Estée Lauder: Building a $30 Billion Beauty Behemoth

Business is a magnificent obsession. I've never been bored a day in my life, partly because as a true business addict, it's never been enough to have steady work. I had to love what I was doing. Love your career or else find another. Measure your success in dollars, not degrees. Respect your product. This is the story of Estée Lauder, a woman who built a company that today is valued at more than $30 billion. Welcome to Ambition, a show about the most ambitious people in history and what we can learn from them. I'm your host, Justin Gordon, an entrepreneur based in Los Angeles. My main source for the episode is Estée Lauder: A Success Story by Estée Lauder, which was published in 1985. Let's get to it. I remember the woman at the Florence Morris Beauty Salon where I had my first cosmetics concession. She was thoughtless and cruel and will always remain that way in my mind. Maybe she was a catalyst for good in the end. Maybe I wouldn't have become Estée Lauder if it hadn't been for her. At the moment, she was cast in my memory to last there forever. I despised her. Simply thinking about the incident brings back a twinge of pain. She was having her hair combed and she was lovely. I was very young and vulnerable and I loved beauty. I felt I wanted to make contact with her in some small way. What a beautiful blouse you're wearing, I complimented her. It is just so elegant. Do you mind if I ask where you bought it? She smiled. What difference could it possibly make? she answered, looking straight into my eyes. You could never afford it. I walked away, heart pounding, face burning. Never. Never. Never will anyone say that to me again, I promised myself. Someday, I will have whatever I want. Jewels, exquisite art, gracious homes. Everything. S.A. Lauder is incredibly ambitious, as you can tell, and this early on stoked the fire. And she, as you will see from this episode, you'll hear from this episode, is relentless. And I love her energy. Her energy in these pages of this book, they come through so viscerally. It's, it's, it's energizing to read it. It's not that long of a book, and I was hype reading this entire thing, even though I'm not into cosmetics or beauty like she is. You can just feel her energy from these pages. Look, you can even see how she is an incredible saleswoman. And every passage, it feels like, is also like a soft sell, which goes on for then years later. Because here I am reading this book 40-plus years after she published it. And one of the things she said in the book is, people are more apt to believe you and like you when you know you look fine. And when the world approves, self-respect is just a little easier. The pursuit of beauty is honorable. Later on, she'd say, the lingering scent of a beautiful woman as she passes by is one of those memories that, in retrospect, live forever. So Estée Lauder vowed that no one would ever tell her that again, that she couldn't afford the beautiful blouse that woman was wearing. This interest in beauty comes at a very early age. A great deal of it stems from her mother. S.A. would say, still, in my parents' case, the 10-year difference loomed large. To my mother, I assumed she was especially aware of those years because her first marriage had failed. She was determined to remain lovely and youthful forever for her second husband. And to be clear, S.A.'s mom is 10 years older than her dad and had a profound influence on her life as well. And there's a quote from her mother where she said, act like you are in control and people will think you are. This reminds me very much so of a quote that Nolan Bushnell said to Steve Jobs. So Nolan Bushnell is the Atari founder. He told a young Steve Jobs, pretend to be completely in control and people will assume that you are. It's almost the same as like the idea of this reality distortion field of having this self-confidence that you're in control. And Estée Lauder definitely has that, as we'll, as we'll see in this, the rest of this episode. Estée would say of her mother, My mother knew that the sun was terrible for skin years before modern scientists and dermatologists told the world. A little later, she said, when she died at 88, she was still beautiful and still certain of her appeal. You're as beautiful as you think you are, she'd tell me. She walked tall when she entered a room and held her head triumphantly. The secret, she'd whisper, is to imagine yourself the most important person in the room, the person everyone is waiting to see. If you imagine it vividly enough, you'll become that person. Estée would go on to say about her father, along with his love for acquiring land, I also inherited his genes for high standards. Things must be perfect to be acceptable. Those high standards remain today in Estée Lauder, but she built that early on. And she was born in a home in the style of the time in New York on a quiet street in the borough of Queens. Even as a young girl, she'd say that her first memory of her mother's scent was her aura of freshness, the perfume of her presence, and that her first sensation of joy was being allowed to reach up and touch her fragrant and satiny skin. Her hair didn't escape her attention either. As soon as she was old enough to hold a brush, she'd give her mom no peace. She's obsessed from a young age with beauty, with faces, with makeup, everything. And she uses that obsession to fuel her to build a business brick by brick. And at one point she'd say that she would set the world record for face touching. And her family couldn't escape her, which I find hilarious, imagining her just going up to everyone constantly asking to touch their faces or brush their hair or anything. And here's a passage from, from the book. Esther, you've already brushed my hair 3 times today. I can still hear her complaining gently. My older sister Renee submitted to getting her face patted with my mother's cream. when she'd rather have been left alone to read or paint. All of this annoyed my father considerably. Stop fiddling with other people's faces, he'd say. But that's what I liked to do— touch other people's faces, no matter who they were, and make them pretty. Before I'm finished, I'll set the world's record for face-touching. And I'm nowhere near finished, I might add. I could spin magic on the faces of my family. As soon as school was over, I'd run home, feed a lump of sugar to my horse, Bessie, Then start on faces and hair. And even at a young age, like 8 years old, she mentions she's into fashion, being feminine, very much a part of her identity. And her father also had an impact on her. She'd say, My father's hardware store was my own first venture into merchandising. I loved to help him arrange his wares. My special job was creating window displays that would attract customers. How I loved to make windows appealing. And this is just Amazing that she gets to learn these business lessons at such a young age because her father's an entrepreneur and has this store. We, we see in every book we've talked about so far on this show how your experiences as a child impact you later in life, and they show up not always in clear ways, but this is one where it definitely showed up in a clear way. Getting experience with her father's store, but also seeing her mother, 10 years older than her father, how beautiful she remained her entire life. And being influenced by that. And it shaped her opinions and views of business. At one time, she says, packaging required special thought. You can make a thing wonderful by its outward appearance, though I think I'd be doing the same thing multiplied a billionfold in not too many years. There may be a big difference between lipstick and dry goods, between fragrance and doorknobs, but just about everything has to be sold aggressively. And that keyword there is aggressively, by the way. I honed my techniques as I played with the wares at my father's store. I whetted my appetite for the merry ring of a cash register. I learned early that being a perfectionist and providing quality was the only way to do business. Then she goes on to say, I want to paint a picture of the young girl. I was a girl caught up, mesmerized by pretty things and pretty people. Thinking about my childhood, thinking about my childhood now, reviewing such early patterns, my drive and persistence were always there. And those are qualities that are essential for building a successful business. Still, I sometimes wonder if I had set my heart on selling tassels, cars, furniture, or anything else but beauty, would I have risen to the top of a profession? Somehow I doubt it. I believed in my product. I loved my product. I loved to touch the creams, smell them, look at them, and carry them with me. A person has to love her harvest if she's to expect others to love it. And beauty was such a bountiful harvest. You can just hear in those words how obsessed she is in her products. And you'll see later on in building this business. And then when she was young, there's this epidemic going on looming over New York. And so she'd say, my mother, terrified, fled with my sister and me to relatives in Milwaukee, Wisconsin. We stayed for months and months, a happy time for me. It was so happy that years later, I always felt and still do that I'd put down roots there, that it was indeed another home. And I just have to, have to say that just because I'm from Wisconsin and grew up in a suburb of Milwaukee. Grew up in Brown Deer. So the connection again to Wisconsin, we saw that in Steve Jobs. Now I see it here with Estée Lauder. Was intentional, but I have to say it. And then there's 2 things that happen to set up the whole trajectory of her business. And one being she falls in love, moves to Manhattan, which she always wanted to go to. And then 2, her Hungarian uncle shows up with a gas stove and a secret, which we'll hear about in a second here. And by the way, these feelings of moving to Manhattan were very similar to Cy Newhouse, who we talked about in episode 1, and his wife Mitzi. They loved it. They moved there because they wanted to be among everything going on in New York. When Cy Newhouse was growing up, he took trips to New York and, and loved it. He played around, had fun with his friend. And this is the theme we get in all the books so far of environment matters. Remember that the right environment matters so much. Just like we talked about with the essay by Paul Graham, Cities and Ambition. how these different cities speak to us. I just think this is an important theme. Put yourself in the right environment, and New York ended up being the right environment for sure for Estée Lauder. She'd say, I was caught up with American glamour when I dreamed in my private universe. I dreamed of being a skin specialist and making women beautiful, since I had heard that many in my mother's family did just that. One thing I promised myself, if I ever did get married, I would live in Manhattan. My excursions to that extraordinary place filled me with solemn joy. Like, think about that. What places give you joy? Spend time there. Life is short. I think we have to do that. I reminded actually of my friend Mina, who loves SF so much, and I get the joy of being there when I'm with her, and I just love that so much too. You can see the joy in everything about them, really. Our environment shapes not only the business we're gonna build, but the life we're gonna build, and I think that's just so incredibly important. Estée goes on to say, I knew someday I would be part of it all, But at the time, I had to be content with brushing Fanny's hair. It was enough to occupy me for a while, but not for long. In every life, there is a moment, an event, or a realization that