Before growing into a global fashion business with high-profile collaborations and over $112m in revenue, Acne Studios began as a boutique creative consulting firm that played by a few counterintuitive rules—ones it still stands by today.

March 14, 2013, 2:08 p.m. ET

How to Succeed in Fashion Without Trying Too Hard

Before growing into a global fashion business with high-profile collaborations, its own culture magazine and an ever-evolving product line, Acne Studios began as a boutique creative consulting firm that played by a few counterintuitive rules—ones it still stands by today.

By LYNN YAEGER

THE BRAND PLAYED ON | Mikael Schiller, left, the executive chairman of Acne Studios, and creative director Jonny Johansson, at the Acne store in Tokyo, which opened in December.

WHILE HE WAS WORKING ON Acne’s spring 2013 collection—the long, floaty parachute-fabric skirts and T-shirts emblazoned with the word “music” that are in stores now—Jonny Johansson listened to a lot of Emmylou Harris. “It was a bit surreal. She talks about women, the difference between a woman who has experience and a woman who is young and free. She was painting pictures in a sense,” he says dreamily. “I could see this woman, in a white dress.”

Johannson, the cofounder and designer of Acne Studios, is sharing this reverie in a lofty room in the company’s world headquarters, a spectacular art nouveau former bank building on an almost ridiculously picturesque cobblestone street in Stockholm’s Old Town. Vintage copies of Flair are enshrined under plexiglass near the entrance; a grand staircase still shows off its original gilded wood paneling and stained glass. The uniformly youthful staff is clad in the kind of clothing that has become the company’s hallmark: edgy and slightly twisted, managing to walk a tightrope between slightly avant-garde and eminently wearable—or, put another way, unthreateningly bohemian.

In an era when every high street from Altoona to Zanzibar is crammed with identical chain stores selling identical merchandise, Acne is perceived as different: Its legions of fans think of it as a brand with integrity, a company that makes principled aesthetic decisions and never resorts to marketing tricks, even though they have hundreds of outlets.

If the most difficult challenge in the fashion industry is to remain relevant and desirable in an ever more crowded marketplace—and the whole project of predicting what customers will want in any given season is at best an ephemeral enterprise—Acne’s ability to play the game while appearing to remain mysteriously above the fray is a deeply impressive accomplishment. The company was founded in 1996 by four guys who threw 10,000 euros into a pot and launched a multidisciplinary digital film–design–creative consulting collective in Stockholm, an enterprise that, by a combination of frankly nutty decisions and shrewd business practices, has become a highly profitable business—$112 million in revenue last year alone—encompassing men’s and women’s ready to wear, footwear, accessories and premium denim.

Johansson, who turns 44 this month, originally came to Stockholm from a small town in Sweden to be a rock musician. “I sacrificed my band for this!” he says, smiling. He has no formal training as a designer, and his interests range far beyond the usual fashion talk—the conversation drifts easily from jazz artist Chet Baker to the turn–of–the–20th century Swedish polymath August Strindberg. Struggling to describe in words how he works, he uses his first love as a metaphor: “When you get into the flow, music connects with the unconscious. Fashion does this too, but it’s more playful, like perfume. And it’s very fast.”

In its early days, Acne Studios strove for a Warhol Factory atmosphere. “We loved how they looked, the way they did things—whether you were old or young didn’t matter,” Johansson says. The business’s borderline-repulsive name—an acronym for Ambition to Create Novel Expression—was meant to be deliberately off-putting, a reflection of the ironic mood of the ’90s. “I didn’t like the name at all,” he confesses. “I was embarrassed to call the bank. I don’t know if I like it now either.”

AS TIME WENT ON, Johansson and his cohorts started flirting with the notion of launching some kind of fashion product—but not just anything. “We knew we had to do something fantastic,” he recollects. They were intent on creating something special, something that lived up, or down, to their name. They were sure they didn’t want to become just another streetwear brand. After all, if their agency was an unclassifiable multitasking synthesis of digital art, film and graphic design, couldn’t their fashion line be just as ambitious? Unfortunately, this was harder than it sounded. In a country like Sweden, with virtually no domestic garment industry or tradition of fabric manufacturing and where the largest fashion retailer, H&M, sources and manufactures everything outside the country, how do you begin?

It turns out, with the most obvious of icons: a pair of five-pocket raw denim jeans with red stitching—an unwitting homage, perhaps, to the American idols that Johansson idolized as a teenager, Marilyn Monroe and James Dean. Johansson designed these dungarees in 1997 on a lark, to give to his friends. “We did 100 pairs. I used up all the money. I didn’t even dare to tell the other fellows. The strategy was to get somebody cool to wear it in front of my colleagues.”

It worked. Fashion insiders, graphic designers, filmmakers, hipster kids—in short, all the people Johannson hung out with and admired—began wearing the pants. Soon everyone who wanted to appreciate how his or her rear end looked ensconced in a pair of perfectly cut jeans embraced Acne. A big spread appeared in Wallpaper, followed by others in French Vogue and Swedish Elle. “We were not prepared at all,” Johansson says. They added other products to the line very quickly, determined not to be identified with a single item. The company had a hunch that the boundaries separating the various sectors of the fashion market were rapidly dissolving, that the same consumer who was able to afford expensive garments was not averse to amusing himself/herself with fun high-street labels. “We wanted to be a creative entity, an eclectic universe,” Johansson remembers. “We knew as customers that if we liked something, we didn’t care if it was streetwear, vintage or couture.”

