Magnolia: Chip & Joanna Gaines. From House Flipping to Household Name

26:26How do I prove that guy wrong and overwhelm him? Because I know what a 235, you know, I know the size tire. I know all of the language, alignment. So I was learning the business. So I happened to be at the front when this guy decided to get his like sixth pair of tires. I got great jobs like weekly if I could afford it. So in that, I mean, you go there with the intention, obviously, of trying to meet Joanna, right? Soul purpose. And then we strike up a conversation. Magic happens. The first thing he says, aren't you the girl in the commercials? Which was truly the most annoying thing that anybody said to me.

27:03You would say that all the time. Yes. And I kind of rolled my eyes like, oh, here's one of these guys. But we sit outside for 30 minutes. 30 minutes. I mean, we talked. And just talk. It was so cute. And hilariously, she looks like she's 20 now at mid-40s. I look like I'm 80 at 50. And so rewind the tape to that day. She thought I was an old guy. She thought I was like an old married guy. I thought he was probably 38 married with kids. So I'm sitting here going, I mean, this married guy is really friendly. Should I be concerned? She thinks I'm some creep like with a family and kids just hitting on her for no logical reason.

27:40So all that to say the next day, I see a note on my desk. Chip Gaines says to call you back. And so call him back. He asked me on a date the next day. And it was amazing. It really was. It was an amazing first date. The one thing I liked about him is everyone had left. All of our friends that went to Baylor all went to Dallas. Also, they moved. No one stayed in Waco. And I remember saying, why are you still here? You're out of college. And I just remember him saying, I love the community. I love the people here. And I want to put my roots in this town. And I just remember thinking, that's risky for a guy outside.

28:13So I loved that, that he thought differently because everyone else was kind of doing opposite. So I just remember that stuck with me, that he saw something special about Waco. But even back on that first date, I just remember there was this unique depth to Joe that I had never really experienced before. I mean, just our conversations were super rich and that we just in a very short amount of time, we got a lot of things covered and it was just really awesome. You must have also really trusted her and found something in her that not just in terms of your interpersonal relationship but like in terms of her instincts because I think like six months in your relationship, you leave town.

28:57You go to Mexico, I guess, to learn Spanish. And from what I read, you basically say to Joanna, hey, can you run my – can you run these – Several businesses. My real – my different businesses. Complicated business. Can you collect the rent from the people? And like, how did that happen? Why did you have the confidence to, you know, give this 22-year-old or 23-year-old like - I'm an idiot. So I will say that isn't all that special. You know, it does sound amazing the way you've described it. And oh man, there must've been this moment. I wasn't really equipped for the job either. I was a complete idiot, you know?

29:31So I just wanted to do this thing in Mexico. She was kind enough to kind of support me to do it. You went to study Spanish. I went to study Spanish. You were like, I'm just going to leave my businesses and go study Spanish. Try to basically do a crash course, three-month immersion Spanish course. And she was like, you should do it. Because I just had these Hispanic guys that I just love like brothers. And we were always so close and it was powerful. But I couldn't communicate super clearly to them. And they were limited in their ability to communicate to me. So I thought this is going to solve my problems.

30:03you know and so but the idea that i trusted her to do these things i would have trusted a monkey i mean i was a complete idiot i was encouraging him as well but what happened in his in his businesses is like every a plus b has to happen or then c you know so it's complete so if you don't get rental money then you can't pay the so i started realizing okay rent's due on the fifth So I would go to these, they all were football players that lived in these houses. So I'd knock on the door and they'd be like, are you here to clean the house? I'm like, no, I'm here to collect rent. And they go, we'll give it to you tomorrow.

30:40And I couldn't collect rent from these guys. So now it's like five houses in, I can't get the rent money. Well, if you don't have rent money, we've already wrote checks to some of our subs for these other things. Now checks are bouncing. So, you know, where Chip could go and say, give me the money and he'd get it or he'd call their parents. I didn't know how to do all of that. I wasn't good at it. I would just take no and be like, okay, I'll wait for tomorrow. Well, what happened is I didn't collect rent. So then a lot of things started. Business starts to collapse. Oh, overnight. At the Firestone.