changes life irrevocably. If the change is to be a happy one, one must be able to recognize the moment and seize it without delay. Rose Kennedy once told me that good luck is something you make and bad luck is something you endure. I actually like that line a lot. A very wise observation indeed. People do make their luck by daring to follow their instincts, taking risks, and embracing every possibility. My shiny moment came in the form of a quiet, bespectacled man who also loved touching faces. Uncle John Schutz, charming, erudite, inquiring, my mother's brother came to visit us from Hungary. He was a skin specialist. What glories those words conjured up. Can you imagine this, by the way? Like thinking about, How important this person ends up being to Estée Lauder. This is like the inception of a $30 billion company. Having your uncle be interested in the same thing you're interested in. I find this incredible that this happened, and who knows where she would be without this happening, like her, her uncle coming into her life. She'd go on to say that, He captured my imagination and interest as no one else ever had. I was smitten with Uncle John. He understood me. What's more, he produced miracles. He produced his glorious cream in our home, working happily over a gas stove, mixing in the first ingredient, which he seemed to conjure up out of nowhere, then another, then another. I watched and learned, hypnotized. Listen to me, Este, said Uncle John. Just try my cream. Try it? I was devoted to it. This is the story of bewitchment. I was irrevocably bewitched by the power to create beauty. Uncle John had worlds to teach me. We constructed a laboratory of sorts in the tiny stable behind the house. And then S.A. would go on to describe just how important it was that her Uncle John was with her at this time. She'd say, do you know what it means for a young girl to suddenly have someone take her dreams quite seriously? Teach her secrets? I could think of nothing else. After school, I'd run home to practice being a scientist. I began to value myself so much more, trust my instincts, trust my uniqueness. With my uncle, I was preoccupied with research into possibilities— mine. Trusting oneself does not always come naturally. If learned when young, the practice sticks. Today, there is no one who can intimidate me because of title or skill or fame. I do what's right for me. Recently, a well-known decorator who shall be nameless here Found this out. While we were walking up the winding staircase in my home in New York City, she said to me with a sweep of her hand that encompassed everything I decorated, I could do wonders with this. I patted her sagging cheeks. My confidence had been born years before. I could do wonders with these, I said. If I was to be a scientist with Uncle John, I needed live subjects on whom to experiment. I didn't have a single friend who wasn't slathered in our creams. And there again is the obsession of Estée Lauder. Everyone around her gets their face touched and makeup done with, with her. I'm sure some people were incredibly annoyed with her, but you have to imagine this passion and this excitement she has and how this fueled her, her empire that she builds. But this obsession, it also pays off. She'd say, Friends of friends of friends appeared. I devised a name for my uncle's cream, Super Rich All-Purpose Cream. My reputation among my peers at Newton High School grew by leaps and bounds. I gave away gallons of cream to friends. And then, then another critical moment for her at a lake resort her father bought basically to keep the peace with her. She meets the man whose name will end up on every jar. So she gets taken away from this tiny bungalow she's staying at in Mohican Lake. She was out there with some friends when tragedy occurs. A young girl drowns. Her family Pulls her out of there, but then she says, "Hell hath no fury like a young woman spirited away from a place she loves." I didn't let my parents rest. Just a day or so later, we took a drive and saw a tiny bungalow with a for sale sign opposite the Rock Hill Lodge Country Club and Mohican Lake. My father gave the owner a check on the spot. It seemed a small price for family peace. This is just like Steve Jobs in that regard, who was relentless. Force his parents to move him in different school districts and decided that he wanted to go to Reed College. And there's this personality trait they share, and I find it very common so far among the people we're studying. I know it's early in this, this journey of this podcast, but this comes out a lot. They are relentless. They are relentless and uncompromising. So at this place, which they, I think they eventually build a new house on, on the spot. She meets Joseph Lauder, and— And she would say, love interfered and postponed my dreams of being a skin specialist and certainly an actress, but one dream looked promising. True love managed to find me a husband who felt as I did about Manhattan. Joseph promised me we would live there as soon as we were married. But of course, early on, there are struggles, and she would say that, we were struggling so hard to be independent, Joe and I, and sometimes this was not easy. Times were lean. About 2 years after our marriage, We had a beautiful son, and I spent my days mothering Leonard. All the time, I was also mothering my zeal for experimenting with my uncle's creams and improving on them, adding to them. I was forever experimenting on myself and on anyone else who came within range. Good was not good enough. I could always make it better. I now know that obsession is the word for my zeal. I was obsessed with clear, glowing skin, shining eyes, beautiful mouth. It was never quiet in the house. There was always a great audible sense of industry, especially in the kitchen where I cooked for my family and during every possible spare moment cooked up little pots of cream for faces. I always felt the most alive when I was dabbling in the practice cream. I felt as though I was conducting a secret absorbing experiment, a real adventure. And I always think about this when I think about people who make excuses about starting a business or building something of their own. You know, they have a full-time job, they have a family, they say they can't do it. And you see these examples of people who just are obsessed and they make the time whenever they have a second here or there and they have a minute here and there, they're working on their business. Like, there just aren't excuses if you want to make something happen. And with Estée Lauder, it was a matter of her almost not being able to help it. She couldn't help making this thing happen. She had to do this. But at the time, she's just experimenting. She's giving these products away. She's not making it into a business, but that changes here. She writes, One day Mrs. Morris said to me, what do you do to keep your skin looking so fresh and lovely? It would turn out to be a question of great moment for me. I didn't have to be asked twice. The next time I'd come, I'd bring some of my products. My heart was pounding. Although Mrs. Morris had asked a very innocent question, my mind began to race with a great idea. There are great ideas and great ideas. In less than a month, earlier than my regular appointment, I was back at the House of Ash Blondes with 4 jars on which only everything rested. Would you mind leaving them with me? I'm so busy now. I'll try them when I have time, Mrs. Lauder, she asked as I offered my 4 products. I knew better. Just let me show you how they work, Mrs. Morris, I said. Give me just 5 minutes and you'll see the right way to use them. Nothing could have induced me to leave my bounty without a demonstration. And that piece is incredibly important for multiple reasons. One, seizing opportunities, even the smallest opportunity is important. And 2, she's not gonna risk just leaving her product with her. She's going to show, not tell about her product. She's gonna show her and demonstrate on her. So then she is hooked with her product. And she would go on to say, I showed Mrs. Morris a mirror. She was a raving beauty. Silence. She was thinking. Do you think you'd be interested in running the beauty concession at my new salon at 39 East 60th Street? She asked. I did not hesitate a second. Up until that point, I had been giving away my products to her. This was my very first chance at real business. I would have a small counter in her store. I would pay her rent. Whatever I sold would be mine to keep. No partners. I never did have partners. I would risk the rent, but if it worked, I would start the business I always dreamed about. Risk-taking is a cornerstone of empires. No one ever became a success without taking chances. Yes, yes, yes, Mrs. Morris, I was interested. First things first, if I was gonna be in business, I needed proper jars. I rushed out to buy dozens of simple white opal glass jars with black covers, which looked quite professional to me. My uncle had marketed creams under his wife's name, Florana, but now it's my turn in my business. I wanted to see my name in lights, but I was willing to settle for my name on a jar. And here's a little bit about the start of how she operates in terms of this salon. She'd say, a woman sitting under the dryer would be rather bored with the time it took to dry her hair. Her restlessness would work for me. I'd ask her to let me try a special cream on her face free of charge. I promised it would make her skin feel pampered and soft, would make her skin feel silky. Of course, she would agree. She had nothing else to do under that dryer. And Estée Lauder is just relentless about finding an opportunity to make women beautiful and showcase her products. And so after Estée makes up these women's faces, they would leave with some of her creams and makeup. And here's the big secret: she would give the woman a sample of whatever she did not buy as a gift. Estée writes, the point was this: a woman would never leave empty-handed. I did not have an advertising department. I did not have a copywriter, but I had a woman's intuition. I just knew, even though I had not yet named the technique, that a gift with a purchase was very appealing. In those days, I would even give a gift without a purchase. The idea was to convince a woman to try a product. Having tried it at her leisure in her home and seeing how fresh and lovely it made her look, she would be faithful forever. Of that, I had not one single doubt. My clientele grew. One day, a representative of the Albert and Carter beauty salon asked me to demonstrate my products there as well. I did some quick calculations in my head. If I could make $10 a day selling $2 worth of products to 5 women at one beauty shop, I could make $50 a day if I had 5 shops—an astronomical sum in those days. There was one problem: I could not be everywhere at once, and sales depended on my special approach. I had to expand and delegate authority, but unless it was done my way, it would not work. I clearly had to train saleswomen. And from this, we just see that Estée Lauder is very ambitious. And this is a difference. And I always find this interesting because ambition is really a choice. It just depends on what you feel like doing. There's a quote from Naval Ravikant. He says something along the lines of, A corner grocery store or shop owner works just as hard, if not harder, than Elon Musk. They're just choosing to work on different things. Their level of ambition is different. One of them wants to create a grocery store or shop. The other one wants to build rockets and electric cars. Both ambitious, but with different applications and different levels to it. And we see with Estée Lauder that she was never going to settle. for one beauty salon or one shop that she would be at. She was ambitious from, from the jump. And that early environment of these salons was really the perfect starting place for her. 