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Steve Stoute’s memorabilia-laced penthouse office is perched high above the hustle and bustle of Times Square, and no wonder. Stoute is a man who likes to be in the center of it all. As the founder of the advertising agency Translation, he’s been at the forefront of marketing to a multicultural consumer base. In 2005, he entered the beauty world, when he and some of his high-wattage friends—including Will and Jada Pinkett Smith and Shawn “Jay Z” Carter—invested in Carol’s Daughter. While he’s since ceded day-to-day duties to chief executive Richard Dantas and founder Lisa Price, Stoute remains a hands-on partner and lead investor, overseeing strategic brand expansion and partnerships. On the eve of the publication of his first book, The Tanning of America, Stoute took some time out to talk about multicultural marketing, the beauty gap and why he never takes no for an answer.
This story first appeared in the September 9, 2011 issue of WWD. Subscribe Today.
You’ve become the go-to guy for the corporate behemoths who want to reach the urban market and its followers. Is the mainstream becoming more savvy about marketing to urban America?
Urban culture has definitely influenced mainstream culture. Urban culture is where a lot of trends are developed, which then spread out wide and become mainstream consumption patterns. How do you market towards that? If the question is, how do you market or embrace this multicultural dimension of thought, and then use those trends and those demographics to help build your brand, I’ve seen a lot of brands do that very successfully. I’ve also seen a lot of brands look at that as a trend that won’t have sustainability in mainstream culture and fail to realize they should be a part of it. They subsequently fail.
Has beauty become savvier when it comes to multicultural marketing?
Beauty has been one of the furthest behind of all industries in understanding the needs of multicultural people. Only in America could you find a thing called an ethnic beauty aisle. How could Beyoncé and Rihanna and Kerry Washington and Jennifer Lopez and all of these beautiful women be on the cover of magazines, yet if you want to buy the products they use for their hair or their makeup, it’s put in the ethnic beauty aisle. Why is there an ethnic beauty aisle? Why don’t you just put the whole thing in alphabetical order? Although women of different ethnicities know they have special needs, they don’t want to be identified via the ethnic beauty aisle. The beauty business has been late to come to grips with that.
How do you see the industry evolving in the next two to five years?
It’s going to take mavericks who recognize that there is a shortfall in products that speak to the polyethnic consumer. It’s not about product performance— that’s a given. I’m talking about the conversation around a product, the way a product is marketed, the feel, the communication, the call to action. Those things have to be modified in order to appeal to the polyethnic audience. I remember our first meeting with [Sephora’s] David Suliteanu and [HSN’s] Mindy Grossman. When I first brought Carol’s Daughter to David, his main concern was did we have enough financial backing in order to keep supplies in stock and deal with supply-chain issues, because he didn’t want to have a conversation with his customers that he couldn’t finish. David introduced me to Mindy, who put Lisa Price on and we’ve become the third-biggest beauty brand on HSN. It takes mavericks like them to help move the conversation forward.
In your new book, you write that color is no longer a determining factor in how people think. What is?
Ethnicity no longer predetermines your cultural values. What determines your cultural values is shared information—what you like and don’t like. People have access to all avenues of information. You can’t put people in boxes because of their ethnicity and then determine they are going to like this color jean or that this type of beauty product will appeal to them or work for them. You can’t put them in that box any more because their shared interests with their peer groups allow them to have a much more peripheral view on what other cultures are doing and what may appeal to them. You need to have a much more open minded and authentic approach towards the conversation than a predetermined push down.
You also note that hip hop was able to grow from a small niche market into a full-grown dominant force because it became the bedrock of hard times. What similarities do you see between then and now, when there is so much uncertainty surrounding the economy?
With the growth of hip hop, a lot of people focused on the music. But the music was nothing more than the Trojan horse for a culture that came behind it. Music videos taught people how to dress, what to drink, how to speak to girls, how to dance. The culture that those videos brought, along with the messaging of the songs, helped create something that blurred the lines of demographics and ethnicity forever, for this transformation that I call tanning. The fact that hip hop artists spoke from a very pure place of, “I came from nothing, and I’m going to use brands as aspirations to show that I’m moving forward in life, so I wear Louis Vuitton, I drink Dom Perignon.” They were using those brands to show the world they’re moving forward, that they do have aspirations in life, that they don’t want to be stuck in poverty. That is a universal language. LVMH should be very thankful for third world countries and people who come from nothing using their brand to signify that they’ve arrived. It is everybody having a chance to say, “Look at me,” and that brand [Louis Vuitton] signifies that. That is a global reality.
What kind of cultural shifts do you think the recession has created? Has consumption changed?
The financial uncertainty actually unites people. People come together in hard times. The haves tend to become a little bit more accessible to the have-nots.
