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Leonard Lauder Talks Beauty, Brand Building, Wayne Gretzky

The chairman emeritus of the Estée Lauder Cos. is the third executive to win the John B. Fairchild honor.

Leonard Lauder, the chairman emeritus at the Estée Lauder Cos., is full of wise words.

Some, like, “When sex goes out of business, so are we,” he borrows from his late mother, Estée, who founded the namesake business. But others, like “people don’t work for money, they work for recognition,” are his own, infused with the deep passion for mentoring that has become the hallmark of his career.

Lauder, the third recipient of the John. B Fairchild honor, is credited with turning what was once an $800,000 one-brand-one-market business into a 29-brand $13.6 billion global conglomerate. He led the charge on bold moves — expanding into the U.K. before global expansion was the norm, and going public in 1995 at $26 per share. (The firm is now trading at above $140 per share).

But beyond that, he is credited with mentoring a generation of beauty executives, and encouraging those around him not to be afraid to take risks. “Everyone who works for us is basically bulletproof,” Lauder said. “We encourage them to take chances. I give a course in the company called ‘Brand Equity’ and one of the sessions I have is ‘Leonard Lauder’s Chamber of Horrors.’ What is that? All the mistakes that I’ve made.”

Lauder, who credited John Fairchild with laying the groundwork for fashion, beauty and gossip to flourish, painted a fond picture of his late friend. “When John came back from Paris to join Fairchild, it was a very quiet world. There was very little happening in designers’ work in the United States. John created — name by name, brand by brand,” Lauder said.

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“The ‘historics’ of that era started the concept of influencers,” Lauder continued. “When we launched Clinique in 1968, do you know what medium I used? Women’s Wear Daily, because they were the most influential press there was of all.”

WWD: When you joined the family firm at 25 — you’d grown up in the business, but you said you arrived knowing almost nothing. How did you learn?

Leonard Lauder: I had a good pair of ears. I arrived in February 1958, I walked into a tiny office that I was to share with my mother, Mrs. Estée Lauder, and on the desk were two piles of envelopes. And we had one secretary. And I said, “What do I do with these?” And she said, “Open them all up, and then the pile on the left, those are orders and you send them out to the plant to fill the orders, and on the right, those are checks — you deposit the checks.”

So the secretary said, ‘The buyer from Lord & Taylor is here to talk about his demonstration.” That’s a bunch of students throwing a tomato at the American embassy — what’s a demonstration? You stand behind the counter and sell the products.

OK, so every evening I took the sales reports back home, totaled them up and wrote up a commission check and then sent a little note. Lesson number one — people don’t work for money, they work for recognition. And when I wrote those notes, the people I wrote those notes to stayed around for many, many years because we were able to recognize them with those little notes.

WWD: Little notes which were on blue paper, I understand. How did you pick blue paper?

L.L.: The color of the packaging. We were called Big Blue at one time — we and IBM.

WWD: You also described how you always tried to be the Wayne Gretzky moment. Explain.

L.L.: Firstly, I don’t play hockey. Relax. But he said, “I don’t follow the puck, I go where the puck will be.” And I always intuited where the puck was going to be, and that’s where I was. I wanted to be the first imported brand to get into the U.K. because they had austerity and you couldn’t import cosmetics. Always get there first — if you’re there first, you’ll win.

WWD: That takes a certain amount of fearlessness. How do you instill that in your executives?

L.L.: Look, everyone who works for us is basically bulletproof. We encourage them to take chances. So, I give a course in the company called ‘Brand Equity’ and one of the sessions I have is ‘Leonard Lauder’s chamber of Horrors.’ What is that? All the mistakes that I’ve made. And people say, “Hey, he can make mistakes? I can make mistakes.” So you never criticize anyone for taking a chance. One of the first things I said to people was this: “Better the wrong decision than no decision.” And that’s what we always have to follow.

WWD: But then what else do you look for in executives when you hire them?

