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Why Steve Case Is Betting Millions on Lolly Wolly Doodle How a children's clothing company stood out in social commerce, catching the eye of prominent investors.

By Brian Patrick Eha

Opinions expressed by Entrepreneur contributors are their own.

Lolly Wolly Doodle
Brandi Temple in the Lolly Wolly Doodle production facility in<br /> Lexington, N.C.

When Brandi Temple began cutting and sewing clothes for her young daughters in 2008, she soon realized she had made more outfits than her two girls, then three and eight years old, needed. So, she put a few items up for sale online, and before long had a thriving eBay store for her children's clothing designs. At the time, she had no idea the hobby would turn into a business employing 160 people.

The decisive moment came when Temple's husband lost his job in construction two years later. Together, they decided to expand her online sales from eBay to Facebook, where Temple offered her designs on a first-come, first-serve basis. "The response was absolutely overwhelming," she says. "We started growing at unbelievable speed."

Today her children's apparel company, Lexington, N.C.-based Lolly Wolly Doodle, earns more than $10 million in annual revenue. What's more, it is one of the largest employers in Lexington, and has just raised $20 million in a funding round led by Revolution Growth, a venture capital firm run by billionaire Steve Case. Two factors lie at the heart of Temple's success: an innovative manufacturing approach known as "just-in-time" manufacturing and a commitment to truly social commerce. Lolly Wolly Doodle currently does 60 percent of its sales through Facebook, Temple says, and the remainder through its website.

Related: Ecommerce Basics: 10 Questions to Ask When Creating an Online Store

In the early days, Temple focused less on sales goals than on fostering relationships with her customers on social media. She interacted heavily on her Facebook page, sharing her entrepreneurial story and designing clothes based on customer input. "If they saw a green dress one day and said they loved it but wanted it in red, the next day that's what they would see," she says.

In turn, customers would post pictures of their kids wearing Temple's designs, essentially becoming unpaid evangelists for the brand. The word of mouth spread rapidly, and today Lolly Wolly Doodle has more than 586,000 Facebook fans. "For most fashion brands, the internet and social are an afterthought," Case says. Lolly Wolly Doodle, by contrast, is "a classic viral brand that resonated with its audience."

Ironically, it was that rapid growth that nearly shut the company down in the summer of 2010. With no background in business, technology or manufacturing, and no seed money for expansion, Temple was struggling to keep up with demand by relying on the help of friends and family. "I thought I was going to sell the business just to make some quick money because I couldn't do it myself," she says.

But then Shana Fisher, founder of High Line Venture Partners in New York City, reached out. She had heard about Lolly Wolly Doodle, and urged Temple to stay the course. "On the first call, I told her, 'You're not selling; we're going to do this together,'" Fisher says. She was as impressed by Temple's business instincts, she says, as she was with her clothing designs and social outreach. Ultimately, her firm provided Temple with an undisclosed amount of seed funding. In September 2010, on the back of that investment, Lolly Wolly Doodle moved into its first real production facility, an 8,000-square-foot space, and hired its first in-house cutters and seamstresses.

Related: What Happens When a Storefront and a Social Media Network Combine?

While Temple advertises her designs on social networks and the company website, she doesn't actually keep any inventory of finished pieces. Lolly Wolly Doodle uses just-in-time manufacturing, which means that a company makes only as many items as are sold. When a sale is made, the buyer has 72 hours to pay. When they do, artisans go to work cutting fabric, and the buyer receives the garment in two to four weeks. The online retailer enjoys substantial cost savings because it doesn't have to worry about being stuck with dead inventory if a garment doesn't sell.

Case says this method of manufacturing allows made-in-the-USA companies to better compete with brands that rely on overseas factories. Lexington, a once-thriving industrial town, would gladly reclaim a piece of the global garment business. Textile and furniture making were the town's principal industries for decades, but with the flight of manufacturing, unemployment soared. Today, Temple is attempting to breathe new life into the town's old textile-making traditions. By August, she plans to move production from her current 20,000-square-foot facility to a 100,000-square-foot building that has been sitting empty for years.

The $20 million infusion of venture capital will make that move possible. Lolly Wolly Doodle also plans to hire an additional 100 people in Lexington over the next two years. The company's physical expansion mirrors its digital growth: Last month, the online retailer released a mobile app and started selling on Pinterest and Instagram.

Yet no matter how many fans the kids' clothing company acquires or how big its factory gets, "it feels like we're still sitting my garage," says Temple, referring to her original production facility. "At the end of the day, it's that same love and that same focus."

Related: The Family Behind Luxury Lingerie Business Cosabella

Brian Patrick Eha is a freelance journalist and former assistant editor at Entrepreneur.com. He is writing a book about the global phenomenon of Bitcoin for Portfolio, an imprint of Penguin Random House. It will be published in 2015.

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