Welcome to Howl Leaders Lead, where every week you get to listen in while I interview some of the very best leaders in the world. I break down the key learning so that by the end of this episode, you'll have something simple you can apply as you develop into a better leader. That's what this podcast is all about. And today's guest is Kendra Scott, the founder and executive chairwoman of the popular jewelry brand, Kendra Scott. Now here's the question for you. Have you ever gotten stuck because you felt so overwhelmed by how complicated something seemed? I've been there, believe me. It happens sometimes when you launch a new initiative or start a new role, and especially when you come up against a new challenge. Sometimes in those moments, we as leaders can over-complicate things. And when we get bogged down like that, it's really tough to make good decisions and keep our teams moving. Now, if you can relate to what I'm talking about, then you're going to love today's conversation with Kendra. She knows how to strive for simplicity when she comes up against the challenge. And let me tell you something. She has faced her fair share of challenges, from a business failing early on in her career to learning how to grow a business from the ground up and even managing through crisis time and time again and coming out stronger for it. With persistence, she pinpoints the heart of an issue and creatively finds a simple, effective solution. There's so much we can learn here about how to strive for simplicity. So here's my conversation with my good friend and soon to be yours, Kendra Scott. Kendra, it's so exciting for me to have you with us today. I want to start by asking about your very first employee, which I understand was your mother. And I know that she worked for Mary Kay. And by the way, my mother was an Avon lady. But anyway, I have to ask you this trivia question. Do you know how Mary Kay recognizes their high performers? Yes. All right. They would give tokens. And lots of times they were pins or broaches. And they were bumblebees. My mom had a lot of bumblebees and she would wear them all on her shoulder pad. Because it was the 80s. She's a general, right? Yeah. And they'd be all sitting on and they were all different styles and colors. Some had stones in them, but it was a really big deal when she received some of these pins for sure. Why the bumblebee? That is a great question. I have the answer. I have the answer. You don't have it. Okay. No, why the bumblebee? The baro dynamically, the bumblebee should not fly, but it does anyway. Isn't that cool? That is so cool. So it just does it? It doesn't. Because it wants to. It doesn't because it wants to. And I was thinking about this. I was going, how does recognition play into your persona? Oh my gosh. I mean, first of all, I think, you know, one thing that I learned a lot from my mom and watching through Mary Kay was how important it is to recognize those that are working hard, that are doing a great job, that are representing your company positively . And so you'll see, you know, we do that daily. I don't think it has to be something that you have to wait to recognize somebody with. Of course, we have our pillar awards and our annual meeting where we talk about our three pillars, which are family fashion and philanthropy and folks that are in our company that really, you know, just exemplify those pillars. But I believe in like kind of that high five factor. It's like, you know, on a great week, I want to recognize folks for what's going on. And I think that recognition can be constant. So it's a big thing for me, you know, and I loved seeing it through Mary Kay and how much it meant to my mom was a director and her group, she called them the Jan's Jewels. So there you go. Like it was, it was out there. It was destiny. It was destiny. And she called them the Jan's Jewels and they would come to my house and we lived in Wisconsin and in our basement, she would have her team meetings and they would start out with these songs, Mary Kay songs where they all be clapping and singing. And I'd sit on the steps as a little girl and I would hear my mom passing out ribbons and awards to her best sales associates and just seeing like the power of gratitude and how those women on her team, not only were doing it for themselves, but they wanted to support each other and lift each other up. And it was just a great example for me and it stuck with me of what I wanted to create someday. I didn't know it at the time, but when I look back, I think now that had a big imprint for me for sure. I understand you have these kachu Kendra cards. Tell me about that. You've got a lot of good information. Yeah, well I dig a little bit in here. Well, so in the olden days when we just had our first store and you know, I would bring my business cards with me wherever I went, like, you know, typical, that's what we did back then. When it was before you could just like put your iPhone up to somebody else's iPhone and give them your contact. We weren't quite there yet. Technology wasn't quite there. So I would carry my business cards with me. And if I saw someone wearing my jewelry, I would first of all get so excited and I would go up to them and I'd say, oh my gosh, you look so beautiful in your Kend ra scotch jewelry. Thank you for wearing my designs. I'd love for you to get a discount at the store next time you come in. So I would write, you know, 15% off and I'd sign my name Kendra scot, bring this card in and they're going to give you a discount. And I mean, I would do that all the time. And so we finally thought one day, well, what if we created cards and we could give them to all of our employees to pass out? And so they became these little gold square, almost like a, you know, golden ticket like Willy Wonka and it said, caught you in your Kendra on it and they'd have a discount on the back. So now those cards are distributed. All of my employees nationwide have them. And if they see anyone in an airport restaurant in the ladies restroom, if you 're wearing Kendra scotch and you get caught in your Kendra, you get a caution in your Kend ra card and you definitely get told, thank you for us for supporting our brand. I love it. You know, I had a conversation once with Colin Powell and he was talking about the power recognition. He says, it shows that somebody's watching and you know, you're recognizing your customers, which I love. I don't want to get to how you started the Kendra Scott brand, but I've known and I've seen where you've written and said that, you know, every day you've seen Kendra Scott sales go up, you know, it's been growing. And then all of a sudden here you get hit with COVID-19, you know, what were you thinking the day that you had to close all your stores? Oh, it was, I mean, it was a, it was a tough day. I have to tell you it was the tougher day. David, as usually the night before you make those big decisions. And I, you know, I remember very distinctly, you know, in during the recession, sitting on my kitchen floor, worrying how I was going to pay off the line of credit that the note got called because they considered my business high risk. And the night before having to go into other banks to ask for help was scarier than the day itself. But on the night before we had to make that decision after hours and hours on the phone with our board, the thing that was paramount, there was no question to me. What the right decision was. And the safety and the health of my KS family, my employees and of our customers, which we consider our family was the most important thing. And you know, I believe just like I saw what happened coming out of the recession, that it is the struggle that can make us stronger. And sometimes in the scariest, most uncertain times, most magical, incredible things come out of it. I wouldn't be talking to you today if the recession didn't happen. It forced me to change my business model. COVID-19, this pandemic, this crisis is forcing us to get uncomfortable again. And sometimes you got to get uncomfortable to make great change. And it is causing us to do new and exciting things with our customers that we hadn't really thought about or maybe thought about it, but was like, oh, we'll get