How a Homeless Immigrant Invented the Tube Top and Built a Billion-Dollar Fashion Empire

0:00Hard to imagine, multi-million dollar designer Eli Tahari arrived in New York City with just a hundred dollars in his pocket. I landed in New York and I never wanted to leave anymore. I slept in the park and showered in a gym. My first fashion show was when Studio 54 opened. That was my first fashion show. And it's$2 a tube top, 250 ,000 orders, half a million dollars. Everyone deserves to experience luxury. Hi, I'm Eli Tahari and welcome to the broadcast. Hi, I'm Jeremy. Welcome to the Burnouts. Ali, I want to go back to the beginning when you arrived in New York for the first time. You worked as an electrician?

0:42Yes. And I want to talk about those early days, finding your first job and then starting the brand. What did that look like? I came to New York because my brother was a messenger at the airlines. And those days, there was no computers. There was carbon copy of the ticket. So his ticket was A, Tahari. I changed it to E. Tahari. And I flew standby. And I landed in New York, slept in the park, and showered in a gym in YMCA. And then I stayed a couple of weeks in the park, and somebody met me and heard my story and said, I know a shelter for boys run away from home up to 22. When I was in the shelter, I heard two people in the street speaking Persian, and that's my background.

1:35So I spoke to them Persian, and they said to me, where are you staying? I said, here in the shelter. They said, no, you're not staying in the shelter. You're coming to Queens with us. And I went to Queens with them, and I was a roommate, and they got me a job where they were working, in a boutique in Macduver Street, selling clothes. from the shelter I went to a diner and the owner of the diner saw me every morning across the street on St. Mark's place and he said to me what job you want to do before I left the shelter I said to him I'm an electrician so he says to me my cousin Julie is the president of the union I'll send it to him to Queens.

2:20So I went to Queens, met him, and he got me a job in a garment center as an electrician. So that's how I started. Wow, that's an incredible story. I cannot believe that you forged your brother's ticket to come here. You're homeless and then you get multiple jobs, it sounds like, by luck and then also the sense of incredible community you have with other Iranian immigrants that are in the U.S. How do you then go to starting the brand? Well, I work as an electrician during the day in the union in the garment center. And then after the work, I work in a boutique selling clothes. There I met girls and I learned about fashion.

3:02The owner of the boutique had a sewing factory and he used to come to the store and ask what's selling. So he wanted to make it. So he gravitated to me after a while and he liked me. So I gave him a lot of ideas. So he took me to work for him. But before he took me to work for him, I noticed that women during the hippie time wanted to wear bra-less. Let it all hang out. Let it all hang out. Yes. and I went to Orchard Street on a Sunday and I saw a bathing suit from the 40s, 50s that was selling pants up to the knee, elastic and a tube. So I took a dozen tubes,$2 each, and brought it to my boss.

3:58and Adam showing him the tubes on the counter. A lot of women wanted to buy it and he noticed that there is a demand for it. So he started making tubes and he made tubes and that's how I started. He took me to - Tube tops? Tube tops, yeah. Oh, I love that. Yeah, there were a whole page in the New York Times about who made that tube. Ellie Tahari invented the tube top. You start with a$2 tube top. Who made that tube? Ellie did. Yeah,$2 wholesale,$4 retail. That's incredible. I mean, that's a 50 % margin. That's amazing. And when do you go from, you know, working with this guy, you're coming up with these kind of creative genius ideas, the tube top, which I wore, unfortunately, all of high school.

4:42But when did you end up starting like your own brand? I started selling tube top to the stores. And one day I came in to get some tube top to fill up my orders because I was in a boutique show. I went to a boutique shop in the box, and I had tube tap, order form, push pins, everything I needed. And I said, I need a room. They told me, fill up an application. They told me, we'll let you know. I said, no, I want to be in a show. They said, we're taking application for the next show in six months. I took my box, and I saw a door that opened to the show, a back door. So I would sneak in, went to the top floor, and put the tube top on the wall.

