Doris Fisher: Don’t mind The Gap

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1:52Welcome to Good Bad Billionaire from the BBC World Service. Each episode, we pick a billionaire and find out how they made their money. And then we judge them. Are they good, bad or just another billionaire? I'm Simon Jack, the BBC's business editor. And I'm Zing Zing. I'm a journalist, author and podcaster. This is a story of a woman, a couple who found a gap in the market, a gap in the generations. Very good. And decided to name their store after it. Yes, her name is Doris Fisher and with her husband, she founded The Gap. Doris Fisher on her own today worth$1.5 billion. At one point she was worth over$4 billion and together with her family she's still worth over$6 billion.

2:33And if you were at any point around in the 90s you will have seen that advertising. It was everywhere. Yeah, one of the most successful clothing brands ever. It revolutionised the way the world shopped and dressed. How would you characterise it? You're the best dressed person I know. Thank you very much. And well, I guess I don't wear The Gap personally, which maybe tells you something about the way it's perceived now, because it's all about all American basics. So we're talking about chinos, T-shirts, polos, jeans, usually quite brightly coloured, you know, kind of think Ralph Lauren, but less aspirational and a lot more accessible.

3:09And yet they started by inventing specialty retail. The Gap started life selling just jeans and records. But Doris Fisher is pretty private. Don, her co-founder and husband, less so. But they were equal partners in the business, which was unusual for the 60s. Now, it's actually been tricky to find out much about Doris specifically. Unlike Don, who self-published a 724-page autobiography, mercifully only gave out around 200 copies to family and friends. And Don is a big part of this story, but he's not the focus because this podcast focuses on billionaires who are still with us. But we can tell you one thing Doris did say.

3:47I'll tell you that I've been successful because I've worked hard. Millions of people work hard. That's not quite good enough. That's not going to do it, I'm afraid, Doris. And Don and Doris really did seem to do everything together. And that includes spending serious money on art. they amassed a$1 billion art collection, which includes over 1 ,000 works by 185 artists, from Andy Warhol to Roy Lichtenstein. But it's been a roller coaster. This wasn't linear, unadulterated success. Doris has described the gap as a stall with a heart, but the last two decades have seen the gap dramatically fall from favour amid allegations of sweatshops and child labour.

4:23So is Doris Fisher good, bad or just another billionaire?

4:31Let's get back to the beginning. Doris Lee Feigenbaum was born in 1931 in San Francisco, USA. There isn't a huge amount of information on her early years, but what we can gather is that she was born into a well-to-do Jewish family because her parents married at the Ritz-Carlton and it was announced in the Society pages of the New York Times. And her father was a lawyer and a Republican state legislator for California. Doris was the middle of three children and she said, I just wanted to make my parents proud and to have them notice me, especially my dad. I really idolised him. I wanted to show him what I could do.

5:04Yeah, she was diligent. She was a Girl Scout. She started volunteering at 12 years old. And she pushed herself to get through school in order to graduate with honours. She said, I put that same energy into building the gap. She must have been smart, though, because she graduated, not the first of our billionaires to do this or drop out from it, from Stanford University in the early 1950s. One of the first women to earn an economics degree there. Because remember, we're not talking about the 70s or the 80s or the 90s. This is someone who went to university in the 50s. Yeah. And in 1953, straight after graduating aged 22, Doris marries Donald or Don Fisher.

5:39Now, Don was actually a longtime family friend of Doris. He was also from a middle class Jewish family in San Francisco. Yeah. He graduated with a degree in business administration from the University of California, Berkeley, despite once being caught cheating in an exam on industrial relations. So quite a colourful character to pair up with Doris, the hard-working girl made good. The hard-working girl scout. He was also six foot four, three years her senior, and had been captain of both the swimming and water polo team. So quite the jock. Yeah. So like many women in 1950s America, remember that period, soon as they got married, Doris spent the best part of the next decade having children.

6:14Together, they had three sons, Robert in 54, William in 58, and John in 1961. And while she was raising the boys, Don started a commercial real estate business specialising in refurbishing old hotels. And this is where the Gap's origin story comes in. So Don had bought a hotel in Sacramento and to make some extra money was leasing out one of the ballrooms to a Levi's salesman who had used it as a showroom. And the 60s were really Levi's decade. Well, they continued to be incredibly popular and iconic, but the 60s was when they became massive. Yes. I mean, Levi's really, I guess you could say, pioneered the jeans.

6:50So, you know, sometimes you'll see this pair of Levi's jeans called the 501s. That's actually considered the first ever pair of jeans in history. You know, the founders of Levi's even patented it. And the 60s, you think back to rock and roll stars, they were wearing jeans for the first time. James Dean, rebel without a cause. So jeans were really, and I know this seems crazy now because they are everywhere, they were very much a new trendy thing. Yeah, they were sort of counter-cultural in a way. They were workwear originally, and then they became fashionwear in the 60s. And, you know, we talk now about workwear being a huge trend.

