Apocalypse Nau? No, Just Business Reality
For what it's worth, my answer is No. The failure of Nau reflects less the inherent weakness of the sustainable business concept and more a series of miscalculations made by the company's management, most of which had nothing to do with environmentalism or social consciousness but rather with plain old business sense.
As this article details, Nau committed some of the same management blunders that have doomed thousands of other startups. They counted on a website to generate 50 percent of their sales, then dawdled over repairing the site when it proved to be awkward and difficult to use. They chose not to make their products available through traditional retailers, thereby eliminating a potential source of vitally-needed early revenue. They decided to "mute" the appearance of their logo on their garments, eschewing a powerful tool for building brand awareness and loyalty.
And most dangerously, they overspent, especially on personnel: "Among the 60 employees at [Nau's] Pearl District headquarters, about 10 held the title of vice president or higher . . . Most hailed from large companies such as Nike." In other words, they hired pricey talent accustomed to big-company perks and working conditions--always a risky choice for a brand-new company.
Given these mistakes--all of which, I hasten to add, are easier to spot in retrospect than they would have been at the time--it's not hard to see why Nau ran out of funds and couldn't find a venture capitalist willing to provide another infusion of money.
The lesson of Nau's collapse? A would-be sustainable company needs to be run at least as well as a traditional firm--because having great environmental and social goals doesn't exempt you from the laws of business physics.
Labels: apparel, Finance and Investment, Management and Organization, Nau, Portland, Small Business
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By 
KW, on
May 19, 2008 7:09 AM
Hey! Thanks for the great info. It bothers me how you sometimes never know whether what you're buying is truly "green" or not. I was browsing through a bunch of green websites and blogs and I came across yours and found it very interesting. There are a bunch of others I like too, like the daily green, ecorazzi and earthlab.com. I especially like EarthLab.com’s carbon calculator (http://www.earthlab.com/signupprofile/). I find it really easy to use (it doesn’t make me feel guilty after I take it). Are there any others you would recommend? Can you drop me a link to your favorites (let me know if they are the same as mine).
By 
, on
May 19, 2008 5:03 PM
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By Barbara Dobrinsky Holtzman, on
May 28, 2008 4:09 PM
I don't think any of the stated reason's for Nau's demise weren't obvious from the outset, not to mention characteristic of wide-eyed novices - you'd a thunk one of those pricey VPs would have seen and mentioned, but noooo. Part of the problem with sustainable businesses is that they eschew traditional models as being too "corporate," yet as the idea is still fairly new, there's little in the way of research developing models with a better fit (the theme of my doctoral work, by the way). That whole "we don't want our logo to dominate" reluctance is the first thing a seasoned mentor/consultant would have kiboshed, and then followed-up with a lot more fiscal belt-tightening and whip-cracking; you schmooze with lattes AFTER you recover from working your ass off for a year or so of 20 hour days, 7 days a week, not before. Can you succeed with less work? Sure. Does it happen to many? Not really.
By Barbara Dobrinsky Holtzman, on
May 28, 2008 4:13 PM
Here's another take on Nau's downfall, this one a column from Business Week that focuses on the company's failure to develop clothing styles and a retailing strategy with mainstream appeal.