Leonard Lauder grew up watching and learning—seeing what worked, feeling how small things can shift the whole look and feel of a brand. This episode is about how a sharp eye for small details can give you a real edge, and how Lauder used that gift to build something that lasts.
Leonard Lauder grew up in a kitchen that smelled like face cream. His mother Estée cooked cosmetics on the stove while he watched. Women would ring the doorbell, get facials in the bedroom, and leave with glowing skin and a few jars in their purse. 80 years later, Leonard sits down to write his memoirs. Where does he start? That kitchen.
This episode tells the story of how Leonard took his mother's small business and turned it into a global beauty empire. The book is called The Company I Keep - My Life in Beauty, and it reads like a playbook.
Leonard learned business by osmosis. At six years old, he could tell which outfits suited which women. At ten, he sold military patches to classmates and put every dollar in the bank. At thirteen, he worked in the family factory after school, typing invoices for twenty-five cents an hour. He wasn't just "a" billing clerk - he was "the" billing clerk.
One scene stands out. Leonard sits at a dinner table with his parents, their accountant, and their lawyer. His parents announce they want to go wholesale. The experts beg them to stop. "You'll lose everything!" But Estée and Joe push forward anyway. Their response stuck with Leonard for life: "Good accountants and lawyers make good accountants and lawyers. But we make the business decisions."
The episode traces Leonard's path from that kitchen to Wharton, then to the Navy, where he learned he wasn't the smartest guy in the room. He finished 12th out of 24 in officer training. That humbled him. He made a vow: hire people smarter than yourself. The head of sales should sell better than you. The copywriter should write better copy. Never feel threatened by talent. Celebrate it.
After the Navy, Leonard went skiing in Vermont. Blue sky, fresh snow. He made a choice on that slope. Estée Lauder would be his life's work. His goal? Make it the General Motors of beauty - multiple brands, multiple products, global reach.
He did just that. When ad firms turned them away for not having enough money, Estée bet everything on free samples. Not tiny packets - full-size products that lasted 60 days. Women lined up down the block. When Leonard saw he'd oversold his college film club (1,500 members, 800 seats), he started a second club to compete with his first. No one knew he ran both. That lesson became Clinique - a brand built to compete against Estée Lauder itself.
Leonard watched everything. He visited stores on his honeymoon. He planned family trips around counter visits. He saw a woman in China unbutton her dull coat to reveal bright red silk underneath. Hidden beauty. That's how he knew to expand into China.
The episode also covers his concept of lateral creativity - taking ideas from anywhere and using them in business. An architect told him about planting young trees to replace old ones when they die. Leonard thought: we need young brands to understudy our flagship. That insight led to buying MAC and Bobbi Brown and developing an acquisition playbook.
By the end of his run, Estée Lauder had 25 brands in 150 countries. But when asked what he's most proud of, Leonard doesn't talk about products or sales. He talks about mentoring people.
This book belongs on the shelf next to Sam Walton and Trader Joe. It's a masterclass hidden inside a memoir.
Deeply Driven Books (Amazon Affiliate) - 100% of commissions will be donated to help support Children’s Literacy!
Past Episodes
Estée Lauder: Divine Purpose of Beauty
#16 How Jim Casey Turned Service Into UPS's Superpower
#3 Becoming Trader Joe | Business Masterclass from a Legend
Sam Walton: Simple Ideas & Deep Business Impacts
When I was growing up in the 1930s. I remember sitting in the kitchen watching my mother cook up facial creams on the stove. Her focus was on her business. For her good was not good enough. It must be great.
I'd come home from elementary school.
The doorbell would ring with a customer. My mother would give them facials in the bedroom. I often heard her encouraging them to care for their skin with what would become her signature phrase.
Every woman can be beautiful. When the women walk through the living room after their treatments, their skin glowed and their purses often held. A few newly purchased black and white containers labeled Estée Lauder,
The company and I grew up together, our lives as closely paired as twins. It has always been more than a family company. It was and continues to be my family. This is our story. It's the story [00:01:00] of a family's transformation.
If we just think about that for a second here, we have a kid, he's watching his mother build her business one face at a time.
This is so powerful that 80 years later, as Leonard Lauder is writing his book, he takes us back to that kitchen where everything started. Leonard Lauder, he put out his memoirs a few years ago, and it gives us this nice inside view of how a Estée Lauder the company was founded and how he grew it into a collection of the finest beauty brands in the world.
The title of the book is called The Company I Keep My Life In Beauty. I find the title itself quite interesting. Leonard. He knows something and he learned it early in life that he was really smart, but he also sees that the world is full of people that are even smarter than he is. And what shocked me about Leonard is that he put his ego on the chopping block as a young [00:02:00] man,
and he vows to seek out the smartest and hire them, embrace them, and keep them in his company.
The story itself starts off with perhaps the smartest saleswoman in history. His mother, Estée Lauder, someone that I admire a great deal, and we covered her just a couple of episodes ago. On episode number 20,
In the early days, as we had heard she was selling one jar at a time. From the family apartment Leonard, he sees with his own eyes how great products are developed.
The pure love and the focus that goes into them.
He tells us how his parents Estée and Joe taught him lifelong business lessons, and along the way he leans into the world and he's always taking note of the things that are going on around him.
He uses what he calls lateral creativity to get ideas from everywhere and then use those in his business. This is something that he repeats [00:03:00] over and over all throughout the book. All of these ideas he puts into motion. Like one day when he saw a poster and he realizes, wait a second, two words next to an image that hits way harder than this big paragraph of text.
In this simplicity, it becomes the foundation for all of the Estée Lauder ads. Leonard, he also really loved running, so one day he was running in China and he was out and he saw these women wearing these kind of dull colored coats, and he says it was the springtime and it was starting to get kind of warm outside, and he notices that one woman had unbuttoned her coat.
So what does he see? He sees that she's wearing this bright red silk clothing and it had this elegant floral pattern to him that is hidden beauty, and he understands that women care about how they look here in China. That's how he expands into China.