to that later. And it's really forced us to connect with our customer in a new and exciting way. And so from this challenge, I've learned so much and I'm excited for the future , terrified and excited at the same time. Let's be truthful. So what advice can you give to others on how to prepare for something unexpected like this? Well, you can't always prepare, right? I think it's important to run your business to where you have those rainy day funds. This is why they call them rainy day funds. It could be a recession fund, a pandemic fund, a variety of natural disaster fund. But having some cushion is always helpful, right? Having great relationships with your banks is a really important thing too, right? And to run your business as effectively as you can, but to know that sometimes the greatest laid out plans are not always going to come to fruition. And that you have to be willing to pivot. You have to be agile. You have to be willing to shift. And you have to have a team that has that entrepreneurial spirit. No matter what size you are, right now we are acting like a startup again. And it is so fun because we're all rolling our sleeves up every day. We're collaboratively thinking and we're just making things happen. We're not waiting for all the red tape and trying to like, oh, let's strategize about this for four months. And then let's, you know, we're just going. We're just throwing things up against the wall, seeing what sticks and moving on each day. And it's such a fun thing to be a part of. So I think from any business, you know, we are trained that we have to do all these long-term, you know, goal setting and planning and budget planning. And this is such a great lesson. You can do your two-year plan, your three-year plan, your five-year plan. It's great. It's not not that it's not great to have a plan, but know that that plan very likely could completely thrown out the window and you've got to be ready to step in and be creative. I love that idea. You got to be ready to pivot, you know, and that's great. And you've got to be agile. I think you can't be too like, this is how it is and this is what we said we're going to do and it's going to have to be this way. Those businesses aren't going to be able to succeed. You got to go, okay, this is our new normal today and this is what we're going to do today. And the way I focus it every day is, where is my customer today? What does she need from me and our company? How can I support her and give her what she needs? And I'm thinking of that every single day, not five years out. I'm thinking about where is she in this moment of her life and how can I support her? Yeah, that's great. You know, I always think positive energy lifts you up, negative energy brings you down. You're renowned for your positive attitude. Has it been hard for you with all this gloom and doom and this crazy time? Has it been hard for you to stay up? You know, there, I think there's, you know, definitely ups and downs and there 's peaks and valleys. I am an eternal optimist and anybody that knows me knows that I'm always looking for the silver lining in the darkest of days. But there have been days that, you know, I have gone to bed at night and my heart has been heavy because of some of, you know, the decisions we're making within our company are trying to figure out how we can support our employees while we're working through getting our stores reopened. And, you know, those moments are real and they're real because I love and care for my employees, if they're my family. And you know, when you are the leader of a company, those families matter to me . And so, you know, I think, but that's where the optimism comes in because if I let the doom and gloom and the knots in my stomach and my heavy heart take over, I won 't be able to get up and do what I need to do to get this company where it needs to be so all those people can live a happy life and a successful life with their families. And that's what drives me to jump out of bed and go, "Okay, let's take this tiger on." Great. I'd like to go back to your childhood again. Can you tell me a story about a person when you were a kid that really influenced you the most on who you are today? I mean, did you have that special person that you looked up to? I had a lot of special people. I'm lucky, but I would say my mother and my aunt were two influential women in my life watching my mom be a, you know, housewife and a mother and then build this business out of our like laundry room through Mary Kay was so inspiring to see that and to see how she's still balanced being a wonderful mother, a caring mother, but she was had this fire in her to do something and have her own career. So I really admired that. And then where I grew up was in a little small town in Wisconsin. And so it's not exactly the fashion like Mecca of the world, David. Okay. Let's just say. Fashion is everywhere, you know? You're opening all these stores. Right. But back then it really wasn't. And my aunt lived in Milwaukee, Wisconsin and she worked for a department store and she was a fashion director. So that allowed her to go to all the fashion shows in Milan, in Paris and you name it New York City. And she would come back with all the pictures on little slides of these shows and she would show them to me in our basement. We'd be clicking through and she had to teach me then how to trend forecast. That was her job as fashion director and how to take these really elaborate couture shows and designs, but make them work for the real woman. The woman who's going to the grocery store, picking up her kids at school and heading to the, you know, her office. And I think that was such a eye opener for me. And when I would go in her closet and wear these clothes that she had and put on her, you know, jewelry and all the things, I didn't feel like a girl from a little town in Wisconsin. I felt like, you know, a superstar, a runway model. And in that moment, I realized fashion was magic and it can transform how you feel. And I knew that that was something that I wanted to be a part of. Tell me about your first experience, the hat box, Brandon. Tell me about that. Everyone loves to talk about the hat box. I love it too. You know, why do they love to talk about it? Because, you know, I think it's important to talk about the failures that people have. I think it was the greatest education that I could have ever gotten in retail. I started that business when I was 19 years old. And that was not the plan. The plan for me clearly with my parents was to go to college and get a good education. And when I said that I was going to take some time off to pursue opening a hat store, my parents at first were like, okay, but surprisingly supported me during that decision. My stepfather was battling brain cancer. And I had met so many men and women that were going through chemotherapy, losing their hair. And it inspired me because there weren't a lot of great headwear options that were comfortable and still made people feel good about themselves. And it just inspired me to want to try to do something. And so that's how the hat company got started. And I had every intention, honestly, of going back to school someday. I really did believe it was a break. But the hat box, it was five years, I ran this little store. And I realized I couldn't just do hats for people undergoing chemotherapy. I made hats for everybody. I mean, you needed a wedding hat, Kentucky Derby, Jester hat, Top hat, Fedora. I mean, I had it. And I had this big vision, David. I was going to open hat stores across the country. Everyone was going to wear hats again, like it was 1940. That did not happen. No one wears, I mean, people do wear hats, but not like 1940. And unfortunately, after five years of trying to make this little store work, I worked seven days a week, open to clothes. I couldn't do it. I was buying other designers hats. I was getting basically a keystone, which 50% margin with overhead and everything else. It just, you couldn't make the numbers work. But I look at that. And when I had to close that store and my stepfather passed away right before that happened, I just felt like in that moment that I was the biggest failure. I had let him down. I'd let my