31:10So now these subs are coming to my dad's Firestone. Her dad is, I mean, above reproach. He is very straightforward. We're getting NSF checks sent to the Firestone. And my dad's like, what is, I mean, he sits me down. He's like, what's happening? And who is this guy? um and so i you know of course i try to cover chip i was like well it's because i didn't collect rent money but it was just you know it was a it was a fragile my parents were like why did you leave her in that spot her parents were saying the same i was like i thought it was gonna go a little smooth here here was the moment i remember as my eyes are now awakening to the reality of like all hell's breaking loose and it's happening at my dad's office and now it's like oh i'm in trouble now.

31:53Chip's parents are mad. Everybody's mad. I was running out of money there. She's running out of money here. I had to like Western Union him money. I mean, so we were like doing this weird thing. And finally, I just said, hey, listen, it all kind of hit. I need you to come home. I called him two days earlier and said, if you don't pack your things up right now and head this way, it's over. I remember getting home from Mexico and I went to her parents' house first. So I'm coming back from this exhausting, almost traumatic. I mean, it was me and my dog and all this stuff. Your broke down truck. And my truck barely made it back.

32:31I mean, there were moments to where I could have not made it back. And I hear this knock on the door at about 1130 at night. And my mom answers at his chip with his backpack. He has a lasso on it. He's got all his like little things he bought along the way. A lasso. And my mom, till this day, will say, when I opened the door, I saw the look on his face of embarrassment, of I know I disappointed. She saw that look and then immediately wanted to, it's okay. And I think him coming in the house, sharing the story, it's like my parents could care less what happened in the weeks before that. They knew he had a good heart.

33:04And I think from that moment is when my parents really fell in love with him because he was humble about it. I messed up. I'm back. His intentions were great. Some mishaps happened and now he's back and we're going to fix it. I mean, young people, right, don't always think about practical things when they decide to get married. But sometimes they do. And I wonder because you guys get married in 2003. Did you see in Chip not just a life partner but a business partner? Did you – like in you, I can imagine that in Joanna, you saw this – she has a great head on her shoulder. She knows how to do accounting and bookkeeping.

33:45She's run her dad's entire business. Like this is I am marrying up. Right. And I want and I don't mean to say that you weren't either. But did you see in Chip like somebody who did you see a spark in him? Maybe that other people didn't see that that that he was going to be able to build something interesting. I think for the girl who played it safe her whole life, I was attracted to this guy who did not play it safe, but who had a really good heart. and I feel like for me and my faith with God, I feel like I'd rather a man of great faith where he trusted in the friendship of God. He trusted in the nature of God and because of that, he could do anything.

34:28And for me, I had faith, but my faith was a little more calculated. Like, okay, God, I'll say yes when I see the green light turn green three times. You know, like mine was not as faith. It was more of this religion. So there's a piece to that I was so attracted to that his relationship with God was one that I'd never seen before. It was real, and it was tangible, and it was risky, and I liked that. Pretty soon after you got married, you started to work together, right? I mean, you're flipping houses, and you're doing this together. So I have to assume that you're not, at some point, you stop working at the tire shop.

35:02When we, as we're engaged, we're engaged, and this is when Chip, I had a legal pad just like this but bigger, And I like four pages back, I wrote down all my dreams when I was supposed to be working for my dad. I was like doodling shop front exteriors and names. And the dreams go back to the time in New York, like a boutique or something like that. And I think as I was bored at my dad's, I was conflicted because I was like, I really want to honor my dad. But I also just don't love tires. You know, I just I couldn't get into it. And when Chip saw this and he flipped back, he said, I don't understand why you have all these dreams on paper.

35:38Why wouldn't you go for them? And I was like, why would I go for them? These are just like, this is my daydreaming. And this is as we're engaged. And he is only coach could do. I call you coach. I mean, now we're partners, but still, I feel like he's like my life coach. He was like, just pick one of those and let's do it. Let's do it. And so I got enough of the courage in me to do it and found a building. And then I went to my dad and I said, dad, I want to buy this building. I want to start my own business. I don't want to do the Firestone. This was like year nine, almost 10. Heartbreak. And I said, I'm so sorry.

