Fubu: True to the street
May 26, 1999: 10:11 p.m. ET

But fast-growing fashion leader faces challenge in staying faithful to its roots
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NEW YORK (CNNfn) - It's an underground success in today's marketplace, a company that says its revenue increased nearly tenfold last year, going from $40 million in 1997 to $350 million. And it doesn't have a name that ends in "dot-com."
     But unless you follow hip-hop or "urban chic," you may have missed the rise of Fubu.
     "Fubu is for us, by us. The acronym is 'For Us, By Us.' And it's basically meaning that we're the consumer, we make it for the consumer," Daymond John explained.
     That sensibility helped 30-year-old Fubu founder and CEO Daymond John turn an estimated $200 million in menswear sales last year, $350 million when you add in licensing. The reason? The most coveted consumer in the multi-billion dollar urban sportswear market -- inner city youth.
     That's the kind of endorsement most urban sportswear makers would kill for, because what's cool there sets the trends for the rest of the nation.
     For John and Fubu co-founders Carl Brown, Keith Perrin and J. Martin, it's street credibility they earned growing up in Hollis, Queens-- where six years ago John got his start in fashion.
Birth of an idea

     "Carl and myself, we were shopping for tie top hats. And about '91, '92 these were in style. It was a little hat, put it on your head, and it had a little string on it that hung off. We paid about $20 for the hat," John recalled. "Carl and I came up with the idea that hey, this hat will only cost $1 or $2 to make. Why don't we make a couple and try to sell them at $10?"
     John charged $20 -- earning $800 his first day.
     "We had a bag and we would put our hands in the bag and pull out the hat and go, 'Hey, do you want to buy this hat, man? Please buy this hat'," he said.
     John took out a mortgage on the family home, turning his basement into a factory as he and his friends set out to build a business.
     "We would come home at about eight or nine o'clock and I would start sewing all the hats or shirts or shorts, sewing the labels in shirts, and Keith would start cleaning it and packing it and getting a box ready. Jay would then come in and he would start cutting patterns and then we'd probably go to bed about two or something like that and then start all over again," John said.
     The first big break finally came when they convinced another friend from Hollis, rap superstar LL Cool J, to wear Fubu.
     "He was on his way out to get, you know, to go to JFK on a flight, so right before he got in a limo, we just put a shirt on him and hat and took the picture," John said.
     LL signed on as the company's official spokesperson, wearing Fubu in commercials, in videos, even a Fubu hat in his Gap commercial.
     "At that point, when he's wearing the hat in the Gap commercial, at that point, that's when he's in the thirty to fifty million dollar advertising budget that we could never have," John said.
Hooking onto a hot trend

     Perhaps more importantly, LL connected the Fubu logo to one of the hottest money making trends in young America -- hip hop. Hip hop inspired rap music overtook country last year to become the nation's top selling format.
     Hip hop may have its roots in the streets of urban America, but if you think it only lives there, guess again. Its influence reaches right into the wallets of suburbia. Consider this. More than 70 percent of the people who buy hip hop and rap music in America are white. And just as the music has crossed over into the mainstream, so too have the fashions.
     Vibe magazine's fashion director, Emil Wilbikin, has been following urban sportswear for four years, when the hip hop movement began to make its influence felt.
     "I think when about two years ago you started looking at the Billboard charts, all the No. 1 hits on the pop charts were rap or R&B based," Wilbikin said. "When people looked at those record charts and saw those sales, I think they said OK, you know these kids need to eat something, they need to drink something, they need to wear something."
     That idea caught the attention of the Korean conglomerate Samsung. John said Samsung saw LL Cool J in the Fubu ads and offered him a distribution deal.
     "Our agreement was we needed to get to a five million dollar business within three years," he said.
     Fubu topped that in less than one year. John moved the company out of his basement and up to the Empire State Building. The new address and big time corporate backing was a wake-up call for mainstream retailers.
Retailers' reluctance

     "They just wouldn't acknowledge the fact, the same reason why we had created the name Fubu, Seventh Avenue would not acknowledge that a large amount of money is coming from the inner cities. And they refused to believe that this was their consumer," John said.
     Today the line is carried by major departments stores including Macy's, Nordstrom, Hecht and JC Penney. And buyers keep flocking to Fubu's showroom.
     Meanwhile, John and the other company founders are putting in more hours these days. Taking a page from the playbooks of heavy hitters like Tommy Hilfiger, Fubu is expanding. Recently, Fubu scored its biggest blockbuster to date -- an apparel licensing deal with the NBA.
     "The NBA is recognized as a very smart marketing organization," noted Wendy Liebman, a Manhattan based marketing and retailing consultant. "For the NBA to go after Fubu and to sort of put their blessing on Fubu as a brand and a design company, that offers tremendous credibility and that's something Wall Street will be watching very closely."
     But John says he's not taking Fubu public yet.
     "Five to 10 years from now, I would like to be referred to as the black version of the Gap. That's where I'd like to go, that's where I'm heading," John said.
Risk of success

     But with so many deals, so many products and the logo on so many backs, some say Fubu runs the risk of getting too big, too fast.
     "If you've got a brand like this, any brand in fact, you need to stay true to your roots if you want to maintain your distinctiveness. It's very easy to start to lose that edge by appealing to a very broad audience," Liebman warned.
     John is aware of the problem and says if necessary, he'll slow growth to protect Fubu's identity. He's taking nothing for granted.
     "I don't know at any point did we say hey, we have it, we're good. You know, even now is this going to last two more years, or 10 more years?" he said. "So you have to have some kind of paranoia to stay in the game. You know? And if you relax, somebody is going to get ahead of you."Back to top


Prophets of profits - March 18, 1999

Fubu clothing combines street cred, savvy - Aug. 10, 1998


Transcript of May 26 "NewsStand Fortune"


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