The simple things that he notices, they have a [00:04:00] big impact. And so another thing that I found really impressive is that Leonard, he comes up with this idea of competing against yourself in business, and I just really love this. He says, don't wait for others to show up with products. Go out and make your own.
The goal here is to protect the mothership and create perfect products that you can put around it. Create products that women all over the world need. The stories in this book, they just keep stacking up, and I really have to pause here and say this book, it's a must read. If you've read the Estée Lauder autobiography or perhaps listened to any of the podcasts out there about her book, this book really feels like it just picks up from her work, gives you a lot of extra details about how Estée founded and she grew her business, and then it kind of just drifts naturally into Leonard's own, deeply driven nature.
Plus, Leonard is a great storyteller. He really pulls you [00:05:00] in and it makes you feel like you're part of the ride. He explains how the business grows, the way he loves it, and how he just really pours his soul into it. You can feel it in the writing and in the words quite simply. Leonard is why Estée Lauder exists today.
If you'd like to pick up a copy of this book, you can use the link in the show notes. Just a heads up, that's an Amazon affiliate link. For any of the commissions that I earn, I donate 100% to help children's literacy.
That's something I believe in very deeply. If you happen to listen to episode 20. You know that Estée found her passion early in life. She followed it persistently with all of her heart, and she found it Estée Lauder and I admire her story. If you can pick up a copy of her book, it's 100% worth the time, and I consider it an absolute must read if you're in business
As a young wife living in Manhattan, Estée Lauder the company and her first son, Leonard. [00:06:00] They're both born in the year 1933 at the height of the Great Depression. And this is where the family story and the business story, they become one, the state knew that women would buy our product saying women will open their purses for quality, and they did great. Depression, or not. Years later, Leonard would give a name to something that his mom had already seen up close and personal.
He calls it the lipstick index. Basically, when the economy's bad women, they stop spending on big ticket items, and what they do is they turn to simple luxury things like lipsticks, creams, and powders. So for Estée in the young family business, she really believed that looking beautiful was a confidence builder.
This was baked in from the start.
My mother deeply believed, and this belief lasted her entire life and would pervade the company that looking beautiful. Built a woman's confidence, something that was especially important when the [00:07:00] depression was beating so many people down.
Then just to double down on this, she puts it in writing in her book and she says, A woman in those hard times would first feed her children, then her husband, but she would skip her own lunch and buy fine face cream.
The quality that a stay pours into her products makes women feel good time and time again. They come back for more sales. They increase each win, gives a stay a boost in business confidence. I see this simply as external wins, equal internal wins. Her confidence is growing and her business is growing.
When Leonard is just six, he says that he started to learn the business by osmosis.
I absorbed fashion by osmosis. It got into my bones, which outfits suited some women, which didn't look so good on others. How little details made a difference how a confident air could pull [00:08:00] everything together.
I find this simply fascinating what happens when a founder or an entrepreneur is born into their purpose, and this is so rare. Most are presented with their purpose At some point in life, Leonard like his mother, is blessed to have known his purpose early in life and he follows it with all of his passion.
I can really read stories like this all day long that gimme a lot of motivation and inspiration. On the last episode, we had talked about Arthur Guinnes, who was born in that malt house. He had the smell of that malt in his nose and in his veins, and it pulls him back to be a brewer later on in life.
Leonard, he knows that small details, they have really big impacts.
He sees them directly in his mother. My mother paid a lot of attention to how she looked and was always beautifully put together. Therefore, it's all in the details and everything that Leonard did in life. It was always [00:09:00] about the details, finding those angles that no one could see. And it was so true when it came to his many collections. Postcards, posters are sculptures, Estée Lauder products and brands that he built. The word collection, it's used over 110 times in this book, and if we step into his shoes, he says, I started early and have been building collections ever since.
This is gonna lead him to his first love, which he says was trading postcards in school. That is when I was first bitten by the collecting bug for Leonard. Each card has a special feeling when he looks at it.
He sees things like the world's fair, exotic travel sites, ocean liners, sports, new technologies, fashion trends. And what he does is he projects himself into those scenes, feeling what it's like to be there. His wife later on, I really like this. She would tease him a lot saying that those postcards were his [00:10:00] mistress.
That's funny. And so he carries this passion for collecting postcards his entire life, collecting all kinds of things. His entire life, he would amassed more than 125,000 postcards. That's amazing. I can't even imagine how much space that took up. He would eventually donate those to a museum, but they did something for him.
They brought him into a new world, and he sees that they have another key use as well.
The lessons that they taught me in terms of immediacy and intimacy, composition and message, would translate into advertisements for Estée Lauder products.
What is so fascinating about Leonard is how he uses the things that he saw and how they make him feel to help shape Estée Lauder of the company. He holds the cards in his hand. He would read the back of 'em, and he really feels what it's like and you can tell that he's building his instincts here, Leonard, he really saw the [00:11:00] angles and the details.
This just reminds me of John D. Rockefeller, who is a boy, could also see the angles in those ledger books. He could see when someone was skimming, he could see the missing pennies, and he says, I had a passion for the detail. Small things become big things, and so for Leonard, this pulls them into small business at just the age of 10 years old.
And it starts one day when his dad brings home these shoulder patches and what he calls insignias. And uh, his dad had this business where he would sell things to military stores. So naturally he just brings home these insignias, uh, for Leonard and they really stood out because they were different. And he already knows from collecting and trading postcards that the unique items, they have a lot more value than just things that are common.
So at this point, we can really feel his excitement is increasing , he had something special and he goes to [00:12:00] work.
I remember one week being very excited because I had sold more than $10 worth of insignias. I took the money and put it right into my bank account at Central Savings Bank. I was a businessman. This was my first commercial venture, and it felt good. The money I earned from those sales was far more meaningful to me than my allowance because I had earned it myself.
From that time on, I was always interested in selling things. Business I thought was a good thing to do.
