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    #361 Estée Lauder

    en-usAugust 18, 2024
    What was the common theme among Buffett, Bezos, and Lauder?
    How did Estée Lauder's family influence her business?
    What strategies did Lauder use to create demand for her products?
    Why did Lauder refuse to sell her business in the 1950s?
    How did Ramp's tool assist businesses in cost management?

    Podcast Summary

    • Cost ControlHistorically, controlling costs has been a foundation for building competitive advantages and driving growth. Cost-conscious culture, cost improvements leading to lower prices, and efficient operations are key outcomes.

      Historical founders, including Warren Buffett, Jeff Bezos, and Estee Lauder, emphasized the importance of controlling costs as a foundation for building competitive advantages and driving growth. Buffett and Bezos both emphasized the importance of maintaining a cost-conscious culture, while Bezos also highlighted how cost improvements lead to lower prices, which in turn drives growth. Lauder, in her autobiography, shared a painful memory of being rejected by a woman due to her inability to afford an elegant blouse, which fueled her determination to build a successful cosmetics business. By focusing on costs, these founders were able to build efficient operations, make informed business decisions, and ultimately, create successful businesses. Ramp's tool can help businesses watch their costs and optimize their financial operations on a single platform, allowing them to build their own competitive advantages.

    • Industry studies and passionSuccessful entrepreneurs study their industries and are deeply passionate about their products to build sustainable businesses and reap long-term benefits.

      Successful entrepreneurs like Jeff Bezos and Estée Lauder build their businesses around things that won't change and are deeply passionate about their products. Bezos focused on low prices, faster delivery, and wide selection, while Estée Lauder was obsessed with beauty and enhancing women's self-confidence. Both leaders studied the history of their industries and were completely devoted to their missions. Estée Lauder's mother instilled in her a love for beauty and self-confidence from a young age, which she carried with her throughout her life and business. Ultimately, their deep interest and obsession with their products allowed them to invest heavily and reap the benefits for decades to come.

    • Estée Lauder's early experiencesEstée Lauder's obsession with her uncle's creams and natural sales abilities laid the foundation for her successful business empire. Her unwavering belief in her products and innovative technique of giving gifts with purchases built customer loyalty.

      Estée Lauder's early life experiences, particularly her obsession with her uncle's creams and her natural sales abilities, set the foundation for her successful business empire. Her unwavering belief in her products, combined with her instincts and risk-taking, allowed her to build a company based on customer loyalty and the innovative technique of giving gifts with purchases. Despite facing challenges and societal expectations, Estée's passion and determination led her to start her business at the age of 38, and she went on to turn it into a global beauty brand. Her story is a testament to the power of following one's dreams, trusting oneself, and taking calculated risks.

    • Customer LoyaltyProviding exceptional customer service and going the extra mile can lead to a loyal customer base that will return and spread the word about your business

      Customer loyalty is a crucial aspect of business success. Companies that prioritize customer satisfaction and go the extra mile to help their customers, even if it means offering free services or products, can build a devoted clientele that will return time and again. Estée Lauder is a prime example of this. By providing free makeovers and beauty lessons to women, she built a loyal customer base that spread the word about her products. Even during her vacation, she would offer makeovers to women poolside, leading to even more business. This focus on customer loyalty paid off in the long run, as her business remained a family affair for over 50 years. Another important lesson is that entrepreneurs, especially those who are single-minded in their pursuit of their dream, can benefit from involving their families in their businesses to maintain a healthy work-life balance. Despite the challenges and hardships, Estée Lauder never gave up on her dream and her secret weapon - word of mouth - helped her business grow steadily.

    • Estée Lauder's marketing strategiesEstée Lauder built a loyal customer base through word-of-mouth marketing, free samples, and focusing on customers' desires, resulting in a global cosmetics empire.

      Estée Lauder's success was built on her unwavering obsession with beauty, her persistence, and her deep understanding of her customers' desires. She used word-of-mouth marketing and free samples to generate buzz and build a loyal customer base. Despite facing rejections and challenges, she never underestimated the power of a woman's desire to look and feel beautiful. By focusing on the needs of her customers and providing them with high-quality products and personalized attention, she turned her small beauty line into a global cosmetics empire. Her story is a testament to the importance of staying true to your vision, being persistent, and never underestimating the power of a customer's desire.