36:10Even for me, I remember. And the irony, again, back to the fate or God, all those things mixed into a pot. I mean, here's a business that already works and sustainable and it's clearly made a living for your dad and mom. Why not? And the fact that you and I looked at that opportunity and kind of equally decided to pass on it is just mind boggling. It doesn't even make any sense. For sure doesn't make sense for you because you really were a big fan. I could have been the son that your dad never had in that practical way. And that, that, that happens all the time. My dad even saw that as the writing on the wall.

36:42Like this is perfect. He got this entrepreneurial guy, my daughter who knows the business, this is going to take this thing to the next level. So when I told him that, I mean, I think it was a bit heartbreaking for him, but he also in that moment of being a good dad was like, I want you to do what you feel. When you describe what you wanted to do in 2003, what what did you say was going to be um a little home store with like decor candles um just wanted a little boutique yeah was there going to be i mean did anybody push back and say you know waco's not the right place to do this it's not you're not going to find people who are going to spend that kind of money no one pushed back on waco they would push back on me though and and and not in not in a mean way your mom and dad no everybody oh everybody everybody was like you don't do design.

37:31You, you've never had a store before. You've only known tires. Like, are you sure you should do this? And this is one of my favorite stories about my dad. Cause now I'm saying this is like year nine and going into almost year 10 of working for my dad at Aspire Stone. Um, and I say, okay, dad, Hey, I'm going to try to start getting, you know, used to this, like, you know, buy and sell goods thing while I'm here. Can I put product in your coffee, like on your coffee table in your waiting area and put a tag on it and just see. And he was like, if people would buy it as where me and chip are renovating this dumpy little building.

38:08Um, so I remember one thing I was super proud of. I would go to garage sales on the weekend. I would spray paint stuff, sand it down a little bit and then like bump it up, like double the price. I found this wicker sled that was like, yay, like, you know, two feet and I, it was$5. And I thought, oh my gosh, I went to Michael's or Hobby Lobby. This was sad. This is why everyone was talking me out of it. I think, okay, I'm going to go buy fake Ivy. So I fake Ivy the whole sled. And then I put battery operated Christmas lights around it. And I put$25 on it and I showed his mom, I showed his sister, I showed my family, I showed my friends.

38:46And every time I chose someone, they all kind of gave the same, huh, is what they would say. Not, that's beautiful. So I put it in my dad's waiting area at the Firestone. I put$25 on it. And I was going to show everybody how you can take a$5 thing, put a little money into it, sell it for 25. Was it like Christmas season? I had had to have been, right? We're moving into the fall season. So as I'm, every day I go in, as I'm working for my dad, I see the sled still there. I'm like, dang it. Two weeks later, I walk in, there's no sleigh, sleigh, sled, whatever it was. And my dad's at the counter and he hands me an envelope.

39:21It's$25 cash. And I'm like, and literally at that point, I was thinking to myself, if I don't sell that damn sled, I'm not doing this business. This is a sign. I shouldn't do this. The day I say that to myself, my dad hands me this envelope,$25 cash. And I thought, okay, it's a sign. It's meant to be. A year later, my dad sells that Firestone to back to corporate. So now they're running and I'm helping him move out. And I find that little sled up in the attic. He had, but what he doesn't know, it was the right moment in time. Cause if he would not have fake, you know, sold that, I would have quit and said, I'm not doing this chip.

40:01So when you decide to open that store, how did you even know how to source material? Like how did you, where were you going to get the stuff from? Well, right up the street is Dallas market. And I learned real quick, this cost is$5 and then you sell it for 10 to$12. and so I was learning this as I was going. I went to market the first time with my mom and I had$25 ,000. That was my line of credit for inventory. But the first day at market, I remember the lady would look at me and say, okay, how many of these do you want? And I'd say four. And she, you only want four of these? And I was like, well, I don't know if the customer.

