#218 Outliers: Estée Lauder — A Success Story
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I remember the woman at the Florence Morris Beauty Salon where I had my first cosmetics concession. She was thoughtless and cruel and will always remain that way in my mind. Maybe she was a catalyst for good in the end. Maybe I wouldn't have become Estee Lauder if it hadn't been for her. At that moment, she was cast in my memory to last there forever. I despised her. Simply thinking about that incident brings back a twinge of pain.

She was having her hair combed and she was lovely. I was very young and vulnerable. And I loved beauty. I felt like I wanted to make contact with her in some small way. "What a beautiful blouse you're wearing," I complimented her. "It's just so elegant. Do you mind if I ask where you bought it?" She smiled. "What difference could it possibly make?" she answered, looking straight into my eyes. "You could never afford it." I walked away, heart pounding, face burning.

Never, never will anyone say that to me again, I promised myself. Someday, I will have whatever I want. Jewels, exquisite art, gracious homes, everything. That's a passage from Estee Lauder's 1985 autobiography, Estee, A Success Story. Welcome to the Knowledge Project Podcast. I'm your host, Shane Parrish.

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I want to tell you about the greatest salesperson you've probably never heard of or studied. Warren Buffett and Charlie Munger said it was a crime that business schools didn't study Henry Singleton. Well, I feel the same way about Estee Lauder. This is a woman who turned homemade face cream into a multi-billion dollar empire by breaking every rule in business. When experts said women wouldn't pay $115 for face cream, she proved them wrong.

When the French said American cosmetics couldn't compete with the centuries of expertise of the French houses, she outsold them in their own stores. When competitors rushed to copy her formula, she turned her greatest weakness, being a small family business, into her greatest strength. But here's what fascinates me most. Her secret wasn't in the chemistry. It was mixing obsession with understanding of human nature. This is the story of Estée Lauder, and it's going to change how you think about business forever.

This is a story about ignoring conventional wisdom, a story about obsession and determination. This is the story of Estée Lauder, the woman who wouldn't, who couldn't be stopped. It's time to listen and learn. This podcast is for entertainment and informational purposes only, and you should do all of your own research.

Paris, 1963. The most prestigious apartment store in France, the Galleries Lafayette, had a simple policy about American products. They didn't sell them. No exceptions. Especially not perfume. This was Paris. What could some American company possibly teach them about fragrance? But Estée Lauder had a policy too. She didn't take no for an answer.

What happened next has become legend in the beauty industry. Here's a summary of how Estée herself recounted it years later in her autobiography, "Estée's Success Story." She managed to get into the store, not to meet the buyer who wouldn't give her the time of day, but to show her products to one sympathetic sales girl. Then came what would become known as the accident. A bottle of her perfume, youth dew, spilled on the carpet floor.

Some say she dropped it. Some say it shattered. Este would only say with a smile, I'll never tell.

What's undisputed is what happened next. The scent began to waft through the air. Customer after customer stopped and tranced. What is that divine fragrance? The buyer passing through at the day couldn't ignore the commotion or the sales that followed. But this wasn't just about selling perfume in Paris. This was about selling something bigger. Before Estee Lauder, perfume was precious, save for special occasions.

After her, it became an everyday luxury. She didn't just break into the market. She totally transformed it. Today, when you walk through any department store and hit that wall of fragrance in the air, you're experiencing her legacy. One accident in post-war France changed an entire industry. But here's what fascinates me most. This wasn't luck.

This was Estée Lauder's playbook. Understand human psychology, create an experience, and make your weakness your strength. She would use this same strategy again and again to build a multi-billion dollar empire. And that's exactly what we're going to explore today. Estée Lauder was born July 1st, 1908, in Queens, New York, the daughter of Eastern European Jewish immigrants. Her mother was from Hungary and her father from Czechoslovakia. She grew up in a working class family above her father's hardware store.

This is where she would become bewitched by beauty. A pivotal influence in Este's youth was her uncle John Schultz, a chemist who specialized in making creams and lotions. He set up a makeshift laboratory in a stable behind the house, mixing up face creams over a gas stove. Now, most teenagers, if your kids are like mine, would watch for about 30 seconds, if that, and then get bored and move on. But Este? Este was different. She became obsessed.

And importantly, Uncle John took her obsession seriously. She writes, Uncle John wasn't just teaching her chemistry. She was learning how to value herself, how to believe in herself, and more than a dash of salesmanship.

She was also earning the knowledge that would later come in handy. While other beauty companies would rely on marketing claims, Estée could explain exactly why her products worked, what was in them, and how they were made. By her teenage years, she's running home after school to test the latest creams on anyone and everyone. Every friend became a test subject. If someone had even the slightest skin imperfection, they got what she called a cream pack.

And here's the brilliant part. She's not just giving them products. She's giving them results they can see in the mirror the next day. While other teenagers are passing notes in class, she's learning how to interact, sell, and add value. By the time she graduated high school in 1927, she had the heart of an entrepreneur. She was ambitious, obsessed, and unafraid of rejection. My drive and persistence were always there, she reflected. Those qualities are essential for building a successful business.

Think about what's happening here. She's learning the fundamental principles of business before she even knows she's learning them. She's discovering that people don't just buy products, they buy better versions of themselves. She writes this line that sounds like marketing copy, but it's actually quite profound.

In my mother's kitchen, I learned how to blend hope into every jar. The beauty industry she would eventually enter and dominate was currently dominated by titans. Helena Rubinstein and Elizabeth Arden had built these global empires through chains of luxury beauty salons, but Estée had something they didn't.

This almost pathological inability to take no for an answer. Years later, when asked what makes a successful businesswoman, she doesn't mention talent or intelligence. She just says it's persistence. It's that certain little spirit that compels you to stick it out when you're just at your most tired. It's that quality that forces you to persevere, to find the root around the stone wall.

The 1920s didn't just change American women, it revolutionized them. Cosmetics weren't just products anymore, they were weapons of liberation. Young Estee, riding a rattling streetcar into Manhattan, watched women spend their hard-earned paychecks on lipsticks as bold as their ambitions. A quick makeup check on a busy sidewalk wasn't vanity, it was a declaration of independence. This wasn't just a trend, it was a cultural earthquake.

By 1923, the cosmetics industry had exploded to $75 million in factory value, a 400% leap in just 10 years. When Sears started selling more face powder than soap, toothpaste, and shampoo combined, it wasn't just a sales record. It was a sign that America itself was being remade, one crimson set of lips at a time.

Her first break comes in 1928. Estée is about to demonstrate one of the most important business insights of the 20th century. Only she didn't know it yet, and neither did anyone else. She's at the House of Ash Blondes in Manhattan, where she spends hours each week not just getting her hair done, but building her future. Under the whir of the hair dryers, Estée chats with all the other young women, all part of this new generation that saw beauty not as a luxury, but as a right.

Her enthusiasm is infectious. These casual conversations become informal beauty lessons, with women literally following her home to learn more about skincare and cosmetics. Then comes the question that would change everything. The salon owner, Ms. Morris, asks, "What do you do to keep your skin looking so fresh and lovely?" For Este, this isn't just a compliment. It's the opening she's been waiting for. But what happens next reveals something profound about human nature and business.

She returns with four jars of her creams. Miss Morris says, "'Would you mind leaving them with me? I'm so busy now. I'll try them when I have time.'"

Now consider the stakes at this moment. Este is 20. She's living with her parents. She's making creams in her kitchen. Most people would have just left the products and walked away and hoped for the best. After all, this is a potential big break. Why risk annoying the salon owner? But Este, she's not most people. She refuses. Just let me show you how they work, she says, already opening one of her jars. Give me just five minutes and you'll see the right way to use them.

