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Katie: Welcome back to the BusinessMakers Overtime Show, heard here and online at thebusinessmakers.com. Welcome to our BusinessMakers Breakdown. This weeks breakdown takes Esther to Dallas Texas as she interviews Tom Patterson, CEO of Tommy John at an exclusive in store appearance at Neiman Marcus.
Esther: How does a guy from Milbank, South Dakota end up in Nieman Marcus we're in Nieman Marcus right now by the way, at the Willow Bend Store in Dallas with his own clothing line being featured here?
Tom: By accident. You know, it's something I never planned to be a part of. I'm not a designer by trade. Really, how Tommy John started was personal frustration; a necessity of mine. I had been selling medical devices for about five years and I had this problem with my undershirts where they would always bunch up and shrink and turn yellow quickly and kind of give me the illusion of an excess fabric throughout the day or a muffin top, whatever you have.
Esther: Yeah.
Tom: And I'd wear a suit and tie every day and there was a show called "The Big Idea" with Donnie Deutsch and it was a show very much like yours in that entrepreneurs come on and they talk about their ideas and the process from start to finish. And I would watch that every night and every day I would look for a big idea; how I can find a better way to make something. Kind of the aha moment for me was I had a presentation at UCSD Hospital in San Diego and I got out of my car and my undershirt had already bunched up. Went to the bathroom, I re-tucked it in and I thought, "There's gotta be a better way to make an undershirt," so I went to some department stores after my meeting and talked to the salespeople and they really didn't have what I was looking for. So I did some research online and I thought for sure Hanes or Calvin Klein or, you know, one of the big established companies had thought of this idea. And no one had so I decided to spend $100.00 and when into Los Angeles to the garment district and started researching fabrics that were very soft, lightweight, breathable, that didn't shrink, which were all pet peeves of mine and I bought enough fabric to make about 15 shirts. I went to a local dry cleaners in San Diego; didn't have a sketch or a pattern or anything. I just described the way I wanted her to make my shirts. I made about 15 shirts and I tried one on and it worked.
Esther: Wow.
Tom: I called some friends up and I said, "Hey, I'm gonna send you some shirts. Lemme know what you think." And they're like, "All right, Tom, whatever." Well, about four or five days later, they said, "Hey, can I get four or five more?" And I said, "Gimme a month," and I made 200 more and launched a website and that's really how I started.
Esther: Unbelievable and I'll, just for the record, I'm wearing the shirt right now and I'm wearing leggings. I'm wearing the shirt over my leggings and it hasn't moved. So I believe you.
Tom: And I have to say I want to make this clear to all the listeners this is not Spanx for men. It's not restricting. It's not compressing. It only takes one person to put on and take off. While it's a great compliment to be used in the same sentence as Spanx, which is a great company, we found that guys are all about comfort. Guys are very hard to change the minds of. They're very loyal to their brands.
Esther: Uh huh.
Tom: And if they find something and they love it, it's very hard to switch and this is one of those products where we literally nine out of ten guys who try our shirt on become a customer because they've never had anything that fits and feels this way.
Esther: And I'll tell you it is extremely comfortable. It's not tight at all around, I mean, it's fitting along the butt area but it is not tight. It's very comfortable and I had to I had to have one. So there seems to be a lot of emphasis on this undershirt. What about the underwear product in your line? How is that different? Is it right that you might be competing against Under Armor?
Tom: In essence. You know, we did everything backwards. Most companies start out making underwear bottoms and then they make t-shirts.
Esther: Right.
Tom: And then they start getting into smaller stores and then they build a distribution network and then they get into a major department store. We kind of flip-flopped it where we made an innovative undershirt and the feedback was so great on the fit and the feel of our fabric, customers said, "Hey, will you make some underwear?" Which we did and we were only in about ten stores before we launched into Nieman Marcus. So now we did it backwards in that we go into the major department stores first and then we'll build our distribution network out from there. So slightly different but one thing we are working on we don't have a launch date set yet is an underwear bottom innovation that could be similar, potentially bigger, than our undershirts. Hopefully, we'll be able to launch that out in the next year.
Esther: How did you get that meeting with Nieman Marcus?
