Intergenerational Leadership

In the mere three and a half years since Donald ?Don? Jones and Janon Costley met, they have bridged the 18-year difference in their ages to build together ?something different,? even ?industry changing,? in the retail and consumer products and private-equity markets. Their vehicles are Total Apparel Group Inc. (TAG), a master distributor of branded apparel, footwear and related accessories with Jones as chairman of the board and Costley as CEO, and Verite Capital Partners L.L.C., a private equity fund Jones launched last year with financing expert Lynda Davey, in which Costley is an operating adviser.

They?ve already attracted attention. TAG, with offices in New York City?s Fashion District and in Los Angeles, recently made headlines when FIFA, the governing body of soccer, for the first time in its 104-year history, launched an official collection of merchandise and selected the company as the official U.S. master distributor of FIFA and FIFA World Cup Licensed Product. FIFA also appointed TAG as its official ambassador to the United States in the year leading up to the 2010 World Cup. And Verite, founded on the belief that the next wave of financing for small businesses will come from equity markets, is setting a new pace as a fund built ?from the bottom up? to support innovative consumer goods and services companies in underserved U.S. markets.

In separate interviews with The Network Journal, Jones and Costley spoke of their relationship as business partners and the decidedly unconventional path upon which they have embarked in a conventional marketplace.

?In my relationship with Janon, I decided that the Total Apparel Group was going to be something he and I can do together and clearly articulate to everyone looking that we?re exhibiting intergenerational leadership and mentorship. I believe in the each-one-teach-one expression,? says Jones, 55. ?What?s really fantastic is what I?ve seen Janon develop into in the last three years as CEO of Total Apparel Group ? how he communicates, his professionalism and articulation and strategic posture, it?s really kind of cool to watch.?
Compared to Jones?s 40 years in retail and consumer products ? he began as a teenager, he says ? Costley, at the age of 37, is a toddler. He?d been in the industry only eight years when he met Jones. ?I?d never had a mentor, especially one that looked like me. He took me under his wing, started talking about our unique industry, about how we can impact the industry and do things no one had ever tried to do before, given the fact that we?re minorities,? he recalls.
Mentors of Jones?s ilk, with his wealth of management and executive experience and industry knowledge acquired at the GAP, Macy?s, Target, Ikea, Marshall Field?s, Lechmere, Federated Department Stores, TJX and May Co. ? some of the country?s leading retailers ? are few and far between in the branded side of retail, Costley notes. Jones acknowledges this in explaining why he chose Costley as his CEO. ?In fashion and consumer products, it was sometimes challenging to get mentors who could effectively move people along. It?s always been my way, at all the companies I?ve been at over the last forty years, to reach back and pull people along with me.?

To be sure, Costley had his own track record, along with a reputation for dynamic management techniques, keen market awareness and a unique ability to identify trends and new business opportunities. A graduate of North Carolina A&T with a bachelor?s degree in business administration and minor in marketing, he was instrumental in building International Apparel Group Inc., a holding company in Miami, using strategic alliances with key retailers and manufacturing partners and creating street-wear brands such as Y-Chrome and Type-Y. He was also instrumental in the development of private label and licensing programs with major athletic apparel brands such as Pony International and Converse Inc.; with celebrities such as NFL Superstar Randy Moss and hip-hop pioneer Darryl ?DMC? McDaniels, of Run-DMC; and with professional sports leagues.

Costley was chief operating officer at Total Luxury Group Inc., a Miami distributorship for fashion brands worldwide that had acquired International Apparel, when Jones reached out to him in 2007. Jones had been running Pogan Retail L.L.C., a boutique retail management, advisory and investment firm he formed in 2003, and had been asked to help turn around Total Luxury Group. He took over the company, and, with Costley, changed the name to Total Apparel Group and streamlined the business model, shedding some of its licensed properties, including Pony International, Hukapoo and Miss Bikini.
Everything seemed right for TAG to take off: track-record leadership and management dynamics, industry experience and know-how, a bulging Rolodex, the opportunities for financing, a clear vision for the company and market demand. The devil was in the timing. ?It just so happened that it coincided with the recession. At the time, we didn?t have any idea of the impact the recession would have on the retail industry and indeed on the equity markets. We didn?t know it would last so long,? Costley says. ?We had to downsize our expectations and get into a survival mode, meaning we had to really look at how we did things, scale back on a number of plans.?

TAG?s most recent balance sheet shows the company far from profitable, with a deficit that was bigger at the end of 2009 than it was at the start of the year. Unaudited revenue for the fourth quarter of 2009 was approximately $552,990. ?The balance sheet is a reflection of a number of things. We had to finance the company in certain ways, eliminate debt from the previous entity, which is still ongoing but is about close to being resolved. We?ve addressed a lot of those issues associated with acquiring a company,? says Costley.

Both men agree that their generational gap serves them well as they set about making TAG the leading product licensing, brand management and retail development partner for pre-eminent sports, entertainment and lifestyle brands in the United States. ?I use my youthful outlook and perspective on things ? a new way of looking at certain issues. He?s a youthful fifty-five, so he?s kind of up on what goes on in the marketplace. We complement each other very well,? Costley says.

TAG is traded off-exchange under the symbol TLAG, in the penny stock world of the so-called Pink Sheets. Companies quoted in the Pink Sheets typically do not need to file financial statements with the Securities and Exchange Commission. TAG may not reside there for long. ?We recently completed an audit and filed to move to OTC Bulletin Board, which will give us more exposure in the market and open us up to more institutional financing and investors. The goal is to continue to grow the company and move to other exchanges. Bulletin Board will mean we?re a fully reporting SEC company,? Costley says. He adds, ?Are we where we thought we would be a year and a half ago? No, but we?re comfortable with where we are, given the situation and the fact that we?re building as a long-term platform; with the things we were able to do with regard to establishing our sales network and internal systems.? ?

With Costley securely at TAG?s operating helm, Jones is putting much of his energy behind Verite. ?That is what really excites me, makes me want to jump up and down,? he laughs. ?Small businesses [including TAG] very often have smart people, the right project, are hardworking, great ideas but need capital to be able to execute those ideas.?
To address those needs, he decided to use his ?own hard-earned money? to build a private-equity fund ?from the ground up? and be its majority owner. ?That?s very different from what other folks do,? Jones explains. ?Private equity traditionally is done by a smart team of men and women who have gone to business school, who understand the business model of companies, have done a lot of case studies, then go out and try to emulate what they?ve seen in the past and learned in school. When you talk about a boy like Don Jones, who grew up in a housing project with single mother and six sisters and brothers, that is not going to be my path.?

He is looking to raise about $150 million for the fund. ?The vision of Verite is really aggressive and could be industry changing once it?s up and running,? says Costley.
Jones laughs, ?I?m an entrepreneur and every day I wake up it?s something new.?
He becomes pensive. ?Having the ability to work with Janon, to develop him and the idea of an international licensing, merchandising, marketing company, that?s really cool.?