Five minutes later, Ms. Morris is staring at herself in the mirror looking incredible. While she doesn't know it at the time, she goes on to make an offer that would launch an empire. Do you think you would be interested in running a beauty concession at my new salon? Estée immediately responded, yes, yes, yes, Ms. Morris. Here's why this moment matters so much.

When a product fails to deliver its promise, customers don't blame themselves, they blame the product. And once they decide a product doesn't work, you haven't just lost a sale, you've lost a relationship forever.

Think about what would have happened if Estee had just left the creams. In the best case, Ms. Morris tries them and immediately somehow manages to use them perfectly. But that almost never happens. More likely she uses too much cream and thus it feels oily and she hates it. Or too little and she has no results and she's disappointed. Or in the wrong order and she gets diminished effects and she's unimpressed. By the time she forms her opinion, Estee wouldn't have been there to correct any mistakes. The

The products wouldn't have failed. The experience would have. This insight would go on to transform retail as we know it. Those makeup counters you see in every department store today with the dedicated chairs and beauty experts. That all started because Esther refused to let her first customer try products alone. The Apple Store's hands-on tables, the car dealership's insistence on test drives. They're all following a principle that a young woman proved in a Manhattan beauty salon in 1928.

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In 1930, 22-year-old Estée-Marie garment trader Joseph A. Lauder

later anglicized to Lauder. They soon had a son, Leonard, who was born in 1933. But motherhood didn't just fail to slow Estée down, it seemed to focus her more and speed her up. Even as the Depression squeezed her family and an entire generation, she turned every spare moment into an opportunity. She would cook up little pots of cream, constantly iterating, constantly refining. "'Good' was not good enough,' she wrote. "'I could always make it better.'"

This isn't just determination. This is obsession. Think of James Dyson and his 5,127 prototypes for the vacuum that would later bear his name. Each attempt changing just one thing, each failure revealed one more truth. Each iteration brought him one step closer to perfection. "'I know that obsession is the word for my zeal,' she said. "'It was never quiet in the house. "'I always felt most alive when I was dabbling in cream.'"

This is what obsession looks like. You think about it in the shower. You wake up thinking about it. It's there when you're driving to work or you're on a date. It's there in the grocery store. And when you're that obsessed, when you're truly all in, two things happen. You get really, really good at it. And problems start to look like opportunities.

This is why obsession matters more than talent, more than connections, more than timing. My friend Naval said this. He said, if you're not 100% into it, somebody else who's 100% into it will outperform you. And they won't just outperform you by a little bit. They'll outperform you by a lot.

Understanding the importance of first impressions was one thing. Finding the perfect moment to create them was another thing entirely. And Estes' genius lay in discovering this moment in what might seem the most ordinary of places, under a hairdryer at Mrs. Morris' salon. Where else could you find women already thinking about their appearance, literally unable to move, completely bored out of their mind, and most importantly, they couldn't leave?

As Essay would later write, a woman sitting under the dryer would be rather bored with the time it took to dry her hair. Her restlessness would work for me. Her pitch was masterful in its simplicity. Would you like me to make your skin feel pampered and soft while you wait, free of charge, of course? It proved impossible to refuse. They had nothing to lose but time, and it was exactly what they had in abundance.

But the timing of her demonstration wasn't just good. It was precisely calculated. She knew exactly when to remove the cream and apply the makeup. Right after the hair was dry, but before it was styled. Before the woman had a chance to think about it, as she put it. Her sequence was choreographed like a performance. First, the glow. Then, the honey glow powder with its built-in foundation. A touch of turquoise eyeshadow.

And finally, her coupe de grasse, the duchess crimson lipstick, which made teeth look like pearls. When these women finally left the salon, they were experiencing something they'd never had before. The perfect convergence of great hair and great makeup. They weren't just looking good. They were looking their absolute best. The way they look only once a month when they visited the salon.

And right at that moment, the peak confidence, when they couldn't stop staring at themselves in the mirror, Estee would introduce a masterstroke, a gift.

Now, the big secret she would later write, but it wasn't just a secret. It was a revolution in retail that began with a simple insight. I would give the woman a sample of whatever she did not buy as a gift. The gifts themselves were almost comically small, a few teaspoons of powder in a wax envelope, a sliver of lipstick with instructions to apply it with their fingers.

Sometimes it was just a little bit of glow, but the size didn't matter. What mattered was that no one left empty-handed. She didn't have an advertising department. She didn't have copywriters, not yet anyways. What she had was something of an intuitive understanding of women and human nature. I just knew, she would later explain, even though I had not yet named the technique, that a gift with purchase was very appealing.

But Este went even farther in those early days. She would give gifts without a purchase. This wasn't generosity. It was complete strategy. The goal was to get her products into every woman's hands, to let them try them at home after she explained how to use them, to transform skeptics into believers in the privacy of their own bathrooms. Having tried it at their leisure in her own home, she wrote, and seeing how fresh and lovely it made her look, she would be faithful forever. Of that, I had not one single doubt.

Those small gifts, those perfectly timed demonstrations would grow into something much bigger than just a sales technique. They would become the foundation of an empire built not on advertising dollars, but on something far more powerful. Women telling other women about products that actually worked.

There were in those days before television and high-gloss advertising only two key ways to communicate a message quickly, telephone and telegraph. But Este had discovered something more powerful than both of them combined, telewoman.

The concept was simple. Work her magic on one woman in the salon and watch that woman tell 10 others. This wasn't just word-of-mouth marketing. It was viral marketing before anyone had invented the term. And it would launch Estee Lauder cosmetics during the most unlikely time imaginable. The Great Depression. But success brought its own challenges. The beauty salons were working. Her products were in demand. But Estee was restless. She needed something bigger. She needed department stores.

Not just any department store, she had her sights set on the crown jewel of New York, Saks Fifth Avenue. Her logic was irrefutable. Beauty salons required cash, limiting impulse purchases. But department stores offered something revolutionary, charge accounts. When a customer kept asking, do you have a counter at Saks Fifth Avenue where I could charge? Estée knew she'd found her next opportunity.

But then came the mayonnaise incident. A middle-of-the-night, 2 a.m. phone call. Will my people die? asked a frantic Miss Nevins, wife of a department store owner. Her maid had mistaken Estee's super-rich, all-purpose cream for mayonnaise in that night's salad. The labels had peeled off in the refrigerator where Miss Nevins stored them. Nonsense, my dear, Estee reassured her. There are only pure products in that cream. It's probably healthier than mayonnaise.

The dinner guests were fine. They even raved about the meal. But the incident revealed a crucial flaw. Her packaging wasn't ready for primetime yet.

What followed was obsession worthy of Steve Jobs. Estée knew her jars had to be perfect. They would sit in women's bathrooms, competing with decor. The labels couldn't peel in the shower steam. The color had to work everywhere. For weeks, she became a covert packaging researcher, sampled jars in her evening purse, excusing herself at every restaurant and every friend's home to compare colors against bathroom wallpapers. Finally, she found it, a fragile, pasty,

pale turquoise that wasn't quite blue and wasn't quite green, but was perfect with every wallpaper from mansion to modest home.

Breaking into Saks Fifth Avenue wasn't just the next step. It was the dream. But like any overnight success, it would take years. The groundwork was already laid. The Tell-A-Woman campaign had made her name known, with customers constantly calling Saks asking for her products. Then came two unexpected allies, Miss Marion Coombs, an assistant buyer with accident-scarred skin, and the daughter of a Saks executive who wore a small veil to hide her troubled complexion.

After Estée's treatments transformed both women's skin, word spread through Saks' executive ranks like wildfire. Finally, Mr. Robert Fist, the cosmetics buyer, acceded to what Estée called her millionth request. The order? $800 worth of merchandise. A sum that represented both everything they'd dreamed of and everything they could lose.

