– We cannot make big mistakes – E24

From an old newsstand in Manhattan, Norwegian caps hit Varsity is testing the American market.

– Caps founder Sebastian Salveson Adams tells E24 that the target is a permanent store.

He is in New York to test the US market with a pop-up shop in the popular shopping district of Soho. So far this year, the U.S. has accounted for about 37 percent of the company's online shopping.

– America is the most important export market for us and is growing faster than any other. It's a huge market, so right now we're learning here first. Adams says it's a huge honor to come to the Caps' home country.

– Excellent condition

Over the past five years, the company has grown Fiftytwo to just under 10 million in sales each year.

Last year, brothers Sebastian and Alexander Salvelsen Adams, who started small in Majorstua in Oslo, brought in more than NOK 50 million from hats made from materials such as linen, cotton, wool and camel hair.

It shows the company's latest annual results from the Brønnøysund registers.

At the same time, both operating profit and pre-tax profit ended up below the zero line:

– Investments mean we are not making a profit. One of the most important things we did last year was to restructure the entire organization. We've gone from being an entrepreneurial company to organizing ourselves like a traditional development company, says Adams.

This includes, among others, a new management level and a new online store with modern systems.

– We are now well suited to international growth and clearly observe the results of investments on a daily basis. But it is still not reflected properly in the accounts, says the businessman.

Selling caps from newsagents

Gaining knowledge of the US market is now in full swing.

Varsity's pop-up shop will be around throughout June and officially opened on Thursday last week. Since then, the company has, among others, a pop-up store at Oslo Airport and two in Kuwait.

In addition to their existing stores in Saint-Tropez and Kuwait City, they recently opened a permanent store in Cannes.

– We strongly believe in growing through retail. Meeting customers face-to-face, getting first-hand feedback and seeing what they want and need can be incredibly beneficial. It has many advantages. The challenge is that it is very capital intensive. You need a lot of money to build stores and secure deals, says Adams.

In the first few days, he met American customers who had purchased varsity caps in the past, stopping as they passed them at the old newsstand where they now stand.

– Then you have to pinch yourself when you're hat from Oslo. You feel a little proud when you manage to impress them enough that they buy more. So no, it's a lot of fun.

– Can't make big mistakes

Being Norwegian in New York is expensive. The dollar was above NOK 11 at the end of April, but weakened somewhat against the krone throughout May. In recent days, the price was NOK 10.5.

Adams won't reveal how much it costs to rent the pop-up shop, but makes no secret that it's not cheap.

– We cannot make big mistakes. Rent in Manhattan… so much money. But we've had a lot of good help from the Norwegian Consulate in New York and Innovation Norway, with whom we've been collaborating for years, he says.

Among other things, they have contributed with advice and tips on how to set up a US company.

– Do you notice the weak Norwegian krone exchange rate?

– We are roughly currency neutral. As we focus more on France and the US, our revenue is increasing in euros and dollars. This means that we are not severely affected by currency differences.

20 million from an outside investor

Last fall, the varsity brought on billionaire Christian Stabel Erickson as its first outside investor. He has contributed about 20 million to the company, Adams says.

– We've always seen it as a very important development tool, but we're very careful not to use it too soon.

Erickson first joined the company as a consultant.

– There are many people knocking on the door and pitching investments. But we were keen to find a good match. A seasoned entrepreneur like Christian, with a very wide network and extensive brand knowledge, has been a huge success.

The brothers are already looking for more permanent campuses in the United States.

– We want to go to New York, but we also looked at vacation spots like Los Angeles and Aspen. But we don't dare commit to a long and expensive contract until we get some more data.

But Varsity now has momentum, Adams believes.

– A lot of positive things are happening. It's a little frustrating not being able to follow through on everything, but we have to be good at prioritizing.