How to Build a Brand

Panel Composition & Context

• The "How to Build a Brand" panel at the Milken Global Conference featured a diverse cross-section of the industry:
  • Tommy Hilfiger: Founder and designer, discussing the transition from a US-centric menswear brand to a global lifestyle empire.
  • Janet Gerwisch: Operating Partner at Castanea Partners and former CEO of Laura Mercier, now an investor in disruptive consumer brands like Drybar and Dollar Shave Club.
  • Jamie Salter: CEO of Authentic Brands Group (ABG), overseeing a portfolio of 32 licensed lifestyle and celebrity brands.
  • Dimitri Baliozny: Chief Investment Officer of Balioszny Asset Management, discussing brand utility in the finance and talent sectors.

Globalization as a Prerequisite for Survival

• Tommy Hilfiger emphasized that no American-founded brand can survive long-term without becoming a global brand; US growth alone is insufficient.
• Hilfiger revealed the brand's expansion timeline: founded in 1985, entered Europe in 1991, and expanded to Asia (China) in 1999.
• Jamie Salter noted that lacking a global footprint causes brands to lose 50% to 60% of the potential consumer market, citing emerging markets like China, Latin America, and Korea.
• Salter's acquisition strategy prioritizes brands with an existing global footprint and a history of 15 to 20 years of sustainability.

Differentiation and "White Space" Strategy

• Janet Gerwisch identified the key to founding Laura Mercier (1996) was finding a "white space" in a saturated market by focusing on the "flawless face" rather than lip color or eyeshadow.
• Laura Mercier's advantage was the founder's personal credibility and connection to high-profile clients (Madonna, Sarah Jessica Parker), distinguishing her from faceless corporate brands.
• Gerwisch noted that Bobby Brown preceded her by rejecting formulaic seasonal trends, instead empowering customers to look like themselves.
• Authentic Brands Group (ABG) recently closed on the acquisition of Nautica and manages rights for celebrity estates including Elvis Presley, Marilyn Monroe, Muhammad Ali, and Shaquille O'Neal.

The "Uber" Licensing Model

• Jamie Salter described ABG's business model as the "Uber of the brand business," where the company licenses brands to local partners who handle inventory, logistics, and operations.
• ABG provides partners with a "toolbox" of tech packs, sourcing codes, design assets, and marketing strategies without taking ownership of physical inventory.
• This model allows for rapid scaling; Salter stated, "Nine out of ten times [in acquisition analysis] it's a no" due to a lack of global distribution or innovation history.

Finance and Brand as a Talent Magnet

• Dimitri Baliozny argued that a firm's brand is critical for recruiting in a competitive talent market against tech giants like Uber and Google.
• Balioszny Asset Management (BAM) leverages its reputation as a "performance-driven" and "collaborative" firm to attract computer scientists and data analysts.
• The firm's name serves as the brand, a decision made after other potential names were unavailable, with the acronym "BAM" aiding memorability.

Data, AI, and the Shift from Gut to Algorithm

• ABG manages 217 million social media followers, using AI and big data to determine optimal posting times, inventory mixes, and trend forecasts.
• Big data now dictates specific SKU decisions (e.g., which denim wash or jacket color to stock), replacing traditional "pencil pusher" merchant intuition.
• Salter noted that if an influencer wears a product that fails to sell, the data provides instant feedback to stop production immediately.
• Tommy Hilfiger countered that data serves as a framework to be blended with human creativity; brands must still offer products consumers "don't know they need yet" to avoid becoming generic (citing Gap as an example of over-reliance on data).
• Baliozny highlighted that the best performing hedge funds are fundamental teams integrating statistical data, outpacing purely statistical models that lack historical context for new market shifts.

The Impact of Technology on Consumer Behavior

• Gerwisch attributed the massive growth in the mature cosmetics industry to the iPhone 4 selfie, which created a daily demand for personal image maintenance.
• YouTube and social media allow consumers to learn from top artists instantly, shortening the educational gap between high-end products and mass-market adoption.
• Tommy Hilfiger criticized the traditional fashion calendar (6-9 month lead times) as obsolete; the "see now, buy now" model with immediate gratification is now the industry standard.
• Domino's Pizza was cited by Baliozny as a non-fashion example of brand success driven by technology, consistent delivery, and a superior loyalty app experience.

Risks of Brand Destruction

• Distribution Dilution: Jamie Salter warned that pushing brands too far into mass retail (e.g., TJ Maxx, Walmart, Amazon) erodes brand equity and price integrity.
• Inventory Errors: Salter noted that brands falling behind in retail execution face an "impossibility" of catch-up due to the speed of trends; one bad season can be fatal.
• Over-Leverage: Brands often fail not due to product issues but due to high debt loads from private equity transactions, as seen in the sale of distressed brands to ABG.
• Lack of Innovation: Apple was criticized by the panel for a potential "problem" where they have stopped releasing products that consumers "absolutely have to have," leading to market stagnation.

Influencer Marketing ROI

• ABG reported an ROI of 10 to 1 on influencer marketing, generating $850,000 in sales from $50,000 spent on influencer partnerships in a single day.
• Tommy Hilfiger stated that the success of Gigi Hadid was a major driver for the brand's global resurgence, proving the power of a single authentic face.
• The panel emphasized that influencers must be believable; paid promotions that lack authenticity are easily dismissed by consumers.
• Influencers provide global reach, allowing brands to penetrate markets like Korea and China without establishing a physical presence immediately.

Consumer Insights and Brand Valuation

• Janet Gerwisch and the panel discussed Fiji Water and Essentia Water as examples of brands commanding premium prices in a commoditized market through specific hooks (pH balance, packaging).
• Baliozny stated that while "brand" is hard to value in isolation, a strong brand provides a secular moat, allowing companies to survive temporary earnings misses because customer loyalty remains.
• Gerwisch clarified that she does not invest in early-stage ideas; she targets companies already generating $20–25 million in revenue with an established following.
• A key metric for acquisition is the percentage of sales coming from the brand's own website, which signals direct consumer loyalty and reduces reliance on third-party retailers like Macy's.

Talent and Self-Awareness

• When asked what top talent should bring to Balioszny Asset Management, Baliozny identified self-awareness as the most underrated trait, specifically the ability to recognize one's own limits and adapt to market changes.
• Tommy Hilfiger stressed that building a successful company requires hiring people smarter than oneself and breaking down executive silos to foster a harmonious, collaborative culture.