Joe and I, she wrote, knew we had to start running a very different, much more serious operation. They set about trying to find a factory to fill the first order. They found a former restaurant on Central Park West. Six months rent had to be paid in advance. In advance were words that made her swallow hard. They cooked creams on old gas burners, sterilized jars with boiling water, and did everything with just four hands, hers and Joe's. No one knew what they were doing.

Night after night, they worked until exhaustion, stealing sleep in moments when the other was awake working. They had to be on time. Everything was on the line. This had to be perfect. The stakes were beyond personal. They'd invested all of their money, plus money from her father. When someone once asked Joseph what business they were in during the beauty salon days, he'd joke, the giveaway business. It does very well. Estee would respond, don't worry. Whatever we give away, God will give back to us.

She was more than right. Opening day at Saks saw every person she'd ever given a sample to, everyone who'd heard about her products, they all appeared. In two days, they didn't just sell well, they sold out completely. It was 1946 and Estée would say the real fun was about to begin.

The secret ingredient to business success is not what most people think. Talent. Este had seen plenty of gifted people fail. Education. She knew successful entrepreneurs who'd never seen the inside of Wharton. Connections.

Starting advantages? No, no. The mystical ingredient was something far simpler and far harder. It's persistence, she would write. It's that certain little spirit that compels you to stick it out just when you're at your most higher. It's the quality that forces you to persevere, find the root around the stone wall. It's the immovable stubbornness that will not allow you to cave in when everyone says give up.

But persistence isn't just about endurance. Take her first day at Frost Brothers department store in San Antonio. A woman approached Estee's newly installed counter, short, barefoot, with two gold teeth, where other shoppers had snowy smiles. Other customers stared. A salesperson grabbed Estee's arm. Not her, Ms. Lauder. Don't waste your time. She's not going to buy anything. I know her type. I live around here. Estee turned slowly. Since when, she asked quietly, do you know how much money she has in her pocketbook? The

Then she did what she always did. She went to work. First, the cleansing oil, patted on and t-sheet off. Then a creme pack for a minute. A touch of all-purpose cream, worked in just so and then removed. Blusher for definition, a dusting of powder, and finally a touch of Duchess Crimson lipstick. When Estée handed her the mirror, something magical happened. The woman's strong and gracious face, set off by her gloriously hued clothing, was transformed.

They couldn't speak each other's languages, Estes English meeting the woman's Spanish in a void of mutual incomprehension, but beauty needs no translation. The woman opened her sagging black purse, overflowing, not with pesos, but with American dollars, and bought two of everything. The next day, her relatives did the same thing.

This story stuck with me because if you've ever been discounted or overlooked or picked last in gym class, if you've ever been looked at funny when you walk into a fancy store, you know how it feels and you never treat others like that. Estée knew. She knew what it felt like to be discounted her entire life. Remember the woman who told her that she could never afford the blouse? She knew. That stuck with her. Just one aside here before we move on in the story.

It's not just persistence that matters. It's persistence and direction. I'm going to talk a little bit more about persistence in the reflections too. Direction gives persistence a focus. Picture this. It's early morning in Dallas at a new location for her in Neiman Marcus. Sleepy-eyed radio technician watches as a woman steps up to the microphone. He expects another dull commercial. What he gets instead is pure electricity.

I'm Estee Lauder, just in from Europe with the newest ideas for beauty. In this weather, you have to work hard to look your loveliest, and I have the secrets. I have an all-purpose cream that takes the place of the four creams that you've been using, and I have a glow and a powder that will make you look fresh and clean no matter how hot it is. And I have a small gift for every woman who comes in. Do let me personally show you how to accomplish the newest beauty tricks from Paris and London. Start the new year with a new face.

The response was electric. Woman flooded her counter. The tagline, start the new year with a new face, became more than an advertisement. It became a promise.

a rallying cry for transformation that Neiman Marcus would repeat year after year. But Este wasn't just selling products. She was rewriting the rules of retail. When opening a new counter, she didn't just show up for a ribbon-cutting ceremony. She stayed for the entire week. She selected and trained her sales staff.

She went to every department in the store and she gave samples to all the women working in the other department. She matched hats to lipsticks. She went and did a full court press with the local journalism. She went all in. And it didn't matter if these stores were in New York or in the middle of nowhere. She was there. She was there for a week and she gave it 100%.

No community was too small for my attention, my absolutely full effort, she would later recall. Consider this. She once rode a bus for six hours to open a tiny store in Corpus Christi, Texas. When warned that no one would pay $115 for a cream, she didn't lower her price. She raised their curiosity. Her advertisement simply asked, what makes a cream worth $115? Come meet Estee Lauder and find out. Her answer was pure Estee, of course. Well,

Why do you spend so much for a Picasso? The linen under his painting cost $2.75. Each jar of paint, perhaps $1.75.

You're paying for creativity, for experience, for something that works for you. This isn't royal jelly with a bunch of wax thrown in. It's 26 pure ingredients blended to make you look your loveliest at any age. This was Estee Lauder's genius in action. Never underestimate any woman's desire for beauty. Never let other prejudices limit your vision. And never ever stop finding new ways to reach people who might not even know what they're looking for.

Like I said, Estee didn't just work the counter. She worked the entire store, and this was part of her genius. Every department, dresses, hats, shoes would receive her visits. She would give all the saleswomen gifts of makeup and cream. This wasn't generosity. It was tell a woman amplified and to tell every woman.

If I could make friends with a saleswoman selling hats, she explained, she might suggest to her customer that a free makeup at Estee Lauder counter would enhance the new hat immeasurably. She was building an ecosystem when she spotted a magnificent velour hat with a coral rose. She'd give the hat saleswoman an Estee Lauder lipstick that matched it perfectly. When you sell the hat, she suggests, why don't you show your customer this lipstick?

Soon the women buying hats would find themselves at her counter discovering not just the perfect lipstick, but a world of other products they hadn't known they needed. Even disasters became opportunities.

At Detroit's Hemohatch department store, she found herself with only hand cream and two shades of lipstick, deep red and pale coral. Instead of panic, she saw possibilities. She began demonstrating how to blend the colors. If you apply the darker color over the lighter in the evening hours, you'll have the most exquisite mouth in the world. Result, 144 tubes of hand cream and every lipstick sold in one day. Those unsaleable shades became Detroit's most coveted colors. But a

But her real masterpiece was how she trained her saleswoman. The saleswoman was my most important asset, she insisted. She has to be a walking advertisement. Her instructions were precise. Never leave the counter empty. Use wooden spatulas, not fingers for cream. In the summer, talk about your liquid diet for the face.

in the winter emphasized protection against the cold. Above all, she demanded honesty. When a customer asked a salesgirl at the Estee Lauder counter if a lipstick would come off when she ate, the well-meaning salesgirl told them, oh no, it's almost indelible. Estee quickly intervened with a smile. Madam, if it never came off, I'd be out of business.

During each week-long store opening bludge, she would also visit every beauty editor at every local magazine and newspaper. Samples, makeovers, beauty advice. She wasn't just selling products. She was building relationships.

She said,

Success, however, has a way of revealing its own limitations. After her triumph at Saks and Neiman Marcus, Estée faced a new challenge, scale. Making individual contacts with each department store worked, but it was agonizingly slow. Weeks, months, sometimes years could pass before convincing a single buyer, one single gatekeeper, to stock her products.

I started late, she would recall. I didn't have time for waiting, nor, I guess, the disposition. This wasn't impatience. It was urgency. She needed a way to multiply her efforts, to turn single victories into massive breakthroughs. She knew her product worked, but she wanted to increase the velocity. The answer came in an unlikely form. Buying offices. These central bureaus purchased products from many stores throughout the country.