family down because I didn't pursue my college education. All of those things going through me. And I realized when I started Kendra Scott that that store taught me retail 101 better than any college education could have given me, I understood margin. I understood overhead. I understood what it felt like to make payroll. I understood how to handle a float. Right? Like, there were so many things I learned that you couldn't read in the textbook that could have ever gotten me to that place. And so I think it's an important thing for entrepreneurs to share their failure stories because they are the bridge to their success. And I don't know any entrepreneur that hasn't failed miserably. Like, I mean, most of it, it's pretty miserable fail that haven't said they're so thankful. Now it didn't in the time it felt horrible in the moment. But now it's like one of the greatest gifts I was ever given. I have to ask you though, five years, pour in your life into it. Obviously for emotional reasons, what was your immediate next step? I mean, how'd you pick yourself up the next day? Close the business. What happens? It was devastating. I mean, I can't tell you that it wasn't. But I had to go get a job, David, because I had rent to pay and I had bills I had to pay and I love my mom. But I didn't want to move back in with my mom. Okay? That would have been real all time low. So I'm like, I got to pay for my little one bedroom apartment. I got to pay for my food. So I went and got a job. I mean, that's what you got to do, right? And so I got a job with a travel company that had a magazine associated with it , a travel magazine. And I worked there and traveled. But what was funny is in my hat store, I was making jewelry as just a side thing. And I would put it in the shelves and the day I'd put it in, it would sell out. So the answer to my future was right in front of me, but I was so blinded that the hat thing had to work. I wasn't paying attention to what was working until I closed the store and customers from the hat box are calling me Kendra. Do you think they're calling me for the hats, David? No, they were calling me for the jewelry. They're like, I want to pair earrings to match the necklace I bought from you or I'd love to buy a necklace for my sister's birthday. So I was buying stones and supplies and making jewelry for my hat box customers and realizing that's what they missed the most. This little just side thing that I kind of threw in there on the side because I enjoyed making it. I thought it was just for me, it was kind of like a fun thing, a release. I'd like to go home and work with my hands. And I loved colored gemstones and I couldn't find them anywhere. So I was always buying up. How'd you learn how to make jewelry like that? I mean, how'd you learn how to do it? You're going to laugh at this because I laugh at it too because I got told so many times when I started Kendra Scott. What school did you go to? Did you go to Parsons, FIT? Where did you go? And I'm like, well, I took a bead class at the local bead shop in Austin, Texas . Then I took a class at the community college, a jewelry making class. And that's what I did. And I literally would. We didn't have the ability even then to go on YouTube and there wasn't any of this stuff to watch it. So yeah, I took little bead classes at the local bead store and learned how to wire wrap and learn how to do basic things and really just kind of self taught myself. I'd sometimes even break apart pieces of different jewelry to kind of see how they were made, what technique they used. So I could try to figure out how to replicate it. Wow. So this hat box, there's a real silver lining in the cloud there. You get the marketing 101 of retail and fashion. And then you discover that you've really got a product line that people really, really love. That's fantastic. You know, most entrepreneurs, and I want to talk to you about your institute that you have at Texas later here, but most entrepreneurs, they intuitively solve problems that exist in a category. You know, what problem did you solve when you launched the Kendra Scott brand? You know, I think at the time you have to look for the white space in any market that you're looking at. Again, after the hat box, I have to be honest, I wasn't thinking big like that. I was just thinking about, well, what do I want that I can't find? And I wanted beautiful color. I loved semi-precious stones, but I couldn't afford what was out there. So I thought I could make a beautiful jewelry line of handcrafted jewelry in this gorgeous semi-precious stones, but attainable in price for a woman. I think she would like that. And it was really because that's what I wanted, what I desired. You know, and I think that was the magic. There was costume kind of, you know, Claire's boutique, very low-end. And then there was bridge jewelry, which is sterling silver, more expensive, but that fashion jewelry category, there was a missing piece that bridged fashion to the bridge jewelry to find. And I really felt like there was an opportunity there to do something special. And the other big thing that once I kind of got going, I realized everybody was using the same shaped stones, just buying from stone vendors and reworking it. So no one had a unique identity in the fashion jewelry category. And where I thought I wanted to be recognizable, I wanted to be when you saw my jewelry, you knew it was me. And so how could I do that? And I kept thinking about it. And it was shape and color. If I could play with enhancing natural stone and doing really cool color and then giving unique shape that we owned that shape, that could be a way to do it. And so in 2008, we introduced our first custom shape. And that's when you kind of start seeing the business really taking off when people were recognizing it and saying, are those Kendra Scott? That was an exciting moment. It's interesting, though, you know, I talked about entrepreneurs, intuition. You wanted to create something, you said that I want that I can't find. So you solved the problem. And there are just a lot of people like you out there. You didn't know how big the market was, but that's how you went after it. Well, and that's what, you know, you look at Sarah Blakely. I mean, that's exactly what she did. She needed this for herself. And it's, you know, it's the same kind of thing. A lot of times it's what you want that you can't find. I promise you, there's a whole lot of other folks out there that feel the same way you do. And then carrying this a step further, you go into the retail store. You get into bricks and mortar. What problem did you solve there? So this is interesting because before 2010, so 2002, I started the company. So that here we are eight years in. And I was just selling to other retailers because after the half-box, David, I was not going back into retail. That was scary. That was so scary. I had never wanted to go through that again. So I was just going along, building the business, but very gradually. No, nothing leaps and bounds, no lightning and a bottle growth. And then recession hit and I realized all my eggs were in the basket of these buyers that worked for these other retailers. And then I didn't have a direct connection to my customer. And I was the one, I wanted to speak with her directly and I didn't want anybody else to do that for me. And the recession really shifted how we run our business. And in 2010, we launched first our e-commerce website. We launched an interactive experience. And again, I was like, I want to be able to go in and bring a shirt or a dress and say, I need a pair of earrings to match this tonight. And if you did that in my design studio, you'd see all of our stones and our designers would just put in stones in the settings and they'd go out to dinner with their friends with a custom pair of earrings. So we created Color Bar, which was a customization thing that wasn't out there. Nobody was, this is before Nike ID launch their stuff. I mean, this was very, very new and coming out of the recession, I was able to build this in Austin digitally for like the biggest bargain in the world. And let me tell you, I tell our IT people this all the time when they show me the bills. And I'm like, I