How hip-hop fashion won over mainstream America.

This isn't supposed to happen to a start-up. In 1990, Cross Colours co-owners Carl Jones and Thomas J. Walker set out to harness the hip-hop craze with a line of street-inspired fashions for young men. Targeting blacks, they lured the masses without a shrug. On a roll, the company segued from clothing to cups and saucers, wooing high-end stores with its African-themed housewares. Next came lines for women and kids, even a special collection endorsed by Earvin "Magic" Johnson. Spinning cash out of chaos, they saw sales explode from $15 million in 1991 to $89 million in 1992.

Sound whack? Well, to borrow a Cross Colours catchphrase, "Judge 4 Yo Self." Barely three years in the business, this Los Angeles-based company has cut a mean swath in the $66 billion apparel industry, and is poised to become the nation's only black-owned fashion conglomerate. Playing off the vibrant themes of hip-hop music, its products--which range from $20 T-shirts to $800 leather jackets and $15 ceramic mugs--have been snapped up by more than 3,000 retail outlets, including department and specialty stores such as Macy's, Bullock's, Oaktree and Merry-Go-Round.

"It's an unbelievable story, all that they've done in such a short time," says Derek Tucker, president of the St. Louis-based Oaktree stores. "I've never seen anything like it in my 18 years in the business."

The hype started with affordable T-shirts and baseball caps, each accompanied by messages like "Stop D Violence" and "Educate 2 Elevate." Hip teenagers latched onto the stuff, which soon showed up on the backs of rappers and sitcom stars. In no time, the MTV generation had cozied up to the urban, ethnic look, which Cross Colours swiftly parlayed into women's fashions and tabletop items. Today, it seems, Cross Colours is stitching itself firmly into the fabric of pop--not just hip-hop--culture.

"We didn't intend to come across as a militant company," says Carl Jones, CEO and founder of Threads 4 Life Corp. d/b/a Cross Colours (commonly called Cross Colours). "We simply wanted to be known for making clothes for African-Americans. That's what our style is about, our colors, our fit." As for the other 220 million potential customers? "We figured, if they dig it, they do; if they don't, they don't."

Dig it they did. Though 1992 was a lackluster year for the rag trade, Cross Colours "was definitely one of the stars," says Robert Parola, sportswear editor for the fashion industry's Daily News Record. Make that a shooting star. Shipments in mens/boys sportswear (Cross Colours' primary market) were up only 4% in 1992; Cross Colours pulled off an increase of 493%. Having debuted on the BLACK ENTERPRISE INDUSTRIAL/SERVICE 100 last year at No. 80, with $15 million in revenues, the company has this year rocketed to 10th place, posting sales of $89 million. For these accomplishments, BE recognizes Cross Colours as its Company of the Year.

From The Surf To The Streets

Enconced in his Biedermeier-appointed office and sporting a color-blocked shirt, Jones, 38, looks more like the 25-year-old hipsters he designs for than the CEO of an $89 million company. It's a perception that he's used to, and in a way, seems to relish. "Yeah, people still come in here looking for the real owners," he winks. "We're not entertainers. We're not athletes. We are two legitimate black guys who pay taxes and don't do drugs. Some people find that hard to believe."

Others might find it surprising that Jones is jockeying his third profitable company. Born in Memphis and raised in South Central Los Angeles, Jones studied design at California's Parsons and Trade Tech schools. Anxious to do his own thing, though, he dropped out in 1982, borrowing $20,000 to start a silk-screen printing firm. There, he learned the intricacies of the garment business--seasons, timing and deadlines--and snared big clients, including Guess and Sassoon.

In 1985, eyeing bigger stakes, Jones hooked up with two white partners to launch Surf Fetish. Known for its multiprinted activewear, the company set trends by taking beachwear to the streets. Yet within three years, Jones' passion for surfer duds had washed up. "The Afrocentric movement was just beginning," he recalls. Having long stored up ideas for a black-oriented clothing line, he felt "the time was right." But unlike fashion revolutions of the past, where women's clothes have dictated style, Jones was looking elsewhere. His fashion assault would be aimed at men.