When the big department stores came courting, at first the Acne guys said no, reluctant to relinquish any control and fearing that retailers wouldn’t properly merchandise their products. (This initial hesitancy has dissolved—Acne is sold in fancy big boxes worldwide, including Barneys New York, Bergdorf Goodman, Isetan, Harrods and Le Bon Marché.) Even now, with 650 outlets in 66 countries around the world, catwalk shows during London Fashion Week and a showroom in Paris (because buyers and press, no matter how intrepid, aren’t likely to schlep to Sweden), Acne insists that it is far more than a clothing company. There is the biannual magazine, Acne Paper (hardly a conventional fashion publication, it has offered such features as an interview with the M.I.T. linguist Noam Chomsky and rarely accepts advertising); an ongoing series of collaborations, including a denim line with Lanvin in 2008; a book with Lord Snowdon; three blouses created with Candy magazine, a cult transsexual publication; and a furniture line that offered an elegant sofa that is quite possibly the narrowest couch in living room history (this skinny jeans version of a settee is still available for sylph-like customers by special order). None of these projects are announced through traditional advertising methods—the company deliberately hides its light under a barrel, preferring to promote the brand through Acne Paper, along with its shifting roster of collaborators.

Mikael Schiller, the company’s executive chairman, says he thinks Acne has succeeded because the company adheres to its own informal catalogue of counterintuitive rules. Rule number one, he confides with a laugh, is their desire to open stores in cities he and Johansson find personally appealing, not places where the company would necessarily make a killing. While everyone else may be rushing to China, Acne was seduced by the charms of Japan, launching its first Asian flagship in Tokyo in December 2012. When the existing Tokyo building was deemed too prosaic, too generic, Johansson and architect Andreas Fornell redesigned the interior to resemble a modern Swedish house.

Schiller himself is a living example of rule number two: the company’s devotion to seek out, cultivate and promote employees who embody the ethos of the brand. “People who work at Acne become so passionate—it’s almost organic. They feel it, and other people know they feel it,” he says. “My former assistant, Mattias Magnusson, is now the CEO.” If Johansson is the pensive bohemian, Schiller is, at least by Acne standards, relatively practical and down to earth. “I was 24, finishing business school, and some friends asked me if I could write an investment memorandum for Acne,” he recalls when asked to explain how a young guy whose previous work experience included starting a fireworks company and working as a high school psychology teacher rapidly rose to a major position. “I had heard that when you write an investment memorandum you had to do discounted cash flow. I was not good with Excel—I worked day and night on this for 10 days. I gave it to Acne, and a little while after that they said, ‘You seem to be good with business—would you like to become the managing director?'”

With the crazy confidence that youth bestows, Schiller signed on. He quickly jettisoned the lessons he’d learned in school: how to analyze markets and figure out which consumers should be targeted. “Acne started the opposite way—let’s make a fantastic product, whether it’s a gown or a magazine. If we do this, it will be easy to sell, and if they like it, they will come back.”

HIS FIRST DAY AT his new job was September 1, 2001. Ten days later, the world changed forever. “At the time, the company was on shaky financial ground,” he recollects. “People were calling night and day asking, ‘Where is my money?’ My first task was impossible—I was trying to raise a million euros. I called everybody we owed money to, and told them we could pay them 30 percent or we could declare bankruptcy. Everybody agreed.” In the end, Schiller and Johansson scraped the money together to buy out their original partners and run Acne Studios themselves, a decision that allows them to pursue their management strategy, which Schiller sums up irreverently as “looking for the right people and the wrong street.”

A recent wintry afternoon finds Schiller, who splits his time between Stockholm and New York, at the company’s digs on a Manhattan street just south of Canal—true to the Acne credo, it’s an area where Soho dips from major to minor, and there are spectacular 360-degree views wrapping around the offices. Looking north, you can almost see Acne’s New York flagship a few blocks away; with a high-intensity telescope, you might even be able to pick out customers lugging dusty pink shopping bags, perhaps containing ankle-length frocks and witty T-shirts, but more than likely, they’re filled with those jeans which, a decade on, remain responsible for the firm’s ascent.

Asked what the business-school guy who came to work at Acne in 2001 would make of the company’s last decade, Schiller laughs at the astonishing way things have turned out. “If I would have known that in 10 years we would have 100 times the turnover, a Lanvin collaboration and stores in so many cities…,” he says, shaking his head at the wonder of it all. “But you know, you change with what happens, your perspective changes and fashion, by its nature, is always changing. We have been perceived as creative and quirky, but we want to become a long-term institution. We want to have even better services, better products, a better online presence.”

Then he turns thoughtful, and almost by accident hits upon what makes Acne so special and so successful: “We had this idea: not to explain everything to everybody.” It may have been the best notion Schiller and Johansson ever had—a bit of mystery could well be Acne’s best revenge.