40:36So at the end of that day, I remember my mom pulled out. I got physically sick. I was so nervous. Like I just blew$25 ,000 in product that I don't even know people like. I have all this inventory now. I had her pull over on I-35 and I threw up. I was so sick physically. Like I am not built. What am I doing? And so it's like, it's funny at every mile marker doubt would hit. Like, what are you doing? You're not built for this. So all that to say that first year was a lot of, I don't feel equipped. I don't feel like I should be doing this. I mean, if one of the things I regret is not keeping my open sign.

41:14That was an A-frame sign by the road. Gosh, this was another ugly one. It said, I don't know which is now open the wicker thing or your first sign. So my A-frame sign, I paint a Magnolia and I write the word O-P-E and then the N didn't fit. So I put the N under it, like literally like a seven-year-old write a letter. And so you look at this A-frame sign, it says now OPE N at the bottom. I mean, what, just some of these things, I'm like, how are we here? Oh, my gosh. When we come back in just a moment, the store finally opens and Chip and Joanna tackle their biggest construction project yet, which looks great on paper until the housing crisis hits.

41:57Stay with us. I'm Guy Raz and you're listening to How I Built This.

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46:11Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2003, and Joanna is about to open her very first home design store in Waco. And, well... She looked me square in the eye, and I feel like your parents were with us, and she said, nobody is going to come to this. Like, I'm going to open this, and I'm essentially going to be embarrassed. And I just kept going, like, we don't know. You know, why don't we assume the best? You know, it could go the other direction. And we opened that thing at like nine o 'clock in the morning. And I'm telling you, if there's a BMW in Waco, Texas, it was at that grand opening.

46:46There were 30 cars in the lot. I was every Mercedes, BMW. I'm like, who are these people? And at 10 a.m., they all pull in at the same time. And the reason they pull in was not because of my now open sign. It was because of the Magnolia sign that Chip had surprised me with a week earlier that went on the building where he went to a junkyard and bought all these old channel letters and put together the word magnolia and they were everyone said we just love that sign we're trying to figure out what's in here those 10 women that were doctor's wives attorneys they come in and i feel like bought everything in that one day and that was what i needed not that they came in every day but that one day of like if you build it they will come they sure came they spent money i did the math on the utilities and you know my payment to the bank all the thing and i had to make$250 a day.

47:37So I just told you, if we make$250 a day, we can stay in business. I remember that first day we did about$2 ,800. Now, again, I didn't do$2 ,800 every day, but what I found is in those like ebbs and flows, I would sit there. There were some days where no one would come in at all. It was kind of located in a weird spot, but what I was learning because of those three hard years of not knowing what I was doing, that was my college. That was my, this was my degree. Do you feel like you had just an intuitive sense of what was nice? I mean, how did you know? No. No. Well, I want to counter that because this is true about Jo, and she's always been this way.

48:18If you gave Jo 15 bucks, she would go out and read your mail, and she would find you exact—you would find some little$15 trinket that meant nothing to anybody, and somehow it would speak to you in this really profound way. and Joe has always had that awesome gift. But you feel like it wasn't intuitive. Well, I feel like that I do because it's like I try to figure out your story and that feels different. What I think as far as intuitive is like what looks good versus what doesn't look good. Those days I was guessing. So you're saying you didn't have great taste at the beginning of all of this. I did not have, and I am not just saying that.

48:56I did not have great taste. The store, so meantime, time you are focused on flipping right on flipping yeah and at what point and you're you're running the shop right and at what point were you sort of getting in like giving chip advice on how to make a house look nice like again you're not you weren't an interior designer you weren't like an apprentice to an interior designer you look just like chip you are an apprentice to a construction worker did you start to do that pretty early on i think about year two of being in the shop women would ask me to come into their homes and help them design a mantle, design a tablescape for Thanksgiving.

49:37And again, every time I said yes, I would learn something new, even though in my mind I was like, I don't belong here. And then all of a sudden something unlocked for me, which is like, it's going to look different in every home. And if you play to the home story and the family story, you can make a really beautiful thing. And so the tricky thing about what Chip was doing is he was flipping houses. There's no story of family, but there's a lot of story of the home. And so that's what I think we worked together on. I think for us together, that's where the magic hit. And we were both just having fun in the space.