    • Estée Lauder's business approachEstée Lauder's success came from giving away products, building long-term relationships, investing in large quantities of materials, and identifying market gaps.

      Estée Lauder's success came from her honest business approach, relentless resourcefulness, and instinctive understanding of customer needs. She gave away products to let people try before they bought, focusing on building long-term relationships rather than one-time sales. Her instinct to invest in large quantities of material instead of advertising was initially met with skepticism but later copied by competitors and banks. Her sense of urgency, focus, and ability to make friends and allies were key to her success. She also identified a gap in the market by encouraging women to buy their own perfume, which led to a major revenue boost for her company. Estée Lauder's story is a testament to the power of persistence, intuition, and customer-centric thinking.

    • Family involvement, PersistenceFamily involvement and relentless persistence were key factors in Estée Lauder's success. She gave her sons valuable business experience from a young age and didn't sell when offered a million dollars in the 1950s. Her unique selling abilities and philosophy helped build a successful company with a market cap of around $30 billion today.

      Estée Lauder's success story highlights the importance of family involvement and relentless persistence in building a business. Estée refused to choose between business and family, and her decision paid off handsomely. She involved her sons in the business from a young age, giving them valuable experience and knowledge. When they received an acquisition offer for a million dollars in the 1950s, they didn't even consider selling. Instead, they kept going, and today, the company's market cap is around $30 billion. Estée's relentless pursuit of expanding her business is also noteworthy. She used various strategies, such as media attention and personal appearances, to create demand for her products and gain entry into prestigious stores like Harrods in London and department stores in Canada. Her ability to sell herself and her products, combined with her unique philosophy of staying true to her business, helped her build a strong and successful company.

    • Business successPassion, visualization, hard work, and unwavering focus lead to business success. Stay connected, demand perfection, and never settle for mediocrity.

      Business success comes from passion, visualization, hard work, and unwavering focus. The speaker, a successful businesswoman in the cosmetics industry, emphasizes the importance of being obsessed with your business and loving what you do. She advises visualizing success and working tirelessly to make it a reality. Additionally, staying connected with customers and business associates is crucial for building a strong network and achieving your goals. The speaker encourages listeners to stay focused on their dreams, demand perfection, and never settle for mediocrity. Ultimately, she believes that potential is unlimited, and success depends on daring to act on your dreams.

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    Founders Notes gives you the superpower to learn from history's greatest entrepreneurs on demand. You can search all my notes and highlights from every book I've ever read for the podcast. Get access to Founders Notes here

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

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    (3:01) No matter how mundane some action might appear, keep at it long enough and it becomes a contemplative, even meditative act.

    (4:00) Pain is inevitable. Suffering is optional.

    (4:00) The hurt part is an unavoidable reality, but whether or not you can stand anymore is up to the runner himself.

    (10:00) You can't fake passion — someone else, that really loves the job, will out run you. Somebody else sitting in some other MBA program has a deep passion for whatever career path you're going down, and they are going to smoke you if you don't have it yourself.  — Runnin' Down a Dream: How to Succeed and Thrive in a Career You Love 

    (12:00) What’s crucial is whether your writing attains the standards you’ve set for yourself. Failure to reach that bar is not something you can easily explain away.

    (14:00) Big ideas come from the unconscious. This is true in art, in science and in advertising. But your unconscious has to be well informed, or your idea will be irrelevant. Stuff your conscious mind with information, then unhook your rational thought process. You can help this process by going for a long walk, or taking a hot bath, or drinking half a pint of claret. Suddenly, if the telephone line from your unconscious is open, a big idea wells up within you.  — David Ogilvy

    (16:00) If you absolutely can't tolerate critics, then don't do anything new or interesting. — Jeff Bezos

    (16:00) So the fact that I’m me and no one else is one of my greatest assets.

    (19:00) Failure was not an option. I had to give it everything I had.

    (19:00) My only strength has always been the fact that I work hard and can take a lot physically. I’m more a workhorse than a racehorse.

    (22:00) I was more interested in having finished it than in whether or not it would ever see the light of day.