What Este saw wasn't just an administrative convenience, it was a lever that would move mountains. One successful presentation to a buying office could accomplish more than months of store-by-store negotiations. She had discovered something crucial about business.

Sometimes the system can work for you. That's how she found herself at nine in the morning in the waiting room of the American Merchandising Corporation, a buying office that could open doors to department stores across the country. She was the only woman in the room. And this is one of my favorite stories in the entire book. And it shows you what a badass she is. Here's how she tells it exactly in her autobiography. I want to get this word for word so you can feel what she's feeling.

I'd like to see Miss Mary Weston, the cosmetics buyer, please, I ventured to the receptionist. She's very, very busy, was the answer. Why don't you come back another time? Oh, I don't mind waiting, I said. Really, I don't. I'll just sit here quietly until she has a free moment. I waited. And waited. Male salesmen for other companies were asked to come in. I waited. What's in your cream, I asked a salesman who was also waiting. What do you mean, in it, he asked back. How should I know what's in it? They tell me what it is. How

How many ads were going to run? They tell me it works. That's all I have to know. I didn't answer. Inside my mind was whirling. My salespeople will know what's in a product they're selling if I ever get that far. How could he sell something so blindly? I knew what was in my cream all right. I knew what was in every last drop of it. I could immediately tell a woman what was in it and how to use it. He was a fraud. Still, he was called in. I waited. He came out. We're

"'We're going to lunch,' said the brisk receptionist, and then Miss Weston's schedule is impossible. "'Really, I think you better come back another day. Monday would be perfect.' "'Well, thank you,' I said, but I'll try waiting a little longer, as long as I'm here, if you don't mind.' Two o'clock, three o'clock, four o'clock, I waited the whole day, feeling invisible. I was close to tears."

At 5.15, Ms. Weston herself came out, looked at me in disbelief and asked, are you still here? Well, do come in and let's have a look at what you have. Such patience must be rewarded.

It wasn't just a look at what I had that was called for in this moment. It was the experience of what I had. In two minutes, I opened my box of cosmetics, made up her face, then showed her how to use the back of her hand to feel the rich softness of her lauterized skin. She liked it. Of course she did. I was lucky to find a woman buyer so that the demonstration was possible. If it were a man, I'd have demonstrated the creams anyway, but on the back of his hand. After he had noted the difference between his two hands, I

I would have given him some cosmetics for his wife, hoping she'd sell my product to her husband. Miss Weston was impressed. That was the good news. The bad news was there was still no room for me at any store. "'Try us again,' said Miss Weston. "'I'll try you again,' I promised with a smile. The smile disintegrated the moment I reached the sanctuary of my home. I remember weeping that night with such despair and frustration. There was to be no rocketing into glory."

Joe comforted me. "'Don't cry, honey. You got in to see her, didn't you? That was a miracle. She'll come up with a store eventually. Remember, we're in this to stay.' He was right. I called to thank her for seeing me. I was always careful to be polite, cheerful, and generous with understanding. Eventually, Miss Weston was able to get me a store for my line, and then Miss Mullins, at another buying office, found me another. I wasn't exactly riding a meteor, but the stone I was pushing was beginning to roll.'

Wow. What a force. Can you imagine sitting in that sales room with no appointment? I'll just wait. I'll wait all day. I got to be polite. All these guys around me have no idea what's in their cream, why it works, how to apply it. I'm the only one who knows. They're all frauds. Finally get in to see her, demonstrate it. She loves it. She has no space at the moment.

S. Day, steel face, takes it stoically, gets home, unloads her husband, partner. Your partner is so important when you're going through these moments. Her partner comforts her, says, don't worry, we're in it for the long haul. You got to see her. That was a miracle.

The story is the spirit that transforms the small family business into a global empire. The same persistence that kept her in that waiting room all day would drive the company's expansion across continents. The same attention to detail that had her knowing every ingredient would ensure quality as the product line grew. The same refusal to take no for an answer would open doors around the world.

Years earlier, when she and her husband Joe were just starting out, their accountant and lawyer had taken them to dinner with grave concerns. Leonard, their son, though young at the time, was included in this crucial meeting. Don't do it, was their advice. The mortality rate in the cosmetics industry is high, and you'll rue the day you invested your savings and your time into this impossible business.

They did it anyway, because that's what all entrepreneurs do. They believe in themselves. They can't be talked out of their ideas. If you can be talked out of your idea, you're not obsessed with it. You don't believe in it. As Leonard, the future CEO of Estee Lauder would later say, I

accountants and lawyers make great accountants and lawyers. We need them, but we make the business decisions. It was a philosophy straight from Mark Twain. Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you too can become great.

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Innovation often starts with a question. For Estee Lauder, that question came at a dinner party staring at three unopened bottles of perfume gathering dust on a dresser. Why don't women use their perfume? She asked herself. The question seemed innocent enough, but the answer would reveal not just what was wrong with the perfume industry, but

but how to revolutionize it. Society had trapped perfume in a gilded cage. It was a gift to be received, never chosen, preferably from a romantic partner. A woman might buy an inexpensive cologne, but proper perfume? That would be almost scandalous.

The result? Millions of dollars of fragrance sitting untouched across America slowly evaporating while waiting for special occasions that never arrived. To Estée, this was nonsense. She'd always chosen her own sense, but she understood something crucial. You couldn't just change a product. You had to change how women thought about themselves.

For months, she became a fragrant scientist, dozens of tiny bottles, endless tests and adjustments until she found something that pleased her enormously. The result was sweet, warm, and diffusive, meaning it would intermingle easily with flesh and water. The last part wasn't just chemistry. It was strategy.

Youth Dew was a branding masterstroke. She positioned it as a bath oil that happened to double as a skin perfume. It also established Estee Lauder as not just a skincare company, but a fragrance house, which added an aspiration to the brand. Youth Dew wasn't just a scent, it was a story. It was sold as an experience, a luxurious ritual for women to pamper themselves. The genius of Youth Dew wasn't just what it was, it was what it represented.

By transforming perfume from a gift into a personal purchase, Estée didn't just launch a product, she created an entirely new market. The numbers tell the story, from 50,000 in sales in 1953 to over 150 million by 1984. That was just for youth too. But the real story wasn't just in the income statement, it was in the lives of the millions of women who suddenly felt free to choose their own scent, their own style, their own definition of luxury.

This is what true innovation looks like. Not just making something better, but making something possible that wasn't possible before.

Just as Henry Ford didn't just build a better horse carriage, but gave people a new way to think about distance itself. Estee didn't just make a better perfume, she gave women a new way to think about luxury and self-worth. Sometimes the biggest opportunities don't lie in competing in existing markets, but in creating new ones entirely. It's not about taking a slice of the pie, it's about baking a whole new pie that no one else even knows exists yet. Now came the real challenge, revolutionizing how women thought about fragrance itself.

Sometimes the smallest changes have the biggest impact. While French perfumers sealed their bottles with cellophane and gold wire, Estée did something radical. She left youth-due accessible. Any customer could unscrew the cap, which she knew was exactly what they wanted to do, and smell it. It was the most elegant trap ever.

ever set. Once a customer opened that bottle, the essence would get on their hands. They might leave the counter, but youth dew will go with them. And that lingering scent would do what no advertisement could. It would make them come back.

Even the chemistry was strategic. Youth Dew was a revolutionary process that released fragrance molecules gradually throughout the day. While other perfumes faded by lunch, Youth Dew kept working its magic. Every hour was another subtle reminder to return to the counter. Women didn't just dab it on their wrists, they poured it into their baths with abandon.

