Depending on what you read and heard about Karmaloop over the past two weeks, the Boston-based streetwear behemoth either had its wings clipped or is soon to soar higher than ever before. On March 23, news broke that the company filed for Chapter 11 bankruptcy protection, the result of overwhelming debt incurred from numerous failed side ventures. On the same day, however, former Roc-A-Fella Records CEO and rhetorical lightning rod Damon Dash told an interviewer he and Kanye West are looking to buy Karmaloop; though just a blip inside a longer clip addressing several other topics, the suggestive hint rocked national headlines.
Beyond that splash, there’s been little information available besides rumors and a press release on business specs (they’ve “secured debtor-in-possession “DIP” financing,” and so forth). Karmaloop CEO Greg Selkoe has shared sentiments on social media, and last week posted a nostalgic pic on his Facebook page of the basement in Jamaica Plain where he first set up shop more than a decade ago. Still, through it all, the public has learned little about the direction of the beloved Hub institution, and even less about what the metamorphosis means for the local creative economy. Selkoe’s not an easy guy to track down, but he’s not exactly introverted either; so on the hunch that he would open up about the Karmaloop sea change, we reached out for the real …
“People see Chapter 11 and they see a padlock on the door,” he told us last week at Karmaloop headquarters on Boylston Street. Selkoe doesn’t seem dismissive; he’s clearly hard on himself about all failures, both real and perceived. Nevertheless, he is relentlessly optimistic, and says he feels like he’s suddenly running a startup again. He continues: “The banks are the ones who are getting the debt restructured, and they’re supportive. We have a plan and we’re working together. I hope that in a year from now we look back and see how much we’ve done since.”
Though New England is as widely known for fashion as it is for surfing, the region’s rich apparel history is real and documented. Besides the timeless preppy styles spun from Brahmin Beacon Hill to Maine and L.L. Bean, Massachusetts in particular has birthed some of the most recognizable mass retailers to date, including some of the very mallfront clearinghouses that have helped put international giants like Ralph Lauren on the map.
A Boston native, Selkoe had tremendous local influence for cultivating his brand. Though Karmaloop is new-school to the core, and dumped its brick and mortar store on Newbury Street in 2011, there are more than a few traces of establishment icon influences in the company’s fabric. Take the North Shore-spawned Marshalls, which broke ground in the early ’60s with a simple but then-novel concept: “Brand Names For Less.” There’s also Filene’s, which more than a century ago initially brought overstock and surplus sales to Downtown Crossing before opening throughout the country.
While Karmaloop updates its virtual racks faster than BuzzFeed can burp listicles, the company has strong connections to the commonwealth’s past innovative retail history. Like Filene’s and Marshalls’, Selkoe’s vision has proven itself to be large enough to sustain an almost undefinable class of its own. When Damon Dash name-checks “Karmaloop” on social media, he’s not just referring to some random gear site where kids occasionally cop kicks. Rather, over time the brand’s become a go-to portal onto everything from comedy to fashion, entertainment news to music.
No icons are perfect. In the case of Marshalls, corporate acquisition after corporate acquisition compromised the core mission, or at least robbed the chain of its unique appeal, while Filene’s endured sloppy financing arrangements and eventually was purchased by Macy’s, which dealt the discount stalwart its final death blow in 2007. It may not matter to the average consumer that those celebrated Bay State names moved operations elsewhere, but to a student of the industry like Selkoe, the void is palpable.
“One of the things that was good early on was that I had these mentors—fashion leaders,” he says. “After they passed away, I looked around and there was nothing. Now retail is all national.” Specifically, Selkoe cites formidable inspirations like the late Frank Estey, one of the early minds behind Marshalls, as well as Sam Gerson of Filene’s esteem. Selkoe continues: “If I was in New York I would have had more support … I traded off the advantages. Keeping the business in Boston was important though because I wanted to have some meaning in life. It’s important to me.”
