Co-Creator Of The Comfy, A ‘Shark Tank’ Hit, Fights To Keep Company Afloat

^{Shark Tank’s Barbara Corcoran helped The Comfy sell millions of its snuggly, wearable blankets. Then things started to unravel, and Corcoran sold out. Now its co-founder is trying to pay off debts and reenergize the brand.}

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_Brothers Michael and Brian Speciale charmed Shark Tank’s judges and audiences when they appeared on the show’s 2017 Christmas episode, singing an original jingle to the tune of “Deck the Halls” and pitching their blanket-hoodie hybrid, known as The Comfy.

The judges all gleefully tried on the snuggly, colorful oversized hoodies. Barbara Corcoran, in particular, was immediately smitten. The Shark, who sold her own real estate agency years earlier, called them “phenomenal salespeople” and shook on a deal with the Speciales on air. Soon after, she invested $50,000 in return for a 30% stake.

The product had not even launched at the time — the brothers, who had no retail experience, stepped into the tank with just a prototype, making their business a risky investment. Still, The Comfy quickly became one of Shark Tank’s most successful and recognizable brands, selling millions via such retailers as Amazon and Target.

But everything wasn’t as cozy as it seemed and any early success began unraveling in the summer of 2021. A slew of poor, possibly risky, financial decisions coupled with supply chain issues and tension among company leaders nearly doomed Cozy Comfort Company, as it’s called.

“Even with all that revenue in the first four to five years, we were very close to being out of business… to the point where we were going to dissolve the company, we were going to sell it,” says Michael Speciale, 47, in a candid interview.

How the brand went from holiday darling and trendy product to near disaster is a cautionary tale for other entrepreneurs who get in over their heads. Not only is the business now on the brink, but a former CEO, who was fired, filed a lawsuit against the brothers and the company alleging breach of employment agreement and promissory fraud. The brothers deny all allegations. Meanwhile both Corcoran and Brian Speciale are gone. Michael bought them both out in June for an undisclosed sum. According to Michael, his brother bailed because he did not want to take on any more risk or liability; Brian wouldn’t comment to Forbes. As for Corcoran, “She’s a celebrity, is really what it came down to. When we truly needed her... she refused,” says Speciale, who claims most of Comfy’s problems could have been avoided with her help. Despite repeated attempts to reach her, Corcoran did not comment.

The idea for The Comfy came to Michael Speciale in February 2017 while he was going through a difficult divorce. Speciale, who had worked as a mortgage broker for ten years, was running his own swimming pool maintenance business back then. He began splitting his time between his house with his two children, then ages 11 and 13, and with his brother, who lived down the road.

One morning at his brother’s house, Speciale saw his then 7-year-old nephew, Saxon, sitting on the couch in one of his brother’s much too big for him hoodies. It was a lightbulb moment for Speciale. “I’m looking at him like, man, wouldn’t everyone want to feel that feeling right there? That warmth and security, that coziness?”

He pitched an idea of an oversized hoodie, not just for kids, but for adults, to his brother. When Brian, who worked in TV production, didn’t shoot it down right away, Michael knew he might have a winner. The Speciales tossed around ideas, did their research, and found a manufacturer in Mesa, Arizona to make the prototype they later used on the show.

“I needed comfort, and The Comfy became something to focus on that wouldn’t just make me feel warm and safe, but others too,” said Speciale last year in a press release in honor of “National Comfy Day.”

Just two months after coming up with the idea, the Speciales flew out to Denver to audition for Shark Tank. Michael sold off his 8-year-old pool business in October that year, and their pitch aired in a holiday-themed episode two months later.

Within months of appearing on Shark Tank, The Comfy went viral. Corcoran helped promote the brand online, where it was picked up by popular influencers and entertainment outlets including LADBible, a UK-based social media outlet. She also connected the Speciales with salespeople and marketers, helping land The Comfy on shelves in retailers including Costco and Target. By the end of 2018, its first full year in business, Speciale says The Comfy had $20 million in revenues.

In late 2019, the brothers hired retail veteran Susan Hudson, who’d worked at Timberland, Kenneth Cole Productions and Levi Strauss, to help accelerate its growth and profitability. That same year, it was touted in USA Today as one of Shark Tank’s top 5 biggest-selling companies.