Amen. Leonard. Yes. Yes it is. Soon Leonard is gonna find himself doing his part, helping a Estée Lauder grow, and what would set this off? Well, world War II had started long before he came up with that term lipstick index. It starts to show its strength right here because as the war was going, more and more women entered the workforce to help out
for example, 65% were [00:13:00] women before the war, just 1%. And so this put more money in the hands of women. And what did Estée say about this? Women will open their purses for quality and that they did. Sales would go from $450 million to over $711 million by the end of the war.
This keeps Leonard busy for some reason. Right here. As we go through these next details, I picture Sonic the Hedgehog just running around at super fast speed. But with the mind of Einstein, always observing the details, building a collection of trusted sources.
I was sent out with a shopping list to see what I could find at the local drug stores. I'd buy a pound of emulsifier here in a quart of mineral oil there. I got to know the most reliable sources and became my mother's most trusted supplier. Then back at home,
the maid's room was where we stored the cartons of empty jars and the bottles. I was [00:14:00] in charge of moving the cases around to make more room, so I knew exactly how much the business was growing,
but then he is back out into the city. I was assigned the job of collecting the cash. Once a week. I'd hop on the bus and go from salon to salon. By the end of my rounds, my school bag was stuffed with between 100 and $200. A lot of money in those days.
Brick by brick, the foundation keeps getting stronger and he knew business was a good thing to do. But for Leonard, it wasn't all about business. He did have some free time and his parents, they would be traveling a lot for business. So this gives him time to explore around the city. And he says that he would fall in love with the movies and going to all of the various museums.
But on the subconscious level, I really do think it was all about business. He would say, I didn't know it at the time, but I was honing my eye for a life, appreciating art and design.
This is [00:15:00] gonna feed deeply into his business life, later on, designing new products and packages, and it just flows into his art collections as well.
Now the next thing that I wanted to share with you is that in her book, Estée, she spoke about this time when she and her husband, Joe, they had decided to go into business full time. So what they would do is they would have a meeting with their accountant and their lawyer, and it was just the four of them plus one more.
Leonard. Now imagine here that you're in Leonard's shoes. You're listening, you're watching the faces, the reactions, the verbal tones, everything that's going on. You're not speaking, you're just paying attention and observing. How would this make you feel?
There were five of us around the table. My parents, their accountant and lawyer, and me. After years of hard work and heartache, my parents had script together enough money to take an enormous gamble
instead of selling their products through small concessions in beauty salons, [00:16:00] they intended to break into the major leagues. Selling wholesale.
The accountant and the lawyer were horrified by their announcement. It'll never work. The mortality rate in the cosmetics business is so high, you'll lose all your money. They pleaded with my parents to reconsider Estée. Joe, we beg you don't do it. You're listening. You're watching.
Probably you're feeling ignored, but you're absorbing, not sure really what's gonna happen next. Are they gonna take this advice? What is the end result gonna be? The dinner ends. But then shortly after this, the golden response. Good accountants and lawyers make good accountants and lawyers, they would later say, but we make the business decisions.
And that stuck with Leonard experts. They tell you the risk, that's their job, but they don't live with the outcome. You [00:17:00] do
always make the business decisions right or wrong. Leonard talks a lot about decisions in the book, how important they are.
And I'll add additional insights about this as we go along with just four products. One saleswoman going up against Revlon, Helena Rubenstein, and Elizabeth Arden.
These were the titans of the industry. Leonard says that his mother would work outside, traveling all over the country, promoting and selling products. She always has her finger on the pulse and her hand on the face of the customers because Estée, she knew that if she had five minutes to show a woman how to use her products, that would almost always result in a sale.
She always said, showing counts more than telling a stay was correct, and the business continues to grow steadily. All of those years of servicing women in her home and in the small beauty salons developed a really strong network for her. [00:18:00] And this turned into a powerful word of mouth army that a Estée calls tell-a-woman.
This changes everything for them because it's hard to hide quality products. They're all natural and they just plain work. The Tell-a-Woman campaign is so successful that it leads to what I like to call, tell-a-store, and a stay uses this to her advantage, especially to land the Saks Fifth Avenue account.
One day she was scheduled to speak at this charity and fashion show at the Waldorf Astoria. It was, and this is just a few blocks from Saks. So what does she do? She goes out and she hires some models. She puts these blue sashes on 'em that say, Estée Lauder.
And then she instructs them to float around the room, presenting each guest with a container of a cream-based powder, saying This is a gift from Estée Lauder, A special gift from Estée Lauder, A gift from Estée Lauder.
A free gift from Estée Lauder
and from [00:19:00] Leonard's book we're treated with a special view about this event.
He tells us directly that in the later years, there would be a lot of rumors about this particular gift. It had been described as this duchess red lipstick that was in a metal case, but that wasn't true. The gift itself was a two by two box of face powder. How does he know that?
Simple.
I know that because I filled each one sticking on the Estée Lauder label and stacking the boxes, hundreds of them into cartons. My mother had this idea that by the time the woman got to the bottom of the box,
that they would've used the powder for so long that they would've become used to it and they would like it and they would want to buy more. She wasn't wrong about this. This has immediate results.
As the luncheon broke up, they formed a line of people across Park Avenue and 15th Street into Saks asking for a [00:20:00] Estée Lauder products. Uh, that's awesome. Estée and her company, they're gonna land their first purchase order from Saks for, $800. This is where the real fun starts.
Estée and Joe, they're gonna go out and pay six months rent up front to lease just the kitchen area of a former restaurant. They couldn't afford to lease the entire space. Eventually they're gonna grow into it. This is another view that we get from Leonard's book about the early days , in Estée book, she just says, restaurant
Leonard gives us some extra behind the scenes detail about that. They would go out and they would hire two employees to help them make the cosmetics and they would call this first location their quote unquote. Factory, Leonard's father, Joe. He's gonna work inside. He just oversees the factory and the business side of the company, and Leonard would say the following about his father.
