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Jun 28, 2018

Q&A with YXU: Building a Business by Building Community

YXU is a for-profit clothing company that sells branded shirts and sponsors community events intended to empower and encourage young adults. The company’s name and logo is “YOU” with an X through the “O” representing its tag line, “Leave Your Mark.” Founded in 2016, YXU believes that every individual can make a difference when they find a local community that encourages and supports them.

The company uses the profits from its sale of clothing to “leave its mark.” The first mark is financial: each year it makes an annual pledge to a target cause. Its current cause is hunger, and its pledge is to donate 5,000 meals to those in need. Its second mark is through running community events and sponsored blog posts that aim to inspire and encourage young adults to engage with the community in a meaningful way.

SocialVentures talked with Matt Pekarek, co-founder of YXU, about how this came about. A version of this article first appeared in Columbus Business First on June 28, 2018.

Did you settle on your business model right away?
We have been around for two years, but it was not until 2017, that our founders team agreed on our identity as a clothing and apparel company. Our team has a shared belief in doing well while doing good, but we found that taking on a social enterprise mindset posed a number of conceptual hurdles we had to work through. Are we a community organizer? Are we a 501c3 nonprofit? Mid-way, we changed our giving model to the current annual pledge approach, and that added more confusion to our purpose. We continually changed the channels we used to create impact, as we learned which efforts really got traction.

What other challenges did you need to overcome?
As a business, we find it challenging to account well for our cost structure when we also have a donation goal. And it is a constant challenge to balance our need to generate a profit margin with our desire, to channel as much time and money to our social cause as possible. We still find it hard to tell our story of being a for-profit clothing company that is about more than needing to sell clothing to make money. The public still has a bias toward expecting a socially driven organization to be a nonprofit. At the same time, it is not easy to convince potential investors that we have a growth story, when we are also devoting substantial resources to our social purpose.

With all those challenges, why do you maintain this business strategy?
Each of us three founders grew up with a community that supported us, whether it was a baseball team, high school classmates, whatever. Being part of a community is what drives us and supports us. Our “aha” moment came in 2016, when we saw how Cleveland Cavalier’s championship created a powerful sense of community in Cleveland. We asked ourselves how can we extend this type of enthusiasm to more areas and causes.

We’ve set out to create an apparel brand that is known for empowering and connecting like-minded individuals in order to position them to advocate for their passions. Everyone’s passions take on different shapes, as do the challenges that prohibit them from living out those passions, but we want our customers to feel that whether they’re trying to work a second job to support a young family, or establish grassroots efforts for a political candidate they support, they have this community of leaders, dreamers, and doers to fall back on to look to for inspiration. More tangibly, YXU also commits $1 from every item we sell towards an annual pledge aimed at confronting a social issue that is important to our team. This is our way of advocating for our passions as a group, and leading by example for our broader community.

What gets you up every day to make this business successful?
The biggest challenge for our team has just been showing up every day and being excited for the new challenges we are confronted with, even when they leave us feeling vulnerable and unsure of the direction we are headed. There is plenty of room for growth and maturity in terms of the formal processes that make our business tick, but our shared camaraderie and passion helps a lot. So does keeping a long-term focus, to go for singles rather than home runs and to make sure we make some progress each month, and appreciate the progress we have made. And since we all are friends, we have our own supportive community to keep us going.

How do you know you are making a difference?
We know it when peers and strangers reach out to let us know that, because of YXU and the community and messaging we provide, they were able to find the little extra “umph” to push through whatever challenge they were facing that day, week, or month.