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Paul Frank, Hurley and Mary-Kate and Ashley brand executives speak about creativity, making money and filling a niche.

This story first appeared in the April 10, 2003 issue of WWD.  Subscribe Today.

Paul Frank

LOS ANGELES — It could be called the anti-presentation of the anti-company.

The trio behind Paul Frank Industries didn’t wear suits, didn’t use a Power Point presentation and didn’t present a whole lot of statistics during their discussion.

But that’s not a surprise to those familiar with the Newport Beach, Calif.-based apparel brand featuring quirky designs — including a wide-mouthed monkey named Julius — that has grown in six years to an enterprise of more than 1,000 wholesale accounts and 11 retail locations, and turned a profit from the start.

Everything the company does goes against Business 101. As co-founder and creative director Paul Frank said, “There isn’t a five-year plan.”

That is the secret to its success, among other well-executed strategies.

Foremost is an unequivocal commitment to design. Frank, who claims he spent “10 years in community college” trying to figure out life, started with wallet-making. Soon, he was the go-to guy among kids for wallets. Now, he designs clothing, accessories, bikes and more.

“Everything I can see, I find a way to make it better,” Frank said. “Nothing is as good as it is. I want to fix it.”

His childlike quality hasn’t even begun to skim the surface of cynicism that develops with business pressures. Perhaps it’s because he doesn’t clutter his time with thoughts of revenues and profits and margins or even the competition, for that matter.

“I didn’t know who Russell Simmons was until last night,” said Frank, referring to the founder of Phat Farm and keynote speaker at the event. “I stay in my own world….Is that weird?”

Chief executive officer John Oswald, a one-time venture capitalist, and president and co-founder Ryan Heuser, who formerly headed public relations at Mossimo Inc., both spend their time worrying about the left-brain side of the business. First friends and now business partners, they rely on one another’s strengths and try to keep the Paul Frank faith by talking it out instead of duking it out.

“I’m sitting between two polar opposites — Phil Jackson would call it the triangular offense,” Heuser said. “We try to keep a happy medium.”

Another eccentricity is the lack of traditional marketing pursued by the company. Paul Frank, which avoids promoting itself in one category, doesn’t sponsor athletes, outsource public relations or hire focus groups. It does rely on interns for getting a pulse on the fashion market and strives for a youthful mind-set at headquarters, where the median age out of 75 employees is 25. It also focuses on getting its design on a musician’s guitar strap or co-branding with similar iconic brands, such as Hello Kitty.

Heuser said the company has created its first marketing budget for the year after six years in business. But, he doesn’t expect the budget to grow much next year.

“It’s not about spending marketing dollars, it’s about investing wisely or not at all,” Heuser said.

That frugal mind-set also applies to the company’s retail strategy. With stores in Los Angeles, San Francisco, Dallas and the 12th set to bow in Chicago by May, the company seeks locations that are in “undefined areas of shopping districts” where rents aren’t as pricey.

“Why be on Melrose or in SoHo where people expect you to be?” asked Heuser.

Paul Frank is like other companies in that it embraces growth possibilities such as potential entertainment licensing agreements. The officials said they’re also testing out a new fixturing program.

But, don’t press them too much beyond that. They seem to take it day by day, while still in awe of their success.

“There’s a lady who jogs by my house and she’s wearing my shirt — it’s a cool thing,” Frank said. “It’s about being cerebral and intuitive. It’s not about forecasting. I don’t want to jinx it.”

— Nola Sarkisian-Miller

Hurley

LOS ANGELES — The power pendulum in retail has swung from the seller to the buyer, said Hurley founder and president Bob Hurley, which means companies have to step up to the service plate.

He said the organizational chart of his Costa Mesa, Calif.-based apparel company represents an upside-down pyramid, with the consumer at the top. Teenagers, who vote with their dollars just like their parents, are no longer left to the dregs.

“They don’t need us for anything…it’s up to us to serve them,” he said.

Service to Hurley, whose lifestyle company sells men’s, juniors’, boys’, kids’ and toddlers apparel, as well as footwear, can represent some of the simplest gestures, especially in retail where he bemoans the lack of friendly help. With plans to open “a couple of flagships within a year,” Hurley hopes to start with the basics: hiring smiling employees.

“There’s a term ‘core’ in the industry and I’d like to replace [the ‘o’]…with an ‘a’ and have ‘care,’” he said.

Is that an attitude encouraged by parent company Nike Inc.? A year after its purchase by the shoe giant, industry observers probably wonder who’s influencing whom in terms of product and direction. Hurley said both parties are still learning to work together, but his company retains its autonomy.

“They leave us alone and sometimes I want more help,” he said.

— N.S.M

Mary-Kate and Ashley

LOS ANGELES — They’re not quite 17 years old and they head a $1 billion empire, soon to reach $2 billion by 2004.

Mary-Kate and Ashley Olsen, the blue-eyed twin beauties behind the Mary-Kate and Ashley brand, along with owner Dualstar Entertainment Group, have managed to pass the brand test, especially the one for celebrities, according to chief executive officer Robert Thorne.

In his message to attendees, he stated that there are only a handful of celebrity brands, most notably Martha Stewart. That’s because the rest of those names on people’s tongues do not offer a combination of longevity, global reach, familiarity and sense of ownership and control.

Thorne said the quickest way to longevity is to target a brand a notch or two above the typical customer.

“We design products for kids three to six years older. We think kids look up and do what their mommy does,” he said, noting the brand’s wholesome image resonates with parents put off by this era of bare midriffs.

Expanding product categories while maintaining control is another branding tool. The media footprint is far-reaching for the brand with an Internet site, TV shows, videos and a magazine by 2004. Among other things, Mary-Kate and Ashley sells beach towels, cosmetics, party goods, cologne and calendars. The group began selling plus-size and toddler clothing to Wal-Mart, and most recently launched its juniors line there, as well.

There’s even more room to grow, Thorne said. Boys are another demographic to target in the future, although the strategy has been met by naysayers.

“People think we’re certifiably insane, but Giorgio Armani sells to women and Donna Karan sells to men, so it can be done,” he said.

To stay on the pulse, Thorne said he prefers to deal with the retailer directly rather than through a manufacturer. He also pays particular attention to the legalese of contract, avoiding the term licensor and licensee, which connote a relinquishment of control.

“We keep a finger on what the product will be and should be instead of just the approval rights,” he said. “We design the clothes and write the media campaign, and then we give the clothes to a manufacturer and we graciously give them the burden of delivery.”

All this can be heady stuff for teenagers, who are just now exploring college options, but Thorne said the Olsens are key players in the business, even if their ideas don’t always fly. He described a mini-business lesson taught to them about the mass market while on a trip to New York.

“Ashley asked, ‘Why Wal-Mart? It’s so down-market. How about Fred Segal?’ And, I told her, ‘You can make $50,000 or $500 million in the deal. [Fred Segal] is not your customer,’” he said.

— N.S.M

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