7:22You look at brands like, for instance, Carhartt. You can talk about people wearing Carhartt who have never worked in manual labour a day in their life, but Levi's was really the brand that kicked it all off. So Levi's were gaining huge popularity. Don himself, Don Fisher, bought a couple of pairs from the salesman, but he couldn't find the right fit. So him and Doris began doing some market research and even the big department stores like Macy's didn't carry every style, size and colour and they often sold out of the most popular ones. So this was their light bulb moment, if you like. They thought about a one-stop shop that brought together every style, every colour, every size that Levi Strauss had to offer.

7:58Don said at the time, I didn't plan to go into the clothing business. I just wanted to take the nightmare out of shopping for Levi's and to offer an easy, well-organised shopping experience that would appeal to a guy like me. So he went to Levi's with this idea and a guy called Bud Robinson, who was Levi's director of advertising, was pretty impressed and he agreed to a novel system of supply and inventory. Levi's would guarantee every style and they'd never run out of stock by offering overnight daily shipments from their warehouse. So in August 1969, Don and Doris open a shop of their own. And now really unusually for the time, Doris and Don decided to be equal partners.

8:36And she said, frankly, I would have always assumed that women were getting paid the same amount as men. I mean, they were doing the same jobs. But back when we started Gap, of course they were. That was a time when I don't think it occurred to many people that women could be leaders. So Don and Doris invested$63 ,000. They each put in$21 ,000. And the other 21 ,000 came from a raid on their children's bank accounts. And they promised to pay them back one day for the rest. And boy, did they. And will they. We'll see. So when asked why she and Don decided to contribute equally to the start-up costs, she answered, why not?

9:09It didn't even dawn on me to do anything differently. We were doing it together as partners. So of course I put in the same amount of money as Don did. So their plan was to cater exclusively to teenagers, college kids. and the store was strategically placed on Ocean Avenue, right near two colleges and a high school. Now, remember, we're talking about the 60s, the summer of love, in San Francisco, which is really the epicentre of this new emerging youth culture. Haight-Ashbury area, you've got the Grateful Dead, you've got Janis Joplin, Jimi Hendrix. Acid everywhere. OK. And at first, all they stocked was men's Levi's jeans and vinyl records.

9:47Now, Don had planned to call the store Pants and Disks, but Doris persuaded him otherwise. I have to say, I don't think Pants and Disks would have turned into an international clothing empire. This is one of those sliding doors moments. We would not be here talking about this story if Pants and Disks was their name. So Doris came up with the idea, the gap in reference to the generation gap, which a lot of people were talking about at that time during this period. She had the idea. They'd just been to a cocktail party, apparently, where the generation gap was discussed. so there was the kind of war generation and then there was the post-war generation and this was seen as a big gap in terms of everything really in terms of lived experience in terms of technological innovation in terms of cultural freedoms things like the contraceptive pill i think that's kind of important part in all of this and also you know morals values ethics you know this entire idea of summer of love of tuning in and dropping out you know that would have been absolute anathema to the people who served in World War II.

10:46So the Gap was really a kind of all-encompassing brand that signaled that the cool was for cool young people, not your dad and mum. Yeah, not for the so-called silent generation. This is for you guys. So Doris at this time was 38, Dom was 41. They were selling to a younger generation, but they both worked at the store. Doris said, I used to wear the clothes, of course, and I could always sell what I was wearing. And the Gap is credited with inventing speciality retail. Now, at the time, clothes shopping mostly happened in department stores. So think of places like Macy's, which catered to the older generation.

11:18But the Gaps concept was new and fun. The store was painted in bright colours. It played rock music. They actually soon dropped selling vinyl records because, as Don said, the pants were selling the records, not the other way around. That's a smart spot. They were also innovative at merchandising. They would display jeans together by size rather than by style, meaning you could go in and shop all the styles easily at once. So, you know, here's my size. Here's the range available for me. Don said, I viewed things with the eye of a real estate man, not a retailer. I always looked for ways to get the most square footage to go beyond the floor space.

11:52I created a honeycomb of cubicles on the walls. I'd never seen this done before, but it seemed so logical. I wondered why not. So actually, when you think about it, a lot of the things we now associate with a traditional retail experience, The gap was basically at the forefront of it. Yeah, all this means the store was gaining in popularity. It was helped by a big marketing campaign. And according to Bud Robinson, the guy from Levi's, Don had insisted that Levi's pay 50 % of the store's radio advertising up front. That's really interesting. Yeah, and when you think about how few places there were at the time to advertise to young people, actually demanding that as part of the deal is pretty smart.