After gathering swatches of the African fabrics he intended to use in his new collection, Jones approached his Surf Fetish partners. "They thought I was crazy," howls Jones. In fact, upon hearing that the young designer was about to abandon a thriving $20 million business, everyone--bankers, colleagues and friends alike--insisted that Jones had lost his head. But the defiant 35-year-old bailed out of Surf Fetish anyway, mortaging his Beverly Hills home and selling a "few toys" (17 Harleys). In total, he raised $1 million to launch Cross Colours.

One of his biggest assets was T.J. Walker--the young designer who'd helped him hash out Surf Fetish's slick T-shirt motifs and who joined him in the new venture as vice president. The two geared up in September of 1989, with the goal of exhibiting at the make-or-break Mens Apparel Guild in California (MAGIC) Show. That meant six frenzied months of sketching, sewing and operating on a shoestring budget to create a fall collection.

By the time MAGIC rolled around that March, "all the cash was gone," laughs Jones. "We went to the show on American Express." Assigned to a booth way in the back of the floor, Jones and Walker feared their exhibit would be a flop. Instead, by the fourth day, their booth was gridlocked. Cross Colours' bold designs were the hit of the show, and orders poured in to the tune of $5 million. The only problem? Where to get the funds to actually make the clothes.

Fashion veterans by their early 30s, both Jones and Walker had groomed contacts in the business--and they knew how to use them. At Oaktree, Walker had already earned favor as the president's T-shirt artist of choice. So when the chain placed its first million-dollar order, Cross Colours gained not just a viable client, but a generous one as well. "We supported our own orders," says Oaktree's Tucker, who offered Cross Colours a six-figure credit line for fabric and other supplies. Jones never, in fact, drew on the credit. But without the backup, Cross Colours couldn't have touched the supplies it needed.

Seven-figure orders in hand, Jones called on Imperial Bank, which had already loaned him $200,000. He didn't swing a second loan, but the bank, which trusted Jones from his Surf Fetish days, agreed to float a few checks. And even though he hadn't yet shipped a single item, Jones talked his way into a $300,000 credit line from a receivables financing company. Within six months after start-up, Cross Colours had shipped $15 million worth of clothing.

Specialty stores in large cities had the biggest appetite for Cross Colours' first collection, which featured bright, oversized jeans and shirts straight from the 'hood. Conquering department stores, however, was more of a challenge. "I think that big stores were afraid [carrying Cross Colours] would pigeonhole their stores--that maybe their white customers would be turned off," says Jones. After all, Cross Colours wasn't merely selling clothing--it was pushing a message, "Clothing Without Prejudice." That slogan appeared on every garment, as did an amusing tag featuring the "Heads of Cross Colours," a photomontage of three heads--Jones', Walker's and Walker's dog, Malcolm--all looming over a globe.

Any retailer fears, however, melted once Cross Colours flew off the racks at Macy's and other major stores. Says Jones: "They'd call up and say, 'Oh my God, it blew out! Send me more!'" Three full seasons passed before any of the merchandise had to be marked down. These days, Cross Colours' 10-member sales team keeps up with hungry retailers by working the phones from offices in Los Angeles, San Francisco, New York, Atlanta and Chicago.

Crossing Over

Cross Colours hit the fashion scene with more intensity than either Jones or Walker had ever imagined. Nowhere is the company's broad appeal more glaring that at places like Beverly Hills' tony Beverly Center. There, Cross Colours occupies a prime piece of floor space in Bullock's boys department--and moves swiftly. Three mannequins (each, ironically is blond) sport bold-striped knickers and tunics from the spring line. They tower over the competition, almost mocking the smaller display areas for rivals Girbaud and Guess. This is typical of Cross Colours sightings--from malls in Middle America where white kids imitate teen rappers Kriss Kross, to Larry Parker's Hip Hop Shake Shop in L.A., where the real trend-makers hang out, and a Cross Colours banner hangs over a choice booth.

Some say, however, that in today's ripening hip-hop culture, overexposure, or "going mainstream," can mean certain death. Not surprisingly, then, Cross Colours' detractors are already "dissing" the company's clothing as "played" (read passe). "You can find Cross Colours at any mall," explains one L.A. hip-hop purist. "The best stuff is more underground."