When one woman wrote that her husband was bored, Estée's response was pure genius. Put a little youth dew in your bath and you'll see how bored he is. The woman later credited Estée with saving her marriage. She would go on to challenge other perfume myths. Why should a woman wear just one signature scent? Why didn't women have different personalities for day and evening? Why shouldn't they have a fragrance wardrobe?

The only rule she insisted was that no fragrance should be overpowering. If a woman's perfume preceded her entrance and didn't arrive with her, she was wearing too much or the wrong perfume. Este had discovered something fundamental. Fragrance exists in the mind, not just in the nose. She wasn't just selling a scent. She was selling hope.

Success, however, has a way of attracting competition, not all of it welcome. The spy network, as Estée called it, was sometimes comically obvious, like the young man who applied for a factory position telling Joe Lauder, I'll love working for you so much you don't even have to pay me. Really, young man, Estée would later write with characteristic dry wit. How altruistic of you. But the industrial espionage was no laughing matter. Charles Revson, founder of Revlon, had

had turned copying into a science, literally. His Bronx laboratory was an arsenal of analysis. Spectroscopes breaking down colors, infrared and ultraviolet machines decoding fragrances, atomic absorption equipment, reverse engineering formulas. The game became almost absurd in its intensity. When Estee Lauder launched a product in a dark brown box lined with brown, Revlon would follow, down to having workers hand paint white edges brown for weeks.

But the Lauders had learned a crucial lesson about protecting secrets. Sometimes the best defense isn't a wall, it's a maze. They created an elaborate coding system for their formulas, turning each recipe into a string of meaningless numbers and letters. 007, ZH, R13, BF, XZ. Pure gibberish to outsiders, but pure gold to the family. Then came the masterstroke.

No formula was ever complete till the final moment. When a fragrance was 95 or 98% done, a member of the larder family would personally deliver the last crucial ingredient, the 2 to 5% that made each creation unique. Only a larder knew the complete formula. It wasn't just security, it was family tradition turned into a competitive advantage.

Sometimes the hardest part of winning isn't knowing what to do, it's knowing what not to do. This lesson came to life one morning when Leonard Lauder burst into his mother's office brimming with enthusiasm about entering the nail polish market. He was about to learn that timing matters more than opportunity.

I don't want to get started with him, Estee's voice was quiet but firm. She didn't need to say the name. Everyone in the industry knew Revson as the nail man. I don't know who him is, Leonard pushed back, and I really want to go in and start selling nail leckers. Then came the lesson, not just in business, but in strategy. Look, Estee explained, right now he doesn't take me seriously. He thinks I'm a cute blonde lady who is no threat to him.

He's always nice, gives me the big hello. And even if he does send spies into the factory, the moment I put something up on the market that competes seriously with him, he's going to get upset, get difficult. We're not big enough to fight him yet.

So this was a lesson in positioning. You need to know which battles to pick, when to pick them. You also want to move in silence. You don't want to alert your competitors to all the things that you can do. I think that that makes a lot of sense. They built their strength quietly and invisibly until they could compete on their own terms.

And the brand positioning that she chose, which was different than Revlon and Elizabeth Arden at the time, was Elizabeth Arden owned pink, you know, as their branding color, Revlon owned sexiness, but Estee Lauder went after something that nobody had ever gone after before at scale, elegance. Only once did she break her rule of restraint when Revson's Ethira tried to challenge Clinique laterally.

Later on in the future, Estee authorized an ad in Women's Word Daily that quoted phrases from an upcoming campaign taken directly from his confidential internal memos. The message was clear. Two could play at corporate espionage. But such direct confrontation wasn't really her style. That was just a shot across the bow. I didn't thrive on fighting, she would later write. I much preferred to remove myself from the fray, remain a lady at all costs, stay out of the scandal and limelight, and stick to my business, not anyone else's.

That's a crucial lesson for business too. Stay in your lane, you know, stop looking at what other people are doing and just do your own thing. The commitment to elegance wasn't just branding, it was strategy. Years later, when competitors rushed to put movie stars and designer names on hasty products, Estee remained focused on authenticity. The name had to describe the scent and the woman who would wear it, she insisted, not another woman, a glittery personality.

This commitment to elegance would prove more than just good manners. It would become Estes' secret weapon. While competitors chased celebrities and headlines, they built something more valuable, a reputation for substance. As they prepared to expand globally, this focus on quiet excellence over loud confrontation wouldn't just distinguish them, it would define them.

If you place your products in a lesser atmosphere, Estée would say, they'll be tainted with second-class citizenship. This wasn't just pride, it was strategy. And in 1959, that strategy led her to an audacious goal, conquering Harold's, London's most prestigious department store. The first break came through an unexpected channel. Sir Richard Burbridge, Harold's owner, asked his friend Alan Gimbel about exciting new products in New York.

Gimbel's response was memorable. He described a cosmetic line owned by a woman who could sell a defunct railroad line in about five minutes. Soon after, Estée's tiny office on East 53rd Street received a call Sir Richard would like to meet. But what seemed like destiny's door opening turned into a lesson in corporate bureaucracy and protocol. When Estée approached the Herald's buyer mentioning Sir Richard's interest, she discovered her first major international mishap.

She's gone over the buyer's head. I'll never tell salespeople to do that again, she would later write. See the one directly responsible for the cosmetics department, not the boss. Let the buyer get the credit. Undeterred, she applied the same strategy that had worked in New York, just with a British accent. For a month, she worked London's beauty editors, building relationships, generating press coverage. The articles appeared. The Herald's buyer didn't call. The buyer's response remained the same. No space. No need. No.

No interest. Then came a test. Selfridges, another London department store, offered her counter space. It was a good offer, a safe offer, an okay offer. An offer that would have given Estee Lauder its first foothold in Europe. She turned it down, not just because she was stubborn because of what it implied. If she couldn't be in the best space, she'd rather be nowhere. This moment deserves a closer examination because it reveals something fundamental about building brands.

The easy path was right there. Selfridge's counter space, ready customers, a foothold in London. Most professional managers would have jumped at it. Most advertisers would have called it smart business. Most investors would have demanded it. But this is why most companies don't become Estee Lauder. Look at this through the lens of second order thinking. Let's ask ourselves, and then what? The problem wasn't Selfridge's itself. The problem was what it would do to everything that came after.

Start in a second tier store and you become a second tier brand. Your prices have to match your location. Your image follows your prices. Your future shrinks to fit your beginning. Estee knew this instinctively. She'd seen it play out in America. The cosmetics counter wasn't just a place to sell products. It was a stage, a theater, if you will. The store wasn't just a location. It was a statement about what your brand meant, who you're associating with. And once you made that statement, you couldn't take it back.

So she said no to selfridges. She went back to London the next year and the year after that. Finally, the Herald's buyer cracked just a little. She offered her a tiny space, not with the prestige cosmetics, of course, but with the toiletries. Oh, I quite understand, SA replied, nearly bursting with joy. Wherever you say will be just fine. Then she did what she always did. She turned a foothold into a fortress.

She visited every beauty editor again, but now with a crucial difference. They could tell readers exactly where to find her products. The results were exactly what she had waited three years for. As demand grew, so did her counter space. Soon, Estee Lauder wasn't just in Herald. It was the largest cosmetics company in England. Starting with the best hadn't just worked, it had worked exactly as she had planned.

France would be another story. France wasn't just another market. It was the market. In France, they thought they knew everything and had everything they needed, Estée recalled. Nothing that America had would interest a French woman. When Galeries Lafayette, the famous French department store's buyer, wouldn't even see her, Estée decided that if she couldn't get an invitation, she'd create her own opportunities.