12:28And also, to this day, you sometimes see co-marketing where you see one brand will be advertising another store. There'll be sort of joint marketing. So I think this is the first time probably it's ever been done. So the radio ads would run on radio almost every day and in Bud's words, bombard every hearing Bay Area teenager and surely drive them to the store. And just a year after launching, they opened a second store in San Jose, a city close to San Francisco, and began selling Levi's for women. Now, by 1971, sales were$2.5 million, but net profit was just$116 ,000. So the next few years, they began a big expansion plan.

13:06They opened smaller stores to keep rent low. This meant they could even open more sites and get their name out there. This is the beginning of what, in retail terms, used to be called the space race. The space race, the space on the high street. Exactly. So by its third anniversary, the Gap had 25 stores across the US. It was all about convenience and easy shopping. For example, stores in New York were placed as close as possible to bus stops and big retailers to get as much footfall, as many people passing as possible. And until now, they'd just been stocking Levi's. But in 1974, they started selling Gap label clothing.

13:38So those wardrobe basics like cords, chinos, casual shirts, T-shirts. So that growth, plus the introduction of their own branded clothing, big moment, meant that by 1975 with 50 stores, Gap's net profit was 4.3 million US dollars. And as sole owners of the company, it's therefore probably safe to say that Doris at the age of 44 and Don at age 47 are millionaires in 1975. OK. And that year they spent$211 ,000. That's around equal to US$1.2 million today to buy a summer home 30 miles of San Francisco in the town of Atherton. I'm not sure you could get the house they bought for US$1.2 million today because real estate has also gone up massively in the Bay Area.

14:19That wouldn't get you a broom cupboard these days. No, you'd have to fight 20 different programmers to get that kind of space. Now, over the next three decades, they would spend 17 and a half million dollars to grow it into a big eight acre estate. And a few years ago, Doris put it on the market for 100 million. There we go. That's what I was talking about. Although it eventually only sold for 50 million. Oh, dear. So they're millionaires, but how do they get to a billion? So the next step is taking their company public. But it's not going to go as well for them as some of our other billionaires.

15:22We'll be right back. mean hundreds more in your pocket. Visit progressive.com after this episode to see if you could save. Progressive Casualty Insurance Company and affiliates. Potential savings will vary. Not available in all states. Hey guys, it's Erin Andrews from Calm Down with Erin and Carissa. So when the pressure's on, you remember the people who helped you get this far, whose knowledge guided you, and whose care kept you grounded. For me, it was my dad, my mentor, who believed in me when I was just getting started in journalism. A real-life example that showed me when you work with someone who knows a lot and cares even more, you're unstoppable.

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16:46How is it faster? OCI's block storage gives you more operations per second. Cheaper? OCI costs up to 50 % less for computing, 70 % less for storage, and 80 % less for networking. Better? In test after test, OCI customers report lower latency and higher bandwidth versus other clouds. This is the cloud built for AI and all your biggest workloads. Right now, with zero commitment, try OCI for free. Head to oracle.com slash strategic. That's oracle.com slash strategic. Hey, it's Ryan Reynolds here from Mint Mobile. Now, I was looking for fun ways to tell you that Mint's offer of unlimited premium wireless for$15 a month is back.

17:28So I thought it would be fun if we made$15 bills. But it turns out that's very illegal. So there goes my big idea for the commercial. Give it a try at mintmobile.com slash switch. A front payment of$45 for a three-month plan equivalent to$15 per month required. New customer offer for first three months only. Speed slow after 35 gigabytes if network's busy. Taxes and fees extra.

17:55So how do they get from a million to a billion? As we've said, with many of our billionaires, Doris and Don decide to take their company public, have an initial public offering at IPO. So in May 1976, the Gap Stores Inc. makes an initial offering selling shares at$18 per share. But that same month, the Federal Trade Commission accuses Levi Strauss of price fixing across its retailers. Years later, Levi Strauss settled this antitrust as competition suit against it to the tune of millions, but without omissions of wrongdoing. But at the time of Gap's IPO, these accusations against Gap's main supplier, biggest business partner, didn't look good.

18:33And later that year, the Gap reported its first loss after 26 consecutive quarters of profit and Gap's stocks fell to$7.25 per share, dropping more than half in less than a year. That's a bad result for an IPO. You don't want to lose half your money in less than a year. And Don, in fact, wrote in his autobiography that stock went into a tailspin. Investors screamed for our hides, accusing us of wrongdoing. And actually, there were nine separate class action suits from stock purchasers who accused Don and Doris of trying to dump their holdings before the gap announced it's bad news. Yeah, that's quite interesting, isn't it?