L.L.: Do they burn. Do they love what we’re doing. Do they like cosmetics — you think that’s funny? You can’t imagine what I’ve been through with some guys.

I interviewed someone, he was 28. “What kind of retirement plan do you have?”

We wanted to go international — “So, tell me have you worked in international? “Yes, I have.” “Where have you been?” “To Geneva, Switzerland.” “Oh really, what hotel did you stay at?” “Well, actually, I changed planes in the airport.”

You learn. We were a tiny company so if someone came in to fill some kind of piece of paper, we said you have to put your title in there, son. 

WWD: Were you ever afraid of making a major mistake?

L.L.: Never. I made a lot of them. I kept my job.

WWD: You’ve also said Estée Lauder’s not a democracy — is that difficult sometimes, to make those decisions?

L.L.: Early on, when we had a handful of people, it was easy because we all understood each other. As time went on, we got bigger and bigger and bigger, and people were making the decisions — then it gets a little tough. But when I said democracy exists, when it came to creativity there was only one boss. I have to tell you a little story. We created our first big ad, a double-page spread for Vogue magazine and it was for the evening makeup collection. This is going to be our breakthrough. There were about six or eight of us in the company at the time, everyone had another idea as to the headline and on and on and on and on.

OK, so I said, “You know what, I’ll bring it home.” I was living in the country for the summer then, I wanted to show it to my late wife, Evelyn. I put it in a big manila envelope, I brought it home, and she said, ‘What’s in the envelope?’ I said, “Something I’m working on.” I wouldn’t show it to her. You know why? I said to myself, “You know what? If I ask her for her opinion, if I don’t like it I’m in trouble. If it doesn’t work, it’s my neck. If it does work, everybody gets the credit.” And so that’s when I made the decision, right then and there, that if you’re accountable you are accountable and no one else is accountable. I’ve gotten into some trouble over the years on that whole thing, but it was always my neck. I’m still here, though.

WWD: You describe your current role at the company as chief teaching officer. Was that something you had to learn or did that come naturally?

L.L.: Well, I learned a lot. I was in the Navy, I decided that — by the way, all my friends are getting drafted into the Army and they became clerk typists for two years. I said, “What am I going to do, spend two years learning to type?” So, I applied for the U.S. Navy Officer Candidate School and I got accepted. That meant not only the three and a half years active duty, another six years in the reserves. I wanted to learn. And learn I did. My first boss was Lieutenant Commander in the supply corp and he had just come back from the Harvard Business School. Well, he was a good teacher for that but when it came to what he learned at the Harvard Business School, forget it.

Am I allowed to tell this story? I had to take an inventory of the whole stock in the ship store and I came to him with a list and said Len, you had 4,000 packages of prophylactics. Let’s mark them down, that’s what they taught me in Harvard. I said commander, we’re at sea — please if you’re recording this forget it.

WWD: That was a lesson they didn’t teach at Harvard, that was important. But what is the greatest lesson you try to instill in those you teach?

L.L.: The greatest lesson is this: Number one, you have to be fair. Remember as kids, what’s the one thing you’d complain to your parents about? “That’s not fair.” But you have to be fair and even though it hurts, be fair.

Number two, recognition. People don’t really work for money as much as they work for recognition. I’m going to tell you where I learned that. At the age of 21, I was a counselor at a summer camp — a camp of six-year olds. And on my day off, I had no car, I was in Vermont (U.S. 7 for those of your who live in Vermont). I hitchhiked to Rutland, Vt., to Woolworths and I bought about 10 or 12 little plastic [trophies] at Woolworths. Brought them back to my six-year olds, and once a week we had an awards ceremony. Who cleaned up their bed the most, who made their bed the best, on and on. The best one was who didn’t wet their bed in a week. You learn.

WWD: You’ve said there’s a difference between profit and relevance. How do you balance them?