'Cause she had customers that were already in the right mood. Trying to sell was a much better environment here. It just reminds me of, I interviewed Jacob Jaber, the co-founder of Philz Coffee. So him and his dad founded Philz Coffee, and he would say that they didn't expand stores. Until customer demand was so high that customers were essentially pulling them into different locations to open new stores of Philz Coffee. And I'm always reminded of that. Your customers are kind of pulling this out of you. Estée Lauder though, she clearly understood that her products would be useful other places and she was not gonna settle for one location. And so she knows she has to delegate. She knows she has to train saleswomen, and here's what she'd say about that. I made it my business to check with each of them each day to make certain she was selling, as I would, and a devoted clientele was developing. Not to my surprise, of course, my products were the finest. The beauty salon atmosphere was perfect. Women were already in the self-improvement mood. Why should they go home with beautiful hair and a tired, lifeless face? It made sense to sell a total beauty package. Word spread. Business moved gradually but steadily. I worked every day from nine when I arrived to polish my jars to six in the evening. I never lunched. I felt I had to be there for every woman or I would surely lose her. And so after this, with Estée Lauder talking to so many customers, customers begin calling department stores looking for her products, which obviously she's elated to hear that. And I don't know if you caught what she said before, but she said my products were the finest. I always love this idea of selling the best, and I think it's easier to sell something when you genuinely believe it is the best product. Like, almost undeniably is easier to sell that. And she knew she had the best products. She put the work into it. She'd go on to say, Quite by accident, I discovered an eager audience waiting for me in the fine hotels of Long Island. During a short vacation, I had made up a few women poolside. The response was electric. In the next few years, I'd spend some weeks alone at the Lido or Grand Hotel on what might be dubbed working vacations. Many women would gather and ask me to teach them about skincare and cosmetics. It was fun for them and profitable for me. I dressed as they did, as elegantly as I knew how. In my day, there were no courses on dressing for success, but I knew I had to look my best to sell my best. I didn't need bread to eat, but I worked as though I did. From pure love of the adventure. For me, teaching about beauty was and is an emotional experience. I brought them charisma and knowledge about their possibilities. They gave me a sense of success. And with this, her business starts to grow. It starts to move. But her marriage is about to go in the other direction, and she is brutally honest about why. She describes it in a few pages of the book. Eventually, her and Joe get divorced in 1939, but 4 years later they get remarried. They come back as true partners, with Joe in the business now with her on the numbers and production, and then Estée Lauder on the selling side of it. She does all the sales side of it. She has a quote in there that says, you cannot fly on one wing, to describe how important it was that Joe was back in her life and they were back together. She'd say about this time, we decided that Joe would give up his business and come into mine, where we would be equal partners in every sense of the word. I think that's very important. We would work together. He would deal with the economics and practical aspects of the business. I would do the selling. It couldn't have happened at all without Joe and his head for figures. They have another child then, Ronald, who's born in February 1944, and things start growing, but Nothing takes off exponentially. She would say that, but nothing happened fast. Many stories have surrounded the growth of big business, certainly my big business, and most of them are myths. The most insidious myth of all is the one that promises magical formulas and instant success. It does not happen that way. I cried more than I ate. There was constant work, constant attention to detail, lost hours of sleep, worries, heartaches. Friends and family didn't let a day go by without discouraging us. What do you need this for? Stay at home with your darling family. They meant well. Despite all the naysayers, there was never a single moment when I considered giving up. That was simply not a viable alternative. I had a secret weapon. There were, in those days, only 2 keys to communicate a message quickly. They were telephone and telegraph. I had a third. It was potent. Tell a woman was the word-of-mouth campaign that launched Estée Lauder Cosmetics. So we see here that Estée Lauder uses what she has at her disposal. She knows she's relentless. She knows she can make up women's faces all over the place, and then she can teach saleswomen to do the same and apply her techniques, which will then get women talking and talking and talking about her products. Which really makes me think, how can you fuel word-of-mouth Advertising for your business. What is your version of tell a woman? And also, how can you put in the reps so that you fully understand how to sell your products and that you can apply that to then other people selling for you? So Esther looks to expand. She'd say, I decided to try another saleswoman in a Brooklyn beauty salon, but I soon discovered that Brooklyn was just too far away for me to control the situation. I had to supervise. I had to be involved. Every day I touch 50 faces. And by the way, this reminds me a lot of Si Newhouse we talked about in episode 1, because he had Advanced Publications ends up being a multi-billion dollar company. It's crazy. He has newspapers all across the East Coast, but he actually eventually expands to the West Coast as well in Oregon. But he kept his newspapers that he bought early on, at least very close by to where he lived. So he could, I think he went to like 2 or 3, maybe even 4 every single day. To visit them, or every week, I mean, to visit them. So he'd go on a train, visit another one, come back. Like, here's the same loop he did for like 30 or 40 years, all in this kind of same cluster location. This is early on how she starts. Like, she starts very small, but she builds on that tremendously. And she would go on to say, though I have read repeatedly that Estée Lauder built a fortune from nothing, the assertion is wrong, wrong, wrong. Do not let them mislead you. One simply cannot start from zero. If you want to start your own business, save some money or know someone who can lend you some. You may not need a huge amount, but those first bills must be covered. When I began, the business practice was based on CBD— cash before delivery, not COD. The same holds true in many cases today. The American dream is powerfully enticing, but it is a dream. One does not move from rags to riches by dreaming or by starting from zero. Henry Ford did begin building cars in a wooden shed with a door too small to allow the cars through, but I guarantee he had some money to buy the shed or even the parts for the car. One could say that Estée Lauder Cosmetics started in a stable, but there is a lovely house in front of that tiny stable and a father with some means who had confidence in his daughter. Hard work, ingenuity, and inspiration are unquestionably important, But so is a little help or a little savings. Joe's savings, I might add. That point is so important. You cannot start from nothing. You need a little bit of something. You need something, but it's amazing what you can do with even a little bit of capital or a loan or anything you can do to get your business off the ground. And that combined with just unbelievable levels of self-belief and persistence, as we're going to see with Estée Lauder, her persistence in sales and in expansion. is displayed in everything, even going international, as we're gonna talk about a little bit later. And so as she expands this company, she levels up. She would say, why new jars? Well, to be honest, the white opal glass jars with the black caps looked a bit medicinal. I was selling pure glamour and it had to be dressed for the part. And she has to get these new jars because there's a story in the book she mentions where the labels get like smudged off. And people use her cream as like mayonnaise. So she knew she had to get some. So she would say, the jars and the untrustworthy labels had to go. The new jars would be a decision of detail that could affect the entire business. I knew I had to make the right decision. The name would have to be embedded right on the jar. Needless to say, the jar had to be beautiful. And this was the hard part. It couldn't clash with my customers' bathroom decor. Every time I went into a friend's home or even an elegant restaurant, I'd excuse myself from the company, visit the bathroom, and match my jar colors against a vast array of wallpapers. I knew that women would not buy cosmetics in garish containers that offended the bathroom decor. I wanted them to be proud to display my products. The jars had to send a message of luxury and harmony. They had to be unique. A great package does not copy. Don't study it. Invent. She's obsessed. She's going into her friends' bathrooms or restaurant bathrooms to match her jars with the wallpaper. You understand the level of detail she went through. And this is one of so many examples in this book. It's why you get so— I get so energized with like thinking about how her attention to detail and relentlessness is manifested in this book. It's insane. And she'd go on to say, In the meantime, Florence Morris and the other salons were filled with my Telewoman customers. Madam, won't you please let me show you how this finest of creams, made from only pure ingredients, can make your complexion glow with youth and radiance? It will only take 2 minutes. Who could resist? As it turned out, no one. Each woman received small gifts and precious directions on how to use the cosmetics. Today, I walk into large department stores and see every cosmetic company in the world giving free demonstrations because they have learned from me that showing counts more than telling. If I could just apply my products to a woman's face, she would see the difference and she would have to have them. I began to realize I had a priceless gift, the ability to make friends and convince others of my sincerity. I know I could not sell a product that was not effective. But let's remember here, Estée Lauder is very ambitious. And so the salons are a starting point. They're almost like the training ground. She has a bike with training wheels on, but her customers keep asking one question that actually points to something much, much bigger. They ask her if she has a counter at Saks Fifth Avenue, and we're going to go through how Estée expands. She'd say. I was beginning to feel restless with the success I was enjoying at the salons. It soon became apparent that I needed to have a larger marketplace, the great department stores to be exact, partly because of the phenomenon of charge accounts. At the beauty salon, a woman would have to pay for merchandise with cash. This precluded impulse buying, that is, making a spontaneous purchase when she had no intention of spending money and had not brought extra money with her. My customers asked me repeatedly, "Do you have a counter at Saks Fifth Avenue where I could