This should surprise no one by this point in the story. What happened next, of course, becomes legend. While showing Youth Dew to a sales girl, she accidentally spilled some on the floor. They said later that I did it on purpose, but I'll never tell, she would write.

You could hear that smile in her words. So what happened? For days, customers kept asking about the magnificent scent. The buyer passing by again and again couldn't ignore the constant inquiries. Soon the impossible had happened. Estee Lauder was in France at the Galerie Lafayette.

Estée treated each market like a puzzle to be solved. In Canada, she turned consignment into conquest. When they ordered bath oil only, she sent them creams too, with an innocent note. You certainly wouldn't want to have to say no to any woman who asks if you have anything else in this line, right? In Italy, she saw past the obvious. While everyone was focused on competing in eye makeup, she introduced skincare. The logic was beautiful. Give those smoldering Italian eyes a perfect canvas of clear skin to match.

By the time she finished, Estee Lauder products were sold in 75 countries. Yet her greatest international achievement wasn't measured in dollars or distribution. It was transforming how women worldwide thought about beauty. Reflecting on her success in France, she noted, Perhaps it sounds immodest, but I have no doubt that I've expanded the perfume market significantly by convincing women they don't have to wear perfume only on special occasions, but could wear it every day of their lives.

This helped the elegant French perfumers as well as me. It was the Estee Lauder philosophy going global. Never compromise on quality, never settle for second best, and never stop until you've changed not just where people shop, but how they think about beauty itself.

Many people view the market like a pie, each person wondering how to get the biggest slice. Governments think this way too, constantly deciding how to divide resources. Large bureaucratic organizations operate similarly. But outliers see things differently. Instead of fighting over slices, they ask...

If we can make pie, why not make a bigger one so everybody gets more? When Este entered perfume, she didn't just ask herself how to get a 5% market share taking a slice from others. She grew the whole pie by redefining how perfume was used and calling it bath oil. The whole industry expanded as a result. This ability to see beyond conventional market definitions would become her signature strategy.

In 1964, she turned her attention to what seemed like an impossible market: men's cosmetics. Toiletries for women scoffed one interviewer after the launch of Aramaze, their men's division. Estée's response was characteristically sharp.

Do you use shaving cream, sir? A shampoo? A soap? And tell me honestly, after a day's sale, when your hands are rough and reddened, haven't you ever crept into your wife's side of the medicine cabinet and borrowed her hand lotion? The inspiration came from an intimate observation, watching her husband Joe come in from winter walks with his face raw and red. Here I'm turning into a cosmetics tycoon, and my own husband's face hurts, she would lament. When he refused her creams, most would have seen stubbornness as they saw opportunity.

Well, what I knew was skin, she would say, and skin was genderless.

Estee dove in with her typical obsessiveness. For 18 months, Joe, Leonard, and eight other men in the firm became living laboratories. Every formula, every texture, every possible combination was tested. Their bathroom shelves became research centers. The first launch in 1965 failed. But the thing about the Lauders is they don't abandon a good idea. They refined it. In 1967, the relaunch wasn't just a retry. It was a revolution. They created the first complete men's skincare line.

Everything from iPads to aftershave and moisturizers. The packaging was distinctive as well. A tortoiseshell, a design Estee insisted on despite committees warning it was too busy. The $250,000 investment at the time wouldn't show returns in the first year. But one of the advantages to being family owned is that they can think in decades, not just quarters.

Sometimes the best ideas look like mistakes. In 1968, right after the relaunch, Estée announced a new venture that seemed to break every rule in cosmetics. She created a high-priced, fragrance-free, allergy-tested line at a time when fragrance was what sold cosmetics. She launched 117 new products at once when conventional wisdom was to start small.

She created a new brand instead of using the lottery name when brand recognition was everything. The industry didn't just think she was wrong. They thought she'd lost her mind. But Este believed in herself when other people didn't, and she saw something that other people missed.

The future of beauty was about science, as Mark Twain wrote in words that would become Clinique's motto, do what is right, it will please some people and astonish the rest. But just before the launch came a crisis, months before a letter arrived, another company owned the name Clinique. The packaging was already printed, the marketing was ready, everything was in place except the right to use their own name. Leonard Lauder offered $5,000 for the rights.

Denied. $50,000. Denied. Finally, $100,000. A fortune in 1968. It was a risk and a king's ransom, Estee would later recall, but we knew we had to chance it. They bought the name...

The launch of Clinique was pure theater. Everything screamed scientific authority. 40 computer stations throughout Saks Fifth Avenue provided personalized skin analysis. In an era when most women had never touched a computer, this wasn't just shopping, it was the future. Consultants in lab coats with green stitching and silver buttons moved through the store like scientists carrying silver pen lights to examine customer skin. The message was clear. This isn't beauty. This is medicine.

Even the packaging had to make a statement. While Lauder was blue and gold, Clinique needed its own identity. But not too clinical or people would think it was only for problem skin. The breakthrough came unexpectedly. Someone brought in a swatch of tiny flowers. Instead of just using it, they kept enlarging and enlarging it until each package showed a different section of the pattern. The lack of conformity made some people nervous, Estée would write, but she loved the uniqueness of it.

Even the decision to launch independently from the Estee Lauder brand was strategic. As Leonard explained, they didn't just want customers thinking Lauder was launching a hyperallergenic line because there was something allergenic about the main products. More importantly, they understood that combining two different lines under one umbrella wouldn't allow for each to grow strongly as a separate entity. The market's response revealed something profound. While analysts saw Clinique as a niche product for sensitive skin, Estee had seen a larger opportunity.

Countless women were using fragrance products not because they wanted to, but because they had no choice. Remember, this is a time when every product sold had a fragrance in it, so the market wasn't small. It was just waiting to be understood. The competition scrambled to catch up. Charles Revson, who had dismissed hyper-allergenic products as a drag, rushed out his version of Clinique Etherea. Within two years, over 180 copycats appeared worldwide. But as Estée noted, they

they all missed the point. It was not a marketing device. It was just an honest service. The commitment to honesty transformed even their advertising. Working with legendary photographer Irvin Penn, they created stark, practical images, a toothbrush and a pristine glass. No models, no faces.

The pursuit of perfection was relentless. Hundreds of glasses were bought and discarded before finding the right one. The result? Their ads didn't just sell products, they ended up in the Museum of Modern Art. When industry experts predicted $5 million in sales, the lotters just kept quiet. They just kept building. Why attract attention?

By 1985, sales had reached $200 million. Turns out it wasn't such a small market after all. In the end, you can focus your attention on dividing the pie in front of you or making more pies. The Clinique launch, like Youth Do launch, showed it's much more profitable to make more pies than worry about the size of your slice.

Business is a magnificent obsession, as they would say. I've never been bored a day in my life. Her success wasn't just about selling creams and perfumes. It was about building an empire on principles that would stand the test of time. Here are some of the core principles that she mentions in her book. I'm paraphrasing a little bit here, but they're found at the back of the book, and it's a really good encapsulation of the book itself.

Her principles are deceptively simple. But what was Charlie Munger's quote, right? Take a simple idea and take it seriously. Estée took these simple ideas and she took them seriously. So her first principle, quality wasn't just a standard. It's an obsession. Being family owned meant they could do what public companies couldn't.

discard entire batches of product if they weren't perfect. Try that with a thousand shareholders, she would say with a knowing smile. If it wasn't perfect, it wasn't lauder, even when no one else would notice the difference. Sounds like Steve Jobs, right? On the inside, he wanted the motherboard to look beautiful. Only he would know the difference. Only Estee would know the difference, but it matters. Principle two, details weren't just details. They were the whole game.