Indeed, for a while, it looked like Cross Colours was just another fad, but as fashion editor Parola points out, "What hip sportswear isn't?" The challenge: "Cross Colours made such a big noise in the market that in some minds, it has come to symbolize a specific look. Jones must now convince people that Cross Colours is not a single look, but one that will change." Parola's guess: "They will be around longer than what we now call hip-hop."

More savvy about the business than some might give them credit for (Jones reminds people that his "overnight success" took eight years), these partners understand that surviving in the fickle fashion world means ducking in, out and around trends--like riding the waves that inspired them at Surf Fetish. Says Jones: "We know this industry and what it takes to stay in the game. Just as new sounds are coming into hip-hop, our clothes will evolve."

Retailers are taking favorable note. "They've cleaned up the entire look of the groups they were offering," says Ron Robinson, owner of Los Angeles' Fred Segal Melrose. "The line still has a strong image, but now there's a softness that it didn't have before." Thus, customers who might have been blinded by the original, bright-all-over palette can now find pieces that fit easily into any wardrobe, such as the striped zipper-front tees that have been a sellout nationwide. "They've taken their clothing from the streets to the parks," explains Robinson, who wagers, "it was the only strategy to stay alive."

Another change: During its start-up phase, Cross Colours' name was the thing. Until recently, all clothing flaunted huge logos, inside and out. "When we first came out, we knew we had to do it in a big way," explains Walker, 31. "The logo had to be an emblem, a symbol, so people could see it coming and going."

Now that Cross Colours is known as a brand, the focus on labels has shifted. "The emphasis is now more on the garment than on the label," explains marketing director Cynthia Atterberry, who points out that a downplayed label should also help foil counterfeiters who sell Cross Colours' labels for $2.50 on the streets. The new logos, some as small as a postage stamp, offer "a new kind of mystique," she adds.

Just how well this new mystique will play in stores, however, remains to be seen. Other menswear makers have tried similar tactics and failed. For instance, Tommy Hilfiger (a label that Cross Colours hopes to compete against) moved its logo on rugbies from the breast pocket to the hem. Hilfiger swiftly moved it back north, though, after retailers complained that the shirts weren't selling as well.

Asked about their competition, both Walker and Jones demur. "We'd like to think that we don't have any," says Jones. They're holding back. In fact, their former Surf Fetish partners--the ones, remember, who Jones says snickered at his original concept--have launched Tag Rag, a line that takes a direct swipe at Cross Colours with its colors, silhouettes, even its message: "Tag Rag Speaks a Colorful Language All Its Own.... Positiveness." Other imitators (which tend to sell for less) include Russell Simmons' Phat Farm and Global Ghetto, both based in New York City.

So what do retailers think of the also-rans? "We run a two-tiered business," says Eric Wical, buyer for Joppa, Md. -based Merry-Go-Round stores. "Those that can't afford the original will accept the look-alike. Adds store owner Ron Robinson: "I can't name any real imitators. And as long as there's a Cross Colours look, we'll want Cross Colours."

Cross Colours' greatest potential threat, though, is now an ally. Jones discovered 25-year-old Karl Kani two years ago, when Kani (a.k.a. Carl Williams) was working in a cramped L.A. studio and sweating to fill orders for his hot-selling low-slung jeans. The day after shaking hands on a deal for joint ownership of the Kani name, Jones put the kid with the gold-toothed smile to work.

"Since [Jones] has a good eye, he decided that the Karl Kani kid was a comer, and he was right," says Oaktree's Tucker. "His major competition is sitting in the office right next to him, and that's brilliant, to compete against himself." Tucker may be on the money. Last year, in less than six months of shipping, Karl Kani toted up $6 million. Sales for the line, which has been expanded to include leather jackets and accessories, are expected to hit $34 million in 1993.

So far, the clothing lines have racked up big sales without a major advertising push. Cross Colours spent less than $1 million on ads last year and plans to spend little more for 1993. Says Jones: "We don't plan to ever do a lot." Why? The CEO feels the company is already reaching its market by advertising in each of the major black publications and showing up in MTV videos.