He was the hardest working person I ever [00:21:00] met
for Leonard. He's gonna find himself on the payroll at 13. I worked in the plant most afternoons after school and most weekends I was paid 25 cents an hour, a good wage at the time.
Within two years, I had graduated to typing up all of the invoices. I was the billing clerk, not a billing clerk, but the billing clerk
And in any case, when you see your parents working so hard, that is what you do too. Their first year sales are gonna amount to about $50,000. He says that expenses ate up most of that, but that doesn't stop 'em. Estée Lauder focused on selling in the high end specialty stores. Tell-a-woman plus tell a store compounded with the persistence of a stay lauder to the saleswoman equals incredible momentum,
which oftentimes meant for Leonard that he was left to his own devices as his parents [00:22:00] worked nonstop. And this gives him a sense of independence. He was focused on his homework, he was focused on working in the factory. And then at the same time, he really loves exploring all over the city. I didn't realize it at the time, but I was getting used to making my own decisions, thinking for myself, and acting on my own.
By the time he's closer to graduating high school, he would often be left to oversee the factory while his parents were away on business trips or little mini vacations that they would take together. And as he finishes high school, there's this really big decision on the horizon. You see, Leonard, he wanted to study business. His father, on the other hand, had different ideas. He was really scared about the struggles that he had seen from the Great Depression, and he really wanted Leonard to focus on a profession. And he thought that a chemist would be perfect because he believed that if you had a profession, no matter [00:23:00] what happened to the economy, you would always have some kind of security.
So one day his father's gonna sit him down and he's gonna say, Hey, open up the newspaper. Flip it to the Help Wanted section. Now do me a favor, count all the chemist jobs. Leonard goes down the list, 30, 40, 50 openings. Now his dad says, go look for businessmen. So Leonard looks, his dad says, how many do you see? Zero point taken. But Leonard, he still has a different view. I figured that if I were a good enough businessmen, I could list my own help, wanted ad and hire my own chemist.
Then just to add to this decision, at this time, Revlon had come knocking. The founder of Revlon was Charles Revson, and he had offered Estée Lauder $1 million for the company. This is 1950 money. That is an insane amount [00:24:00] of money. In 1950. A stay flat out says no. She tells Leonard. I said no because I wanted to keep the company for my children.
And his reaction here in the book, he says, that was fine with me. I love working at the company, but I didn't want to be a chemist. Good choice, Leonard. He followed his passion in his heart. I admire that. So it's the fall of 1950.
Leonard sticks to his guns and he enters the Wharton School of Business.
As Leonard heads off to school, back home, his parents are gonna hit a wall. After five years. In business sales were still below $500,000 a year. And how do they keep going? The advice that they got was to advertise, advertise, and advertise even more.
This was the standard in the industry. The Titans that they were up against, they regularly spent between 20 and 25% of their net sales on advertising. So with Estée and her husband Joe, they [00:25:00] scraped together $50,000 and they go out to one of the national advertising firms thinking that this would be enough to get him off of the ground.
But this wasn't even close enough to get started. They were advised that they would need at least a million dollars to make even the littlest impact. It turns out that that rejection turns into a pure gift. It galvanizes into coming up with a different idea and doing it on our own terms. This reminds me a lot of Jim Casey, who was the founder of UPS, when they needed to expand the bank, rejected him
but the loan officer did give him some wise advice and he said, men working together, can do anything.
And so Jim turned this into determined men working together can do anything and it would become a lifelong maxim for Jim and UPS, who obviously go on to become the largest parcel company in the world.
His [00:26:00] mother Estée knows firsthand that free samples always resulted in more sales, and that once women tried the product, their word of mouth spreads and that becomes more powerful than any advertising campaign that they could ever dream up.
This firm belief compounded with the rejection, it changes everything.
My parents gambled on an audacious marketing scheme. They took their entire $50,000 advertising budget and ordered huge quantities of products to give away on a scale. Never before seen.
And what they did here was to send mailers to every woman who had a charge account where they were selling their products. They would invite them to come in for a free box of face powder, not a little sample and not some low end ingredients. These were the full size top of the line merchandise that would last a woman 60 days.[00:27:00]
They were the real deal and they weren't messing around. But something else is different here. The samples were made available with or without purchase, that without purchases what put them on the map. There were some other companies that were doing with purchase. They took it further without purchase, and this is a game changer.
No one had ever done that before. Women come out in mass scale this leads directly to high touch sales as women are made over by caring and trained saleswomen. That direct result was spontaneous buying.
It increases loyalty, and they see lots and lots of new customers. The department stores, they love the campaign just as much as they saw their sales of other products increased by more than a hundred percent. Leonard says a free sample was the basis on which a Estée Lauder was built. Meanwhile, Leonard, he's still in [00:28:00] college, he's doing very well here on all of his subjects.
Some of his favorites, he says, were business law, marketing and salesmanship,
but he wants to learn more. So he goes out and joins various clubs as you would normally do in college. And then he would eventually found one of his own, he would call this the cinema club. So for $1 you could join the club. This enabled you to see, uh, 10 movies, I think it was said in the book. And this was a really good deal because he says it costs $2 to see a new movie.
And then it was like a dollar to see a rerun, I think. And so this is just an incredible value. And he goes out and he sells 1500 memberships. Now the problem was. He only had seating capacity for 800, and I can really feel the anxiety kind of growing here because he was really scared that if he had a run on the movies, he wouldn't have enough seats for everyone.
So how would he fix the problem? This is really brilliant [00:29:00] here to siphon off some of the patrons. I launched a competitive film club. The Film Arts Society offered three films for a dollar 50 held in a different auditorium. This second club, they're gonna focus more on experimental type of films and quickly it sells out as well.
Now the really interesting part here, no one knew that he ran both clubs from the outside. They appear as competitors, different films, different audiences. Both of them are sold out. That's when it clicks
I learned a valuable lesson you can compete with yourself and win. It was a lesson that a decade later would spawn Clinique and would eventually inform the thinking behind the Estée Lauder company's portfolio of brands. The lessons in the book just keep stacking up. During the [00:30:00] summers, Leonard, he goes to work as a camp counselor for six and seven year olds.