rub it in on what I created the first Color Bar with. But that was really innovative in that time to do something like that. And then I opened our first retail store, not again thinking we would open retail stores all over the country. I really wanted it more as a laboratory to learn, to listen to our customer, have that interaction with her. But if I was going to do it, I wanted to do it my way. And I thought about, okay, from a customer perspective, what do I love about going into jewelry stores? Guess what? I didn't love anything about going into jewelry stores before. I hated going into a jewelry store. I immediately felt like I was being judged. Everything was under glass. If you asked for something and you didn't want it and they put it away, they kind of like, I felt like I was embarrassed to ask for something else to see. It was a very intimidating experience in shopping for jewelry. So what I wanted to do was take all the scary away. I wanted to make it fun, inviting. I wanted the jewelry really displayed where people could touch and feel it, try it on. There was nobody looking at them, judgey, the opposite. We'd hand you a glass of champagne and a cupcake on your way in. We had the color bar where you could interact and we would be visiting with you . We were very event driven, always having some type of event for community, service. And so it really was this, it was a party in a store. I mean, it was so fun and it was a community. It was an experience that made people happy. And from day one, I believed that the most important thing we could do is create a connection with our customer. That the transaction will follow. And the goal of the store was let's connect, let's learn from our customer, let 's find out what she loves, what she hates, what she wants more of. And then let's utilize that to build the best collections we can. What happened was that experience was so magical that we would have lines down the block to get in. It was like they were releasing a new iPhone or something. I mean, it was unbelievable. People could not wait to get into our stores. And that's when we knew, okay, maybe this isn't just a one store situation. Maybe we could bring this to other places. So you totally disrupted the category before people were talking about disruption. You really, you changed the game in terms of what a jewelry store was really all about. And I think that's funny because right now they're like, you were on the forefront of this disruptive. And I was like, you know, guys, I didn't know that's what we were doing. I again just knew I wanted to do something unique and different. And if I was doing what everybody else was doing, why do it? Why do it? Because that wasn't clearly for me wasn't working. So I think, you know, that mindset of, you know, I always tell my managers to this day, never walk in the back door. I want you to walk in the front door of your store every day. And I want you to see it with fresh eyes like you've never been there before. And look at every single thing from the customer's perspective, and you're going to learn so much. And we do that every day. We walk through the front door. Good. Good. You know, you are obviously a tremendous innovator, whether, you know, it was just thinking about what you wanted or not. I mean, you are an innovator. There's no doubt about it. Now you've got this big company. How do you drive the importance of innovation in your company? I think it's one of our most important, every day I always say to our folks, we can never be complacent. And I think a lot of businesses start to get to certain levels and they're like , oh, yeah, we're really on top of our game right now. And they can become a little complacent. That's when you have to work harder, in my opinion. And we are never complacent. Every day I say, we have to wake up and we have to think about how am I going to surprise and delight my customer today? What are we going to do today that's going to surprise and delight her? Because to surprise somebody, it's not doing the same playbook that you did yesterday. You're doing something fresh. You're being innovative. You're connecting with her in unique ways. And when the pandemic hit, okay, we are used to this physical touch with our customer. And I believe still that human touch is so important, but you don't have to physically touch someone to touch them. You can touch their heart. You can touch their spirit. You can touch their mind. And we're figuring out ways now. How do we do that virtually? How do we do our Kendra gives back events, which are supporting local community charities, when we don't have stores to open? Well, we did them virtually. And now we have 1,200 of them booked because so many nonprofits need our help. You know, what do we do because our customer can't try on the earrings in the store anymore? You know, we used to, like I said, we had the signs that said, have fun. Try on. We want you to play with the jewelry. Well, she can't physically do that right now. How do we solve this problem? Virtual try on. We did a program for Virtual Try on in a matter of weeks because our team was able to just go. I gave them the green light to make it happen, that the red tape was taken away . We need Virtual Try on. Let's do it. That went live, you know, just last month. So I think it's that conversation of, you know, where's our customer at? How can we surprise and delight her? And when you look at that from that perspective, it makes making decisions a lot easier. You've got such a great insight on the customer, particularly in retail. I mean, everybody just talks about transactions, transactions, connections. What a great way to get your people to think about how to really satisfy customers. I love that. You've got a great way of simplifying. You have this thing called the sister rule. Yeah. Talk about that. I love this one too. Well, you know, again, like you just said, I think so many companies, you'll get a customer service packet that's like 200 pages and you give them to a new employee and you say, here, here's our customer service and policies. Read this. Good luck. Thank you. And they go home and they're like, Oh my God, mine is simple. It's a sister rule. This is your customer service. Okay. This is your policy. You treat every customer like they were your sister or your brother. Hopefully you like your sister or your brother. What would you do for your sister? If she had a broken earring, you'd fix it. If she lost one earring, but had the other, what would you do? Give her 50% off on a new pair. It's just take care of her like family. Treat your customer like you would your family and I give every single associate part time, holiday help, interns, the power to please. You do not have to ask for manager approval in a Kendra Scott store. You in that moment, you make a decision, the best decision you can, but you make a decision and you help that customer. It's very simple. And when you give young associates that power, that trust that you believe in them, they will do magical things. If you don't believe in a part time sales associate, then you shouldn't have them on your floor. They're the most important person in your company or the people that are interacting with your customers. So if you don't think that they have the power to make a decision, why did you hire them? Right? So I think the mentality of customer service could be so simplified for businesses. They get over policy driven and not that there aren't good foundations of how you handle things. But I also think it's important to think about how you can really empower your people to give the best service they possibly can every day. That is like the sister rule. It's so simple as I mentioned and you know, versus the hundred page manual on how to do all this stuff, you've got the sister rule, then you talk about connections versus transactions. You lay a bed at night and think about these things, these ways to simplify. I mean, how do you take the complex and simplify it like that? Has it just come natural to you? I mean, I don't, I think the way I've always thought about it is you just, you know, you wear a brand of kindness. I want to have something that spreads joy. And so it makes it really easy for