50:06Did you, do you remember trying things in the early days and then looking at it and saying, wow, this looks terrible? Or, or were you already starting to put the pieces together? I think we tried and failed is the answer to that question. I think it's for sure true. people were still buying the properties. And so I do think that there was an element of success that kept me feeling like, okay, at every level I'm upgrading a bit. And then it became, kind of became this cool thing of like about year three, I had my second baby and there was something instinctively in me to just shut the shop down.

50:43I could not hold two kids on the hip cell. It was too hard. And so I really - There wasn't enough duct tape to wrap these babies I felt like I was letting go of my dream. I remember that was sort of one of those moments for you. It was a God moment where I was like, if I let this go, is it gone forever? And I remember, I'll never forget, as I was turning the key for the last time as I locked the door on the last day I was open, I felt like God said it's going to come back in in a way bigger way because of your trust, like just trust me. And so that's where I started looking at the plans from home saying, hey, what if we add a beam here?

51:19And so that's how we really started to partner together is I'm now at home. I'm not at the shop. We're partnering on these projects. We're taking the kids with us. And now this becomes like our new business was Magnolia Homes, which is now we renovate. And again, like you are, I mean, you've got this great business. You're buying homes, renovating them, flipping them. Now this is becoming a thing, right? This is like 2006, 2007. Property values all over the country are skyrocketing. Totally. Now we know it was a bubble happening. Totally. We didn't know it at the time. And you had been in that business for a long time, and so presumably taking on more risks because it makes sense, and then the financial crisis hits.

52:05Totally. And, I mean, I have to imagine you guys get hit pretty hard. Yeah, we were over our skis. We were knee deep in a developed, we've never done a development before. We always did one house kind of one or two at a time. And we found six acres of land and Chip had this vision of doing 38 patio homes. Called a pocket community. I was so excited. And so it looks like a dreamy little neighborhood with big magnolia trees, 38 homes. Small houses, all 1500 square feet ish, you know, and we were doing big, big real projects. I mean, we were, we kind of stepped out of sort of a entry level flip kind of construction company to where we were doing renovations that were hundreds of thousands of dollars for houses that were nice houses.

52:48Yeah. So we're doing this development streets, curbs, and gutters, and it hits. And so that was a rough three to four years of just every day was like, is this when we do the bankruptcy thing? And you have four kids in a five-year period. Four kids. At one point, four and under. I think three of them were still in diapers. Babies. We were in trouble. Doing that, trying to keep this, and then also doing renovations and doing everything just hit at once. But again, because of our naivety, it was like we didn't even know that you could file bankruptcy. So that really wasn't on the table because we didn't know anything about it.

53:24Everybody was being super gracious because we weren't the only people going through this. And again, if we're the dirtbags that are always screwing everybody, I'm sure everybody would have locked us out and that would have been the end of it. But they always knew we were trying and, you know, we owed somebody$500 and we'd give them a hundred. And then we'd owe somebody$5 ,000 and we'd give them$1 ,000. And we just kind of kept sort of stair-stepping, making the best of these worst-case scenarios. And again, it was exhausting. It was, I wish I could say it was six months and it was this lesson learned and that was the end of it.

53:56Years of doing this, just virtual bankruptcy. We were always broke. We were always begging people for one more minute, one more day, one more week. Is that because you were over leveraged? Like you had too much, like you would purchase too much property at too high of a price and then the crisis hit? Not really. We were always pretty conservative in that way. So all of our properties were in good shape. So we had lots of equity in several properties, which really, even as you're describing it that simply, that's probably what saved us. We probably were refinancing some of these pretty good bets that we had had for now going on nearly a decade.

54:30But it was just this bank development note. And I mean, I remember it like it was yesterday because again - How much was it? It was$500 ,000 to do the infrastructure on this dirt. And that loan was - Was called. So we basically had gotten to, I'm speculating on this part. I remember the amount, which was 500 ,000. So we had gotten this line of credit for$500 ,000. We probably had$300 ,000 worth of that line of credit in the dirt. So in infrastructure, streets were in, you know, curbs and gutters were in. No buildings up. A lot of electrical stuff was already preemptive. Yeah, but there was not a single house.