5:27And I had a crowd of people. And the guard used to come and say to me, what are you doing here? It's fire hazards. You got to leave. I said, I just came from the office. And they went to check with the office. And I went to another floor. And I got 250 ,000 tube orders from that show. Wow. I did the show for one day. And everybody was buying dozens and dozens in every color. And there were$2 wholesale,$4 retail. And what year was this, 1972, 73? Yeah. And it's$2 a tube top, 250 ,000 orders, half a million dollars in 1972, 1973. That was a lot of money. And then I went to get tubes from my boss, my ex-boss.

6:16And he said, I don't have tubes. I said, what is this mountain of tubes? He says, this is going to Bloomingdale, this is going to Macy's, this is going to Nordstrom, this is going to Neiman's. I said, you don't have tube for me? He said, no, I'm sold out. So I left and started my own sewing factory and started a tube tub. And you guys had your first boutique on Madison Avenue, right? How many stores do you have now? We have 800 retail locations, including wholesale and retail. 40 countries. This is our 51st year. And last year, we hit a billion dollars in sales. So really, really exciting milestone.

6:57But I think your first boutique was on Orchard Street, no? No, it was on Madison. 802 Madison Avenue. What was this, 1970? In the 70s. I don't remember exactly. But you were one of the first there, no? This was before everyone was on Madison. this wasn't the Madison Avenue that everyone thinks of. Yeah, how did the store come about? I was friendly with my friend in Milan, Italy. I was a lot of friends in the fashion business. Versace was my friend. Armani I met a few times. We were hanging out. And there was a store called Very Womo. Leonardo Brugognoni was the owner at the time. He passed away.

7:38But I remember he asked me to help him open up a store on Madison Avenue. So I took this big space and he took most of the space and I, a little space left and I opened an Ali Tahari store. And it was the first, one of the first shops, fashion shops on Madison Avenue. How did you think to go there? Because he wanted to be on Madison Avenue. So I looked for a store for him and it was too big. So we divided it to two. and then I opened an Ellie Tahari store. From my perspective, he's always had an incredible knack for knowing what a good location is. And it's almost an unteachable thing. He can see where people are going to be attracted to or go or a neighborhood that's going to become more popular.

8:36I've seen him do it dozens of times.

8:49Yeah, I wanted to know, because as you were growing up, the brand was continuing to grow and get bigger. What do you think are some of the best business decisions you made during that time period that helped elevate the brand? If I can answer for him, you know, I would say that he has always been, you know, an entrepreneur to the core. And that means, you know, always trying to be as vertically integrated as possible. So when the opportunity came to do his own shipping and logistics, it wasn't, hey, let me pay someone to ship for me. It was, I'm going to ship for myself. When he was going to ship for himself, he could have chose to be a tenant and lease.

9:25He said, no, I'm going to buy the building. And all of those things sound like he just chose to do them and they're really easy. And no, actually, it's much harder to manage a shipping and fulfillment business. No, it's actually much harder to own the building and pay the property taxes and deal with the maintenance. And so these were difficult adversities that he chose. And I think that's what really set him apart. I think the warehouse was one of the best investments. I agree. It was 40, 30, 40 years ago, and now it's 10 times worse more. But when you're in fashion, you can help it, but knowing what people want all the time.

10:11New York streets are my inspiration. I walk the street, I go on the subway sometimes with my assistant, Colin, and I see what people worry, ordinary people. And you notice what people want to wear. And then you make it better. And that's what fashion is. That's why real estate is also the same principle. It seems like a lot of this is trend forecasting, both for fashion, really understanding what it is that people want to wear, and then also for real estate, what it is that people would want to buy. And that's actually something I wanted to go back to is I wanted to learn more about your process for designing.

10:55How do you come up and how did you come up with all those beautiful clothing designs? Well, I started with a tube tub and then I used to hang out with the clubs, disco. In fact, my first fashion show was when Studio 54 opened. That was my first fashion show. So I made disco clothes and they took off. Everybody wanted the hassle, the dress that swing. and I made a lot of disco dresses and then I went and made suit. I made the first suit before Armani, before anybody making suits because women used to wear polyester printed dresses. And I noticed that my first suit sold very well. I started making suits and today still the making suits.

