By Emily Bobrow
It still irks Leonard Lauder when people presume he inherited his wealth. "I created it," he says over the phone from his home on New York City's Upper East Side. Sure, his parents "worked their tail off" to get the Estée Lauder Cos. started. But Mr. Lauder says that his vision made the business the $89 billion international behemoth it is today.
This is the story he tells in his new memoir, "The Company I Keep: My Life in Beauty," which will be published on Nov. 17 by Harper Business (which, like The Wall Street Journal, is owned by News Corp). Less a tell-all than a chronicle of the hard choices and hard-earned wisdom that made Estée Lauder a success, the book puts Mr. Lauder, 87, at the center of the drama. "I could never have written this book while my parents were alive," he admits, given his mother's need to be the star of the show.
The company was, after all, his mother's idea. Born Josephine Esther Mentzer to East European Jewish immigrants in Queens, N.Y., she learned to confect moisturizers and concealers from her chemist uncle and began selling them at beauty salons in the mid-1930s, when she was in her 20s and her son was a toddler. She branded both the products and herself Estée Lauder, softening her Germanic married name, Lauter. "She wanted something that sounded feminine and vaguely European," Mr. Lauder writes.
Charismatic and full of chutzpah, Mrs. Lauder was "a genius at sales," her son writes. She gave free facials to women held captive by hairdryers and packaged free samples of whatever they didn't buy. She trained women to sell in salons -- "Touch your customer and you're halfway there," she would say -- and cooked and bottled her lotions at night, while her son watched in the kitchen.
Mrs. Lauder often complained that Leonard was "just like" his father, Joseph. Her son took that as a compliment. "My father was probably the hardest-working man I ever met," he writes. His mother's concerns over his father's earning power led her to divorce him in 1939, when Leonard was 6, but they remarried in 1942 and had another son, Ronald, two years later. Mr. Lauder says his parents grew the company as a team, with his mother inventing new products and promotions while his father oversaw the finances and production. At 13, Leonard began working in the plant most afternoons and weekends.
The company "was in the right place at the right time," he says. The war boosted demand for cosmetics, as many women suddenly had jobs and money to spend, and the postwar boom enhanced it still more. Eager to keep distribution narrow and posh, Mrs. Lauder convinced the owners of high-end specialty stores, such as Saks Fifth Avenue in New York and Neiman Marcus in Dallas, to give her counter space. ("It was easier to say yes to Estée than to say no," Stanley Marcus later said.)
Charles Revson, the owner of Revlon, offered to buy Estée Lauder for $1 million in 1950, according to Mr. Lauder. But his mother wanted the company for her children. Was that pressure uncomfortable? Mr. Lauder laughs at the thought. "This is something I wanted to do literally for as long as I can remember," he says.
Instead of becoming a chemist and helping with manufacturing, as his parents hoped, Mr. Lauder studied business. His bachelor's degree from the University of Pennsylvania's Wharton School wasn't enough to get him into Harvard Business School, so he joined the Navy in 1954.
When Mr. Lauder officially started at Estée Lauder in 1958, the company had barely a dozen employees and annual revenues of less than $1 million. His dream was to make it a global empire, "the General Motors of the beauty business." While his mother was the company's public face, Mr. Lauder made most of the decisions, using sales data to tweak promotions and invent products (like travel-size powder compacts). He sent personalized notes to everyone from buyers to salespeople.
Mr. Lauder launched new brands to lure different shoppers. This began in 1968 with Clinique, a less expensive, hypoallergenic line designed for skin-conscious younger women, which remains a top seller. The company now sells more than 25 cosmetic brands in over 150 countries.
This diverse global portfolio has helped during the pandemic. Although sales declined by 9% overall this past quarter, and mask mandates defied Mr. Lauder's "lipstick index" (whereby lipstick sales rise as an affordable luxury in times of stress), sales in China saw double-digit growth, and demand for products from Dr. Jart+ (a Korean brand Estée Lauder bought last year) added around 3 percentage points of net sales growth. Analysts predict the company's global market share could exceed 20% by 2025.
"We were one of the first companies to enter the Asian market," Mr. Lauder says. "If you're the first to market, you always win."
Another key ingredient of the company's success, Mr. Lauder says, was his habit of putting women in top jobs. The original Clinique leadership team, for example, was composed almost entirely of women. "I tried to find the people who are smarter than me," he says. "Most were women."
Mr. Lauder says his biggest gambles were possible because the company was privately held. Yet he took Estée Lauder public in 1995, largely to remove tension over money in the family. Now worth more than $22 billion, Mr. Lauder headed the company for over 25 years, as president and then CEO, before becoming chairman emeritus in 1999.
He now spends much of his time giving his money away. He helped create foundations to fight breast cancer (which afflicted his first wife, Evelyn, who died in 2011; he remarried in 2015 to Judy Glickman Lauder) and Alzheimer's disease, which he now admits claimed his mother. New York City's Whitney Museum named its new building after him ("I didn't ask for that"), and the Metropolitan Museum of Art will get his Picasso-rich cubist collection, valued at $1 billion.
Mr. Lauder doesn't want to talk politics and says that top executives at consumer-product companies "should not get involved in politics," though Forbes reported that he donated more than $100,000 to Democratic candidates this election cycle. Over the summer, some 100 employees demanded that his brother Ronald, who has praised President Trump as "a man of incredible insight and intelligence," resign from the board, writing that this support was "damaging to our corporate values."
Mr. Lauder wants his book to give people hope. The story of Estée Lauder, he says, is about the hustle and grit that turned a business born in the Depression into a gigantic success. "I want other people to have enough optimism in tomorrow to make something happen today," he says. What could be more American than that?
(END) Dow Jones Newswires