“That’s not true,” argued the Spitter. “We can always dump the shoes to Marshall’s or TJ Maxx or one of the other closeout chains.”
Steve swiveled his chair around and said to me, “John’s not giving you the whole picture. Yeah, we can sell all the shoes we want to people like Marshall’s and TJ Maxx; but then we destroy our business with the department stores and specialty shops.” Now Steve looked the Spitter directly in the eye and said, “We need to protect the brand, John. You just don’t get it.”
The Spitter said, “Of course I get it. But we also have to grow the brand, and we can’t grow the brand if our customers go to the department stores and can’t find our shoes.” Now the Spitter narrowed his eyes in contempt and stared the Cobbler down. “And if I leave this up to you,” spat the Spitter, “we’ll be a mom-and-pop operation forever. Fucking pikers, nothing more.” He turned directly toward me, so I braced myself. “I’ll tell ya, Jordan”—his spitball missed me by ten degrees—“thank God you’re here, because this guy is such a f**king p**sy, and I’m sick of p**syfooting around. We got the hottest shoes in the country, and I can’t fill the f**king orders because this guy won’t let me manufacture product. I’ll tell you, it’s a Greek f**king tragedy, nothing less.”
Steve said, “John, do you know how many companies have gone out of business by operating the way you want? We need to err on the side of caution ’til we have more company-owned stores; then we can take our markdowns in-house, without bastardizing the brand. There’s no way you can convince me otherwise.”
The Spitter reluctantly took his seat. I had to admit I was more than impressed with Steve’s performance, not just today but over the last four weeks. Yes, Steve was a Wolf in Sheep’s Clothing too. Despite his outward appearance, he was a born leader—blessed with all the natural gifts, especially the ability to inspire loyalty among his employees. In fact, like at Stratton, everyone at Steve Madden prided themselves on being part of a cult. The Cobbler’s biggest problem, though, was his refusal to delegate authority—hence, his nickname, the Cobbler. There was a part of Steve that was still a little old-fashioned shoemaker, which, in truth, was both his greatest strength and his greatest weakness. The company was doing only $5 million right now, so he could still get away with it. But that was about to change. It had been only a year ago that the company was doing a million. We were shooting for $20 million next year.
This was where I’d been focusing my attention over the last four weeks. Hiring Gary Deluca was only the first step. My goal was for the company to stand on its own two feet, without either of us. So Steve and I needed to build a first-class design team and operational staff. But too much too fast would be a recipe for disaster. Besides, first we needed to gain control of the operations, which were a complete disaster.
I turned to Gary and said, “I know it’s your first day, but I’m interested to hear what you think. Give me your opinion, and be honest, whether you agree with Steve or not.”
With that, the Spitter and the Cobbler both turned to our company’s new Director of Operations. He said, “Well, I see both your points”—ahhh, well done, very diplomatic—“but my take on this is more from an operational perspective than anything else. In fact, much of this, I would say, is a question of gross margin—after markdowns, of course—and how it relates to the number of times a year we plan on turning our inventory.” Gary nodded his head, impressed with his own sagacity. “There are complex issues here relating to shipping modalities, inasmuch as how and where we plan to take delivery of our goods—how many hubs and spokes, so to speak. Of course, I’ll need to do an in-depth analysis of our true cost of goods sold, including duty and freight, which shouldn’t be overlooked. I intend to do that right away and then put together a detailed spreadsheet, which we can review at the next board meeting, which should be sometime in…”
Oh, Jesus H. Christ! He was drizzling on us! I had no tolerance for operational people and all the meaningless bullshit they seemed to hold so dear. Details! Details! I looked at Steve. He was even less tolerant than me in these matters, and he was now visibly sagging. His chin was just above his collarbone and his mouth was agape.
“…which more than anything else,” continued the Drizzler, “is a function of the efficiency of our pick, pack, and ship operation. The key there is—”
Just then the Spitter rose from his seat and cut the Drizzler off. “What the f**k are you talking about?” spat the Spitter. “I just wanna sell some f**king shoes! I couldn’t give two f**ks about how you get them to the stores! And I don’t need any f**king spreadsheet to tell me that if I’m making shoes for twelve bucks and selling them for thirty bucks then I’m making f**king money! Jesus!” Now the Spitter headed directly toward me with two giant steps. Out of the corner of my eye I could see Steve smirking.
The Spitter said, “Jordan, you gotta make a decision here. You’re the only one Steve will listen to.” He paused and wiped a gob of drool off his round chin. “I want to grow this company for you, but my hands are being tied behind my—”
“All right!” I said, cutting off the Spitter. I turned to the Drizzler and said, “Go ask Janet to get Elliot Lavigne on the phone. He’s in the Hamptons.” I turned to Steve and said, “I want Elliot’s take on this before we make a decision. I know there’s an answer to this, and if anyone has it it’s Elliot.” And, besides, I thought, while we’re waiting for Janet to put him through, I’ll have a chance to tell my heroic story again.