11:47Professional women wear suits and it's still going on. So that's fashion. Fashion, you got to know what people want, not now, but in the future to wear. I think a common thread between the two is that just self-expression, right? It's like he's saying, paying attention to what people want. And whether it was the tube top, she felt empowered by being free. And that was exciting. And then when women were entering the workplace, he was like, they're going to need suits. And that was a pioneering insight. During early 80s. But I think the main principle that I went to Offenich and I studied the Bible.

12:35And the end of the Bible, I learned to treat other people the way you want to be treated, to do good. And I recently wrote to Jeremy a text. I'm 73, and I realize now that all I want to do is help people. And that's my intention. And all I wanted to do, I came to New York for one reason. My mother had epilepsy. She was 24. She was divorced. And I wanted to help her. And that was my intention, coming to New York, to help my mother and my brothers and sisters. And he did that. And it's so incredible that a guy who grew up with outclothes without a home is now providing homes and clothing to people all around the world.

13:25And I think it's so beautiful. In a sense, it's kind of the American dream, right? The story that you're outlining here really is the American dream. And what did your family end up thinking when you came to America? You ended up becoming incredibly successful. What did they think as you were navigating all of this? Well, it's very interesting. I used to sell. My mother had epilepsy and she suffered for half of her life. The other half, I spoiled her. I sent her cruises. I bought her houses. I used to give her money. I used to buy her all kinds of clothes and jewelry. And my father, I used to send money to.

14:01And he didn't change. He lived the same way, put in a bank and saved it. Wow. Yeah, because Jeremy, I wanted to ask, I'm sure growing up you had all these incredible stories that you told about how you first got your start. What would you say are some of your favorite stories you've heard from your dad? Well, that's a good one. Another one is the building that he currently lives in. One of his first jobs when he was homeless was washing cars. And he now lives in the building that he used to wash cars on. And I live where the building is very tall, but before there were only land and there was parking.

14:41So when I slept in a park, I used to wash cars in the garage and I live there now. And did you always know you wanted to go into fashion? I know you started a line, you know, for streetwear in high school. Was there ever a conversation between the two of you as you like stepped into fashion or did you think you would go somewhere else? I'm curious about how your kind of career developed. as well. Yeah, absolutely. When I was young, I started the line, but when I was really young, you know, I always wanted to follow his footsteps. But, you know, when he would put me to bed at night, you know, he would tell me, don't do it.

15:16And I think that made me want to do it even more. And then came a time where he was doing his thing and it wasn't the right time for me to come and help. And so I started getting involved in real estate, looking for my own foothold and my own path. But ultimately, that led me back to still working with him, working with the family and having a role in the company. Yeah. Walk us through Tahari Capital, because I know you guys, of course, are known for fashion, but then you do also have this incredible real estate division. How did you guys build the structure of the company? When I was in fashion, I used to invest money in real estate.

15:59And I noticed that the most money I made was in real estate. And I met the real estate guy and he told me, development is what the money is. And I keep saying to Jeremy, go to real estate, go to real estate. And when he was 20, he was still in college in NYU. and he got his license to be a broker. And he started being a broker and he opened up a brokerage firm and then he bought some buildings. So now he had a real estate company that manages building and a brokerage firm. And that's how he started when he was 20. And then he took over the... I'm basically, most of my business is licensing now.

16:46The name is very strong. So a lot of people license the name. I design only online now and we have some retail stores. So that's where my clothes, the collection, the top collection is online and some stores. And he took over the licensing and now he's taking over the fashion online. I'd love if you could dive into like what licensing looks like and kind of the pros and cons of that and how the unit economics work. Yeah, absolutely. Licensing is the concept of someone having a license, a usage of a certain trade name. And so let's say you have a great idea for a pair of underwear or pet wear, but you don't necessarily have a brand that will attract the customer.