me because if a customer walks in our store, that's a win. We have just won today getting people to walk through your door in a brick and mortar is a win. That is a win. Getting her to stay and enjoy her experience, even if she doesn't buy something that day and she walks out smiling, we won again because she will come back or she will go online or she will tell her friends about that experience. And I think we've got to get out of what we thought brick and mortar was built for. Today's goal is XYZ and these number of transactions. And if you don't do this today and what is the number of, you know, if the people came in and they didn't convert, your conversion rate is off by this percentage, you failed. You have failed. I don't look at it that way because I look at our overall business. I'll look at how a market is lifting. Are we driving revenue to our website? Are we driving revenue to our wholesale partners? Are we seeing a lift? Has that lift happened because a store was there and that experience that we're giving and that community outreach that we're doing, that is success. That's how I measure success. We'll be back with the rest of my conversation with Kendra Scott in just a moment. Is your company's vision simple enough that all of your people can understand it and really get behind it? In my conversation with Larry Merlow, CEO of CVS Health, you'll hear how simpl ifying his vision made a massive difference in their company. I asked everyone, which one is the mission? Which one is the vision? You got a 50% chance of getting it right. And that's exactly what we got. 50% of the people got it right. And I still remember in that meeting, making a commitment that, look, this is the last time you're going to see this mission and this vision because we haven't been able to operationalize it in terms of bringing a day-to-day meaning to our work. And if we can't answer that question as the leadership of the company, then how good a job are we doing leading the thousands of individuals that are counting on us for that level of leadership and focus and direction? If you want to lead well, you need a simple and compelling vision and you'll learn how to do that in my conversation with Larry. You know, in 2012, here on How Leaders Lead. You've learned everything pretty much by yourself. You don't have the NBA, but you have the NBA by experience for sure. You know how to make the jewelry, how to source the jewelry, how to sell it. How did you go from being this basically one-person band? Now you've got this incredible organization. How do you have to change as a leader to scale the business? The most important thing I think I realized early on is I know what I'm great at, but I know what I'm not great at and that is the biggest lesson that any entrepreneur should know. Any entrepreneur that thinks they know it all, that they are the king or queen of everything and they can answer every problem and they're the ball. That's where they fall down and they will have mud on their face. The biggest thing I learned right away is I knew. If I could focus on the things that I was great at and I could bring other people in that were great at the things that I was not good at, but that's the things that they excelled in and that we shared core values, that they were kind, they were thoughtful, they understood our core values of family, that would be able to build a winning team and that's the key is bringing people in at the right places, the right people that understand where you are and also planning ahead. I didn't bring people in for today. I bring people in where I said, this is where I think our company is going in three years. I want to bring somebody in today that can get us there. If I'm bringing somebody in for where I am today, I'm not going to go very far. Bringing in really great talent was important and fortunately we got incredibly lucky. We were lean, we would all roll our sleeves up and that was part of the culture was we wear a lot of hats, we do a lot of different things. No one's too good to do anything at Kendra Scott and it was scrappy and it was bootstrapped and it still is a lot of fun. You have to put as you've gotten bigger more process and discipline around what really matters. I know that doesn't even sound like your language, but big companies would say you've got to have the process and discipline around what really matters. You've got your sister role and you've got a lot of things that really make just such great common sense, but you're big now. It's like how you open up stores, how you make money. What's your thoughts on process? You know, look, you're absolutely right. You have to have those elements to run a successful business, but I think it's how you put processes in place that matter. Again, if you inundate folks with so much process, then you lose that entrepreneurial spirit, that entrepreneurial mindset and I think a lot of big companies get over processed and from start to end becomes all of this minutia that people have to try to get through this forest of confusion where when you're young and you're agile and you're a startup kind of mode, your points are much shorter. It's like here to here, here to here. We go, go, go, go, go. I think for me trying to figure out ways that you obviously we want to give some process, but taking out all those trees and making the path a little bit clearer to walk on is my job. I do look at it from a way of a 360 approach of I'll look down at that forest and when I start seeing too many snarly trees popping up, I try to go down and go, "Hey guys, we're over complicating this. Let's pull some things out. Let's make this a little easier and let's empower our people. Let's empower these amazing people that we've hired to do great things. Let's do that." I want to sign up right now. I'm ready to go. You need an ex-marketing person or something like that. You're hired. You're hired. Thanks. I definitely try to be kind, so that's one of the good things. Tell me the story we talked about. Scanlan, how did you go about raising the capital, go national? It took a lot of money to get to where you're at. When I started, I started out of my bedroom and I started with $500, which is a true story. I first just got a line of credit. I signed everything I had up for collateral. I joke that I think the shoes I was wearing the day I went and signed the loan was probably also up for collateral. It was scrappy as scrappy can get. Basically, I was trying to just reinvest everything to keep growing and building. I didn't take on any investment capital for almost 11 years. If you can believe that, I did it on lines of credit, debt, and credit cards. That is how I was building the business. In 2010, when we opened our first store, we just saw such an immediate, it was just unbelievable what this little store was doing that we opened a few other stores and they were also having incredible results. We did this again with no financing. I have a lot of mentors. I believe so much in having great mentors around you. One of my greatest mentors, I came in and I just said, "I'm trying to figure out what to do, how I go about doing all of this. Now we're opening stores. It's a big investment. It's my name. I'm personally guaranteeing everything at this point." He said, "Look, can I please invest?" I was weird back then a little bit about giving away equity because here I was. It's Kendra Scott and I'm a standalone business and I don't want to give up any equity. I want to own it all. When I looked at this partner, he was somebody that I wanted to have on my team . He believed in me. He's always been there for me. He was my first investor and he got 5% of the company. I wasn't giving away too much at that point. He gave me a pretty fair valuation. I think our agreement was about six pages long. It wasn't very big. It wasn't a huge amount but it was able to get us to open a few more stores and keep the train moving and get the inventory levels that I needed. Then shortly thereafter, we started getting our literally our phones were ringing. What's funny about this, David, is raising equity before. I remember when the recession hit, I was like, "I need a partner. I need somebody to bring in equity." It was like, "No