19:07So you have your IPO and then almost immediately you have this big lawsuit that comes out, which sends your stock down. And the suspicion you would have as an investor is like you knew something like this was coming. You sold up before the bad news hit. No evidence that's the case, but that's what investors would have thought. Now, the SEC, the Securities and Exchange Commission, actually investigated these complaints, but they found no criminal wrongdoing. But they did say that Gap hadn't released all pertinent financial information to their investors. Now, Gap eventually settled with the SEC and subsequently also settled the related investor lawsuits for a total of$5.8 million.

19:42Yeah. Mark Cohen, Director of Retail Studies at Columbia Business School, who worked for Don in the late 1970s, said of that whole Levi's saga, it became a big enough problem that Gap strategically felt they had to migrate away from Levi's. Big moment. And so in 1978, Gap launches its own in-house jeans, although they continue to stock Levi's. But people were starting to wonder if the Gap was really destined for success. By the beginning of the 1980s, they had over 300 stores. But what had initially been its strength, the narrow assortment of things on offer and targeted custom base was beginning to look like a bit of a weakness.

20:17So the question was, would the store age with them or would they keep targeting young people? And by the end of the 1970s, a cultural change was in the air again. And over the early 80s, the Gap's fortunes started to go down. And I remember this. I was around in the 80s, believe it or not. Well, you probably do believe that. The casual look was out. And this was the era of power dressing. Wall Street suits, big shoulder pads. Big hair as well. Big hair, huge hair. On top of that, department stores have begun to get their act together. They offered several specialty outlets under one roof. And Don and Doris went both now in their 50s.

20:52So, you know, they needed to move with the times and make some big changes. Their first gamble is purchasing clothing company Banana Republic in 1983. That was a Banana Republic customer. I'm sad to say it's all sort of safari and travel style clothes. It made you look like a kind of casual Indiana Jones. Right. I would love to see a picture of you from this time. I'm imagining safari chinos in the hat. Yes, that look was popular. They began a big expansion programme of Banana Republic, opened dozens of stores. But within a few years, unfortunately for Simon in the 80s, the safari look was no longer in style and Banana Republic was starting to struggle.

21:27So they also had a go at buying something else. They bought a homeware business called Pottery Barn, but they sold it within two years after absorbing$14 million in losses. And Don said that the failure was an important lesson. He said, I decided I would never again get involved with a business I didn't already know and understand, which is quite a different attitude to some of our other billionaires. That's true, yes. Usually they think the rest of the world is totally wrong and they're completely right and they'll keep going until they're proved right. So their next move was important though because there was a little touch of humility, I think, which came in here and realising they didn't know everything.

21:58They're in their 50s. They're in the fashion business. You could argue this is a younger person's game. So they found one. So they did. They hired a man who would become known as the merchant prince and the man who dressed America. Yeah, retail expert Mickey Drexler was a 39-year-old from the Bronx where he had to sleep in the foyer of his family's apartment. So he doesn't come from much, but he was known for his take-no-prisoners management style. And over the years, he would actually often clash with Don and Doris. So he was given a senior role as president of Gap Stores and he set about overhauling their entire image.

22:30He spent$8 million to remodel 500 stores. That sounds pretty cheap to remodel 500 stores. He painted them all white with wood floors polished twice a week and gave it a fresh, clean look. That's the gap I think we would all recognise. He slashed prices to sell off old merchandise so he could introduce new lines of clothing. And initially the markets were not into it, so profits and the company's stock initially plunged. But Mickey Drexler had a vision and he stuck with it. And he described the clothes he was going for as not high-risk fashion, but good taste, good style. Not too far to the left, not too far to the right.

23:03And they focused on casual, cool basics. So, you know, those khakis, jeans, T-shirts. But he also added a wider range of styles and all in an extensive colour range. And that kind of range of colour, I think, is one of the most distinctive things about The Gap now. Things like the classic pocket T-shirt, that was a big hit. And in 1985, it was worn by both Mick Jagger, who was performing at Live Aid, and Marty McFly in Back to the Future. So it's an 80s icon. And they more than doubled the number of styles for women, adding things like blouses and dresses. And because they're original custom-based, the baby boomers were now becoming parents themselves, they also launched Gap Kids, followed a few years later by Baby Gap.

23:42And they also expanded outside the US, so they opened several stores in London, England and a store in Vancouver, Canada. But their rapid expansion and the impressive work ethic that the Fishers cultivated led one British retail consultant to say, they were the most anal people I have ever met, comparing the Gap to the Moonies, which is a common nickname for the leaders of the South Korean religious group, the Unification Church. They also revamped Banana Republic, so they got rid of that safari theme and they brought in sportswear. Mickey's plan was working. The New York Times at the time called it one of the most remarkable turnarounds in retailing history.