PODCAST: Level Brands CEO Marty Sumichrast and the Kathy Ireland Franchise
Level Brands Inc. (NYSEAMERICAN:LEVB), a company dedicated to creating bold, unconventional and socially responsible branding for leading businesses, recently raised $12 million by selling 2 million shares. CEO Marty Sumichrast chats with James about the company, as well as their success led by Chairman Kathy Ireland.
James West: Marty, thanks for joining us today.
Marty Sumichrast: Thank you for having me.
James West: Marty, let’s talk a bit about Level Brands. You just completed a $12 million IPO through a Reg A+ offering on the NYSE; tell me about what Level Brands does.
Marty Sumichrast: Level Brands is a licensing and brand marketing company that we have together with our leader, Kathy Ireland. Kathy services as Chairman Emeritus and Chief Brand Strategist, and we have four diversified business units; one of them is Kathy Ireland Health and Wellness, which is in the licensing space. One is I’M1, or Ireland Men One, which is the men’s line of kathy ireland Worldwide. And one is EE1, which is our Experiential Entertainment and Production Company, and then Beauty and Pinups, which is our disruptive haircare brand that we have. So that’s what we do at Level Brands.
James West: Okay. So that’s quite a diverse sort of set of businesses under one set of brands. What is the value proposition for investors?
Marty Sumichrast: Well, we like to think of ourselves first and foremost as a company that is tied to the licensing world and, of course, we have no better group to help us succeed than Kathy Ireland and her team at kathy ireland Worldwide. I mentioned Kathy’s role in the company; also the co-founder, Eric Sterling, is on my board of directors of Level Brands, he’s the co-founder of kathy ireland Worldwide. Stephen Roseberry is the President of kathy ireland Worldwide; he is the President of three of four of our divisions. Jon Carrasco, who’s the Creative Global Director of kathy ireland Worldwide, is our Global Creative Director. Tommy Meharey, who’s the managing director of I’M1, is the youngest board member of kathy ireland Worldwide, and Nic Mendoza, who’s the cofounder of EE1, is also a member of kathy ireland Worldwide and is the managing director over at EE1.
So people have said, wow, you not only have the playbook but you have the players. So our proposition is, kathy ireland Worldwide is a private company. It’s 100 percent by Kathy; it will never go public. So if you would like to participate with Kathy in the development of a company that she is involved with, Level Brands is the way to do it. Kathy has taken her business from a $50,000 investment to a company that is generating over $2.6 billion a year, according to Forbes, in sales; 17,000 SKUs, 55,000 stores worldwide. So you get all of that experience and know-how, together with three companies that were originally Kathy Ireland businesses which are now Level Brand businesses, we think we have a proposition which is very exciting for investors.
James West: So does Level Brands act as a sort of royalty repository for the revenue that comes from all of these brands and stores? Or what’s the revenue model?
Marty Sumichrast: Yeah. The revenue model is exactly that way. So Ireland Men One, I’M1, is in the licensing business, so we go out and sell licenses. We’ve been in business, that particular entity has been in business since January of this year, and we have been actively signing up licenses from everything from sunglass companies to suit companies in the fashion space, to speciality retail in the vape space. We’ve got a lot of other licenses which are coming along into 2018. So that’s a pure licensing play.
Kathy Ireland Health and Wellness – another pure licensing play where we have just a whole – I mean, health and wellness is such a diverse, wide field. We’re the only company, by the way, in the world that has the Kathy Ireland brand outside of kathy ireland Worldwide. So you can imagine the amount of companies, from skin care companies to nutraceuticals to just about everybody in the health and wellness sector wants to be tied with Kathy Ireland. So Kathy Ireland Health and Wellness allows us to go out and do licensing.
On the brand management side, EE1 provides brand management services. So companies come to us and say they want to sell more of the product that they’re currently selling. For instance, Oxigen water, who’s one of our great brand management clients, Oxigen came to us earlier this year and said ‘we want to tie in with Level Brands and Kathy because we want to sell more of our products’. So we got involved with them, we signed them up as a brand management client, and we have increased the amount of doors that they’re selling into exponentially just in the last six months. Next year, we expect that number to really go global.
We think Oxigen water, in the next two to three years, will become a household name, and it will create a lot of value for everybody at Oxigen water, because we understand branding. We understand what it takes to build a brand, how to position a brand, how to message a brand. Not only that, but you know, with 17,000 SKUs and 55,000 doors, we know a little bit about the retail and the consumer space. So our ability to help brands promote their products and get out there and ultimately sell more, we get paid for doing that. We get paid service fees for helping brands, we get paid royalties as the brand’s products sell.
And so again, the licensing space under Health and Wellness and under I’M1 is just straightforward licensing, and then you’ve got the brand management space, where we’ve signed up numerous brands that we’ve gone out and we’re helping them with their brand distribution strategies.
James West: Interesting. So it’s the only way to get a piece of Kathy Ireland and her enterprise. Tell me about, when did Kathy Ireland start, and what’s the back story on that? We aren’t that familiar with her up here.
Marty Sumichrast: Yeah. So Kathy started, obviously, I think most people are familiar with Kathy in her days as arguably the leading supermodel in the world, having been in Sports Illustrated over a dozen times, having been on the cover record-setting times, having the number one Sports Illustrated swimsuit cover of all time…
James West: Oh, sorry. That Kathy Ireland! Sorry, I didn’t realize. Oh, that’s interesting. So she’s morphed that whole franchise into this incredible sort of horizontally diversified marketing empire?
Marty Sumichrast: Yeah, well, now people know her as one of the great female entrepreneurs in the world. kathy ireland Worldwide, she’s grown, as I said, from a small investment into a global fortune. She’s one of the savviest CEOs. She’s the 25th largest licensing brand in the world. She’s one of the top female, if not the top female, licensing brand of CEOs in the world, and it’s just a – she’s an incredible businesswoman, but she’s even a better person. Everything she does revolves around her millennium development goals. She’s socially conscious, she’s a philanthropist, and she’s really, I’m just honoured that she’s my friend and partner.
So when people get to know and they research what Kathy’s done in her life, sure, they remember the modelling days, and it was incredible – I remember them. But then they start to pay attention to what her mentor Berkshire Hathaway, Warren Buffett sees as an incredible businesswoman. You know, she opens up every Berkshire Hathaway meeting with Warren Buffett and Bill Gates doing the newspaper toss, and she says she beats Bill Gates but she can’t beat Warren Buffett because he practices a lot.
Because they all had newspaper routes!
She’s a remarkable, remarkable person who’s had an incredible career, and if you ask her, she says we’re just getting started. So that’s what’s going on in Level Brands. We are literally on the first pitch of the first inning; we’re very excited about the future.
James West: Wow. What a great story, Marty. We’re going to follow that with interest. Thanks so much for the introduction.
Marty Sumichrast: Thank you so much. I appreciate it. Have a great day.
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