According to an old saying, behind every successful man, there is a woman – and if we look around in the creative industries, we can translate this for 2021 by saying that behind every successful business, there is a team with significant knowledge and experience. Just like Hungary’s first global fashion brand, Nanushka, could not have reached the level it’s on now without such a systematic structure behind it. This success-building company behind the scenes is Vanguards, which, relying on the brand-building experience they’ve gained from Nanushka, now brings more and more luxury brands to the top. We talked about fashion industry know-how and the concept of planned success that goes beyond creativity with Vanguards founders Péter Baldaszti (PB) and Ágoston Gubicza (ÁG). This interview was published in print in Hype&Hyper 2021/1.
Interview by Zsófi Tillinger.
How did Vanguards start and what exactly is it?
PB: Ágoston and I envisioned the concept of Vanguards quite a few years ago. It was kind of a chicken and egg situation since Nanushka came first, then Vanguards grew out of its success. Vanguards is a fashion investment company operating in the modern luxury sector, with the aim to support businesses with annual sales of one to twenty million euros and help them move from this level to reach annual sales of fifty to one hundred million euros or above. Since we’ve been through all of this with Nanushka, we’ve had an awful lot of experience about making a company successful. At Vanguards, we transform this experience into creating value. The knowledge, professional staff and technological background we built up in the past few years will help to keep many other companies in this field, and we can recreate the success story of Nanushka for other companies.
Vanguards works with an independent organization and its own international team. We currently have eight team members in Budapest, four in Milan, three in London and three in New York, the latter team being responsible for the North American market. As an investment group, Vanguards’ primary task is to support the growth goals of the portfolio’s brands and coordinate their operation from HR through finance and legal functions to transactional, financing and fashion merchandising strategies such as product portfolio planning or digital developments. With this complex package of services, we provide companies with a so-called growth platform; we plug-in brands under the Vanguards group, allowing them to use the features of this platform. We also help them with financial support from the capital fund provided by GB & Partners; this is indispensable for development, as fashion is an extremely capital-intensive industry.
How many brands are currently in the Vanguards portfolio?
BP: We are currently working with three fashion brands, Nanushka and Aeron from Hungary, and Sunnei from Italy, which I think is the most exciting Italian new-wave brand emerging within the market. In addition to these three fashion brands, a fourth company also belongs under Vanguards: Scala Technology Zrt., which serves our in-house companies with online and offline commercial software solutions. We will soon make this technology available to external companies as well, since it is the platform that helped Nanushka become as successful as it is now.
ÁG: GB & Partners is one of the largest Hungarian venture capital fund management companies. As the owner, I started to lay the foundations of Vanguards with Péter when we started investing in Nanushka five years ago. With Nanushka, we got to the point where we can only jump to the next phase of growth by engaging notable experts and creating a pool from which the plug-in model mentioned earlier by Péter can take form. We’ve lived through this success with Nanushka, so the idea came up organically: why not try working with other brands with the same approach?
Behind Vanguards’ whole philosophy is the experience that these smaller companies not only can’t afford the professionals they need for growth – but these experts are also completely out of their reach. We have successfully developed Nanushka into one of the trendiest brands in the world: its company size is relevant on the international market, the coolest international magazines write about it, celebrities wear its products, and in addition to its three stores, people can find Nanushka items in more than fifty countries, in shops such as Lafayette or Bonmarché.
Pofessionals desire to join such success stories, because they want to be part of the next hype. A crucial recognition on our part was that there are big fashion hubs on the international market: groups with turnovers of hundreds of billions of euros, who say that they cannot work with accounts of ten or twenty million. This is the point where Vanguards stands out: on the one hand, through GB & Partners, it has the resources to fund this range, which is not a typical target scope for investors, and on the other hand, it’s supported by a team of professionals, with the track record and experience of Nanushka.
How does portfolio expansion work at Vanguards?
PB: Right now, we are careful in terms of expansion, as last year was not easy for us either. We have already started looking around on the market, but we are very selective. We decide according to both objective and subjective viewpoints, because this industry has a very unique, not purely right- or left-brain story: fashion is partly a form of art, but a highly professional machine has to be built around it. Therefore, the criteria of success are creative and subjective, such as looking at a brands’ aesthetics, communication and cultural relevance, or whether their team is capable of putting the knowledge provided by Vanguards into practice.
ÁG: At Vanguards, we have a conscious acquisition plan. We don’t want to invest faster than putting those already in our portfolio on track.
PB: Once all of them are on the right track, we can focus on new projects. To name one example: in 2016, Nanushka manufactured 8000 garments per year, this number rose to 160.000 by 2021. This volume requires completely different manufacturing procedures.
ÁG: At Vanguards, we can foresee the operation of the market a year in advance. We foresaw the possible financial effects of the global health emergency situation before it hit, and now we can clearly see from the numbers that this all will change by the end of September, as orders are already well above the pre-crisis volume. This is exciting, because we have to work ahead and in real-time simultaneously.
At the level of Vanguards, which brands seem exciting in Hungary and internationally?
PB: Keeping in mind the range of companies we are looking for, currently, we don’t see targets with global potential in Hungary in terms of company size. There are some brands in the wider European region – including Croatia, Georgia and Poland – we consider very exciting. However, in the next period of time, we will be looking intensively at the Western European market. This current, difficult situation is a good opportunity for sales, as many have realized how beneficial it is to belong to an investment group.
ÁG: However, it is very empowering that despite the very extreme impacts of 2020, Nanushka was able to grow its revenue further. Regardless of an average decline of 25% throughout the industry, we were able to grow 8% in 2020 with Nanushka. All this with a complete season, a quarter left on us; a company without an equity firm wouldn’t have survived this. And with Aeron, we can already see that we’ll double the numbers of the previous year.
PB: Creativity within a framework – this is the key to success in the fashion industry. To be creative while remaining incredibly rational and logical, interpreting creativity within a system built around it. Brands’ content is produced by creative directors and their team, while we provide a supportive frame.
How do you see the growth of Vanguards in the future?
PB: We’re very much thinking in the long term with Vanguards. Currently, our priority is to expand these three brands.
ÁG: Let’s just look at what it’s like when you kick things off with a new brand. For example, at Nanushka, it was only women’s clothes at first. Then came accessories, menswear, other products, shoes, bags, sunglasses, perfumes – and I didn’t even go into the Home segment yet. So we’re not in a hurry to grow. It’s a very conscious decision on our part that we will not jeopardize the growth of subsidiaries in our portfolio only because of one good opportunity.
What would you recommend to fashion brands who would like to reach your standards in terms of size and sales?
PD: I would suggest designers to think globally. To place their brands globally and design with the global market in mind, positioning and differentiating their brands according to these high standards. Those who get lost in the success of the domestic market, have no future. I also highly recommend that they read a lot: all the knowledge about the global fashion market is available online. When someone wouldn’t take the trouble to acquire at least a bit of knowledge, that person is not worth talking to. The key to success is knowledge and talent: to learn from our own mistakes as well as from that of others.
ÁG: Stay inspired and be humble as a designer. In addition to determination, vision and awareness, designers must also have respect towards market demands.
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