Introduction to the 7 filters

TH FASHION FRONTIER CHALLENGE 

INTRODUCTION TO THE 

THE 7 FILTERS 

ADRIAN JOHNSON

THE TOMMY HILFIGER 

FASHION FRONTIER CHALLENGE 

THE SEVEN FILTERS 

• Filter 1 - Market Analysis 

• Filter 2 - Financials 

• Filter 3 - Leadership and Talent 

• Filter 4 - Strategy 

• Filter 5 - Impact 

• Filter 6 - Inclusivity 

• Filter 7 - Fit for Tommy 

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TOMMY HILFIGER CONFIDENTIAL – FOR AUTHORIZED USE ONLY




Filter 1 - Market Analysis 

• What is the value proposition? 

Who are the customers and what is the problem being solved for them? 

• How big is the market? 

• Who are the competition and where does the product/service sit in the competitive landscape? 

• Is there a sustainable, defendable competitive advantage? 

• Is an unmet need being served, or is there an efficiency breakthrough? 

• Is this the right time for this product or service? 

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Filter 2 - Financials 

• Have financial projections been presented (3 to 5 years in the future)? 

> Profit and loss statement (see example on next pages) 

> Cash flow statement (see example on next pages) 

• Do the financial figures seem realistic? 

• Have historic financial figures been presented (if the business has already launched)? 

• Has a credible case been made for the investment needed to build the business? 

Does this tie in with the cash flow projections? 

• Has an attempt been made to value the business? 

• Equity investors take shares/ownership of the business 

• Debt investors lend money, which has to be paid back, but do not take shares/ownership in the 

business, unless things go wrong, i.e. default on interest payments or debt repayments! 

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Filter 2 - Financials - Example 

The product/service sells at €250 per unit. Each unit costs €150 to manufacture and distriibute. Starting with 1,000 units 

per year, projected to grow at 50% per year for 5 years. 

The projections of the income (or profit and loss) and cash flow statements are on the next page. 

Note the differences between the income and cash flow statements! 

The main reason for the differences are: 

> The income statement “books" sales revenue when the invoice is issued, but the customers do not pay immediately. 

> Likewise, our costs are booked when we are invoiced, but we pay some of those costs some time later. 

> Our capital expenditure (capex), i.e. our investment in equipment and machinery (including computers, furniture …) has 

a large immediate effect on our cash flow, but the income statement only reflects the “depreciation" we allocate to each 

year. For example a €1,000 purchase of a computer might be depreciated over 5 years, i.e. the “cost” in our income 

statement is €200 per year, but the €1,000 to pay for the computer is reflected in full in the cash flow statement this year. 

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Filter 2 - Financials - Example cont. 

This business needs to raise about €500,000 to finance the business in the first five years. 

If this is raised from equity investors (eg venture capitalists) by giving away 20% of the equity for €500,000, 

the “post-money” valuation (valuation of the company after the investment) = €500k / 20% = €2.5 million 

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Filter 3 - Leadership and Talent 

• Single most important factor in early stage companies 

• What skills/experience does each founding manager bring to the team? 

• What are the gaps in the team? 

Have plans been presented for how they will fill the skills gap? 

• Is this a credible team able to deliver on the business plan? 

• Have thoughts been given to non-executive advisors and/or board members? 

• Does the team come across as passionate about the business? 

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Filter 4 - Strategy 

• Is there a well-developed strategy and implementation plan? 

• Future goals defined (business and impact) 

• Go-to market plan 

• Clearly defined milestones 

• Effective allocation and use of resources 

• Defined major risks and mitigation 

• Are the functional parts of the business aligned in a holistic strategy? 

Product/service development, operations, sales and marketing, human resources, finance … 

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Filter 5 - Impact 

• Well developed theory of change designed to achieve desired impact 

• Identify clear impact indicators 

• Defined feasible measurement methods linked to impact indicators 

• Reach of impact: How many people without access are reached through the solution? 

• Depth of impact: What is the depth of the impact of the solution? 

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Filter 6 - Inclusivity 

• We are looking for a direct inclusive impact 

• The quality of trying to include many different types of people and treat them all fairly and 

equally 

• Potential to increase inclusiveness: 

in fashion landscape, short-term, long-term … 

• Benefit a group of people previously excluded (or felt excluded) 

• Solution designed and organised in an inclusive way (with target group) 

• Inclusion at any stage of value chain: 

raw materials, production, sales and retail, marketing, product concept, business model … 

• Inclusivity can also mean: offering choice 

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Filter 7 - Fit for Tommy 

• If it is good for the industry, it is good for us! 

• Does the solution and company fit our brand and our product? 

• Does it provide services that are of direct use or can be applied in our supply chain? 

• Can the solution offer value in our retail and sales channels? 

• Can we link this to current projects or priorities? 

• Are there business development or innovation opportunities? 

• Can we offer skills, contacts and insights that can truly add value for this company and help 

them? 

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THANK YOU

Introduction to the 7 filters

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