When launching Beautiful, Estée orchestrated a symphony in pink. Every flower in Paris, bought and arranged, napkins, tablecloths, dyed to match the packaging, even her own dress coordinated precisely. Everything must be treated with infinite respect and care, she insisted. This wasn't just showmanship, it was part of her strategy.

Principle three, identity wasn't something you can compromise on even once. When the siren song of discount stores promised quick profits, she didn't just refuse. She doubled down. We don't do that. We do the best skincare products available today. She understood the credibility was like crystal, beautiful but impossible to repair once broken. Principle four, think small to grow big.

While others chased size, the Lauders broke operations into small units. You can do anything if you're small enough, Leonard would say. They'd rather have a few department stores who love them than a thousand who merely stalk them or just like them. Principle five, respect the customer. Their ads showed whole women, never just lips or eyes. When competitors sold sex, Estee continued to sell elegance. My women were too fine and more important, too smart to be taken in by crudeness.

Principle six, the standard is excellence. Sales training happened in remote locations where focus was total, not exciting cities where attention might wander. Everything had to be perfect all the time. These weren't just principles. They were the foundations of success. Each one explained why some brands flash and fade while others endure. Each one taking a long-term view over a short-term view.

At the heart of every lasting business lies a truth about human nature. For Estée Lauder, that truth was deceptively simple. Touch a woman's face, she would say, and you have her. This wasn't just about makeup. It was about understanding what makes us human and connecting with people at their deepest level. Her wisdom revealed itself in unexpected ways. Anger never went into writing because written words can't be taken back. When

When competitors copied her, and they did, endlessly, she chose to see it as flattery rather than theft. You get more bees with honey, was her motto. She never lost her grace.

What looked like simple business rules were really profound life lessons. Stay private and stay true to your vision. Trust your instincts, but verify with research. Be tough without losing your grace. Never compromise on quality, but be generous with everything else. These weren't just business principles, they were the philosophy of life. I am what you would call a stern taskmaster, she once said. I expect perfection, and then a little more perfection when perfection is offered. Let's

Like her grandmother making soup who would perfect a recipe and then add just a touch more, Este understood that excellence wasn't a destination. It was a journey. She built more than a company. She created a template for how business could be both elegant and effective, how standards could be maintained while constantly innovating, how principles could remain steady even as the world changed. But perhaps her greatest legacy was proving something fundamental about business itself.

All right, let's get into my reflections and afterthoughts. This is something we normally reserve for members. It's a little more off the cuff.

than what we're doing in the show. And so I'm going to offer some thoughts here. First, what a badass Estee Lauder is. Oh my God. I think more business schools need to study her and learn from her and more young women and young men need to look up to her and try to emulate what she did. She did it with grace and style and determination and persistence.

One of the things we didn't cover was Estée's brief divorce from Joe in 1939. A lot of people put this sort of on her ambitions and drive. I'm not sure. You know, her book goes into it a little bit, but...

Soon after, she did have second thoughts and they remarried. So they were apart for about three years. They remarried in 1942. And it was a key turning point for the company as well because Joe would eventually work in the back office in the business. SAA might have been the face of it. But he was a steadfast behind-the-scenes partner. They also had another son, Ronald.

In 1944, I believe. So Estee Lauder, the company, officially launched in 1946. Estee was 38 years old. I think of this fact often when I think of people who say that they're too old to start a business. Ray Kroc, you know, he bought a local hamburger chain that would turn into McDonald's as we know it today when he was 52.

Kentucky Fried Chicken started with Harlan Sanders, and he was 62. Arianna Huffington started the Huffington Post when she was 55. Sam Walton started the first Walmart at 44. I could go on and on.

Another interesting thing is when she got the Sachs deal in 1947, Estée bat the company. Not only did she and Joe go all in on the factory, that sort of abandoned restaurant in the middle of New York that required six months rent in advance, but she also shut down their small salon business, the concession stands, and won.

went all in on Saks, literally all in on that $800 order, which it was risky, but it played out like a masterstroke because she wanted to be associated with those high-end stores and the brand got instant credibility and cachet. So she knew she couldn't be available everywhere if she's going to be available in the very best stores. Two things I think, you know, she instinctively knew that they wouldn't want to carry her if she's in these salons as well. They want people coming to Saks, obviously. Yeah.

And the second thing, you know, we saw this with the Selfridges thing later on. She didn't want to be associated at the time with anything less than the best. Once she got into the best, there was no going back.

And getting into Saks, you know, this wasn't just luck, right? Like she made this happen. She had people go there and ask for her products. I'm sure she was telling women to go to Saks and, you know, sort of subtly hint that they should carry her products. And every time she was in there, I'm sure that she would do the same thing and ask, oh, do you have, you know, Estee Lauder's face creams? And I think, you know, she's genius. She's a force.

Once in the store, she took an obsessive approach. And, you know, I think...

This goes unappreciated or underappreciated today. You know, she rolled up her sleeves and she went to the front of the line. She traveled to every new store. She found, selected, and trained the saleswoman. She showed them exactly what to do, what to say, how the displays should be arranged. And she even showed them how to demonstrate the products on customers herself. These women represented the only touch point that the customers would have with the brand at the store.

One bad experience would multiply everything by zero. She made sure the entire store knew about her products. She gave samples to all the ladies. She mentioned lipstick that would match what they were selling. And if that wasn't enough, she blitzed local media, making sure everyone knew about her products and where to get them. She didn't just ask people to write stories. She showed them her products and they wrote stories.

And she did this for every store. It wasn't just the flagship store. So often we see people today and they're too busy to do this stuff. But she did this for years at every store opening. And it didn't matter if it was New York or the middle of nowhere, she would go and she was on the front lines and she knew the business inside and out. So I think of map territory a lot when I think of this.

which is a lot of people sort of run their business on the spreadsheet. They get the map and Estee had the territory. She's talking with customers. She's interacting with them. She's interacting with the salespeople. She's interacting with the stores. She's getting a dose of reality that you can't just see on the spreadsheet.

The gift with purchase, the little sachet of perfume or like the tiny jar of cream was revolutionary for its time, but it became the standard as we learned more and more about psychology. And you can read Robert Cialdini's book on why reciprocation is so effective. At one point, Leonard noted that a free sample was the basis on which Estee Lauder was built. I don't think he's wrong. I don't think that's overstating it. I think that he nails it.

That really was a key. She didn't have a marketing. She didn't do it because she knew it would work. Psychology would later prove that this is one of the most effective things you can do. It's why one of my good friends, Peter Kaufman, has this saying, he says, go positive and go first. And you unlock human nature to work for you rather than against you. And if you really deconstruct that principle into what it means, you understand that you

The best way to get what I want in life is to help people get what they want. What happens when you help people, when you go out of your way to help somebody get what they want? They have the natural reciprocation. They want to help you. They look for opportunities to help you. Este turned her customers into advertising. They would try the products, love them, and tell their friends. This was the birth of Tell a Woman.

And I love that name as she calls it. Estee stepped down from CEO and appointed her son, Leonard Lauder, as the CEO in 1973. She remained active with the company until she passed away in 2004. So at the time of her passing, the company that she started with just a few hand creams had over $5 billion in revenue.

There's a legendary anecdote about how she got into Neiman Marcus, the famous store. And the story goes something like this. And, you know, it's familiar from the book, but it'll sound familiar because it sounds like some of her other stories. So I think it's believable. The store's cosmetics buyer was skeptical at.

And Estee managed to arrange a meeting with Neiman Marcus co-founder Stanley Marcus in the store. Rather than pitch her line, which would just make her another brand, she arranged for the entire meeting room to be set up with fine linens and flowers as if it were for a fancy tea party.