charge?" Though the answer was no, I knew I would soon have to transform that into a solid yes. Again, this goes back to like Phil's Coffee. Their customers asking for them in different locations. Estée Lauder is doing the same thing decades before expanding because of her customers. She went on to say, "Saks then and now represents one of the most elegant, finest shopping places." I resolved to break the rules that sheltered this traditional and exclusive store from experimental merchandisers who would sell their souls to sell from Saks. And here we're going to see her persistence pays off. It came to pass one day that Mr. Robert Fisk, the cosmetics buyer at Saks and one of the nicest men, acceded, acceded to my millionth request. He gave me a small order for approximately $800 worth of merchandise. Hallelujah! We were in business in a big way. We closed down our counters at Florence Morris and at Albert and Carter to concentrate on Saks. And that point is important. When she gets the Saks Fifth Avenue account, even if it's a smallish order, she focuses only on that, knowing it's a much bigger opportunity. And she ends up going all in on it. She'd say, We decided to send my own customers and all those people with charge accounts at Saks a small, elegant white printed card With gold lettering that read, Saks Fifth Avenue is proud to present the Estée Lauder line of cosmetics, now available at our cosmetics department. Joe and I knew we had to start running a very different, much more serious operation. Space became the operative word. We set about finding our first factory to fill our new, terribly momentous Saks Fifth Avenue order. They were the first, the very first, to take us on, and I will never forget it. Ever since, I've had a special place in my heart for this store. Breaking that first mammoth barrier was perhaps the single most exciting moment I've ever known. Fortunately, our confidence equaled our excitement because we had had to have enough faith in our work to invest all our savings. And this is just like Dietrich Mateschitz for Red Bull. He invested like hundreds of thousands of dollars. We talked about this a couple episodes ago. Most of his life savings went into getting Red Bull off the ground. And that's not to say you're always gonna go all in and bet all of your savings and, you know, sacrifice everything. But we do see in these stories so far that it happens multiple times and it comes from a belief in their abilities, but also very clearly seeing an opportunity in a market that they have to execute on. They have to take advantage of, and they're very compelled to do so. Estée would go on to say, we had to pay 6 months rent in advance. Those are potent words. In advance. But we swallowed hard and signed. We did everything ourselves. We stayed up all night for nights on end, snatching sleep in fits and starts. The order for sacks had to be produced on time. D-Day, delivery day, loomed. We hired a man to help us and deliver. We did it on time at last. We were in the big leagues of business. For years, I had been giving away my merchandise. When someone once asked Joseph what business we were in during the beauty salon era, he replied, the giveaway business. It does very well, don't you worry. I recall telling him, whatever we give away, God will give back to us. And that is the way it happened. All the people to whom I had given samples, all the people who had been telling other people, all those people appeared on opening day at Saks Fifth Avenue. In two days we were sold out. The fun was about to start, and with that came the endless work, the endless travel, the endless streams, rivers, tides, torrents, oceans of words I would utter in praise of the products I knew were the creams of the crop. I was a woman with a mission. I had to show as many women as I could reach not only how to be beautiful, but how to stay beautiful always. I hoped in my secret heart. to find fame and fortune. It was 1946. And by the way, at this point, Estée Lauder is 38 years old. And that passage reminds me of this idea that the reward for good work is more work. That's always what happens. So you make some progress in your business and guess what you get? More work for making that progress. And there's more levels to it. There's always more levels to it. Which is why she said the fun was about to start and the endless work came. And that is what's going to happen. Because while Saks Fifth Avenue was this beachhead of sorts, she takes a show on the road and expands way beyond where she starts. And I've told you that Estée Lauder is relentless and she is on a mission to make women beautiful. And there's a story in the book when she's going to all these different locations. One of them was in, was in Texas. She's about to assist a Mexican woman in a store in Texas. Another saleswoman taps her on the shoulder. She says, not her, Mrs. Lauder. Don't waste your time. She's not going to buy anything. I know her type. I live around here. But Estée Lauder says, I remember whirling around to tap the salesperson on her own shoulder. Since when do you know how much money she has in her pocketbook? I asked quietly. And then Estée Lauder does the woman's makeup. She stares and smiles. The other woman doesn't speak English. Ester doesn't speak Spanish. And Ester says, You know the ending to this story before I write it. She opened her sagging black purse. It was literally overflowing with dollars. Not a sign of a peso anywhere. She bought 2 of everything I'd used on her face, and the next day her relatives did the same. I never forgot her. She symbolized so much for me. Never be patronizing. Never underestimate any woman's desire for beauty. That proud woman embodies my whole philosophy. I would be on the road for the rest of my life in a way, always touching faces, always making the sale that others said was impossible. And to make those sales, she keeps her foot on the gas. She would say, I felt so exhilarated from the Saks success, almost as if I was riding my childhood horse, Bessie, in a fast gallop. A slow trot was more like it, and it took every effort to keep even the modest pace going. It would be so easy to lose ground if I let up for just a moment. And that last part is incredibly important. It would be so easy to lose ground if I let up for just a moment. That is the job of a founder or CEO. You are supposed to push the company forward. You can't get complacent. The default status for any company is not growth. You have to push it. You have to make it happen. You hear that in these interviews and I listen to a ton of podcasts. They're always talking about the greatest, the greatest founders. They are finding ways to inspire and motivate their team to push and push and push. If you wanna build an empire, if you're incredibly ambitious, that's what it takes. And Estée Lauder knew very well that she could not let her foot off the gas. She continues to press. She goes on to say, the next prestige store I decided to take by storm was Neiman Marcus in Dallas. Mr. Ben Eisner, the store's merchandising manager, was less than optimistic. There's no room for a new counter. It's a bad time of the year. Give me a call when you can. We'll talk again. I called and I went to see him. It was always a bad time. There was never enough room. One day, I suppose, in deference to my profound eagerness, my refusal to be put off, and my insistence that was getting dangerously close to nagging, Mr. Eisner said that he could probably give me some room to open up on the day after New Year's. No one will come out. It's just too hot. Besides, every woman will have spent all of her money already on Christmas. Don't get your hopes up. That's just where they were— up. Is there a local radio program I could go on? Just give me a 15-minute spot on the radio the day before we open, I begged Mr. Eisner, and he reluctantly agreed to do what he could. So Estée gets on this radio program at 8:15 in the morning on New Year's Day. She gives her spiel, and the last couple of sentences are, I have a small gift for every woman who comes in. Do let me personally show you how to accomplish the newest beauty tricks from Paris and London. Start the new year with a new face. The women responded with verve. My counter overflowed with customers. My heart overflowed with joy. Neiman Marcus ran the ad every year for all the years that followed. Start the new year with a new face. Estée Lauder Cosmetics. And she personifies this idea of finding a wedge and getting a foothold in a company by starting anywhere you possibly can. She'll take a small counter, she'll take a terrible radio spot. She's not worried about conditions that are not ideal. She just has a long-term view of if she gets in in any way possible, She will find a way to land and expand. As soon as she gets in with a, with a group, with a department store, she knows she'll expand. She has full faith in her products. And that's why she pushes so hard so that any opportunity, however small that she gets, she will make the most of it. And she'll find a way to build off of that. And she fully understands what appeals to her customers. In the radio bit I just read. You're hearing a couple important things. One is the small gift she has for every woman that comes in. 2, she's mentioning the newest beauty tricks, so from Paris and London. And 3, she has a line that sticks with you: start the new year with a new face. She is just so incredibly smart, and I just, I love hearing from her. And to expand, she obviously has to open new stores, and here's how she does it. Her 4 cornerstones. One, I would open each store myself. I might have to travel by bus, train, or donkey. But I'd be there for a week to train the salespeople and to set out the merchandise attractively to create the aura. 2, I needed a special kind of salesperson. The saleswoman was my most important asset. 3, ambiance counted deeply. Counters had to be attractive. And 4, the lure, the reason to appear at my counter was the gift to the customer, the free something that would sell everything else. It sounds so simple, doesn't it? I'd have to agree. It was simple. Most good ideas sparkle in simplicity. And that line I think is so great. Most good ideas sparkle in simplicity. And she'd gone on to say that the sample was the most honest way to do business. You give people a product to try. If they like its quality, they buy it. They haven't been lured by an advertisement, but convinced by the product itself. Not that we never tried to go the advertising route in the beginning. Why wouldn't we? We tried everything. We had asked a friend to recommend an advertising agency. BBDO wasn't interested. They wouldn't take us on. No one would. We had far too little money to spend, nothing in their minds, but decided to go back to the samples. We took the money that we had planned to use on advertising and invested it instead in enough material to give away large quantities of our products. It was so simple that our competitors sneered when they heard what we were doing. And she would go on to say, I believe we were the very first cosmetic company to offer a free gift by mail. As the business progressed, in the other stores, we decided to send postcards directly to customers that read, Madam, because you're one of our preferred customers, please stop by the Estée Lauder counter and present this card to get a free gift. It was a direct way to get people to try us. Today, mail lists are common, but in those days, no one thought of personally contacting the customer. Who is faceless and addressless. As Louis Pasteur once said, chance favors the prepared mind. Incidentally, the merchandise we gave away is our prime merchandise, the best, the top of our line. Later, many