55:08And I remember the bank called and they said, listen, man, this note has basically been decreased by 50%. So we were at like a$250 ,000 cap of which we had$300 ,000 already implemented. I mean, done. And we need this obviously couple hundred thousand to get it across the finish line. But we didn't have long. I mean, six months, something like this at that moment. So what did you do? I got, yeah, I can't even remember exactly how it played out other than I remember that Joe and I were literally like, we have got to finish this development because if we get it across the finish line and that's all the fundamental stuff, then start building houses.

55:48Maybe just maybe we get out of here alive. Go ahead. I'm just thinking you're a young couple. You've got four young kids. I mean, and a business that looks like it could collapse if it really was collapsing. It wasn't like it could and might, it was collapsing. But I just remember Joe and I just had this epiphany in our marriage. Cause again, it was pretty early in our marriage in that sense. We kind of, we kind of envision it's sort of like a tug of war to where she and I are always tugging against one another. And then there's a problem or an issue, you know, we're just kind of all, every man for himself, it feels like in those moments.

56:24But if we could ever get aligned and pull against the thing that we're trying to overcome and literally align and almost like swear to God, we're going to align on this pinky promise, let's be together. We noticed this sort of energy. It was like this one plus one started equaling 10. It wasn't always easy, but we just decided to stop sort of bickering at each other and nipping at each other's heels and instead just support one another wholly. And I think we started just getting creative. Chip would sell some things. I started doing these home shows because I still had my vendor contacts. So I would buy about$12 ,000 to$15 ,000 of inventory, put it in the house that we were doing, and tell everyone, come look at our newest remodel and have a one-day show and sell$25 ,000 to$30 ,000 of product in that home.

57:15Well, then that would then pay off something. So we just started getting scrappy. We started getting creative. And I feel like that's just where we don't wish that upon ourselves but in those moments we saw things differently because we weren't going to quit. And you were living in a lot of the I mean you lived in nine houses in the first ten years. Ten years. So you were living in the house that you were in, raising kids, doing demo work you know right like some of the parts of the house are like plastic sheeting to protect the kids from the dust and then you'd move to the next house and you do the same thing.

57:48And by move, it was because we couldn't afford boxes. It was putting everything in trash bags on the back of Chip's trailer. You could always see, oh, the gains are moving again. It could be a trailer with just trash bags. Like the clampets. All of our clothes. I mean, it was a show for sure. We were the Waco hillbillies for sure. I mean, on one level, that's a really practical way to like run a business, right? You're going to live in the place where you're renovating and then you move to the next place. On another level, you can look at it like from an outsider's perspective And, you know, you could have looked at your family and thought, you know, they're not giving their kids any stability.

58:19They're just constantly moving. That's true. Yeah. Was any part of you, I don't know, worried about that, about living that way? We didn't have friends that were really – had really made it and that were at the country club looking at us like, what are y 'all doing? it was pretty much just you and I and my parents and her parents both had very similar circumstances to where they had very tight seasons of their lives. So it wasn't like we were being judged by our parents because our parents were like, when we were 30, we were broke like this. We know the feeling and we didn't have really any external mirror to look against and say, oh my gosh, we're really failing even the kids to your point.

58:59Because as you say it back. The stability piece I think is interesting. But when I think about, when I look back to pictures of us, when we finally moved to our 10th house, which was the farm, the kids were about five, six and under. So even the, you know, the, the resilience of kids at that age, they were just always along for the ride with us. Like they had no option. I just remember car seats were always driving around. We're always at projects. I almost felt like pioneers. I mean, you think about pioneers literally hauling their families looking for a better life. You can't explain it, but I will say what evolved out of that journey was we had, we were living in this dream home of mine in this historic part of Waco Castle Heights.

59:38And when all this hit, we were like, okay, we can't, we know we have to start choosing. So we, I just finished decorating and designing that big house that we loved. It was like a model home. It was a dream. And then we move into this thing that's just like, had no character, no story. It was a house from the eighties. but I started tweaking everything about that house so my kids would be happy and my kids would feel seen and they would feel like they could live in this house and that's honestly where the epiphany came for me with design is like don't ever design for pretty design for the people that are living in the house so it's practical and make it pretty if you want but for me I think it was seeing my kids thrive in that space that wasn't the beautiful house in Castle Heights it was I remember you had that one room that was almost like this arts and crafts room.