Tom: You know, I called the buyer about a year before the meeting and she was going on maternity leave. She said to call me back in the fall. I called her back in the fall and she said, "I don't have an open to buy," so I called her back in the spring and I said, "I'm gonna be in Dallas next week. I have a product that you need in every single one of your stores. I've spoken to sales associates across the country. They said they don't have it. They said that it would do great if it was in here. Can I send you some samples before the meeting to try out?" and she said, "Okay, fine." After the phone call, I booked my ticket and I met with her the next week and the feedback was so great on the shirts and I had a presentation that I walked them through and they said, "All right, we want to bring it into 15 stores in August."
Esther: Wow.
Tom: So I guess it was kind of a year in the works. I mean it didn't happen overnight.
Esther: You're not an overnight success is your point.
Tom: But no, I think it was meant to be because that year between when I initially spoke to her and when my meeting took place, I really was able to perfect a lot of things that were very important for my product to sell in the stores which is my packaging. Eighty percent of underwear sales are purchased by women. Women don't know that guys have underwear problems.
Esther: It's gorgeous and it's got a very nice looking man on the package, so
Tom: Yes.
Esther: - that helps.
Tom: And we designed it that way. Women look for two things the brand that's advertised everywhere or the model that they're maybe most attracted to. And we chose two colors that women love. We found that women love Tiffany's jewelry and they love chocolate, so we thought that would allow us to stand out among the other brand names and we designed our box with a slide open, which was also different. You know, our shirt's very different, so it's very important that our packaging stood out equally as much and packaging is it's so important, which I've learned and
Esther: In retail for sure.
Tom: - and that year really allowed us to perfect it and design it so it would be able to display it in a store such as Nieman Marcus.
Katie: Well Esther that was really a fantastic interview and I must say I am feeling a little self-conscience about my shirt sticking out a little here. Don't tell Tom.
Esther: I won't tell him. I actually wore the shirt during the interview, it was very comfortable. And people were very surprised... "Oh that actually looks kinda cute over leggings." I was like, yea I know, I kinda want one of these.
Katie: Awesome, so for all the businessmen out there, it looks really cute over leggings.
Esther: Or ladies. Ladies who like to where leggings with their t-shirts.
Katie: That's right. I love it. And now it is time for a business survival tip with Carl Kleimann of Odyssey One Source.
Carl: Hello business owners this is Carl Kleimann from Odyssey One Source with another Business Survival Tip. Chances are, you recently received your state unemployment tax rate notice for 2010. And it is even more likely that your tax rate is up significantly over the prior year. According to the Bureau of Labor Statistics, the national unemployment rate reached 10 percent during the 4th quarter of 2009. In fact, all 50 states and the District of Columbia reported an increase in unemployment for 2009. Michigan reported the highest unemployment at 14.7 percent while North Dakota reported the lowest at 4.1 percent.
Each state is responsible for its own unemployment system and nearly every one of them is struggling to pay record unemployment claims. Many states, including Texas, have had to borrow money from the federal government in order to continue paying benefits. In order to repay these loans, states must either increase their unemployment tax revenue, issue bonds, or both. In Texas case, both methods will be used.
Texas for example, has nearly tripled its minimum unemployment tax rate from .26 percent to .72 percent and has increased its maximum tax rate from 6.26 percent to 8.6 percent. That means that even those employers who have not experienced unemployment claims will pay more. And those that have experienced claims may pay a lot more.
More than ever, it is important to actively manage your firms unemployment claims experience. Employers are likely facing years of higher unemployment taxes and those with the worst unemployment claims experience will suffer the most. So do everything possible to prevent claims and when they do occur, defend them vigorously. Remember, unemployment is an experience based tax. The more claims you lose, the more tax you pay.
I am Carl Kleimann and this has been another Business Survival Tip by Odyssey One Source, ranked as the number one Professional Employer Organization three years running by the Black Book of Outsourcing. For more information on this and other issues affecting employers, please visit www.odysseyonesource.com.
Katie: You've been listening to the BusinessMakers Overtime Show, and we are so glad that you are. We are closing out segment 2 and we can not wait to see you in our segment 3, Special Features, coming up next.