other companies jumped on our bandwagon to offer gifts, but what they were giving away were their mistakes, the colors that didn't sell last season, the ineffective creams that died on the counter, last year's failures. They tried to unload their lemons on customers. Many still do. Bad business, I say. How can you expect a customer to return for more if you've given away your worst, even for free? Before they copied me, they scoffed. And Estée Lauder approaches business in a serious way. It may seem like it's not, but she does. And she'd say that business is not something to be lightly tried on, flippantly modeled. It's not a distraction, not an affair, not a momentary fling. Business marries you. You sleep with it, eat with it, think about it much of your time. It is, in a very real sense, an act of love. If it isn't an act of love, it's merely work, not business. We see her obsession in so many of these pages and how she speaks about business and how she operates. I can't underscore this point enough. And once again, we see how she ratchets up the growth of her business. She already has a couple of flagships with Neiman Marcus and Saks Fifth Avenue, but for her, going store by store is too slow. She's obviously incredibly ambitious, and so she finds a way to expand more quickly. And she says, What makes us— what makes a successful businesswoman? It's persistence. It's that certain little spirit that compels you to stick it out just when you're at your most tired. It's that quality that forces you to persevere, find the route around the stone wall. It's the immovable stubbornness that will not allow you to cave in when everyone says give up. And so Estée Lauder's accountant and lawyer tried to talk her and her husband out of the cosmetics industry. They said, don't do it. Estée is like, we did it. And today Leonard, her son, is fond of saying, and I agree, that accountants and lawyers make great accountants and lawyers. We need them, but we make the business decisions. No one else. We make them. And she quotes Mark Twain in saying, keep away from people who try to belittle your ambitions. Small people always do that. But the really great make you feel that you too can become great. That is an incredible quote. So Estée goes on to say that her first year sales were about $50,000, but their expenses ate up pretty much all of that. But Estée does not care, and she's so driven. She says, no matter how far forward there's a stone wall in my path after my successes at Saks and Neiman Marcus, I was determined to leap over it, or at the very least, tiptoe around it. Making individual contacts to gain entry into department stores was a solid way to do business, but it took too long. She goes on to say, I started late. I didn't have the time for waiting, nor I guess the disposition. By the way, it is never too late to start a business. It takes a certain tunnel vision, the ability to look directly ahead until the daylight is in sight. Older women are not quite as easily distracted. Whether they've decided to improve their faces or their fortunes, older women are usually more successful. Believe it or not, they have an advantage of years. My immediate problem was to find a way to make contact with many stores simultaneously. Miracle of miracles, I learned about buying offices. Have you ever noticed that when you're concentrating with passion on a project, you start hearing or reading about things? germane to that project? Perhaps it's because your antennae are up, but I always considered it fate. Today I note how the world around me responds to my particular current interests. A buying office was what I needed, a central bureau that purchases for many stores throughout the country. And so Estée Lauder goes to the Associated Merchandising Corporation at 9 AM one day, this buying office, because she wants to expand. She's trying to get a meeting. She's waiting and waiting. Male salesmen from other companies were asked to come in. She waited. She'd ask, what's in your cream? To a salesman who was also waiting. What do you mean, in it? How should I know what's in it? They tell me what it is and how many ads they were going to run. They tell me it works. That's all I have to know. I didn't answer. Inside, my mind was whirling. My salespeople will know what's in a product they're selling if I ever get that far. How could he sell something so blindly? I knew what was in my cream, all right. I knew what was in every last drop of it. I could immediately tell a woman what was in it and how to use it. He was a fraud. And so Estela is waiting. Remember, she gets there at 9 a.m. It's 2 o'clock, 3 o'clock, 4 o'clock. She'd say, I waited that whole day feeling invisible. I was close to tears. At 5:15, Miss Weston herself came out, looked at me in disbelief, and asked, are you still here? Well, do come in and let's have a look at what you have. Such patience must be rewarded. And think about that. Would you do that? Would you have done the same? Would you have waited 8 Hours to get a meeting? Are you willing to do anything to succeed? I mean, this is just next level, and she is so persistent, and stories like this get me hype. So she sees Miss Weston. She says, I was lucky to find a woman buyer so that a demonstration was possible. If it were a man, I'd demonstrate the creams anyways, but on the back of his hand. Miss Weston was impressed. That was the good news. The bad news was there was still no room at any store for me. Try us again, Ms. Weston said. Ms. Weston, I'll try you again, I promised with a smile. The smile disintegrated the moment I reached the sanctuary of home. I remember weeping that night with such distress, despair, and frustration. There was to be no rocketing into glory. Jo comforted me. Don't cry, honey. You got in to see her, didn't you? That was a miracle. She'll come up with a store eventually. Remember, we're in this to stay now. He was right. I called to thank her for seeing me. I was always careful to be polite, cheerful, and generous with understanding. Eventually, Miss Weston was able to get me a store for my line. Then Miss Mullins at another buying office found me another. I wasn't exactly riding a meteor, but the stone I was pushing was beginning to roll. And I have to highlight just how important it is to have a supportive partner if you're building something like this. There's jokes on Twitter about like no girlfriend or no boyfriend till Series B or something like that. And people are like waiting and trying to lock in. But when you have the right supportive partner, it is not a 1+ 1= 2. It is a 1+ 1= 3, 4, 5, 6, whatever. It is a net positive having that person. And think of it in this, this story where we're at. She's had some success already. But she just had to wait 8 hours, an entire day, watching other men go in and get seen, and her have to wait till the end of the day to see this person. And she still does not have a counter for her available. But she goes home and gets comforted by her partner, and she knows— which is a very important aspect of it— she knows that in the long term it'll be okay. Because as he says, we're in this to stay now. If you have the long-term view, That you're in this for the long run, these short-term losses are easier to ride out. And I find these stories incredibly helpful and inspiring for my own journey of building my own company, that I'm playing a long game too. So you just keep trucking, you just keep moving on, moving forward day by day. And Estée Lauder would say that she'd go on to research the market of every specialty store in the country. Which is just like Sam Walton did when he's flying his airplane to learn from other, other stores so he can build Walmart and takes the best ideas from all of them and combines them into what becomes one of the greatest fortunes we've ever seen in the world. So as S.A. says, the stone is rolling, and now you get to watch her push it across the entire country, one train ride at a time, one counter, one face at a time. This thing really gets going. She'd say, in the early days, I spent an endless amount of time riding the rails. The sound of train wheels became background music to my dreams. As I traveled around the country to be present at each Estée Lauder counter opening, I met the women who would one day be my customers. At least I hoped they would be. To that end, I never stopped talking to people. Not ever. In those early days on the road, I developed a routine that I repeated in every store where an Estée Lauder counter opened. I would be in town to make a personal appearance, not just for the day, but for the week of the opening. Although my major focus was on that counter, I had work to do throughout the store. I was convinced that I could make other departments in the store work for me as they went about their own business. I visited the sales personnel in dress departments, the hat department, the shoe department, as well as other cosmetics departments. To each saleswoman, I brought a gift. If I can make friends with a saleswoman selling hats, she might, just might, suggest to her customer that a free makeup at the Estée Lauder counter would enhance that new hat immeasurably. The dress salesperson might mention to her customer that Estée Lauder had the perfect shade of lipstick to wear with that new dress. In the early days of my counter openings, I learned the merchandising method of inducing the whole store to speak for my products. Think about that for your business. Like, how can you get other people to sell for you? What's a strategic partnership you can go into that helps what you are doing? I think I underutilized that in my own business. It's hard cuz you're so focused on what you're doing, but I do think there's incredible value in strategic partnerships where you don't have to have these incremental growth. You can have a much faster growth when you combine that with other people helping you and you helping them. Estée would go on to say, the point was to keep thinking, to keep placing the products in the public eye, keep devising new ways of capturing the consumer's attention. During the week, I made it my business never to leave town without seeing every beauty editor of every magazine and newspaper. I brought them samples, made up their faces, gave them beauty advice. I promoted beauty, made friends everywhere. I made friends. There's no such thing as bad times, I kept telling myself. There's no such thing as bad business. Business is there if you go after it. And S.A. Lauder does not do this alone. She has someone help her set up the counters, make up the women, and train the salespeople. They traveled together from Dallas to Seattle, from Chicago to San Francisco. They traveled everywhere. S.A. would say, if they had never heard of me when I arrived in town, they knew my name when I left. No community was too small for my attention. My absolutely full efforts. No one here will buy a cream for that price, I was advised. The advice didn't impress me. Never underestimate people who live in small towns or those with limited budgets. People, no matter where they live or what their finances are, will spend if they are convinced of worth. This is the best cream in the world. It's not royal jelly with a bunch of wax thrown in. It's a compilation of 26 pure ingredients. And she gets creative in these different markets she's going to. So at one point she says, there is hardly any merchandise at all left to sell, only a great deal of hand cream and lots of deep red and pale coral lipsticks. A bold step was called for. So what'd she do? She tells the customers how to blend 2 colors of lipstick and mentions that you can try the hand cream on your face. And then she'd say this, do you want