After a few years of steady growth — The Comfy hit $43 million and $65 million in revenues in 2019 and 2020, respectively, per Speciale — the business began to face serious financial issues in 2021.

Like many products at the time, The Comfy was affected by massive supply chain disruptions that in its case were made much worse by a cash crunch. The U.S. Customs and Border Protection department suspended Cozy Comfort’s ability to import and increased its customs bond by approximately $1.6 million. Unable to pay that higher sum, it couldn’t get its 1.5 million units out of warehouses in China.

Speciale says he approached Corcoran around August 2021 asking for a letter of credit to cover the cost of goods, but she declined. According to Speciale, Corcoran said she had negative experiences issuing letters of credit in the past and wasn’t comfortable putting more money into the company. Those 1.5 million units sat overseas until December 2021, when Speciale says The Comfy finally secured funding to cover the cost of goods via a letter of credit loan from a private company (which he declined to name, but which former CEO Hudson claims came through her). He also says some of the company’s money problems were the result of Hudson’s overspending on advertising.

“Even with all that revenue in the first four to five years, we were very close to being out of business.”

The money came too late to get products onto store shelves in time for last year’s holiday season. Speciale originally expected The Comfy to top $110 million in revenues in 2021. Instead, it ended the year with $75 million, still a record.

The Speciales and Corcoran, who were then all company board members, agreed to fire Hudson in February 2022, according to Michael Speciale. While Hudson didn’t comment directly to Forbes, she filed her suit against the Speciale Brothers and Cozy Comfort in March, claiming that her termination breached her employment agreement: she alleges that she was not given the proper 30 days notice before termination and that she was fired without cause. She also claimed that she used her personal business contacts at the behest of the Speciales to secure the financing–despite her initial reluctance–in exchange for a promised ownership stake in the company. But soon after Cozy got the credit line, Hudson alleged, the brothers reneged on the promise and refused to give her the ownership interest.

“Challenges were also created because the Speciale Brothers and Corcoran continually gorged on the company’s profits,” alleges Hudson’s legal complaint, “like pigs feeding from a trough, leaving the company undercapitalized.” “Neither my client nor I intend to comment further about this case outside of court,” Hudson’s lawyer Douglas Barritt said in an email to Forbes.

The brothers have denied all the allegations. Discovery is set to begin in January, and the case appears likely to go to trial in September 2023.

After Hudson left, he says they hired someone to turnaround the company (though won’t say who it was) but parted ways with him in June when Michael learned that his plan was to sell the company. That’s when he stepped in as CEO and bought out Corcoran and his brother Brian, who did not want to take on any risk or liability. (Michael also declined to disclose how much he paid.) “Offers were coming in, restructuring deals. And I’m like, I invented this product… I’m not giving this up,” he says. Corcoran and Speciale’s brother, who apparently didn’t agree, resigned from the company’s board.

Amid the financial and legal disruption, Speciale is trying desperately to save his business, which had racked up about $15 million in debt as of this summer. He cut nearly two-thirds of his staff: a team of 35 is now just 13. Sales are expected to hit just $40 million this year, down from $75 million a year ago, amid a slew of competitors and knockoffs like the Huggle Hoodie and the Oodie.

Speciale says he has felt pressure to innovate — his business had been selling the same product for several years, and consumers and retailers wanted newness. “We have to concentrate on what's right in front of us in the present right now. But we have to have an eye on the future as well and continue to innovate and offer new products, colors, patterns, whatever, to the customers because retailers are coming back to us now and asking for that,” Speciale says.

Cozy Comfort is fighting back with new Comfy designs including ones with Mickey Mouse, Spider-Man and college logos of nearly 30 large universities, including the University of Alabama and Michigan State, that retail for anywhere from $49.99 to $90, depending on style and site.

And at least this holiday season, The Comfy is back on store shelves and, according to Speciale, sales exceeded expectations on both Black Friday and Cyber Monday. By the end of the first quarter of next year, he’s hoping to have paid off the company’s debts.

Speciale says he knew it was a big risk, taking on a heavily indebted company by himself, but he didn’t want to turn his back on his own business. “It’s an enormous risk, obviously, on a personal level. But it’s my invention, my product, my trademarks, my patents. If I’m going down, I’m going down fighting the whole way.”