Indeed, the company's significant celebrity exposure is probably the best billboard a CEO could hope for. "We work really hard to get the right people to wear our clothes at the right time," explains Jones, who describes his target customer as between ages 12 and 30 and "very much influenced by entertainment." Current clients include pop newcomer Ce Ce Peniston, George Clinton, Big Daddy Kane and Arsenio Hall.

The celebrity connection, though, hasn't come without a few headaches. There was talk last year of Magic Johnson joining Cross Colours as an equity partner. Negotiations changed course, and Johnson emerged instead as an endorsee of the New Classics line. (Both parties say they're still talking.) Then there was the Spike Lee debacle. Lee, who was once a client, last year filed suit against Cross Colours, presumably over the use of several slogans: "Ya Dig" (both Cross Colours and Lee used it in promotional material) and "Joint" (Cross Colours' parent company was originally called "Solo Joint"; Lee's movies are billed as "a Spike Lee Joint"). Cross Colours has since settled the case--for undisclosed terms--and changed the name of its parent company to Threads 4 Life.

Challenges Of Growth

Fashion empires aren't built on threads alone. Diversification, into perfumes, housewares and other products, is key to beating the trend trap. Known for their great instincts, Jones and Walker long ago had this figured out. For instance, tapping the demand for ethnic items in the $18 billion home-furnishings market, the company last spring launched Cross Colours Home, a linens and tabletop collection that was quickly picked up by upscale stores like Marshall Field. Footwear, belts and other accessories are becoming a part of the mix, too.

"Originally, we were targeted to young, black men," says Walker. "Now, not only are we trying to keep the kids but, as they mature, we want to keep them as customers."

One of the company's latest incarnations is Cross Colours Classics, the company's "version of Gap clothing," as one buyer describes it. Selling for roughly 10% more than the original "street" line, Classics offers more conservative hunting vests, rugbies and chinos, and is promoted by Magic Johnson.

Classics is the company's fifth clothing line. (See organizational chart.) And as insiders point out, fast is the only way to move in the capricious fashion world. "In apparel, when you're hot, you're hot," says sportswear editor Parola. "And you'd better cash in on it right away." 1993 sales for the entire company are projected at $150 million.

But as orders swell and Cross Colours puts more on its plate--will success strangle it? Reeling from demand in 1992, the company was forced to cancel $67 million worth of orders. More than 200 retailers got the ax, and for a while, it appeared as if the company was in over its head. "Carl drove me crazy with late deliveries, of course," admits Oaktree's Tucker, who brushes off the delays. "That's just a part of being hot." Understandably, other buyers questioned the company for rolling out new lines when they were still struggling with the first.

Despite the growing pains and setbacks, Jones has stayed the course. Anxious to crank up productivity, he recently hired a top-notch team of managers to oversee operations and shipping. His newly installed chief operating officer, Jim Boldes, in fact, was a former vice president at Guess, an $850 million jeans market competitor.

Jones expects that both physical and managerial improvements at the company will help fix glitches in production. Their new 150,000-square-foot headquarters helps, too: It is a far cry from the five scrappy buildings the company occupied prior to last December. Located in Commerce, Calif., the new facility also has enabled the company to save money by bringing more jobs in-house--including the key function of fabric cutting. The company invested $200,000 on equipment to bring the process in-house, which should shave 10% off manufacturing costs. Quality control is under the roof, too, as checkers inspect not one garment from a batch, but nearly every piece of clothing before orders are shipped to the stores.

Like all apparel makers, the company relies heavily on outside vendors, mainly for fabrics, sewing and silk-screening and packaging. Unlike others in the industry, however, nearly every stitch at Cross Colours is made in the United States. "We're not interested in going overseas," says Jones, citing quality. "We know that blacks are particular shoppers. That's why we use only the best fabrics, the best sewing operations."

One shortcoming that especially rankles Jones is that there are "almost no black vendors" in the apparel business on whom he can call. On his ever-expanding roster of contractors, there is just one black company, a New York-based accessories maker, who supplies Cross Colours with necklaces and other adornments.