one. How do you find these people?" "Where do you go about finding people to invest in you?" It wasn't easy at all. People said, "Well, you just need an angel." I'm like, "Hello. Tell me something I don't know. Of course I need an angel. I need a lot of angels." "Where do angels like, do they go somewhere or I don't like to meet them somewhere?" It was really crazy because our phones started ringing. One of my friends earlier said, "Kendro, just build your business." When you build it, they're going to come to you. It was like that if you build it, they will come. It was exactly that. We were building a business. It was getting attention. We were being disruptive. People noticed lines outside of the store that wasn't happening anywhere. Boy, did they come. They were coming and they wanted to be a part of it. We had about 12 private equity firms reaching out to us to invest in that first round that we took in 2013. Wow. That's a great story. You've pretty much done it on your own coming up anyway. You had to be a pretty good self-coach. How did you go about in this process of raising your own game as a leader? What are you working on today? I think every day I want to learn something. I'm like a sponge. I love learning from other people. I'm always asking questions too from people. A lot of people are scared to act like, "What they're going to think? I'm stupid if I ask a question." I disagree. I think it is an incredible sign of a great leader when they want to continue to learn something new every day. There is no way that we could ever learn everything no matter how long we are on this earth. I think it's such a thing for me that I want to wake up today and I want to learn something new. I took an entrepreneurial master's course through an organization called EO that was in 2006 to 2009. It was three years. I'd go to MIT and we did this course. 65 entrepreneurs from around the world. We were learning from some of the greatest coolest entrepreneurs out there were teaching the class. They gave us amazing books to read those three years as well that we would all talk about. That was huge for me because it really gave me some good foundational things and how to run a business effectively. When you look at when I finished that course in 2009, we had lost about 20 students because of the recession. They had lost their businesses. There were about 45 of us left at graduation in 2009. My business took off in 2010 like a rocket ship. I really think a lot of those foundational elements of what I learned from all these other entrepreneurs really helped me. I love reading. You can see I'm in my library talking to you and I love to read. I'm always looking for new books to read. Then again, just visiting with entrepreneurs and business leaders and understanding what's happening out there in the world and just trying to gain insight every day and not being afraid to ask for help. I will raise my hand many times and say, "I'm running a company bigger than it was yesterday. This is new territory for me. What would you do if you were in my shoes?" You've been there before to ex-entrepreneur who's now running a $2 billion brand. It's amazing these conversations I have because I think a lot of people don't get asked for help often, but it is our human instinct to want to help other people. Don't be afraid to ask. The worst thing they can do is tell you to hit the road and you haven't lost anything. You are very charismatic. No question about it. You're really personal, but I bet deep down you are toughest nails. Is that true? Yes, I think it is. I am. No, this is the thing about me. This is true. I will admit this. My husband, when I get to you, would be like, "Oh God, she is tough as nails. Trust me." I am, like I told you, an internal optimist. I'm always looking for the silver lining. I always give people the benefit of the doubt. I'm always looking for the good in them and giving them an opportunity. I don't right away go to the bad part. I'm trying to think about the good part, but if you cross me, more importantly, my family, like KSB, then Mama Bear comes out. I think that's you. You mean Mama K, don't you? Mama K. Yes, Mama K comes out. And Mama K, dumb ass around. I also think when somebody comes in and they think, "Here's this blonde from Texas." They're pre-judged me and are maybe not taking me serious. I'll get it and I'll right away. I'll put them in their place in a nice way. I do it very Southern Charm Way, but they will know that I mean business. You may call it the Velvet Hammer. Okay, I know when you're an entrepreneur like you, I've read your story and how you had to just basically go sell everybody, get a chance at all these kinds of things. But you had so many people say no to you so many times. What if I see a give to people on how to handle the word no? Ooh, you know what? No one in the mirror is on. I've said this a million times. And I say, if you're in a business discussion and you've pitched somebody and they've told you no, guess what? Now you're talking to them at least. You got communication going. No could be the beginning of the on. So maybe it's like, you know what? Today you may not be interested. No worries. Next month I'm going to send you new line sheet and then I'd send cupcakes or cookies or whatever and a nice hidden written note. The more they push me, wait, not stockarish, but I wasn't afraid to keep going back to them, to keep trying to engage them, to get to know them. And I think that's an important thing to remember. You're going to get told no a lot. You're going to get told that you can't do things. I couldn't be a jewelry designer because I didn't go to one of those fancy schools. I couldn't be a real fashion brand because I wasn't starting on the coasts. There were so many times I was told that I couldn't do something. And that for me, whatever the reason is, was just like a fire started. It's then I got like, okay, I'm going to show you. I can do this. So now when somebody says, oh, you can't do that or that'll never happen, I'm like, oh, yes. I'll say, oh, watch out, baby. Here I come. You know, like I can't wait to put it. Yes, I can. And I get excited now to be able to do that. And I think that's an important thing for people is to not take that as a down, to smile inside and just nod and then walk away, go and watch out because here I come. You know, Kendra, you are, you know, you've just created such a great brand and you're into every little detail I can tell about the brand. So I have to ask you, why the color yellow in your packaging? Well, if you see the color yellow, what does it, what does it make you feel? Well, it's bright, sunny. Yeah. Happy. I mean, yellow is happy. If you see the sunshine yellow, it's, it is what makes you happy. The darkest of days, yellow shines a light in the dark clouds, right? And so to me, that was the brand. It was, we are happy, we are joyful. In addition to that, what's really funny is when we were trying to side in the color, I had taken a personality test. And I don't know if you've ever done this where it's like the red, green, blue, yellow. Do you know what I'm talking about? Yeah. And you're like yellow energy or red energy or blue and jic. I can't remember the name of the personality thing, but we did it in our company. And a lady who performed the test called and she said, Kendra, I don't know. Maybe there's something wrong with the test you took. And I was like, why? And she said, because your yellow energy is off the charts. I've never seen anybody that has that much yellow energy. So we joked about it in my company that like they really thought the test was defective. And so it was, it was kind of fitting that that, and that was yellow was on the mark for one of our colors. And it was like, duh. It's got to be yellow. Kendra, do you see yourself as a trendsetter, you know, staying on top of trends? You see yourself as a trendsetter. And what's your process for staying on top of the trends? Yeah, you know, from learning from my ancho and I'm so interested and excited about how fashion and trends work. But what I think I'm most interested in is what my customers want. And so, you know, I love that we have social media because I can read and I do every comment about