What he does here, as he shows them everything in camp, including how to swim, how to play baseball, how to play softball, and he discovers that he was really good at teaching. Teaching kids forces you to focus on the absolute fundamentals of the topic. Start talking about anything extraneous. In fact, start talking about anything except the basics, and you'll lose their attention.
However, if you can successfully teach a 6-year-old kid, whether you're teaching him how to put his face in the water, or coaching her how to hit a softball, you can teach anyone anything. That's as true for selling as it is for swimming or softball years later.
These lessons are absolute fundamentals that become the core of the Estée Lauder training program training is all about teaching [00:31:00] people that they can achieve anything if they know what to do and how to do it, and giving them the confidence to do it.
Well, in the book, Leonard says that if you hired a new saleswoman and she doesn't make a sale that first week, generally they're out of there. They don't stay for very long, but if they do make a sale, they're staying for life. So we're back in college here, Leonard. He's making really good progress. What his parents are doing is they're sending him copies of all of the correspondence for the business, and he notices something really interesting.
A Estée Lauder cosmetics has branched into fragrance. It turns out that breaking into fragrance is way harder than cosmetics,
as it was always given away as a gift. It was normally packaged in an elegant bottle. It came with a special box, and it was only used on special occasions, so it tended to last [00:32:00] forever. It wasn't a high repeat purchase type of item. Estée in her book, she's going to give us some insights about her thinking around perfume and fragrance and why it was such a shame why a woman couldn't buy it for herself.
It was considered self-indulgent, narcissistic, and even decadent for a woman to treat herself to a bottle of perfume
Estée, she approaches this product completely differently. She doesn't call what she develops, perfume, she called it youth do, and then she marketed it as a bath oil. And this changes everything. It helps stay fulfill her lifelong vision of making women think about perfume the same way as they did about lipstick, and it gives women permission to go out and buy it for themselves.
Which they did at Neiman Marcus. Sales of a Estée Lauder products went from $300 a [00:33:00] week to $5,000 a week. Not surprisingly youth do would go on to develop into one of the world's best selling fragrances, and nobody saw this coming. They had successfully backed themselves into a market.
They flew under the radar in a very non-threatening way. Leonard learns really early here to pick his battles in what is a highly competitive and cutthroat business.
So if we fast forward here just a little bit, Leonard had just graduated from the Wharton School of Business. He finished his third in his class of 750, and he perceives himself as really smart.
I mean, that's pretty high up there. Three three outta seven 750. So he did what he thought was obvious. He applies to Harvard Business School and got rejected. And so he says he had to turn to what would be plan B.
In knowing how the book ends, this is absolutely the best choice for [00:34:00] him. He goes to apply to the US Naval Officer's, candidate School Leonard. What he's after here is he's seeking leadership training. He was really thirsty for it. I couldn't learn leadership in the company because it was such a tiny organization and there were no people to lead.
And to be honest, my parents didn't have any formal leadership experience. They pretty much made it up as they went along. I needed people who were trained in leadership to teach me, and that's what I got. The Navy gave me a PhD in hands-on leadership.
Quickly. Leonard is stunned. After a four month training program, he learns that he finishes 12th out of 24, middle of the pack. However, something shifts inside of him. I eventually realized, okay, I'm not the smartest guy around, but I only [00:35:00] need to prove myself to myself. I don't need to prove myself to others.
That was the key turning point. The ranking taught me the greatest lesson of my life. No matter how smart you think you are, there's always someone who's smarter. No matter how good you are, there's always someone better. I vowed that when I got out of the Navy and went into business. I would search out and hire exactly those people.
So if they were the head of sales, they would sell better than me. If they were a copywriter, they would write better copy. They all had to be better. I would respect and celebrate their abilities and never be threatened by them. This belief would play an enormous role in the growth of Estée Lauder and help us build a company of the greatest people in the world.
Leonard learns endless lessons in the Navy that he uses all throughout his career as [00:36:00] Estée Lauder. These, I think they're really deep, and what I wanted to do here is just run through some of the top ones that he shares with us in the book. I'm just gonna run down the list here real quickly so that you can get a feel of everything that he takes away from the Navy.
Decisiveness is a must. The wrong decision is better than no decision. We spoke about decisions earlier. This is drilled in even deeper.
Give praise about accomplishments and hard work is often as you can. Just be sure it's meaningful. Praise in public, criticize in private. Plus, he also says, never write criticism down on paper. People will just take that home and they'll read it over and over.
Always give criticism verbally. If you wanna write anything down, write down the things that you're gonna praise them for. When someone tells you that they did something good, thank them, and the person who did the good deed, [00:37:00] this doubles your gratefulness. You can delegate authority, but not accountability.
A leader takes actions for themself and their team. The buck stops with you. If you respect others, they will respect you.
Now. Another interesting thing that Leonard did here in the Navy was that he was tasked with teaching an American history class, which quickly becomes a hit with all of the sailors that are aboard the ship,
he learns something that sticks with them here,
the men learned about American history and I learned something too. Stories are a powerful platform, and a tale told by a good storyteller is far more mesmerizing than the sound of your own voice.
What he sees here is that men lean in when they hear a tale, not a lecture. So after three years, Leonard finishes his obligation with the Navy and he's preparing to exit.
And in the book here, he describes this [00:38:00] interesting strategy that he had learned and observed , the aircraft carrier always has a destroyer along with it. This helps to serve as a screen for the larger ship, and he didn't know it at the time, but this strategy is one day gonna protect the Estée Lauder flagship of products. This is something that we're gonna see here real soon.
So it's 1958, and Leonard officially completes his service with the Navy and he says the following about this, I had made an important discovery. I succeeded on my own. The Navy was not a family business. I succeeded not because of my parents and because of my name, but because of me.