Managing Creativity

Cross Colours' sprawling headquarters, home to 250 employees, oozes creativity. Hunched over drafting tables on the open design floor, young staffers (the average age is about 25) work to perfect the intricate fabric patterns that will bring life to a new fall line. Swatches of material are everywhere, as are cardboard pattern pieces, racks of clothing, sketches--and energy.

Jones himself exudes what his management style is all about: loose and democratic, yet demanding and team-oriented. His managers shun suits in favor of baggy jeans, but are expected in at 8 a.m. and often work on weekends.

"I don't want to hire nine-to-five people," says Jones, who, despite his uniform of jeans and sneakers, describes himself as strict. He also eschews "too many layers of management." Jones is "75% business," signing off on every check; Walker is "75% design."

Aside from the two, the company's highest rungs include Chief Financial Officer Ben Reynolds, Chief Operations Officer Boldes and a dozen managers. A management quirk: Jones patently forbids titles on business cards. "I hate titles; they aren't important," he quips. "Everybody here is part of a team."

Though they have a dozen designers and assistants on staff, Walker, Jones and Kani still fashion most of the clothes, often sketching well into the night. Several times a day, models get trotted into their offices to test-run the latest designs. As the models move in the clothes, no detail gets overlooked, as each offers approval ("looks smooth") or criticism ("needs more belt loops").

As for their inspiration? The trio is constantly canvassing the streets and the club circuit, talking to rappers and wannabes from the swirling hip-hop crowd. They do more than observe their customers, though: Kids get summoned to the offices to size up works-in-progress. "It's amazing how young kids can talk about color and fabric," notes Jones. After all, "they set the trends."

Apart from running a multimillion-dollar company, Jones is developing young talents in a business that's abysmally short on African-American stars. "For an apparel company, I'm sure I employ more black managers than all the other companies combined," he says. Jones may be right. About half of his staff is black or minority.

Not surprisingly, Jones and Walker are their own best talent scouts. One of the company's new designers in fact, was discovered in, of all places, the invoicing department, having impressed Jones and Walker as a "funky dresser." Then there's 21-year-old June Ambrose, a former free-lance stylist who is stirring up East Coast publicity from the New York office. Jones plucked her from the rap magazine circuit, and she's now pushing mainstream publications like Elle and GQ to use Cross Colours in their editorial layouts.

Looking Ahead

To say that Jones and Walker have ambitious plans for Cross Colours is about as understated as the clothing they've made famous. Presently, deals are in progress to license the Cross Colours name for a sneaker line.

And although Jones vows that Cross Colours will always be made in the U.S.A., he is trying to establish a presence overseas. Markets in Europe, Canada and Japan, he says, look particularly promising. On top of all that, Jones is reviewing plans to take Cross Colours public--a distinction enjoyed by only three businesses on the BE 100s.

Also high on the partners' list of priorities is training black teens to enter the apparel business. To that end, Cross Colours has joined forces with L.A.'s Common Ground Foundation, which works with kids from South Central in special mentoring programs. Several from the foundation have entry-level jobs at the company--and it is the hope of both Jones and Walker that they can inspire these kids to get an education, learn a trade, start a business.

Their ties to South Central, the company's original location, don't end with the foundation. Last March, Cross Colours' first store debuted in Inglewood, Calif. In addition, says Jones, "we want to open a sewing factory in South Central that's owned by this company, manufacturers our garments, and offers jobs and training." Before the year is out, he hopes to seal such a deal--a $500,000 investment that would give a boost to the community they once called home.

If all goes on schedule, they'll need the extra facility: Within another two years or so, the company plans to reach even further upmarket with their clothing lines. Says Walker: "We want to go to better lines, to blazers and more dressed-up looks." That will probably happen with Karl Kani first, a hip-hop cult figure whom Jones refers to as "the black Giorgio Armani."

As for the CEO's long-term goals? "I want to walk into any major store and see Cross Colours shoes, linens, perfumes, as well as clothes," he says. "I'm into doing a lot of things."

As if we hadn't already guessed.