when we're showing or if we're testing product, I'm listening all the time to her and watching and looking around me and trying to see what is trending not just in the runways or in fashion. But what is trending in certain regions? What people are wearing in California versus New York or what colors are out there? And of course, wanting to bring trends, but I want them to be relatable to our customer. I want her to love them and feel comfortable wearing them. And so it's that balance of trend setting, but also making it attainable and also something that she's going to feel comfortable wearing. You alluded to it a little bit earlier, so I want to ask you a question about it. You talked about people taking you seriously, being, you know, southern, whatever, you know, female. Do you run into any particular challenges coming up in business as a woman? Oh, absolutely. I walked into many boardrooms where no one in the room looked like me and it would, I knew that within the first five to 10 minutes, I just had to prove myself. I had to prove that I was smart, that I was business, I had business savvy, that I knew what I was talking about, that I wasn't just an artist. And I think, you know, I was told that, you know, you go to school and you would have a major and there was these left brain and right brain. And if you were left brain, if you were creative, you couldn't be that business side. So there's business minded people and then there's creative people. And I think for me, I am one of those people that I loved both. I love the art and I love design, but I love the business. I love trying to understand how business operated. And I just needed to meet people and learn and create that bridge that got me from the creative side to the business side. And so I think, you know, today, what I'm trying to do, even with the Women's Entrepreneur and Leadership Institute at UT, is to, you know, we're basing it, which sounds like a very business program, entrepreneurial leadership, in the fine arts building at the University of Texas. It's open to all majors because every student should have the opportunity to learn how to have an entrepreneurial mindset. You don't have to run a business to realize the benefits of that. And you just need the bridge. Somebody needs to give you the tools so that you can understand if you're an artist, how could I take this art that I'm creating and create an amazing business? The creative minds are the ones that are going to change the world. And so we need those people in business today. So, you know, I think, you know, I want to give the tools to not just women and we're open to everybody, but it is the Women's Leadership Institute for a reason. I want them to walk into a room, into a boardroom, and they are the majority. And that is my hope for the future. Well, right now in your company, as I understand it, 95% of your team members are female. Are you okay with that? Oh, are you kidding me? I love it. I love it. We love it. What about it? What about us poor men? Come on. You guys, we have, it's now more like 90%, just to be fair. We have the most awesome men at Kendra Scott. And I think a lot of times, you know, it is our amazing men, not just an organization, but you know, I have an amazing father who told me that I could be anything I wanted to be. So we have to give a lot of credit to the amazing men out there in our lives because those men who have been cheering us on and rooting for us are incredible. And so, yeah, we do have a lot of women, but you know, we only hire nice people , David. We hire gracious, kind, thoughtful, our fashion in Austin, Texas is very different than probably the cutthroat fashion world and other, you know, other places. We're a very loving company and we cheer each other on, we support each other. And if we've got somebody in the company that is not have that soul that does not have that, they can go work for someone else. It's okay. They don't get the, they don't last long. I can tell you that right now. No, no. So I got to ask you this. What advice do you give men on how to work best with and develop women into really great leaders? Yeah, I think that's a really great question. I think, you know, I've got three sons. One is graduating from high school. So he's going to be going off to college. And I think the biggest thing that we can teach our sons and our, or our daughters is respect is to respect people of every gender of every race. And to look for their star inside of them, that brightness inside of them, you know, everyone has it. And sometimes somebody just needs to be able to pull it out of them. And I think, you know, we've just all got to do a great job of doing that. I think men that have helped women get to where we are today that have looked for their amazing, brilliant minds and have looked for the things that they have inside of them to succeed are really important. We should all be doing that. No matter what, we should all be lifting each other up, supporting each other and cheering each other on when we have successes. We've got to take the negativity out of it. And, you know, and I promise you, if we can do that, this world is going to be a great place. I'm with you all the way, you know, and I love the fact that you're a huge philanthropist and you really give back and we could go on and on talking about all the things that you do. But I want to address two specifics. First of all, could you tell us about Kendra? Kendra cares. Yeah. You know, I love going to MD Anderson, going back there. That's where they treated my stepfather when he had brain cancer. And I got a tour of the new pediatric cancer center there. And I was looking around and they do different therapy activities just to get the kids out of their room. And there are a lot of things for like really young kids, but there wasn't a lot of activities that really bridged all ages. And I thought, you know, wouldn't it be cool if we brought our color bar up to the pediatric cancer center? And we had coloring sheets for the little kids so they could color their designs and then watch, pick the stones they wanted. And we would give them a piece of jewelry just to brighten their day, just to bring them some joy. And so we piloted this program at MD Anderson in their pediatric center. And we had kids better, three years old on up to 16 years old, you know, kids that were too sick to get out of bed. And we'd bring an iPad, they could design what they wanted and the nurses would bring them in their gift. And they, you know, we'd go back and they'd all be wearing their bracelets or their earrings. Little boys were making them for their moms who was sitting by their bedside. So before Mother's Day we went in. And it was just such an amazing thing to see how much joy this brought. And so that one hospital is now turned into 31 hospitals across the country. We do Kendra cares every single month. We haven't been able to do it in the last few months because of COVID, but we cannot wait to get back into our hospitals and just keep continuing to bring joy. Thousands and thousands of patients and their caregivers are benefiting from this program as well as nurses. We'd like to spoil our nurses too. I love it. I love it. You know, we have the Novak Children's Care Center here in Louisville. It's new and it's fantastic and we're trying to break. Congratulations. We're going to try to hit you up for one of these. I think that'd be fantastic. You know, consider it done. Consider it done. I have to ask you this. Understand you build a home and I don't bring up the home because you built this nice fancy home, but I understand you have a really unique feature in your home as it relates to philanthropy. Yes. Who told you that David? I know, I just kind of get around a little bit. Okay. I do my homework. I try to do my homework. That's pretty exciting. I'm excited about talking to you. Oh, I'm excited to talk about you too. Yeah, you know, this home for me was a special project. I obviously did not grow up in a very big house. We lived in, you know, a little town in Wisconsin and was very modest upbringing, but I wanted to build something that not it wasn't even a just about for our family. It was about what can I do to leave a legacy