to succeed? Make the most of what you have. I love the creativity, the ingenuity, finding ways to sell products in different ways. She's a relentless saleswoman as well, and she can sell anything. Happens to be her own products, which then helps her tremendously. And she goes on to tell more about how she operated. One thing she would say is, tell the truth always. Never sell what a customer doesn't want or need. She goes on to say, I was unstoppable. So great was my faith in what I sold. There were moments of great heaviness in my heart when I missed my family. All those long days on the road. Career women in every age, I don't care how powerful and effective they are, will always have the problem of juggling priorities. It's not easy, but take heart. It's possible to handle many things at once. My family has always taken precedence over all other things, but I've never felt the need to choose between family and business. I could, I would have both. Perhaps I missed some small part of my sons growing up. Perhaps I was not there at one or two crucial moments, but I was building something for all of us. I called home every night. I kept in constant touch when I was on the road. I even called my own parents almost every night to allay their worries. On the road, I never allow myself to feel complacent. There's always a little more cream to sell after you've sold the last lipstick. I set monetary goals for each day and urged the women behind my counters to set such standards for themselves. And there's this one time she tells a story that she was aiming for $1,000 in sales in this one day. She gets to the counter at the end of it. It's $998. And here's the insanity of Estée Lauder. She sees a customer making for the door. This lady's walking out. And Estée Lauder, who had just stepped out of her shoes, puts her shoes back on. Basically sprints over there, nearly tripping as she goes to catch up to her. And she convinces this woman as she's like walking out the door to buy a jar of cream, which was only $2.95. So the woman like puts her off at first, but then she convinces her. And the woman rummaged in her purse, found the money, took the jar, and then she rushed away. And then Estée Lauder has this big grin on her face because she knew she sold over $1,000 that day. That gives you an idea of this woman who is relentless and does not get complacent. And when you compound this day after day after day for decades, you get a company that one day is worth the $30 billion. Obviously that was long after she passed away, but you see this, how that is the foundation for a much bigger company. And let's remember, when she starts this company, she's 38 years old. She goes on to say, it wasn't youth that made me so energetic, it was enthusiasm. That's why I know a woman of any age has it within her to begin a business or a life's work of any sort. And she's working with her husband Joe, remember, this time. So she says, our roles by this time were quite clear. Joe ran the factory and dealt with numbers and production. I ran the sales force. Leonard, still a teenager, ran errands during the weekend. Mailing packages to stores, delivering samples to buyers, getting the feel of the business. Ronald, still a young child, drank in the activity of his very busy family. There were no such things as Saturdays and Sundays in my life, neither on the road when I used every second to make friends and to spread the word about our products, nor at home. I'd often work at my desk until I saw the light creeping into the window and realized I'd have just a couple of hours of sleep Until it was time to begin another day. And that part about her, her sons being kind of in the business and around the business, that actually ends up being very important because they end up playing critical roles, as we'll talk about here, in the company. And Leonard ends up being CEO over time and leads it to a much, much larger company through a few different things we'll discuss here. But that ensures, I mean, it just shows the importance of what can happen when you bring your kids into the business. Yeah. Not like forcing them to be in the business, but if they want to be involved, you give them opportunities and see what they can do. And then sometimes these— your kids will run with it. And as Ese is sharing more about how she operates, she says, in business as in human relations, it's that rare touch, that person-to-person contact that leaves the deepest impression. Imagine a business world where you are the seller and the buyers are your allies. Then make it happen. And a little bit later, she'd say, It seemed obvious from the start that I should use my womanness as an asset rather than a liability. And so I established my own version of today's business lunch. Instead of 2 martinis, I offered a fine wine. Instead of restaurant silver, I served with my own precious silver and my finest dishes. Instinct told me to entertain buyers as I would my dearest friends. My secret weapon happened to be next door. It was called the Stork Club. Certainly, it would have been possible to escort the buyers to the Stork Club itself, where Sherman Billingsley, the man who prided himself on exclusivity, would have played host. But it was I who wished to be hostess. I wanted to project the image of home. Still, it was the Stork Club that catered the beautiful salads, the elegant desserts, the impressive wines. And she goes on to tell a little bit about her giveaways. She'd say, regarding giveaways, which cosmetic was the best of all? Item that would entice a customer to come receive and then buy more lipstick. Always lipstick. Later, sell fragrance as the next best giveaway. This was an important concept. Generosity is met with generosity. It's funny how we see this all the time in media with newsletters and, and there'll be free downloads or lead magnets, as they say, to entice customers into your funnel, your sales funnel. They're doing this with free gifts. Decades and decades ago, which ended up helping them tremendously, as you, as you can see already. And she'd say, Make the most of what you have. I operated full-time on that precept. If you can't have everything you think you deserve at that moment, you would do well to surround yourself with symbols of your ideals. In that small office, I surrounded myself with touches of the good life, the lovely and intricately tapestried life of my imagination. An imagination that has always been, I'm proud to say, Large enough to admit any possibility. And that is a core, a fundamental principle of how she operated and how any founder operates and achieves remarkable success. They have to believe it's possible in the first place, and then from there, work like hell to make it happen. And as you heard about in the early days, these different creams she has, this is what builds the company. But what comes next? Helps a company expand. Going from this first early product into other product categories is incredibly helpful. As they would say, it took until 1953 to find out what being a nose really meant. In Gertrude Stein's world, a rose is a rose, but in the world of perfume, a nose is a rare person, one who possesses a special olfactory sense and who can identify exactly what components make up a fragrance. A nose can differentiate between a great and irresistible scent and a mediocre one. The great perfumers of the world have all been noses. And so Estée Lauder is also a nose. And here we get the birth of a new idea that will help her expand her empire. I knew what the trouble was. Perfume was the perfect gift that was killing it. Only a rare woman would walk into a department store and buy perfume for herself. One evening at a dinner party, staring at one more dresser tray With three unopened pretty bottles of perfume, I had an idea. I'd convince the American woman to buy her own perfume, and she would buy a lipstick. Simple? Yes, just like a gift with purchase. Too simple for anyone to bother with. There was a scent I had been exposed to for years. My uncle had created it for a Russian princess, and my mother always had it around the house. It wasn't exactly right, though. Not exactly. For months, I worked on it. I bought essences in dozens of tiny bottles. I experimented and experimented until I found a scent that pleased me enormously. It was sweet, it was warm, it was diffusive. That is, it would easily intermingle with flesh and with water. The last was essential to my idea. How could I get the American woman to buy her own perfume? I would not call it perfume. I would call it Youth Dew, a bath oil that doubled as a skin perfume. I had another idea. I wouldn't seal the cap of the Youth Dew bottle as the French perfumers did. Why should I make my creation inaccessible? If the bottle were unsealed, a browsing customer could unscrew the cap, as every customer secretly wishes to do, take a whiff, and by the time that occurred, she'd have the essence on her hands. Now the customer might well leave my counter, but she'd be smelling Youth Dew wherever she went. Chances were excellent that she'd return to the source, the scent leading the way, and buy that source for her very own. The bath oil that doubled as a perfume took the cosmetics industry by storm. We were inundated by letters. One woman wrote me that her husband was bored. I answered her, put a little Youth Dew in your bath and see how bored he is. To this day, she credits me with saving her marriage. I find that hilarious, by the way. Power of, of Youth Dew. Not only were the oils rich, the new process we developed, which, which released molecules of fragrance in the body sporadically rather than all at once, was a breakthrough. Youth Dew lasted. Instead of using their French perfumes by the drop behind the ear, women were using Youth Dew by the bottle in their bathwater. It doesn't take a graduate of business school To figure out that meant sales, beautiful sales for Joe and me. In 1953, Youth Dew did about $50,000 worth of business for us. In 1984, that figure had jumped to over $150 million. That is insane, by the way. I find that utterly insane. She'd say that we were a hit. The nose knew we were in business. I think the legendary Chanel put it best. Perfume, she said, is the unseen but unforgettable and ultimate fashion accessory. It heralds a woman's arrival and prolongs her departure. And to me, Youth Dew is Estée Lauder's Red Bull. Dietrich Mateschitz said there was no market for Red Bull, and so he would create one. Estée didn't want to compete with the French perfume buyer. She invented a whole new category: a bath oil women buys for herself. at a price you can justify and sold hundreds of millions worth of it. Neither of them entered a market. They built their own market. If you get creative, you're thinking about your ideas all the time. This is where that can happen. And Estée would go on to say, it was 15 years before I felt the next scent was ready to be brought out, but it took 15 years to come to understand the nuances and possibilities of this extraordinary fragrance. And so she's all in basically on perfumes by this time. And she would say, it was time to develop a testing routine if I was to make a life's work of creating great new perfumes. If you are within arm's reach of me and I'm testing a new fragrance, I'll rub a generous amount, not a skimpy drop, inside your palm and ask how you like it. I ask elevator operators, taxi drivers, society women, princes, professors, Do you like this? Would your wife like it? And their eyes answer. Of course, as she's succeeding, this level of success attracts attention and not particularly friendly attention. There's spies that enter. There's competition from Revlon started by Charles Revson. And Estée