Iowa entrepreneur wants to make the fashion supply chain sustainable

It takes about 700 gallons of fresh water to make a cotton t-shirt.

Another 1,000 for a pair of denim jeans.

Few people know the production process of their clothes and the resources needed to make them. Russel Karim wants to change that.

Karim is the CEO of Dhakai, a Des Moines-based technology company and marketplace that helps connect small and midsize apparel brands in the United States with ethical and sustainable South Asian manufacturers.

Karim, who started the business in 2021, says the company helps fashion brands oversee manufacturing, from loom to final product. Dhakai connects clothing brands and designers with manufacturers who make clothes with sustainability in mind. Thus, they may use less water per pair of jeans or t-shirts produced.

“Dhakai is really built on the basis of (that) we want to tell both sides of the story – not just the brand side,” he said. “We want to tell the story of the people who make our clothes and how it positively impacts communities.”

In June, Karim completed the Nasdaq Milestone Makers, a 12-week program in New York that pairs entrepreneurs with coaches in their industry to receive mentorship and business training. This year’s program focused on sustainability and climate action.

Growing with the garment industry in Bangladesh

Karim says his childhood was centered around garment production in Dhaka, Bangladesh, where he saw the positives and negatives of the industry. Her parents and several relatives were involved in the clothing supply chain.

“Growing up, we were talking about buyers, different brands, and supply chain challenges at our table,” he said.

The garment and textile sector is the No. 1 industry in Bangladesh, accounting for 80% of the country’s exports, according to Forbes. Bangladesh is the second largest garment manufacturing country in the world, second only to China. H&M, Target and Marks and Spencer are among the global brands contracting with garment factories in Bangladesh.

The multi-billion dollar export industry is a big achievement for a relatively young country, which gained independence in 1971, Karim said.

“It created a lot of jobs. It created a lot of opportunity,” he said. “Nearly 80% of people working in the garment industry are women.”

But there are also negatives.

The country’s mighty garment industry has been plagued by a series of disasters over the past decade, including a fire in November 2012 at the Tazreen factory that killed 112 people and caused the building to collapse. The collapse of the Rana Plaza building, which housed five garment factories, less than a year later killed more than 1,000 people and injured 2,500 others.

Karim said the disasters “shook the whole industry,” causing lagging industry-wide audits and compliance initiatives. He pointed out that Bangladesh also had more than 140 factories certified by LEED, a US-based rating system for green buildings.

Thanks to Dhakai, Karim hopes to be able to continue making progress in improving the industry.

“I know there are a lot of negative things that have happened,” he said. But “things have changed, and we need to tell a better story of what’s happening with apparel manufacturing.”

Karim is no stranger to entrepreneurship. After studying computer science and entrepreneurship at the University of Northern Iowa, he started a few businesses, including a food delivery service called Food Runner in 2016, which served Cedar Falls, Waterloo, Council Bluffs and St. Cloud, Minnesota. It was sold to EatStreet in June 2019.

But he said he always had a vested interest in the garment industry due to his upbringing.

“I know how many people’s lives are affected,” he said. “The garment industry brings in 80% of GDP, but also, I’ve seen these struggles…factories trying to find the right buyers, or being able to connect efficiently, or having logistical issues.”

From loom to final product, Iowa CEO Russel Karim is advocating for a more transparent and sustainable apparel manufacturing process through Dhakai, a marketplace that helps connect apparel brands to factories.

A “Shopify” for a clothing supply chain

Karim explains that the company’s goal is to solve one of the biggest problems in the supply chain: the lack of accessibility and compliant manufacturing, especially for small and medium “underserved” brands.

While big brands often have resources to build and manage relationships with factories, Karim says finding an ethical and sustainable manufacturer for small businesses is like climbing Mount Everest.

“You are a medium-sized brand. Where to start ? ” he said. “It’s not just (about) finding a factory, it’s also about finding a green-level factory. Can you send $100,000 to a factory in a foreign country? Do you understand their language? Understand do you know their culture? Are they going to deliver what they say they’re going to deliver?”

Intermediaries – or “intermediaries” who work between the brand and the producer – also take high percentages, making the process opaque. Sometimes, says Karim, there are several intermediaries.

“You wouldn’t know which factory makes the products or what percentage they take,” he said. “And the clothes can cost up to three times the cost of production for some brands, because each middleman would increase between 7% and 15% of the market, so it just keeps adding up.”

Karim says brands have direct access to a factory through Dhakai, so companies know who they are working with, their compliance policies and their production processes.

The process starts with the brand idea, Karim said. Dhakai will make a physical sample of the product and once the brand owner approves the sample, Dhakai will help match them with the correct factory to produce the product.

After the product is produced, Dhakai helps audit the product to ensure it is of quality. Dhakai also helps businesses manage logistics, including international payment and shipping, Karim said.

From loom to final product, Iowa CEO Russel Karim is advocating for a more transparent and sustainable apparel manufacturing process through Dhakai, a marketplace that helps connect apparel brands to factories.

“We become the ‘Shopify’ of your supply chain,” he said. “We’re like the operating system for small clothing brands.”

He says that by replacing middlemen, Dhakai cuts costs by up to 30%, allowing brands to get a better, more sustainable product for less.

Dhakai uses a four-step process to vet manufacturers, then works with businesses to meet their needs to find the right factory for them, according to a company statement. Its compliance process includes working with international textile associations, sustainability initiatives, and labor rights nonprofits.

Karim says Dhakai has over 500 factories featured on its website. So far, more than 100 have been verified, including Dhakai team members visiting facilities and testing products from factories.

Karim’s first client was Erica Cole, founder of No Limbits, a adaptive clothing company that started with prosthetic covers. Cole, a University of Iowa graduate, lost her leg in a car accident in 2018 and quickly discovered that when it comes to clothing, practicality trumps personal style.

Cole’s company launched a Kickstarter campaign in April 2021 for the Amp Pant, designed for people who have prosthetic limbs, which quickly caught the attention of “Shark Tank” producers.

Erica Cole, founder of No Limbits, appeared on an episode of ABC "Shark tank." The episode premiered on April 1.

After pitching the idea to the “sharks,” Cole walked away with a $100,000 investment from Dallas Mavericks owner Mark Cuban and Emma Grede, co-founder of inclusive fashion company Good American.

Since then, the company plans to launch a clothing collection for people in wheelchairs and those with sensory processing disorders, according to the No Limbits website.

Dhakai has 20 employees, including 10 in an office in Dhaka, Bangladesh, and works directly with around 45 brands and has around 200 brands in the pipeline, he said. He said he plans to double his squad by next year.

Karim acknowledges that his business isn’t perfect and improving the apparel industry takes time. Its objective is simply to “do better”.

“I think sustainability is not a sprint, it’s a marathon,” he said. “When you run a marathon you have to prepare, you have to warm up gradually. If I don’t act now, we will never get there.”

Tips for buying better

Consumers can make a big difference.

It’s important to look at labels and know where your clothes are from, he says. The same goes for understanding the impact of clothing.

“One of the best things a consumer can do is buy less, buy more quality products,” he said. “For example, with fast fashion, a lot of people wear clothes once. (Instead, can you buy a quality product that you can wear five times, 10 times, 20 times, for a year, for two?”

Virginia Barreda is a trend and general assignment reporter for the Des Moines Register. She can be contacted at vbarreda@gannett.com. Follow her on Twitter at @vbarreda2.