That gave me the confidence that I could do anything I tried to do. And so Leonard, he's gonna take himself a little break. He's gonna head to Vermont for some skiing and reflection, trying to figure out what it is that he wanted to do in life.
He needs to choose an arena where he can lead. Life is about to give it to [00:39:00] him.
The sun was shining out of a sky as pure blue, as only the sky can be On a clear winter day in Vermont. It seemed to invite me to take a chance. As I swished down the slope, I felt I had stepped out of one life and into another. That day in Vermont, I decided that Estée Lauder was my destiny.
I set a new goal. I wanted to make Estée Lauder the best company in the world.
So as Leonard joins the company in 1958, they're still very small. They're doing less than a million dollars a year in sales, and I think they had something like a dozen employees or so, and they only sold to a handful of upscale specialty stores.
And so he says he started pouring over the sales reports and he can clearly see what is selling and what's not selling. And from this, he quickly builds a mental model for what he wants the future to look like at the company. My dream was to make a Estée lauder the General Motors of the beauty business with [00:40:00] multiple brands, multiple product lines, and a multinational distribution.
Leonard was familiar with GM's history and how they had blown past Ford's one brand with a really long list of multiple brands.
This was not just his first order business. He says it was his long-term vision,
and a vision it would be over the next 50 years that guided him. Now, shortly after starting something really big happens One day he's gonna walk into the buyer's office at Neiman Marcus and he's gonna learn some valuable, firsthand information.
You know, we have a product that every time we sample it, the customer comes back to buy it. Not most times, every time it's your youth dew bath oil, you have a winner there. Free market research. Leonard listens to the feedback and right away he goes and orders 50,000 samples of Youth Dew. By the end of the year, 80% of their [00:41:00] sales were coming from Youth Dew
This one act alone changes the entire history of the company. Revenues increase, and it's obvious where Leonard belongs. He belongs in sales, he's gonna take over all of sales, and he begins redefining the company. And so his first priority is to shine a spotlight on the superstar of the company. His mother.
He wants to make her the Betty Crocker of the beauty business only. She was a real person who was much larger than life Estée. She loves this and she plays the role perfectly. She was always dressed beautifully and she desired to be in front of the camera, and she did loads and loads of interviews from reading Estée book and this book, she actually didn't have to play the part, she was the part.
This was her deep inner purpose and her drive. She naturally thrived on this. She loved it. It was play [00:42:00] for her. Leonard says that the relationship would change into more of a professional relationship over time,
and as he works to open new stores, he uses his mother's natural sales skills to help him close deals with the buyers. And at the same time, he places her into the stores to train the saleswomen. And of course. Put her hands on women's faces, it all goes back to fiddling with other people's faces. Estée never gives this up.
She was always touching her customers. She wanted them to know how beautiful they were. Now, it doesn't take them long. The company quickly becomes the fastest growing and the hottest new brand in the specialty stores. But they still had a lot of work to do as they were behind in these high-end department stores.
So he rolls out the time tested playbook and he drops a large number of direct mailers. Now, keep in mind, at this particular time in history, [00:43:00] direct mailers, they're not that common. So this was really pioneering stuff. So he would send out as many as a hundred thousand mailers. And they would say something like, come into the beauty counter at so and so department store for a free sample.
And here's where things get interesting. This brings women in by the hundreds. Many times they'd be overflowing the stores and they'd be forming lines down the street.
Not only did they sell out, something else happens. It makes the other major department stores in the city sit up and take notice. Imagine with me for a second that you're a manager of a competing store. You look outside and what do you see? A long line of women down the street. There's no way. You're not gonna wonder what the hell is going on over there.
Leonard says that you have to make a splash, especially when no one knows you. Styles may change. The ripples from that splash [00:44:00] never stop. For Leonard as a young leader here, something else important is happening. He's learning to trust his instincts. This helps him connect the dots a lot faster. When you can make those business decisions faster, obviously you move forward faster in business.
This is the same instinct that drove Elon Musk to be everything on one more Falcon Rocket launch. The same instinct that made a Estée turned down that million dollars from Revlon. And the same instinct that we saw with Arthur Guinness on the last episode, who signed a 9,000 year lease on a rundown brewery, Leonard.
He goes on to also say that if you have to make a choice between what your head says and what your heart says, always follow your heart. Founders trust their instincts and they follow their hearts. Speaking of hearts here, Leonard, he's gonna meet his first wife, Evelyn, in the 1958, I believe it was said.
Yeah, 1958, and they're gonna [00:45:00] marry the following year in 1959. Here's how you know how deeply committed he was to the business. He goes out and he pulls what I like to call a Sam Walton move. He's on his honeymoon, they're out in California. They're enjoying themselves. He brings his new bride on a sales call to a store that was called Bullocks, not just one store.
They visited a few of them. Leonard, he goes on to explain later in the book that the store visits were always a priority for him. I guess he wasn't pulling a Sam Walton move. He just has that same entrepreneurial spirit as Sam, and he really knew that being in the stores was critical. Early in his career.
What he does is he plans all of his family vacations around store visits. He wants to be able to spend his time in the stores because he understood that the [00:46:00] best information that comes from the front line, he's always making connections with the folks that are there selling the products. He was learning his business from A to z
Plus another thing happens is that all of those folks out in the field, they got a chance to know him as a person, not as some executive setting in the high office. They got to know him personally and they can see that he really cares. This reminds me a lot of Sam ZeMurray, the banana man that we spoke about on episode nine.
He always said, there's no problem you can't solve if you understand your business from A to Z. Sam, He preferred to be in the jungles with his workers. Versus in the boardroom. This is how he keeps pulse on the company For a Estée Lauder, the interface between the customer and the business happens at the cosmetics counter.
These visits revealed to Leonard that California was unique and it was [00:47:00] special. He considered California as the pacesetter for the nation. The stores, they were always packed and the sales were through the roof. So Leonard, he's gonna place a special focus on this market. He and his team, each year they're gonna rent a van and travel up and down the coast visiting stores.