Lauder would say, business was going well. I thought I could focus on our business without other distractions. But I was naive. There was a new worry at hand. The spy network was awesome. It became evident that secrecy in the development of our products was required because our competitors spent more time trying to scoop our new ideas than developing new ideas of their own. And to combat this, they used an elaborate coding system. At the time, early on as well, Revlon is much bigger than Estée Lauder, and there's this whole idea of how to deal with competition. She'd say, I didn't want to spark his interest, his competitive spirit, his need to copy. I tried to keep a low profile and stay out of his sphere. We kept a low profile, kept our sales and profits to ourselves. We stayed out of sight until we were strong enough to compete, to invite copy. Very strategic of them. When they're small, stay much more quiet. Only open up a little bit more as they got bigger and bigger and bigger. And Estée is actually energized by all the other competitors. She would say, if there was frenzied competition in the fragrance arena, the competition often served to whet our appetites. There's something very heady, very stimulating in beating out the competition. It can exhilarate, propel. So she's fueled by all these other competitors to then continue to push her own products, to develop new products, to continue to expand. And she says, you only make millions when you do something extraordinary. Something no one else has ever done before. But here's the thing about the Estée Lauder company: it's never just Estée. It's a family operation, and others go into growing this business as well. Estée would say, despite my belief in independence and self-sufficiency, a family or intimate friends adds so much texture to one's life. Doesn't have to be blood family. The family I speak of, Estée stresses the importance of relationships. And then she writes, as the business grew, we cared very much about involving our sons. When we were starting out, Ronald was a small child, but Leonard worked at the office after school every day from the time of our first sale to Saks Fifth Avenue in 1946. She'd go on to say, there wasn't a move he made from his early adulthood that wasn't in some way geared to sharpen his business skills. Leonard always had business on his mind. Leonard's application of the professional business skills he developed in the early years Brought us into the forefront of the industry. And so when Joe and Estée head to Florida for a 2-month vacation, she'd say that, I knew Leonard had to learn the ropes by himself. I knew he had to be out of the shadow of Estée. And she goes on to say, chance favors the prepared mind. It bears repeating. In 1957, our company had just broken $800,000 in total sales. After Leonard was discharged from the Navy in 1958, He came to work full-time and we shared a tiny office. Leonard established a sales force where none existed, created our first research and development laboratory where none had existed, brought in professional management on every level, and made Estée Lauder a company of international repute. By using print and television advertising, he built our business account by account, city by city, country by country. No business of any size or worth is ever the work of just one person. A skilled cooperative effort is always necessary for survival and growth. Leonard Lauder sets the Estée Lauder pace. Then she talked about her other son, Ronald. It was Ronald more than anyone who made Clinique into a profitable business. He organized the sales forces into cohesive groups. He traveled to every city in America to tell the Clinique story. Ronald was the general manager of Clinique for about 4 years. Bringing a company that was very much in the red into the black. Then she'd go on and talk about Jo Carroll, who was her son Ronald's wife, and say that she, as well as many other executives, spent time selling so they might learn the market in the most direct way. This is just like the DoorDash founders. They were doing deliveries in the beginning when DoorDash started, and even as DoorDash expanded and grew and grew and grew, they'd still do deliveries like once a month or once every couple months or whatever it was. Because they wanted to stay close to customers and still know where they can make improvements in their business. She'd go on and describe something else that Leonard did, saying, I recently saw Leonard giving out stamped, self-addressed postcards to salespeople all over the country. In this way, he stays in touch with our most valuable asset, the sales force. A suggestion, a complaint, a comment can be immediately forwarded to the front office as it occurs. to a salesperson. And with the insistence of Leonard, who was the first one to say that he wanted to go international, Estée Lauder decides to expand the business. She writes, if I could start with the finest store in London, which was Harrods, all the other stores would follow. Fashion cachet would only come through the best outlets. But as I'm about to tell you, it is not a straightforward process. And here's another story of persistence in expanding internationally that I think is important. So I'm going to read much of this. As luck would have it, Sir Richard Burbidge, the owner and director of Harrods, came to visit his good friend Mr. Adam Gimbel in New York. He asked Mr. Gimbel if there were any exciting products in the market. Mr. Gimbel told Sir Richard that there was a new cosmetics line in the store that was selling brilliantly. He went on to say that it was owned by a woman who could sell a defunct railroad line in about 5 minutes, which is I think a great way to describe Estée Lauder. She can sell anything. Sir Richard decided to see me. It was 1959. I could hardly contain my excitement. He told me that Adam Gimbel never raved about anything, and since he was raving about Estée Lauder, Sir Richard would like me to stop in and see his buyer the next time I was in London. Not so simple. Nothing is ever simple. What a blunder. I had gone over her head and bypassed channels by Speaking to the buyer's boss before spoke with her. So SLR spoke to obviously the buyer, who she tried to be like, oh yeah, I basically have an in already because I know the person above you. And she was not all about that. And so she wouldn't give me the opportunity to say more than two words. Simply not interested was the unmistakable message. So little media attention was called for. I was especially interested in the British edition of Harper's Bazaar. Yes, they would be happy to write a piece about my products. What store in London would be carrying them? My products were not available in London. It had to be my reply. Well, she answered, I'll write a piece saying that Estée Lauder's cosmetics will be coming soon. Queen Magazine came out with a fine article, but we still had no place in London where customers could find us. Again, I went to Harrods. Again, the answer was no. I had committed a fatal error by speaking to her boss before approaching her. I wasn't sure I could redeem the mistake. But I had to keep trying. Since this incident, I always tell salespeople, never go over the buyer's head. I stayed in England a month after visiting every beauty editor to make my name known. Before I left London, I visited with the buyer one more time. Can you just take the smallest order? No, no, no. Send me nothing. Harrods was looking very bleak. The next year, I went back to London and Harrods. The buyer wasn't quite as hostile this time. Let me tell you, I have no room here, as I told you before, she said brusquely. But perhaps I could take a tiny order and put it in general toiletries. It won't be next to the good cosmetics. You'll have to understand. Oh, I quite understand, said I, nearly bursting with joy. Wherever you say. And so we found a spot. It appeared almost invisibly at last. It was not a victory yet. I visited every one of the beauty editors again to remind them of me. Do you think he might write another piece? I asked each one. Now that we're in London at Harrods, the articles appeared. Customers also appeared. I was on my way. Women were beginning to ask for us. The Harrods buyer was reluctant to notice, but she had no choice. About 6 months later, I made my third trip to London. Well, we seem to have many London women asking for your products. She grudgingly admitted, I think I'll give you a small spot at a more prestigious counter. And that's how Estée Lauder came to Europe. Think about that persistence, though. A year and a half just repeatedly trying to work different angles to get a counter at the best store she wants to get into in Europe. And think of how this happened. She works every angle to try to get into the best store in London she can. 'Cause she knows it will be worth it and she of course makes it happen. And she would write, I went from one store to another to train my salespeople. I worked day and night to make our line a success in England. And in each market there's different challenges, but she of course is relentless. She refuses to take a no. She just finds ways around it. She always finds ways to show her product versus telling about her product and leaving some behind. She'd write that today we do half our total sales volume abroad in 75 countries. Remember, this book is written in 1985 for context. And Estée wants to continually expand her product offering. One of these products was a skincare line for men. It's called Aramis. She launches it in 1965. It doesn't sell. But no worries. In 1967, a couple years later, she decides to relaunch the product. With a whole new idea, a whole new approach, which was this master plan for skin, which is an entire line of men's products that had never been born before. In addition to their aftershave and cologne, they included pickup masks, eye pads, aftershave moisturizers, all different products. And they end up launching this one in The New Yorker magazine, which becomes a smash hit. And she'd go on to describe why she was able to do this the second time. She says, we moved slowly as usual since we were a family-owned business and since we didn't have investors to contend with. We didn't have to apologize to anyone if we didn't show immediate profits. New lines and new forays like Arambis cost money in research, design, and promotion. It could take 4 or 5 years to turn a new venture from the red into the black. Getting Aramis on the counter cost $250,000, not an insubstantial amount of money in those days. We did not make that $250,000 back in the first year, I can assure you. I believe only a privately owned company could consider risking a large amount of money on a new untried product like a men's toiletries line. And of course, this expansion continues. She writes that Leonard said it many times, if ever there was a brand new concept that could compete with Estée Lauder, he wanted Estée Lauder to introduce it, which reminds me very clearly of Steve Jobs when he talked about how if you don't cannibalize yourself, your competitors will. And so essentially he killed the iPod with the iPhone. He knew it was important because he was thinking about products that could kill Apple. And at the time when they had these other products like the iPod, for instance, he's like, well, he's like, a phone will do it. A phone will kill Apple. So they, they obviously had to create the iPhone. It's the same idea decades apart. And this new idea is Clinique. Estée would write that without Leonard, they were— without Leonard, they would not have been Clinique. At the time, I must confess, I had my doubts. He insisted he knew we were onto something exciting and big. And Clinique would be this unique dermatologically tested product line. They would write, why do we market Clinique under its own name rather than under the umbrella of Estée Lauder? Many people have asked me this question. One, we didn't want it to confuse the customer. Two, we didn't want anyone to say that Estée Lauder had a non-allergenic line. Three, combining two different lines under one umbrella wouldn't allow for each to grow as strongly as separate entities. Estée would say, I knew if we were going to launch Clinique, we had to do it right. 