Before becoming the big boss, Selkoe set out on a starkly different route. Following his undergraduate stint at Rollins College in Florida, he studied public policy at the Kennedy School of Government at Harvard University, and even took a job at the Boston Redevelopment Authority. In time, Karmaloop became his full-time career, and Selkoe and his wife and partner Dina migrated the burgeoning boutique from his parents’ basement in JP to larger spaces. The rocketship officially took off in 2008, after a $35 million boost from venture capital, and by 2011 Karmaloop became one of the 50 fastest-growing Internet companies in America, grossing north of $100 million in annual revenue.
Even with ambitious business plans, Selkoe remained civically active, and along the way founded Future Boston Alliance to help shepherd the Hub toward modern times. Despite rumors of his political aspirations, he never actually ran for mayor, but was among the few significant figures who were audacious enough to support opponents of then-Mayor Tom Menino in 2008. The issues Selkoe raised at the time—namely transit and the retention of young people in Boston—have since swung front and center. Though he’s not always the one personally hounding lawmakers, the Karmaloop founder’s fingerprints can be found all over urban improvements.
“The type of stuff that we do, you couldn’t do that in thing Boston 30 years ago,” says Selkoe, who at times has employed more than 100 area artist types, and who has made enduring efforts to spur a downtown that’s more accommodating to young people. Among his longtime gripes: arduous permitting processes, minimal “street commerce,” and most of all the lack of late-night entertainment options. “Theres a real aversion to risk,” he says. “We need to figure out a better way to create an infrastructure for them to stay. We need to create an area where people can express themselves. Everyone doesn’t have to love it. We just need it … Facebook, Reddit, Dropbox left. We didn’t even ask, ‘What happened?’”
Selkoe sits with iconic community activist Mel King | Image via YouTube
It’s not all bad. Selkoe also says, “This city has changed a lot and for the better … One of the good things about Boston is that we punch way ahead of our weight class … We’re tough … In LA, everyone is your friend. In Boston they’re really your friend, and if not, they tell you to fuck off. We respect people who can handle adversity.”
As for his own adversity … Selkoe’s been in debt before, albeit to the tune of millions rather than hundreds of millions. Still, if he’s proven anything it’s that he doesn’t fear things that threaten entrepreneurial mortals; after all, he launched Karmaloop in 2000, smack between the dotcom bust and 9/11, and slugged more than five years before turning a profit. In any case, as Karmaloop adjusts, Selkoe hopes the Hub will change in tandem—he needs it to. “We employ local staff like [DJ and tastemaker] Texas Mike,” he says. “All of these kids worked for me—it means a lot. We need to have more affordable housing if young people are going to stay in Boston.”
No matter what the future holds, one thing’s for sure: Karmaloop is at a difficult and major crossroads. Despite assets that are reportedly worth in the $10 to $50 million dollar range—everything from inventory to proprietary contracts—the online retailer has about $40 million in actual debt with additional liabilities involving convertible notes, equity, and so on, totaling a little over $100 million dollars including money owed to vendors. To get over the hump, Selkoe has been wide open about such troubles, and about an upcoming bankruptcy auction in April. “The core company is still doing well,” he says. “The other companies were a drain on Karmaloop.” Selkoe adds …
“If you look there are very few apparel companies that are making money … Karmaloop core brand went into black in 2006—the other businesses were hurting that success … This is a business that has been about growth because it’s been about a new way of doing business—we’re the railroad. E-commerce is only 20 years old at best. We’re 15 years old—how many other retailers have been in business that long?”
Candid as he was with us, Selkoe stopped short of confirming any deal with Dash and Kanye. As far as that news goes, we’re on the edge of our computer chairs along with everyone else, especially since the pair addressed matters on Instagram last Friday. “We just about to do some new shit and just stick together culturally and take over the world,” Dash boasted. “We linking up and we decided to go buy Karmaloop. We just talked about it so it’s gonna happen.” Selkoe says they are among prospective buyers, and that’s good enough for us—so long as he remains on board, of course, and keeps the Hub at the forefront.
“Its about trying new things,” Selkoe says. “I’m not going to sugarcoat this—I’ve taken my lumps, but I haven’t hid from anyone … This is not the end, this is the beginning … We want to have an impact. I want to have a reason to get up in the morning.”