    (26:00) I’m the kind of person who has to totally commit to whatever I do.

    (29:00) The entrenched professional is always going to resist far longer than the private consumer. — James Dyson

    (34:00) You really need to prioritize in life, figuring out in what order you should divide up your time and energy. If you don’t get that sort of system set by a certain age, you’ll lack focus and your life will be out of balance. I placed the highest priority on the sort of life that lets me focus on writing,

    (37:00) You can’t please everybody. If one out of ten enjoyed the place and said he’d come again, that was enough. If one out of ten was a repeat customer, then the business would survive. To put it the other way, it didn’t matter if nine out of ten didn’t like my bar. This realization lifted a weight off my shoulders. Still, I had to make sure that the one person who did like the place really liked it. In order to make sure he did, I had to make my philosophy and stance clear-cut, and patiently maintain that stance no matter what. This is what I learned through running a business.

    (40:00) The reason we're surprised is that we underestimate the cumulative effect of work. Writing a page a day doesn't sound like much, but if you do it every day you'll write a book a year. That's the key: consistency. People who do great things don't get a lot done every day. They get something done, rather than nothing. — How To Do Great Work by Paul Graham. (Founders #314)

    (41:00) When you follow what you are intensely interested in this strange convergence happens where you're working all the time and it feels like you're never working. — How To Do Great Work by Paul Graham. (Founders #314)

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    (44:00) Nobody ever recommended or even desired that I be a novelist—in fact, some tried to stop me. I had the idea to be one, and that’s what I did.

    (45:00) I decided who I want to be, and that is who I am. — Coco Chanel

    (46:00) Once, I interviewed an Olympic runner.  I asked him, “Does a runner at your level ever feel like you’d rather not run today, like you don’t want to run and would rather just sleep in?” He stared at me and then, in a voice that made it abundantly clear how stupid he thought the question was, replied, “Of course. All the time!”

    (47:00) I pity the poor fellow who is so soft and flabby that he must always have "an atmosphere of good feeling" around him before he can do his work. There are such men. And in the end, unless they obtain enough mental and moral hardiness to lift them out of their soft reliance on "feeling," they are failures. Not only are they business failures; they are character failures also; it is as if their bones never attained a sufficient degree of hardness to enable them to stand on their own feet. There is altogether too much reliance on good feeling in our business organizations. —  Henry Ford’s Autobiography

    (50:00) If I used being busy as an excuse not to run, I’d never run again.

    (51:00) Focus and endurance can be acquired and sharpened through training.

    (54:00) Exerting yourself to the fullest within your individual limits: that’s the essence of running, and a metaphor for life.

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

    Be like Gareth. Buy a book: All the books featured on Founders Podcast

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    (1:00) America is today in the midst of a great technological revolution. With the advent of the silicon chip, information processing, and communications, the national economy have been strikingly altered. The new technology is changing how we live, how we work, how we think. The revolution didn't just happen; it was engineered by a small number of people. Collectively, they engineered Tomorrow. Foremost among them is Robert Noyce.

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    (43:00) This wasn't a corporation. It was a congregation.

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    (45:00) If you're ambitious and hardworking, you want to be told how you're doing.

    (45:00) In Noyce's view, most of the young hotshots who were coming to work for Intel had never had the benefit of honest grades in their lives. In the late 1960s and early 1970s college faculties had been under pressure to give all students passing marks so they wouldn't have to go off to Vietnam, and they had caved in, until the entire grading system was meaningless. At Intel they would learn what measuring up meant.

    (49:00) When you are trying to convince an audience to accept a radical innovation, almost by definition the idea is so far from the status quo that many people simply cannot get their minds around it. They quickly discovered that the marketplace wasn’t just confused by the concept of the microprocessor, but was actually frightened by its implications. Many of my engineering friends scoffed at it was a gimmick. Their solution? The market had to be educated. At one point, Intel was conducting more seminars and workshops on how to use the microprocessor than the local junior collage’s total catalog of courses. Bob Noyce, Gordon Moore, and Andy Grove became part of a traveling educational roadshow. Everyone who could walk and talk became educators. It worked.  —  The Intel Trinity: How Robert Noyce, Gordon Moore, and Andy Grove Built the World's Most Important Company by Michael Malone. 