100% fragrance-free, 100% allergy-tested. And they also do something unique with this. They launch a full-blown line of products With Clinique, not just one product. Everyone said it was impossible. There's no way this can work, but they did it very secretively, by the way. And this is a massive risk. They end up launching Clinique with 117 items. Estée would say, "We spent so much money on Clinique, money that would be lost if there was not an even flow of the product into the marketplace." Risk, risk, risk—the name of our game. She goes on to say, we decided to spin off Clinique from Estée Lauder a mere 2 months after we first launched. We realized we could expedite production if we also had a separate facility for manufacturing Clinique. We also knew that if we built the factory and Clinique didn't work, we would surely increase our losses. We took the chance on the international market with Clinique to beat out Revlon. As a family-run business, we could move fast. Clinique beat Revlon by 1 week. That was good, but not good enough. Although Clinique was accepted by consumers, it wasn't a successful business for the first couple of years. But it definitely does become successful. As Estée writes, we at SLR never discussed the figures publicly, but let me break this longstanding practice by doing so right here. I can't resist. After the first year or so of Clinique's growth, outsiders estimated that one day Clinique would reach $5 million in sales. To date, our figures have reached over $200 million and we are still growing. That, folks, is insane. So insane. And to promote it in the early days, they go very hard. By the way, they placed their advertisement first in The New York Times. It ran in a 4-color spread, which was incredibly expensive. And this whole experience was a lesson for Estée. She would say, The Clinique success was a lesson for us. Use the skills of each member of a family-run business. Each has fresh perspectives. Remember, Estée Lauder was herself hesitant to launch Clinique and to even go this route, the route that by 1985 the sales figures have reached $200 million. But she trusted her son, went with it. The whole family was involved in this. And it pays off handsomely. And through this and many years of experience, Esther has found her way of operating, her way of running a business. She shares a bit of this here as well. She says, each business person must find a style, that voice that grows clearer and louder with each success and failure. Observing your own and your competitors' successes and failures makes your inner business voice more sure and vivid. She goes on to say, "How do you grow in a slow, dead market?" We asked ourselves. Simple: you take share away from someone else by coming up with a better product. Aramis Clinique Night Repair. New concepts, better products. And then Estée goes on to say, "Our unique styles come from years of trial and error. Truths have emerged that work for us. Let me share them with you." And then she shares these like fifteen different. Truths, and I'll go through them pretty quickly here. 1, find the proper location. In real estate, there are 3 things that matter: location, location, location. If you're in the retail business, the same holds true. The positioning of the counter is critical. Walk into large exclusive department stores in any city in the world, and if it carries Estée Lauder products, chances are the counter will be at the right of the entrance. 2, when you're angry, never put it in writing. If you write it down, you can never take it back. The recipient has your furious letter to rankle him for the rest of his life. 3. You get more bees with honey. Being pleasant, even when you don't feel like it, is best for business in the long run. 4. Keep your own image straight in your mind. From the beginning, I knew I wanted to sell the top-of-the-line, finest quality products through the best outlets. 5. Keep an eye on the competition. Innovation doesn't mean inventing the wheel each time. Innovation can mean a whole new way of looking at old things. 6, divide and rule. I must admit I'm not terribly democratic in my business, and neither is my son Leonard. There's always one person at the top who must be the final authority. Running a business is rarely a matter of group vote. 7, learn to say no. 8. Trust your instincts. I've discovered that pondering facts and other people's judgments usually leads me down the wrong path. 9. Act tough. What others call tough, I call persistent. If you know you're correct, you must be firm and not bow to pressure. 10. Acknowledge your mistakes. One of the biggest mistakes was artificial eyelashes. I always hated them. I jumped on the bandwagon when every other company came out with them. They always looked false, never sat right, and just weren't pretty. We withdrew from the lash market almost as soon as we entered it. Another mistake was trying to reach the teenage market. And by the way, this reminds me, we talked about Dietrich Mateschitz in an earlier episode. Same thing with them. They made mistakes and they acknowledged them, but they made mistakes with new products and Red Bull was always their best product. The OG of products that they had. They did try other products that were never quite as successful as the original Red Bull. 11, write things down. 12, hire the best people. 13, break down barriers. Walls between people are not conducive to sales. Offerings of food have been breaking down barriers for centuries, which is why SA did all these dinners all the time. And 14, give credit where credit is due. Lastly, number 15, train the best sales force. And on that last note, Estée would say, we could get up and tell our salespeople, this is what we have to sell, go out and sell it. Or we could show our salespeople what we have to sell in the manner in which we expect them to sell it. We choose the latter approach. Remember, always show, don't tell. And then Estée had this note on Sales meetings and how they should be run. She'd say, everything is perfect. Only by making it perfect for my own people will I be able to pass on the message that they must spend as much attention on detail as I do. They will pick up the thread of what I want by being treated with excellence. Same idea here, showing versus telling. Show them what greatness looks like and what your expectations are. And you personify that in how you act, and then they see it. And soon after this, she would again extol how she wanted to stay independent. She said, if you're your own boss, you can move fast. When ideas have to be implemented overnight, speed, flexibility, and authority to make decisions without consulting shareholders are of utmost importance. She said that she had lunch with Bernard Gimbel after he went public. Don't do it, he urged. I travel second class now because I have to make a report for everything. And this is really a thread that weaves through the episodes we've done already with, with Syneuhaus remaining private, Red Bull remaining private. Estée Lauder was private for decades. They do end up going public in 1995, so about a decade after this book. But let's remember, that was almost 40 years of being a private company. 40 years in which, yes, they grew tremendously, but they were able to take their time and take risks that maybe they wouldn't have been able to do If they were a public company, and speaking of just the duration at which this company has been around, and we're talking 1946, she'd say in the book, "Big business, I think, is a combination of timing, hard work, and ability to see beyond one's nose. Patience. People with big ideas and dreams often fail because they can't wait out the slow times." This is also something that every subject we've covered so far. Won by outlasting. I mean, the Wright brothers, they spent 4 seasons in the sand at Kitty Hawk and testing out their invention to make the first man-powered human flight. Dietrich Mateschitz had to wait years to get a license, sell his products. Cy Newhouse worked for years and years and years to expand his empire. Steve Jobs went into exile for more than a decade. We just see this again and again. In creating these big companies, there's patience. It's almost like it's macro patience, micro just speed. They're working super hard and trying to operate quickly on a day-to-day basis, but on the macro, these people have a lot of patience for what they're going to build. And as we wrap this up, there's just a few more passages from Este. She says, From where you sit, you can probably reach out with comparative ease and touch a life of serenity and peace. You can wait for things to happen and not get too sad when they don't. That's fine for some, but not for me. Serenity is pleasant, but it lacks the ecstasy of achievement. Living the American dream has been intense, difficult work, but I couldn't have hoped for a more satisfying life. I believe that potential is unlimited. Success depends on daring to act on dreams. How far do you want to go? Go the distance. Within each person is the potential to build the empire of her wishes. Don't allow anyone to say you can't have it all. You can have it all if you are willing to work. No one has to settle for the mediocre if she dreams of glory. I've always believed that if you stick to a thought and carefully avoid distraction along the way, you can fulfill a dream. My whole life has been about fulfilling dreams. Whether your target is big or small, grand or simple, ambitious or personal, I've always believed that success comes from not letting your eyes stray from the target. Anyone who wants to achieve a dream must stay strong, focused, and steady. She must expect and demand perfection and never settle for mediocrity. If you push yourself beyond the furthest place you think you can go, you'll be able to achieve your heart's dream. Estée Lauder was 77 years old when she wrote those words. She'd live in there 2 decades. The company would grow, as I mentioned earlier, to more than $30 billion. It's a tremendous story. The book is a quick read. It leaves you so full of energy and hype from how she operates and how relentless this woman was. It's remarkable. Thank you so much for listening to this episode. I'm heads down focused right now on the Ambition Summit, which is September 24th in Los Angeles. I know this episode will be listened to years and years from now, so that'll be irrelevant for many of you, but you can find more about that in the links in the show notes or below this video. It's only 150 people. We have some amazing speakers, and I'm so excited for this to take place. If you're enjoying this show, please leave a rating or review in your podcast player and tell a friend about it. I am putting a tremendous amount of hours into making this show great. The last episode I did with Steve Jobs took 60-something hours to produce. Each episode's easily 35, 40 hours to create, to like read the book and synthesize it and think through the notes and create the outline. And I've been having so much fun. With this project. I hope to be doing it for many, many years to come. This was episode 5. Hopefully hundreds and hundreds more. Talk to you in the next episode. Thanks.