Alas, I never got the chance. The Drizzler was back in less than twenty seconds, and a moment later the phone beeped. “Hey, buddy, how ya doing?” said Elliot Lavigne through the speakerphone.
“I’m good,” replied his hero. “But, more important, how are you doing, and how are your ribs feeling?”
“I’m recovering,” replied Elliot, who’d been sober for almost six weeks now, which was a world record for him. “Hopefully, I’ll be back to work in a few weeks. What’s going on?”
I quickly plunged into the details, careful not to tell him whose opinion stood where—so as not to prejudice his decision. Ironically, it made no difference. By the time I was done, he already knew. “The truth is,” said the sober Elliot, “this whole idea of not being able to sell your brand to discounters is more hype than reality. Every major brand blows out their dead inventory through the discount chains. It’s a must. Walk into any TJ Maxx or any Marshall’s and you’ll see all the big labels—Ralph Lauren, Calvin Klein, Donna Karan, and Perry Ellis too. You can’t exist without the discounters, unless you have your own outlet stores, which is still premature for you guys. But you have to be careful when you deal with them. You sell them in blips, because if the department stores know you’re there on a consistent basis, you’re gonna have problems.”
“Anyway,” continued the recuperating Garmento, “John’s right for the most part; you can’t grow unless you have product to sell. See, the department stores will never take you seriously unless they know you can deliver the goods. And as hot as you guys are right now—and I know you’re hot—the buyers won’t step up to the plate unless they’re convinced you can deliver the shoes, and right now your reputation is that you can’t. You gotta get your act together on that quick. I know it’s one of the reasons why you hired Gary, and it’s definitely a step in the right direction.”
I looked at Gary to see if he was beaming, but he wasn’t. His face was still set in stone, impassive. They were a weird bunch, these operations guys; they were steady Eddies, hitting singles all day long but never swinging for the fences. The thought of being one was enough to make me want to fall on my own sword.
Elliot plowed on: “Anyway, assuming you get your operations in order, John is still only half right. Steve has to consider the bigger picture here, which is to protect the brand. Don’t kid yourselves, guys—at the end of the day, the brand is everything. If you f**k that up you’re done. I can give you a dozen examples of brands that were red-hot once and then f**ked up their name by selling to the discounters. Now you find their labels in a flea market.” Elliot paused, letting his words sink in.
I looked at Steve and he was slumped over in his chair—the mere thought of the name Steve Madden—his own name!—being synonymous with the words flea and market had literally knocked the wind out of him. I looked at the Spitter; he was leaning forward in his seat, as if he were preparing to jump through the phone line to strangle Elliot. Then I looked at Gary, who was still impassive.
Elliot went on: “Your ultimate goal should be to license the Steve Madden name. Then you can sit back and collect royalties. The first thing should be belts and handbags, then move to sportswear and denim and sunglasses, and then everything else…your last stop being fragrance, where you can really hit it out of the park. And you’ll never get there if John has his way in everything. No offense, John, but it’s just the nature of the beast. You’re thinking in terms of today, when you’re red-hot. Eventually you’ll cool down, though, and when you least expect it something won’t sell through, and you’ll wind up knee-deep in some retarded-looking shoe that no one outside a trailer park will wear. Then you’ll be forced to go to the dark side and put the shoes where they don’t belong.”
At this point Steve interrupted. “That’s exactly my point, Elliot. If I let John have his way, we’ll end up with a warehouse full of shoes and no money in the bank. I’m not gonna be the next Sam and Libby.”
Elliot laughed. “It’s simple. Without knowing everything about your business, I’m willing to bet that the bulk of your volume comes from a handful of shoes—three or four of them, probably—and they’re not the ridiculous-looking ones with the nine-inch heels and the metal spikes and zippers. Those shoes are what you guys create your mystique with—that you’re young and hip and all that shit. But the reality is you probably sell hardly any of those facockta shoes, except maybe to some of the freaks down in Greenwich Village and in your own office. What you’re really making your money on are your basic shoes—the staples, like the Mary Lou and the Marilyn, right?”
I looked at Steve and the Spitter, both of whom had their heads cocked to the side and their lips pursed and their eyes wide open. After a few seconds of silence, Elliot said, “I’ll take that lack of response as a yes?”
Steve said, “You’re right, Elliot. We don’t sell too many of the crazy shoes, but those are the ones we’re known for.”
“That’s exactly the way it should be,” said Elliot, who six weeks ago couldn’t tie two words together without drooling. “It’s no different than those wild couture outfits you see on the runways in Milan. No one really buys that crap, but that’s what creates the image. So the answer is to only step up to the plate with the conservative items—and only in the hottest colors. I’m talking about the shoes you know you’re going to blow out, the ones you sell season after season. But under no circumstance do you risk serious money on a funky shoe, even if you guys are personally in love with it—and even if it’s getting good reads in your test markets. Always err on the side of caution with anything that’s not a proven winner. If something really takes off and you’re short inventory, it’ll make it that much hotter. Since you guys manufacture in Mexico, you can still beat the competition on the reorder.