’s still OK because of having had that experience. Obviously, the investment should be in something I understand and something that is compelling. I write checks between $100,000 and $5 million. We are giving them money and guidance,” he said.
One of the beneficiaries is Linc, a post-purchase customer service currently in a pilot phase. “Because we are so technology-focused, we want mentorship from people who have a deep understanding of brands and how brands want to connect with their customer base. Haim sits on that side of the table,” said Fang Cheng, the founder and chief executive officer of Linc. Cheng, who sold her touchscreen startup TouchCo to Amazon in 2010, said Linc provides quicker interactions between consumers and brands and is geared to help companies build loyalty and reduce their costs of conducting service.
“Linc anticipates your questions. For example, you can click on a delivery widget, and it will tell you where your product is,” in the delivery process. Linc also assists consumers with product assembly, warranties and other post-purchase concerns. “There’s a large void in terms of how businesses are taking care of their customers,” said Cheng. “They are still pretty much using what they have been using for decades — a phone number, an e-mail or a big form.”
Stylitics, another HDS investment, is a personal style management platform that operates like a digital closet, helping people track their purchases, know what’s in their closets, what they wore and when, and suggest items that haven’t been worn in awhile. It also provides a stream of data to retailers, for trend spotting and sharing fashion information with consumers. “For brands and retailers, Stylitics provides a real-time view of the marketplace to alert them early to what’s trending, like what style of jeans is doing well after being down for a couple of years, or that silver bib necklaces are trending,” said Rohan Deuskar, founder and ceo of Stylitics. He said 200,000 people, 90 percent of whom are women in the U.S., have downloaded the app, and that a total of 1,200 brands and retailers are receiving the data.
The two-and-a-half-year-old Cosmic Cart enables shoppers to buy directly from different sites and apps with one universal checkout, and helps digital publishers, including apps and blogs, monetize their media. “We look at HDS as a strategic investor with deeply rooted fashion experience,” said Alex Adelman, Cosmic Cart’s cofounder and ceo.
The Dabahs said they take “a portfolio approach,” anticipating that not all the investments will be home runs. “There could be some very good ideas and very good people behind them, and they may not resonate,” said Haim Dabah. “Sorting through the huge volume of ideas and figuring out which will likely resonate means doing some hard homework. Even if it’s a great idea, it’s a question of whether the execution is right. That’s two things that could go against you. That said, technology is the way consumers are living their lives today.”
Dabah didn’t seem particularly wistful about shifting from fashion and manufacturing to tech, though HDS keeps him at “the intersection of fashion retail and mobile,” he said.
“It’s been not quite four weeks since I left my day job and I don’t miss it at all,” he said. “For the traditional wholesale business model, the expiration date has past. Twenty years ago you could have a wholesale company with 20 labels that could be successful. It’s not as exciting anymore. I need to do something more exciting. I want to be involved in something I am passionate about….I love Uber. It took an old traditional business model, the car service, and automated it in a way that is much more effective today. I wish I invested in it.”