17:35you can make a deal with a brand who has that kind of allure or cachet. You pay, like he said, a certain percentage of sales. And the pros from an entrepreneur's perspective is that you can scale pretty quickly. But some of the challenges are maintaining brand consistency and synchrony. And so you really have to do a good job of investing and supporting your licensees so that there's still a coherent story between, you know, color palettes in the season. And, you know, what's the you know, what's the story you're trying to tell? You know, maybe it's earthy tones, maybe it's neon colors. You know, it varies from year to year.

18:21What's cool, what's not. And so it's kind of like a marriage in a way. And you got to be you got to work with them. As you're talking about kind of the principles that you have in leadership, it sounds like kindness, giving back is really key to you. As you've, you know, you've had these two incredibly successful businesses, what hard decisions have you had to make? Are there been times where, you know, in business, like you didn't, you had to not be kind? What did that kind of look like? And I'm curious, yeah, like what key decisions you made over time? When you come from a good place, you want to do good, you become successful and you love what you do.

18:53And I tell my son always, do what you love. Make sure you love it. Be kind to people and be humble. Always. And that's all I taught him. The rest is himself. Not sure. Yesterday, we moved offices. And last week, he had a meeting with all the company, how to move. And I noticed 50 people listening to Jeremy and Jeremy running the meeting. And he's the youngest. So yesterday, Grandpa came to visit and to see the new officers. So I told him the story. He says, I remind you another story. When Jeremy was four, we were on a beach, 10 people laying down. And then we find ourselves collecting driftwoods for Jeremy.

19:43because Jeremy was building something. We was four. And grandpa goes to me and he says, in the beach 20 years ago, he says, you notice we're all working for Jeremy. That was funny yesterday. And how did it happen that you ended up taking the reins and taking over the CEO role? I want to know more about your guys' working relationship and how it's evolved over the last few years. he's constantly emphasizing humility to me and I think that's always been his uh strongest you know quality and you see it coming through when he's telling me oh you're the boss I'm resigning like um you know in in a way it's just another manifestation of him trying to empower people me being his son this time but I very much work for him and and and I try to you know I try to carry on all the amazing processes and structure that he's put in place.

20:42And we're just stepping into the next 50 years. There's a lot that's gone right. And if it ain't broke, don't fix it. Right. So it happened organically. He started a real estate company and he started buying buildings and managing them. And then he started a brokerage firm. And I saw he's being very successful. So he took over the licensing because the licensing brings the most money. And he did good there. Now, instead of closing the company, I let him run it. So he has a good eye. He has a good eye for women and fashion. And I let him do it. And he's doing better than me.

21:31I'm curious for you, Jeremy, because I think something that I don't want to say struggle with, because being part of my family, there's so much privilege, right? I have had my education paid for, I've had doors open for me because of who my parents are. But internally, I think I have some insecurity about like living up to my father's legacy, especially in tech. And that's something that I struggle with is like kind of finding my own path and defining myself and own value. I'm curious how you have like dealt with that working in a business where you're working so directly with your father and now taking over as CEO and what that kind of internal monologue looks like.

22:02Yeah, it's a good question. I mean, I'm curious, is you as well? But, you know, I think constantly, of course, there's tons of privilege and opportunities that I wouldn't have been afforded otherwise. But also, he didn't have a choice, right? He was homeless. It was, I need to get money so I can eat tonight, right? And so that was never a concern of mine, which is incredible and allowed me to learn so much more and focus on myself, self-actualization and all that stuff. But ultimately, I made a choice. I made a choice that I wanted to follow him and learn from him. I think getting caught up in trying to be as great as him is not the right outlook.

22:49it's really about just being the best version of me, being the best version of yourself. And if I can try to help people the same way he's so passionate about, I think I've done half as good, right? I think the motives is the main thing. We have to bring God into the picture. When you have the right intention, God helps you and supports you. And I always said, I made a lot of millions, millions of dollars. Jeremy is going to make billions. I love that so much. And I'm curious, I want to ask both of you, how do you think you're alike as leaders and how do you think you're different? I think Jeremy is educated to the best schools in Europe.