You’ve been quoted as saying that trends are perishable, cool is forever. What’s a trend in beauty right now and what’s cool?
What’s cool right now is allowing yourself not to be defined by a brand. Not allowing a brand to say, “If I wear this brand, then I fit this particular archetype.” So mixing brands, putting things together and disassembling the one-brand phenomenon is cool. Reality TV, and using Facebook as the digital
version of reality TV, is a trend. People are going to look at their Facebook pages in five years and it’s going to look like bad tattoos. Too much information? [There’s] too much information shared for no reason at all.
What will take its place?
An analog lifestyle. Digital numbs you. It doesn’t teach you how to look for information. One of the most
important things that ever happened to me in life was having to go to the library and research things. The fact that people think they know everything because they can go on Google and find an answer is a short cut that removes the process of learning.
With the launch of Mary J. Blige’s My Life fragrance, you created a new distribution path for scent. What about the plan worked?
When you are deprived of certain things, it forces you to be resourceful. When I first had the Mary J. Blige license, I went to the big fragrance houses. Mind you it was 2008-2009, and we had the recession and celebrity fragrances were overdone, so I probably came at the wrong time. But I don’t think people understood Mary J. Blige. They thought it was an African American woman–only kind of thing, and it didn’t have a chance to be global. When I got turned down, I still had to put this fragrance out. I went to Mindy Grossman and said, I really want to get this done. I’llgive it to you exclusively—it’s not like I had another choice. But I said, I think people are going to buy this story because I watch fragrance houses all the time. They spend all this money on photography because they’re trying to tell a story. If it was just reliant on how the fragrance smelled, they would save a lot of money and send out the notes or sample the scent in a magazine. So I thought that if I can create a story, I can sell this fragrance on HSN. People trust the celebrity. The reason why you bet on a celebrity is not only because of their fame, but because there is authenticity and trust. They trust that Mary J. Blige will not put out a bad product, so if I provide them the story, they will come. Mindy believed in that premise and we used HSN as a story-telling medium and sold more fragrance bottles that day than anyone could possibly expect.
What was the key learning and what would you do different next time?
The key learning was follow your gut instinct. My gut instinct was that Mary could sell fragrance, but if I listened to the beauty houses that were saying no and I allowed that to stop me, we would never have My Life. What would I have done differently? Honestly, nothing. Now we’re launching the Blossom fragrance on HSN, and we’re taking My Life mass and we got everybody. We went right from HSN to mass and that has never been done before—never.
How do you see celebrity marketing evolving when it comes to beauty?
We’ve got to edit. We are going too crazy with it. Somebody better stop. There’s a truth that no one wants to talk about. People are buying Q scores and not buying true impact. They are buying popularity over content and substance.
How would you describe your management style?
My management style has evolved. I started as an entrepreneur when I was in my early 20s and I used to think everybody was a type-A personality, so I would treat everybody as such and that was not a winning hand. I’ve become much more patient. At the end of the day, you want people to do exactly what they say they’re going to do or at least try really hard. You have to accept that people fail, but when they fail, they have to find the learnings so they can succeed in the future. I allow that space to exist where I wouldn’t allow it before.
What do you do to relax?
I love to travel to Europe, go to remote destinations and explore. I hang out with my six-year-old daughter and learn from her. Recently, I’ve gotten into wine. I love tasting wines from different regions around the world. Learning the wine-making process and the blends is fascinating to me.
What drives you?
Dreams, winning, changing the landscape. It’s not about financial success. That’s a by-product of the aforementioned.
What’s the hardest business decision you’ve made?
Looking at the last four years, as the world has changed dramatically and quickly, the hardest decisions to make have been over that period of time. Any decision that has long-term implications is very tough right now, because you don’t have long-term perspective when the landscape keeps changing drastically. You have to be very good at winning the short-term bets. It doesn’t change that you have an end game, that you have a vision in mind of where you want to take your brand and company, but it forces you to be really, really good on your short-term bets.
What’s the end game?
The end game is to build companies that are in culture, that respect culture, that are successful for all the right reasons, to be in businesses that are always involved with what tomorrow looks like. I don’t ever want to stop working or being curious about life and business. When I find myself doing something that seems like yesterday, that’s when I know I’m not paying attention to tomorrow.
Steve Stoute is the founder and chief executive officer of Translation, a division of the Interpublic Group. He started his career in 1990 in the music industry, rising to president of the urban music divisions of both Sony Music Entertainment and Interscope Geffen A&M Records. In 2005, Stoute formed a partnership with the Brooklyn-based beauty brand, Carol’s Daughter. He has been instrumental in transforming the brand from a single-store operation into over 1,000 doors, including Macy’s, Dillard’s and Sephora. Stoute’s first book, The Tanning of America, is being published this month.