Now another observation that he keeps seeing. He keeps running into a wall with some of his product placements,
he had discovered that there was an executive at another company named Bob Barnard that had kept blocking him out. So what does Leonard do here? He goes out, he does some investigation, and he finds out that this gentleman is the best cosmetics executive in all of California.
In Leonard's mind, the conversation is. We have to hire him. He's the best. There is Leonard. He holds true to his commitment to hire the smartest people he could find. Bob is gonna join Estée Lauder. He's gonna end up running California, and then one day he's [00:48:00] gonna go on to become president and CEO of the company.
In the nineties, Leonard was always connected to the front lines, observing and hiring the smartest people. These were the nuts and bolts of everyday business for him.
Now shortly after Leonard is married, he starts expanding the company's product lines, and I see this as building the aircraft carrier, if you will, his mother Estée. She would develop what was called Re-Nutriv, and it would be marketed as the world's most expensive cream at $115 a jar. These things flew off the shelf.
It was different and it helped them launch at the top and more on launching at the top in just a moment. This product also helped them expand into the European market. Then to showcase Leonard's commitment, always hiring the smartest.
He goes out and hires this gentleman by the name of Bob, Worsfold to lead international sales. Leonard says the [00:49:00] following about Bob.
Bob was better than I was in so many different ways. Bob goes on to run international for the next 25 years.
When Re-Nutriv, it launched at the top, it was the first of its kind cream in the market. I mean, $115 a jar, and this is in the sixties. That is a lot of money from this point on, Leonard is focused to develop products that launch at the top,
launch at the top, and stay at the top. If you launch into the heart of the market, there's always someone who will sell a similar product cheaper than you, and you have nowhere to go but down in what becomes a race to the bottom. Launch first, launch strong and stay strong. It worked for us. Then it continues to work for us today.
Competition in the beauty business, as described by Leonard, is often war. It wasn't uncommon for companies to hire spies and then [00:50:00] send them to work at their competitors. That's just nuts. And then they would also copy products, that was just normal day-to-day business.
Leonard takes a different path. He still defended the company, obviously, but he learns to fly under the radar and pick his battles only when necessary. He had better things to focus on. The book has so much detail on this, and I really do hope that you can pick up a copy.
It just pulls you into the story and you can really feel what it was like during this time. And I just wanted to share a few examples real quick with you so that you can get a feel of this here.
Revlon, one of the biggest brands out there. They were known for their rainbow of enamels or nail polish, and instead of competing directly. With Revlon in this particular category, what Leonard decides to do is launch a completely new product that was called the Evening Makeup Collection. This [00:51:00] collection, it has a wide range of colors for your face, your eyes, and your lips.
For them, it was another launch at the top of the market. This was really revolutionary. No one had this type of evening makeup collection. Revlon would never catch 'em in this category.
Then shifting focus to advertising. It was normal to promote products that you wanted to sell, not for Leonard. He took a different strategy . The brand would be timeless and would translate across languages and countries.
Focusing on the brand would hone our identity and be our North Star., If a product is a musical instrument, a brand is the entire orchestra, remember he had that goal to create the GM of the cosmetics industry. They keep moving forward with products. They roll out the daylight collection, then they follow this by the Pharmacist Collection.
This was, uh, fragrances for Men. They had over 20 different fragrances, and the way [00:52:00] they broke into the men's category is with gift, with purchase, they gave away 400,000 free samples. So each time a woman would buy something, they would give her a sample to bring to her husband.
Needless to say, Armas went on to be an instant, hit another launch at the top to help expand the products. Leonard, he goes out and he hires the best r and d talent that he can find, and then finally, he fulfills a promise that he had kept to himself to hire a chemist.
The company today, they hold over 120 unique patents. Now, if we fast forward just a little bit here, we're in the mid sixties, Estée Lauder is the fastest growing beauty company in the United States.
And Leonard could see that customer buying trends, they're changing quite rapidly. More and more people are moving out to the suburbs in these shopping malls. They're springing up all over the place. Then in addition, young women [00:53:00] who were born during that baby boomer generation, they're starting to become old enough to buy their own cosmetics, and more and more women are continuing to move into the workforce.
Leonard notices something. what he sees is that the more that women earned. The more conscious they were about their skin and the skin sensitivity, they really wanted products that would match those expectations. For some reason, this section of the book and what he observes here kind of reminds me of, uh, what we talked about with Trader Joe.
In his book, he said the following, we had noticed the people who traveled even to San Francisco were far more adventurous in what they were willing to put in their stomachs. Travel is after all a form of education. This was also happening during the mid-sixties as air travel had started to become cheaper.
People earn more, they typically become more educated, and this is reflected in their buying choices. [00:54:00] So for both Leonard and Joe, they're both on the front lines of their business constantly. They can see the trends in. What do they do? They just stack them in their A to Z warehouse for a state Lauder.
They develop the first full line of hypoallergenic products. This line is called Clinique. Now this is where things get a little bit interesting, because if we think back to Leonard's college days when he had those two competing cinema clubs,
well, he uses that same strategy here with Clinique. It wouldn't be marketed as Estée Lauder, Clinique, or have any connection. Clinique was a standalone brand that would compete against Estée Lauder.
Leonard says
Clinique was the anti cosmetic and sold well, where Estée Lauder did not. And where Estée Lauder sold. Well, Clinique did not for Clinique. They would have their own counter space. They also had [00:55:00] Saleswomen who wore these, uh, white lab coats and then they market it to the younger generation of women who wanted these type of products.
And then to top it off, Leonard draws from his experience in collecting postcards and posters. You see the ad for Clinique is gonna be really simple, but highly effective. It would show a toothbrush in a water glass on the left side of the page,
and then on the right side there were three Clinique products and the headline, twice a day. So simple. I love that it's effective. The ad runs again and again and again. All over the United States. And all over the world. All they had to do is change those three words to match the foreign language, and it was perfect.
