In a civil deposition last July, a gent named Russell Simmons, who has long “reigned as one of the entertainment industry’s most capable promoters” provided some unusual insights into fashion marketing.
The New York Times (5.16.05) reports that he founded a hip-hop-flavored clothing line in 1992, called Phat Farm. Another company bought it last year for $140 million.
How did he get so much money and why are people suing him?
Well, he wanted to give a good impression to those who were about to put up their money and time to buy his company, so he wanted the business to “look good” to them.
“Here’s how you develop an image for a company,” he says in the deposition. “You give out false statements to mislead the public so they will then increase in their mind the value of your company.”
The New York Times noted that the strategy “seemed to work.” They write, “In February 2003, for instance, Mr. Simmons appeared on CNBC saying that Phat Fashions was ‘doing $350 million in sales.’ In fact, Phat Fashions’ revenue for 2002 totaled $14.3 million, according to court papers and the company.” (That’s 4% of what he hyped.)
The Times wonders, is this testimony “remarkably candid or troubling”?
Simmons explains the huge discrepancy by saying that the $340 million in sales that he stated his company had done “accurately reflected my optimism – or my brand position statement – a good brand positioning statement.” And he adds, “I was hoping it would sound good – I was hoping that maybe by that year the gross numbers were there, I don’t know.”
Would you buy anything from this man?
Are we letting what we think “sounds good” replace the real numbers to lure people in?
Ladies, is there anyone you know in front of the room that tells others what she (or he) thinks “sounds good”, to get unsuspecting women to buy in?
Would you buy anything from such a person?