23:28He went to England. He went to Horace Mann. He went to Dwight Inglewood. He also went on when he was a bad boy. It was wild. He went to Outbound. He slept outdoors when he was zero degrees. And he slept in a tent and he learned the hard way. When he was good, he was good. When he was bad, he got punished. But all I gave him is love, and he did the rest. So I'm very proud of him. As a leader, he is a legend, you know, an ideal to look up to, the American dream. And I think for myself, I just try to take all those great nuggets, all those great qualities, and try to present them in my own way. He's really inspirational.

24:18I don't know if I can match that. It's such a story. And then, okay, taste-wise, what's something you guys disagree on in terms of fashion taste? We have a lot of disagreement on a lot of things, but he wins. He's a boss. Okay, but I have to hear, like, is there a trend you guys disagree on? Colors you lean more towards? Casual versus formal. No, I don't know about everything, but he likes dressy clothing a lot. And I think, you know, our generation is more casual. More comfortable. Not trying to be ironic with the suit, but, you know, I think people want something that is comfortable to wear all day and then wear out to get drinks after or meet their friends.

24:55And so, and it's funny because he always wanted to make the clothing work for the girl as much as possible. And so I think I'm trying to do the same thing, but it's now not dressy. And, you know, he has a little bit of hesitation about that. I like to make women look feminine and sexy. And he likes sexy means different things to him, more casual, more relaxed, more comfortable. I think sexy means different things to different people now. And so now we're just trying to broaden that and appeal to more people. And now it's not necessarily a skin tight thing. Now it might be a wide leg pan or boxy.

25:32But he's got a great eye and the stuff he comes with selling very well. So I have to follow his lead. What's one of your favorite things he's designed or come up with? The wide leg pants, it was his idea and it's selling very well. Some dresses he came out with that are comfortable and loose. It's selling very well. So those are the items I can think of. What surprises you about kind of like fashion and culture now? Like were you surprised when, you know, streetwear took off and he had the incredible streetwear company? What kind of surprises you about taste in our generation? Well, I am surprised that women don't want to dress up as much.

26:20And I think my generation, they were dressed up. Women always wore dresses. And dresses was a big thing when I was his age. But it changed. He went to suits. Now it's casual. And he knows that market very well, better than me. We are complete opposites. I will always wear a dress to work. It's easy. I just throw it on. It's great. Sophia, if we're not recording casual 24-7, I'd say we're complete opposites. There have been times where I swear we've shown up to something and Sophia's in leggings and I'm in probably a full ball gown. I mean, we are two different ends of the spectrum. So I love seeing this kind of divide between your guys.

27:00I agree with Phoebe Morris. Thank you. I agree with Jeremy. We could do a switch up day. For Halloween, we can all dress as opposites. Well, I think it's funny because also I'm curious if this ever played a role in your influence, but I would say Iranian like Persian culture. My aunts all always get dressed up. They're always in full makeup, beautiful dresses. And my sister and I grew up in the United States. And so we were wearing sweatpants, no makeup. And my aunt would always say, you're embarrassing me. Go home, change. You need to look dressed up like that's how women present. And it was always a huge back and forth.

27:35But I did want to go back to your early roots. I am curious how the Persian culture and your original home really influenced any of your fashion design. You touch a very important point. The Persian culture is one of the oldest cultures. And they love color, they love the carpets. Women in Iran like to dress up. They like makeup, they like jewelry, they like accessories. And I'm lucky to come from that culture. Do you agree? Which part? All of it. Yeah, no, I think it's very much in his roots, and you see it in every part of him, whether it's architecture that he designs or clothing. I should have been an architect or interior design because I love that.

28:26I love beautiful space. Me too. I say that all the time. So it's funny. We're very similar there. But Jeremy has a different taste. He has more current, younger generation taste. I'm a traditional. I like Art Deco. I like mid-century furniture. And I started that. Every store of mine had mid-century furniture. So I have a warehouse full of mid-century furniture. And you guys now, you know, Tahara Realty has done over$250 million in financing transactions. What have you learned, Jeremy, particularly from like the fashion business that you think applies to what you're doing in real estate? And what would you say is different?