Everyone understands that concept today. The ad is celebrated in the Museum of Modern Art in New York. As Leonard moves into the future, the company, they continue to [00:56:00] develop products that serve three pillars, fragrance, skin, treatments, and makeup,
Which translates into more sales. At the start of the seventies, they were doing $50 million in sales by the end of the seventies, 700 million through the eighties, Leonard's gonna continue to run the playbook,
launching Prescriptives and Origins to compete against the Estée Lauder,
Then in the early nineties, Leonard, he says that they had a very difficult decision to make. Should they take the company public. The company was already being managed, basically like a public company. They would issue quarterly profit statements. They had outside auditors, they had separate profit centers.
They were basically doing everything that a public company would do. Anyways, Leonard, in the book, he offers really deep reflection on this decision. You can tell by reading the book that they really put a lot of time, attention, and thought into [00:57:00] this to do the right thing for the company. He does spend a lot of time in the book on this.
That's why I would highly recommend picking up a copy just to understand and know all of those details. One thing really stood out for me here is what he describes as patient capital. This is the first time I've really heard this particular concept, and I really like his view on this.
Because he says when they developed new products as a private company, it would often take them two or three years to pay themselves back because when they were developing products, they put a lot of r and d, a lot of care, and a lot of research into those products.
So it took some time to get those dollars back as it gained market penetration. But once they did, the profits were usually quite phenomenal. But if you shift your view to a public company standpoint, he says that this never would've been allowed.
'cause generally that's just not acceptable. They wanna see returns right [00:58:00] away. Basically, they want them right now.
So at this point, the company is worth $3 billion in the early nineties. So with everyone's blessing, they end up taking the company public. In November of 1995 for Leonard, he says that it really took a lot of pressure off of him financially. He really felt that as a public company, this gave him a lot of stability.
It's kind of the same thing that Sam Walton said when he took Walmart public. He said, going public really turned the company loose to grow. And it took a huge load off of me. And if we think about this for a second here, Sam and Leonard, they're both deeply impacted by the Great Depression Leonard.
He has a really great quote about this. You can take the baby out of the depression. You can't take the depression out of the baby. So I think I can really understand how he would feel more security by taking the company public.
He doesn't have to carry that burden on his back of [00:59:00] making sure that they were always financially stable. He can offload that. And for Leonard, it does give him some more flexibility and it gives him more free time in life, which he would turn his focus to growing his collection of art. However, he does continue to grow the company as well.
What he does next here is he continues to build on top of this concept of the aircraft carrier always being surrounded by destroyers. He calls this lateral creativity. I think we had mentioned that kind of at the start of the show.
Basically, this is getting ideas from everywhere and then using those in your business. One day, Leonard, he's listening to an architect who's giving a lecture and they say the following, they would plant young trees to understudy the mature trees when the older trees die. The saplings will be full grown and they will seamlessly replace the older trees.
[01:00:00] And then the grand revelation here, I realized we needed new brands to understudy our existing brands as well as to fill in the gaps and expand the company as a whole. We needed to launch or acquire competitors
so that as newer customers came into the market, they could discover new brands and make them their own. That lecture became the inspiration for our portfolio of great brands.
So with Leonard's leadership, Estée Lauder, they're quickly gonna acquire a company called Makeup, art Cosmetics, or MAC. MAC was this over the top brand that sold to all ages, races, and genders. Their target customers were those who had dyed hair of all colors, had tattoos on their skin, and were pierced in all places.
And then shortly after that, he buys another company called Bobbi Brown Cosmetics. They were completely different from MAC. They were kind of [01:01:00] a young Estée Lauder that they sold in these high end specialty stores. And then the key aspect for both of these acquisitions. Leonard, didn't try to combine them to save costs because he knows that would've destroyed them.
He lets them stand on their own. He keeps the original founders in place and he allows them to run the companies as they always have.
We saw this with Jim Casey. He used that same playbook to grow UPS as he acquired new companies. Normally he would do that for stock and then he would just keep on the original founders, and this really helped them grow because they knew the local markets. And then in addition, they were just empowered as owners to continue to drive the business forward.
They were stock owners and the better the business did, the better they did.
Leonard, he goes even further. He gives them more funding and authority to expand their brands as they see fit.
And another thing happens. He now has a playbook for acquisition and [01:02:00] he runs it over and over. At the time of the book here, they had over 25 brands and it says that they were selling in more than 150 different countries. This book is a really fun read.
It's a fast read. It's a great book full of interesting stories. It really feels like a playbook similar to like Sam Walton or Joe's books.
The concept of lateral creativity. I think this is how we can gain the most from books like this. Taking lessons from the stories that Leonard shares with us. Stripping out his products and inserting our own if we just think about this for a second, 15, maybe 20 bucks for this book, it contains way more valuable information than I've ever personally learned from any class than I've ever taken.
Personally speaking, I would love to see this book put into some kind of visual mind map to see how all of the things that Leonard learned in one area of his life. [01:03:00] Are applied in his business. I think that would be really fascinating., Then if you could somehow overlay similar thinking from founders like Sam Walton or Joe Colombe on top of this, I think that would be super, super powerful.
This is why I really believe that podcasts like this and so many others that are out there are first class education. They help you see those connections. I realize that a lot of people may not have time to sit down and read good books like this one, but they can listen to podcasts as they're doing other things in life.
Which is where I also find a lot of value when I'm listening to podcasts. I love listening and learning to podcasts, and then creating them is just a joy for me. I really hope that you found some value today in the episode, and that some of these lessons that we spoke about will help you in some small way in your business especially, especially if they help you serve your customers better with more value.
That really is my ultimate [01:04:00] goal, to take the ripple from the books that you and I talk about, pass it along to you so that you can pass it along to your customers.
I just wanted to leave you with a couple final words from Leonard. I'm often asked what I'm proud of. I'm certainly proud of creating and nurturing products and brands and companies that bring in new customers, but what I'm most proud of is mentoring people.
Until next time, make it a beautiful day in the neighborhood, my friend.