and so building the house, we wanted to keep a pristine place in Austin that was an older property, you know, in a very nice area town, but it had four acres, which is unheard of. And I wanted to keep it intact. I wanted to keep it what it should be. And I wanted to be able to have it so that we could do charitable events here and really be able to support our community. So built it with that in mind, with having a vet lawn space and places where we could have these events so that nonprofits wouldn't have to pay for event fees because that's so expensive for nonprofits. And this way, more money could go back to their nonprofit. And then thinking bigger about it. I thought, you know, we don't want this in our family. We want it for the community. And so once we're out, this is a gift to our community in Texas and to be able to use it as a place for philanthropy. And so we'll be gifting my home after that. So I'm just a store to take care of it until then. That's great. That's great. Well, I definitely want to congratulate you on the Kendra Scott Entrepreneurial Center for Women at the University of Texas. What would be your three most important bits of advice you give aspiring leaders and entrepreneurs and especially women? You know, I was so excited about building this institute for a lot of reasons. But I wanted to be able to provide a place, a safe place that women could go and really be able to find the confidence within themselves, to overcome any obstacle that they get faced with throughout their lives. And there will be many. To understand that failure can be a gift in how to navigate those moments. To be inspired by amazing other leaders in all different facets of business and industry to see their stories of failure, success, how they got there so that they can learn from people in their actual lives. And so for me, I want to inspire them. I want to give them the ability and educate them and build that bridge. No matter what they're doing, giving them the tools that they need, that they feel like they may be lacking to make them feel like they can go out and leave the university. This unbelievably confident person who can tackle the world and also leave it better than they found it. So philanthropy is also teaching them the power of giving back. Fantastic. This has been a blast for me, but I want to kind of wrap this up with a lightning round of Q&A. Oh, great. Oh, geez. Okay. What's the one word that best describes you? Optimistic. If you could, oh, no, I don't believe that. If you could trade places with one person for a day, who would it be? This is so hard. One person for a day, Lady Gaga. Okay. I love the dog myself. You know, mine was Bruce Springsteen, by the way. What one thing about you that few people would know? I can speak in a lot of different accents. Do you have any hidden talents? Oh, I like to, I like, I don't know, I don't know if I have a hidden talent. I don't think I do. Okay. And I want to ask you this, and this goes back to, I think what your company's all about family. They call you as I understand it, mama K in-house. Yeah. Okay. And I'll talk a little bit about how motherhood and being a mom comes into play when you think about your company and what you're trying to do. Absolutely. You know, I started this business when my first son was born. He was a newborn. We would go door to door when he was three months old. So building a business that allowed me to be a great mother was paramount. And I wanted to create that same environment for other mothers and fathers, a place where having a family was an exciting thing. And that we could support and love each other around it. And I am the mother to my Kendra Scott employees. I care for them like a mother does. I want to protect them. I want to see them thrive. I want to see them live their best, most happy lives. You know, it's so crazy how we have so many employees that may have worked for me for five years or six years and they may start to do something else. I am excited for them. I check in with them. I want to find out what they're doing. Not many business owners think that way. Many of them end up coming back, by the way. They're like, can we come back? We want to go back to the nest. They call our office to the nest. And so much better. But I think that's my role is and mothers do. They are fiercely protective of their home and their family. And we're going to do everything we can to keep everybody growing and succeeding. And that's my goal as CEO of this brand. Great. Chief Mom. That's great. Well, I have three sons, but I have thousands of daughters. So I get all of my girl energy from all of my, you know, female Kendra Scott team members. I want to close Kendra by going back to the beginning when I talked about Mary Kay. I understand you were recently inducted into the Texas Business Hall of Fame, joining Mary Kay. Yeah. And I want to ask you, how did that make you feel? I don't think there's that many women in the Hall of Fame in Texas and doing it with Mary Kay. Yeah, I was number 12, the 12th woman. Mary Kay Ash was the first. She was the very first woman to be inducted into the Texas Business Hall of Fame. And my mother actually accepted the award on my behalf. And it was a really moving speech. My father had had a heart attack. So I was with him. And my mom accepted and she told that story how she couldn't believe that her little girl that would help her unpack her boxes of Mary Kay cosmetics and put them on the shelf in our laundry room and help deliver the product to her customers would someday have been inducted into a Hall of Fame with Mary Kay Ash herself. It's surreal, but it goes to show you that anything in life is truly possible if you believe. And you know, I had parents that told me I could do anything. And I think if we can keep telling our children that it doesn't matter where you come from, dream big because something like that could happen to you too. Kendra, you are definitely a bumblebee. There's no question about that. And I want to thank you so much for taking so much time to share your insights and the office of Asians because you understand business and you have really established the magic of the end. You are creative. You're an artist and you know business cold and you can do both. So thanks for inspiring us to do that. Well, it sure means a lot to hear that from you. I was just as big of a fan of yours. Trust me. So you may be getting a call from me asking for advice. Hopefully you won't mind giving me some. I think I'll take it. So thank you. Well, thank you so much. I have enjoyed this so much. I could talk to you all day. Well, I love it when I see bureaucracy busters. And Kendra's sister rule of customer service is truly brilliant. Nobody's going to remember every policy in a handbook and who would want to. But everybody knows how to help someone they care about. Everyone knows how they would want to treat their sister. Kendra just has this knack for getting to the heart of a complex problem and distilling it down into a clear and simple solution. The thing is, it's not really a knack. It's hard work to simplify something. It takes persistence and creativity and really hard work to boil something down to its very essence. And now it's time for my favorite part of our podcast episodes. This is where I give you some coaching to help you develop as a leader. This week, as part of your weekly personal development plan, here's what I want you to do. I want you to think about a recurring process or company policy in your world that's just way too complicated. Schedule a block of time and work on simplifying it. It may not be easy, but when you whack away at those needless complications, your team's going to say it's about time and they're going to really appreciate you for it. So do you want to know how leaders lead? What we learned today is the great leaders strive for simplicity. Thanks again for tuning in to another episode of How Leaders Lead, where every Thursday you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business so that you will become the best leader you can be. Thank you. in the next video. in the next video. for today's episode. the next video. the next video. the next video. the next video. You [ Silence ]