We received our latest introduction to entrepreneurship in northern Colorado at our in-person meeting on March 13. Trent Johnson, the owner of Greeley Hat Works, led us through a brief history of the company, founded in 1909, and his path to ownership of the company and its current level of world-wide success. Trent, the fourth hat maker to own the company, has owned it since 1996. The company creates high-quality custom hats, by hand and by human, to custom-fit the head of the customer. They now supply hats to some 100 stores both in the US and world-wide.
Trent is a Colorado native, having grown up in Pueblo. Starting from mowing the lawn for his parents, he opened his first business – Trent’s Lawn Care – where he learned his first business lesson when his father required that he rent the family lawn mower to do his business. He was sufficiently successful that he bought his own lawn mower and expanded the company, ultimately employing 15 men, the oldest of whom was 40. The second lesson: as a 19 year-old, you can’t be a boss, you have to be a leader.
He wanted to go to business school for college, but the only school that would accept him was NCU (Northern Colorado University) at Greeley, and even there his grades were not sufficient to get into the business school. His first summer, back in Pueblo, his parents had him pay rent to stay in his room at home. His second summer, he stayed in his parents second home in the mountains but the rent was higher – costs are higher in Summit County – so he became the condo association grounds keeper and a camp counselor in Vail.
With the rise in Country Music (esp. Garth Brooks), everyone, including Trent, was wearing cowboy hats. He took his hat to the Greeley Hat Works on the Orr family ranch near Greeley and, while getting his hat cleaned, wormed his way into a job on the ranch. He cemented his position there (lesson 3) by doing more than the job required. And that was how he was introduced to the Greeley Hat Works. The Greeley Hat Works then, as now, uses hat-making equipment that was created from the 1850s to the 1940s (and looks almost Medieval) so there is nothing there that you can acquire off the shelf or even easily in Denver or at Wal-Mart.
Still wanting to satisfy his desire for business school, but now also wanting to create a business plan for acquiring and developing the Greeley Hat Works, he started taking night classes at the Small Business Development Center (lesson 4: you actually have to know something). One of the issues was finding financing for doing the deal. The Orr family agreed to doing a 50% owner carry but with the stipulation that, if he wanted to move the business, he would have to pay off the loan immediately. An uncle loaned him some money with the stipulation that, for any year in which the loan was still outstanding, Trent would owe him a hat. His parents refused to loan him any money (jerks) but then informed him that all of the rent that he had paid to them had been invested and was his to use (awesome jerks). His relationship with his banker in Greeley has been maintained from then to this day (lesson 5: respect and community connections).
In his last year as an apprentice at the Hat Works, the company made 60 hats. In his first year as owner, they produced 120. He soon paid off the Orrs so that he could move the company to a bigger location in Greeley. He paid off his uncle and gave him two hats (so he would have some good will for the future).
In 1998, Trent established a partnership with the National Cattlemen’s Beef Association to provide them with 100 pure beaver hats in celebration of their 100th annual convention; he is now in the 28th year of that relationship. A national retailer asked him to provide them with hats but without his name or logo – be their ghost hat maker. They and other widespread retailers are now selling his hats with his name and logo inside. In order to illustrate the current relative size of his operation, he said that the big name brands produce around 150 dozen hats per day whereas the Greeley Hat Works builds 50 hats per day (around 14,000 per year). Perhaps his biggest PR success was in providing hats to President George W Bush, both for him to wear and for him to give to foreign dignitaries.
He spent some time talking about his supply chain and current challenges. Most of his materials come from Europe where the factories are clean and the product is scientifically quality controlled, as compared with US factories that tend to be dingy and unprofessional-looking. Much of his fur comes from Ukraine and delivery has decreased from seven trucks per week to one truck per week, and insurance for the drivers has dramatically increased. Shellac, which has long since replaced Mercury for stiffening hats, comes from India and is more expensive. The fur for a beaver hat requires the belly fur from six to eight beaver hides (the rest of the beaver is used for other products).
The corporate growth has been mostly by word of mouth – they do little formal advertising. He has been involved in creating the hats for the TV series “Yellowstone”, for which they have to create five hats for the actors and two additional for the stunt doubles, each to reflect the character of the character as well as an appropriate age or wear of the hat.
Questions:
What do the Xs in beaver hats mean? There are actually no rules or standards for that. In the old days, trappers would mark beaver hides with a number of Xs to indicate the quality of the hide, more Xs for better hides. In the 1940s, hats were marked with a number of Xs to reflect the quality of the hat with 10X being the best and worth maybe $100. Since then, the number of possible Xs has increased but the quality indicated has gone down.
What do you charge for a hat? Prices for beaver hats range from $450 to $1800 depending on the quality. He has an old hat in his shop that was worn every day for 33 years in a feed-yard setting so that works out to maybe $.33 per day. So relatively high cost but great durability.
Is it true that beaver trapping was on the road to extinction of the beaver until silk hats replaced beaver hats? Trent was not sure of the validity of that story but did point out that beavers may be either a blessing or a nuisance depending on the circumstances.
Can you give a little more of the history of the Greeley Hat Works? Trent said that there have been a number of owners but only four have been actual hat makers. The company was started by two Greek brothers. It was purchased by Ben Martinez in 1925 but he changed his name to Ben Martin because no one would want to do business with a Mexican. He ultimately sold out but then came back. While Trent has owned the company, some of Martin’s relatives have visited the shop and would become both informative and emotional in looking over all of the old equipment.