L.L.: Look, you have to know what your customer wants. And if you have what she wants, that’s what you sell. Sometimes it’s a highly profitable product, sometimes it’s a less profitable product. You sell her what she wants and what she likes. The first sale you make is the most expensive one, however, if she comes back and buys it again and again and again and again, that is when you’ve done well. You always have to try to match what you’ve got with who you have. I don’t know what went on in today’s session, but there’s something fascinating going on I think. The America I grew up in was all white-bread. Today, we are the one of the most diverse nations in the world. So, therefore, if you’re selling a product in a Hispanic neighborhood, you give them foundations and products that they’ll use. If you’re [selling in a] Vietnamese [neighborhood] in Los Angeles, that’s what you sell them. By giving them the products that they want and they need, rather than the products that you want them to buy, slowly but surely you’ll win, and they’ll come back to you again and again.

WWD: Very early on when you started at Lauder, how did you see the opportunities globally — was it the Navy, apart from the Harvard business school lesson?

L.L.: A little of both. When I was in the Navy I was in the Atlantic fleet and our ship went all over the Atlantic. It went as far south as Guantanamo Bay in Cuba, and also to places I haven’t been back to since. Haiti and stuff like that. And then every time we came into port — for example we went to Edinburgh, [Scotland], I took a week’s leave and went down to London. And in Barcelona, I took a week’s leave and I went to Madrid. I saw things I could never have seen before. When I went to Germany in 1953, Frankfurt and Cologne were in ruins. But they were building, the energy there. I came away from there convinced that our future lay not just in the United States, internationally and worldwide. I kept it in my mind.

WWD: Did it go as smoothly as you thought?

L.L.: Nothing goes as smoothly as you think.

WWD: Switching gears a little bit, and slightly going back to the Wayne Gretzky moment, was it a Wayne Gretzky moment that made you collect Cubism?

No. What happened was that — by the way I’m a collector at heart, I have the bug. As a little kid I collected picture postcards. Then I collected posters, then I collected this and that and whatever. So I loved film, all films, and I would go down to the Museum of Modern Art every week or every other week and see the old movies. I’d always arrive early and walk around in the gallery. I loved the complications of Cubism, I just loved them. And suddenly, I found a painting in a gallery done by a guy named Pablo Picasso, who no one had ever heard of except for me of course, so anyway, I loved what it looked like and it spoke to me. Then I bought another one and another one, and I had three or four or whatever it is. And a friend of mine invited me to a lecture at NYU’s Institute of Fine Arts. It was a lecture given by the late Kurt Vonnegut from MoMA. And he flashed on the screen a picture — an oval canvas, a picture by Picasso. And he said, “This is the most important Cubist painting in the world.” That’s my picture. Boy, am I brilliant. I didn’t know it was the most important, but all of a sudden he’s saying to me, “Well, your taste isn’t bad.” So, I followed my nose. And by the way Mr. [François-Henri]  Pinault, I bought something from you a month ago. I hope you’re grateful. I’m grateful to you, too.

Audience Question: Hello, Leonard. That was a great conversion. You’re one of the world’s greatest travelers, you’ve been everywhere a zillion times, you’ve been to a hundred million events and a zillion stores and a zillion countries — is there one moment that sticks out in your mind with this career of yours — one glittering moment that stays with you?

I’d like to say yes, but I really can’t. I’ll tell you why. There was a song from a Broadway play, I think it was [Burton Lane], it says, “When I’m not near the girl I love, I love the girl I’m near.” Judy, my wife Judy is here, Judy I didn’t mean that. Anyway, that means that I can think of a hundred incidents — I used to be a runner — running in the Champs de Mars under the Eiffel Tower at 6 o’clock in the morning. Running along the Seine at 6 o’clock in the morning, being in Red Square in the snow, running also. Going to every country you could ever imagine, each one of them made an impression on me. I believe life is like a mosaic — red tile, green tile, gold tile, silver tile — and it all adds up to the image of the world. I love the world, not any one particular country or the other.