And at the end of the meeting, she did two things. She gifted Ms. Marcus's secretary a bottle of youth dew bath oil. And as they left the room, she spilled a few drops. And soon the entire area was filled with the intoxicating aroma of her fragrance.

Women who passed by were asking, what is that smell and where can I get it? Both impressed and amused, Stanley Marcus placed an order on the spot. Estée knew how to get things done. She wasn't just persistent. She had this flash of theater and showmanship to her. We saw a little bit of that in the Eaton's episode. We're going to run into this over and over again, including with Rockefeller. You know, he inherited a little bit of his father's showmanship as well.

SDA became known for her marketing. You know, she was one of the OGs that sold lifestyle and not product. She was selling an image. She was selling aspiration. She was selling hope. She took these two things that are rarely found together, the personal touch and the obsession of a shopkeeper and even the entrepreneurial mindset. And she blended them together and get something stronger than any of them individually or any of them outside.

added, they became so much more valuable when combined together. And there's something about combining skills that are rarely found together that gives you a huge edge. The company decided to go public in 1995 after nearly 50 years of private. The company's market value at IPO was $2 billion. Leonard Lauder noted that going public was one of the best things that ever happened to us. We're smarter, tougher, more competitive because we're under the scrutiny of the public.

There's a lot to be said about going public, and it's really interesting. I mean, part of the reason that Estee Lauder was so successful at the time they went public is because they hadn't gone public before. Private companies, we learned about this a little bit in the conversation with John Bragg, and we're going to talk about it more coming up.

There's a lot of advantages to being private. You can take a long-term view. You think about the quality standards she had where she's throwing out batches, where she's being patient, where she's saying no to self-riches. All these instances would be incredibly difficult as a public company and almost impossible with professional management and not a founder at the helm. There are also pros to being public, which there is sort of a forcing function to be a little bit tougher, a little bit more efficient,

While you might take a little shorter term view, you also have more access to capital. You can raise money in various different ways from debt covenants to shares to just pure debt. There's a lot of different things at your disposal. And if you're opportunistic, as we're going to see in an upcoming episode with Henry Teledon, if you're opportunistic, you can use the public status to work for you.

One of the reasons that quality was so important to Estee is that she lived or died on repeat sales. She knew that her empire was built on recurring purchases, not one-time sales. One-time sales sort of encourage you to fleece the customer or to take the last dime. You can engage in a win-lose relationship when you're only going to have a customer once. So I win, you lose. But

But you can't get repeat sales in a win-lose relationship. So if you think about this, there's only four permutations of relationships. There's win-win, win-lose, lose-lose, and lose-win. And only one of those relationships, win-win, will survive across time. And so it's incredibly important that Asday is delivering the highest standard product because she wants her customers to come back again and again. She doesn't want to just acquire a customer and have her buy one or two jars. She wants her to buy jars for life.

And you think about SaaS and all of this stuff, and there's a lot of business models built on repeat purchases today. Apple seems to have learned a lot from Estee Lauder as well, right? If you think about it, they have a hands-on demo. So they guide you through it. They show you how their products work, how to use them. They focus on the customer experience with the packaging, even to the obsession of how it sounds when it opens.

and how the quality of the packaging is a million times better than almost anybody else's packaging. Because that's part of your experience with the brand. It's part of why you're paying more money for it. It's part of why you can command such a premium price. And they control how and where their products are sold. Sounds a lot like the Estee Lauder playbook. Some themes that emerged for me with Estee, you know, she had a passion for the product. She was relentless and persistent.

She kept a low profile, you know, despite being out in the media and using the media to her advantage. She tried to keep everything pretty low profile. She didn't want people to know how much money she was making, what she was doing next. She didn't want a lot of attention outside of the business. She did everything high end. She never cut corners. She had uncompromising qualities. She was obsessed with.

She worked hard. One of my favorite quotes that I came across while researching her was, she didn't get there by wishing for it. I worked hard for it. And her story captures that. She had so many rejections and challenges to overcome, so many problems, but she learned to see problems as opportunities and just got to work, whether it was, you know,

persuading a store retailer to carry her products for the 15th time or waiting all day to see a buyer without an appointment or spilling perfume because she couldn't just get them to even open the jar and smell it. She showed up every day and did the work. She also learned an important lesson in business. No often means not yet. No often means try a new approach. I try to tell my kids this, you know, we were knocking on doors the other day and we're shoveling driveways.

And they get rejected all the time. I kind of love it as a parent. You know, I'm labor, so I'll go help them. But they get rejected and it's about, well, why are they rejecting? Why are they saying no? Is it money? Is it something else? And how do we overcome those objectives? So it's interesting, kids, you know,

They say no and they don't think to, oh, well, you know, why not? And we've gone through this iteration over years now and it gets to the point where my kids have been quite good when they want to be convincing people. So a lot of times people will be like, oh, I have a driveway service. I'll pay for it. They're going to be coming by later. And my kids got to the point where they were like, well, you know, they're doing thousands of driveways today. Like they're not going to give you the care and attention that we can give your driveway. We're only going to do like five driveways.

So we can make your driveway the envy of all your neighbors. And you start thinking about little kids saying this, and it becomes really hard to say no to them at that point. But it's all about overcoming the no. The first no is rarely a no when it comes to business. You just have to find a way around the wall. And Estee talks about this with persistence. She also never hopped on the latest fad, right?

And I thought that was interesting. She just sort of did her own thing. She swam in her own lane and that's really important.

And there's some takeaways too, like that you can use maybe today or tomorrow in this. If you're pitching a new client, you can find a way to make them experience the product. If someone says no, you can assume it means not yet and try a new approach and try an approach around that. The other thing is if you're a premium brand, you can't associate as a second tier brand. I ran into this the other day. I was in this gas station service center and I saw what used to be a premium high-end tea company

And I was just like, oh man, nobody's ever going to give these products away anymore. Now they're just a commodity before they were luxury, before they were the best of the best. And now they're in a convenience store at a gas station. Now I can't give this to anybody as a gift. Who's going to want to give a gift like that? So if you want your product to be luxurious and premium and elegant, everywhere it's available has to maintain that sort of elegance.

One thing I love that I don't think gets enough attention, she imagined a world where every woman could feel beautiful and luxurious using her products. It's almost like a reality distortion field. And then she made it happen.

In an era of sort of unicorns and rapid growth, she's a reminder of the fundamentals of business. Know your product. Know your customer. Work hard. Set the highest quality standards. Don't lie. Think long term. She didn't just break the glass ceiling. She smashed through it and invited every other woman to follow her.

All right. As a reminder, these Outliers episodes are a format I'm playing around with. We're going to experiment a little over the next few months and then land on a format that I think works for everybody. If you have any feedback, just email me, Shane, at FarnamStreetBlog.com. That's F-A-R-N-A-M Street S-T-R-E-E-T blog.com.

This podcast is largely based on the 1985 autobiography, Estee's Success Story, which is one of the best business autobiographies I've ever read. I came across it a few years ago, recently picked it up again. The book shares her journey. And if you enjoyed this podcast, you're going to love that.

I think I'll end with this. Estee didn't just build a business. She built a philosophy and one that defied convention. She ignored experts. She redefined the entire industry. The takeaway, if you wait for permission, you'll always be behind. The real outliers are the ones who create their own opportunities, just like Estee Lauder did. ♪

Thanks for listening and learning with us. For a complete list of episodes, show notes, transcripts, and more, go to fs.blog.com or just Google The Knowledge Project.

The Farnham Street blog is also where you can learn more about my new book, Clear Thinking, turning ordinary moments into extraordinary results. It's a transformative guide that hands you the tools to master your fate, sharpen your decision-making, and set yourself up for unparalleled success. Learn more at fs.blog.com. Until next time.