1:00:24So even though we were kind of dying on the vine and not sure if we were going to make it, I feel like my kids felt for the first time at home somewhere. By 2011, 2012-ish, you've pulled out of this crisis and the business is stable and you've got, you know, right? You're sort of a robust business supporting your family. At that moment in your lives, right, it's not that long ago, was any could any part of you have imagined what was going to happen to your lives no way you were in waco obviously you had a reputation with your design eye you were the local magazine and people would come to your houses that you flipped to see them and and it was cool um the store i mean the story which is which is well known by people who know a little bit about you is that you write you You start to write a blog and put photos up, and that gets noticed by a production company that is doing reality TV shows.

1:01:26So this is like now the sort of really the boom time of reality TV. and what they reach out to you and say hey we'd be interested in meeting with you they didn't know i mean they didn't know what you would be like on camera they certainly didn't know about your husband right um and what was your reaction we remember thinking i thought it was a scam this is going to be some kind of a you've got to pay somebody five thousand dollars and they're going to come down and produce some nonsensical thing joe was telling me about this i was like baby you can do it and she called on my cell phone was like hey what do you think about us just coming for a day and just filming you what you do a day in the life.

1:02:07And I said, okay. And so I told you, I was like, Chip, this could be kind of fun. And he said, don't call her back. It's a scam. I remember sitting on the couch going, should I listen to him? Even now, again, as a 50 year old that prides himself, there's been several moments through all of this to where somebody had to see into the future and make a bet or make a prediction on that future. I'm so thankful that for Joe. When they came and they filmed you and then they sort of came to you and said, hey, we think this could be something. Did either of you think a show based on us renovating houses?

1:02:44Like how are we going to – why are people going to be interested in that? 100%. Was that – I think we thought – That was exactly the way we felt. Oh, wow. People in Waco are going to get to see our work on television. Central Texas. Never thought. My grandma. But did you even ask them, like, how do you turn that into a TV show? Yeah, the whole thing. We didn't know anything about anything. We didn't have a TV. We didn't watch reality television. Even as they captured us via these, you know, cameras, we were just like, what is this? What is this going to be about? And back to the point, I think you were alluding to I would be the secret weapon.

1:03:21Thank God for me because I've got the gift of gab. I didn't know, of course, because how could you know? You'd never been on television. You didn't know anything about television. I have an actual phobia of cameras. Oh, really? Modern day. Modern day, I've worked it out. But you were not comfortable? The least comfortable. He turned into a totally different, when I watched him. I was terrified. I was like, what is, he would sweat. He would, he couldn't get his words out. He couldn't breathe. Well, they would turn the thing on. And so there was a red dot above the camera. And it freaked him out.

1:03:53And I would see that freaking red dot and it would just terrify me, A. And B, I need like immediate affirmation. I need that sort of interaction where when you're looking at a camera and saying something funny and nothing happens as a result of that, then I get in my head going, oh gosh, that didn't land. That wasn't funny. I need more of this. I need less of this. And I just, I became the guy that like, what do you do with your hands? I didn't know where to put my hands. If I put my hands in a weird place, it was weird. I would always like protect my genitalia as if somebody was going to throw a soccer ball at my nuts.

1:04:29So day one, he removed himself from that side of the camera. So it was like, and then I stepped up because I was like, well, this poor company is here. And one of us have to talk. I remember little Duke who's now our middle child at the time. He was our third out of four. And so this middle kid that was literally a toddler was just holding on to Joanna's leg. And as she would walk around the kitchen trying to describe what was happening, she was literally kind of limping with this kid that was literally hanging on her foot as she was moving around as if he was like this ankle weight or something like this.