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

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    #355 Rare Bernard Arnault Interview

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    (3:00) While other politicians were content to get their information from a scattering of newspapers, he devoured whole shelves.  — Young Titan: The Making of Winston Churchill by Michael Shelden. (Founders #320)

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    (9:00) Arnault is an iron fist in an iron glove. — The Taste of Luxury: Bernard Arnault and the Moet-Hennessy Louis Vuitton Story by Nadege Forestier and Nazanine Ravai.

    The public conception of Sam as a good ol’ country boy wearing a soft velvet glove misses the fact that there’s an iron fist within. —  Sam Walton: The Inside Story of America's Richest Man by Vance Trimble.

    (12:00) People often ask me, “When are you going to retire?” And I answer, “Retire from what?” I’ve never worked a day in my life. Everything I’ve done has been because I’ve loved doing it, because it was enthralling. — Am I Being Too Subtle?: Straight Talk From a Business Rebel by Sam Zell. (Founders #269)

    (16:00) “I am not interested in managing a clothing factory. What you need, and I would like to run, is a craftsman’s workshop, in which we would recruit the very best people in the trade, to reestablish in Paris a salon for the greatest luxury and the highest standards of workmanship. It will cost a great deal of money and entail much risk.” — Christian Dior to Marcel Boussac

    (17:00) Arnault believed that luxury brands could be larger than anyone at the time imagined.

    (20:00) Arnault said this 35 years ago: “My ten-year objective is that LVMH's leading position in the world be further strengthened in the luxury goods sector. I believe that there will be fewer and fewer brand names capable of retaining a worldwide presence and that those of our group will be among them as we will provide them with the means for growth.”

    (25:00) There are huge advantages for the early birds. When you're an early bird, there's a model that I call surfing—when a surfer gets up and catches the wave and just stays there, he can go a long, long time. But if he gets off the wave, he becomes mired in shallows. But people get long runs when they're right on the edge of the wave, whether it's Microsoft or Intel or all kinds of people, including National Cash Register. Surfing is a very powerful model.”  —  the NEW Poor Charlie's Almanack: The Wit and Wisdom of Charlie Munger. (Founders #329)

    (25:00) One thing I learned from having dinner with Charlie was the importance of getting into a great business and STAYING in it. There’s a tendency in human nature to mess up a good thing because of an inability to sit still.

    (25:00) The incredible career of Les Schwab: Les Schwab Pride In Performance: Keep It Going! by Les Schwab. (Founders #330)

    (30:00) Dior in his autobiography: It is widely, and quite erroneously, believed that when the house of Christian Dior was launched, enormous sums were spent on publicity: on the contrary in our first modest budget not a single penny was allotted to it. I trusted to the quality of my dresses to get Christian Dior talked about. Moreover, the relative secrecy in which I chose to work aroused a positive whispering campaign, which was excellent (free) propaganda. Gossip, malicious rumours even, are worth more than the most expensive publicity campaign in the world.

    (31:00) Munger: “There are actually businesses that you will find a few times in a lifetime, where any manager could raise the return enormously just by raising prices-and yet they haven't done it. So they have huge untapped pricing power that they're not using. That is the ultimate no-brainer. Disney found that it could raise those prices a lot and the attendance stayed right up. So a lot of the great record of Eisner and Wells came from just raising prices at Disneyland and Disneyworld and through video cassette sales of classic animated movies. At Berkshire Hathaway, Warren and I raised the prices of See's candy a little faster than others might have. And, of course, we invested in Coca-Cola-which had some untapped pricing power.”

    Charlie Munger: The Complete Investor by Tren Griffin

    (33:00) The benefits Arnault receives from owning commercial real estate: He makes money from his own stores, from leasing space to rivals—and from the appreciation of premium real estate. When LVMH buys a building, it takes the best storefronts for its own brands and often asks rivals to move out when their leases expire.

    (35:00) Arnault is all about details. He has 200,000 employees and he’s paying attention to details about landscaping in the Miami Design District.

    (36:00) If we lose the detail, we lose everything. — Disney's Land: Walt Disney and the Invention of the Amusement Park That Changed the World by Richard Snow. (Founders #347)

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