1:05:06I mean, I've seen obviously many episodes in that first episode. You've got the – you're doing the demo work and you're tearing down that wall and like you're on top of that – you're almost – like the electrical wires are coming down and stuff. Did you have a sense that it would be – I mean it was picked up, HGTV orders based on the pilot, I think a season, 12 episodes. um i mean what did you think at that but did you think did you have a sense of how successful it would be did you did you know where it was going to go i think we were still we were so naive that we didn't know i think if anything we thought oh this will secure another hopefully 12 jobs for us as we're you know for us it was on the business side of it was never about the tv side of the business it was always what is this tv show going to enable us to do on the business side of it.

1:06:02So we were always laser focused on the business part. I think it premiered in 2014, season one. When did you first realize that this was bigger than you realized, than you imagined? I mean, you're in Waco, you're doing your job, but you're being followed around by camera. And then there's obviously some production work. For me, it was a season or two. Yeah, it wasn't straight out. After the first season, we said, yes, we did a home show in San Antonio. Gosh. $2 ,500 speaking engagement. And I was like, oh, we're doing this. Let's do it. We went to this thing and there were two or three other types of us that we actually kind of knew about.

1:06:41Generally speaking, we're like, oh, I know that guy. And I know that guy. We were kind of awestruck by these other characters. Who were also on TV shows, HTV or something. But when we stepped out. Oh, yeah. We looked and had no idea. I really thought maybe 30 people. Thousands and thousands of people were there for us. Way in the back. And we would leave and there would be 15 or 30 or 50 for all the other alternatives. And I don't want to overstate that because I'm not trying to – But you were shocked at the number of people who came to – The meet and greet did not be ours. You did not know. You didn't realize that you were having that kind of impact.

1:07:17Could not believe that many people would come to a home show. And these people that were running this thing came to us at the end of this meet and greet. And they were like, we are so sorry. We should have had a better strategy. We had no idea it was going to be like this. And I think that's honestly, when people say what separated us or why did the show become so relevant to so many people, I think it was just that we really do this for a living. You know, we did this for a living. We do this for a living. We really are married. We really have these kids. I mean, you know, there was nothing artificial about it.

1:07:46And I think something about that really spoke to the audience, spoke to the moment, you know. Whether or not you liked it, you're becoming television stars, which was not on your bingo card in 2012. But you are still grinding, running a business. It was a weird thing for us to try to navigate production and our business. And those two things were always at odds because when you're doing a real project, which we were doing, this was not a made up thing with made up clients. It was a real project. We were indebted to that client, the timeline, all the things. Well, now you have production step in and it's like, okay, we need to expedite that.

1:08:32So if this is a six month project, we need it done in eight weeks. We need it done in 12 weeks. That times 12 puts a pressure on your business like nothing else. um and then we look back in the rearview mirror and we're like we don't know how we made it and maybe that's why we don't remember much because it was such there was so much that we were juggling at the time we were doing these four young kids renovations for the show that were in this expedited timeline we were doing renovations outside the show and we were still trying to finish that dang development maybe we were done by then i don't even know i feel like that was always with us always a part of it yeah your lives were now on television so people start as they come to Waco, Texas to maybe to see you guys, just wanted to see you at your desk or at your office.

1:09:16And then you had people saying, hey, I need this job finished. I mean, there must have been, I mean, maybe it was all a blur, but it must have been. It was a blur. But I will say there were not enough hours in the day. I mean, we look back and I think we were running at 18 to 20 hour work days. We were kind of already doing that. What's so weird is like before all this hit, we were already navigating life with too much on our plate. A lot of kids and just always just pushing forward and going. And I felt like it didn't feel like much more. It was now that I look back, but really it was just like, this is what we're good at.

1:09:51We're good at juggling things. We're good at keeping our family close. We were just being very selective at what we said yes to what we said no to, but we were also to be completely honest, having a lot of fun. So I think for us, we, we surround ourselves with our dear friends. They were doing business with us. I mean, we were doing this with the people we loved. We really found great people. And I think that that was the secret sauce. As I look back in the rear view mirror of it all, none of them were all that great at the literal thing that we had hired them to do. You know, the, nobody was just never been trained for it.

1:10:26We were just like, do you want to do this? A warehouse manager prior to us and this relationship, but we had these people that adored us that were like, if you need me to figure out that warehouse, I'm going to figure out that warehouse. And they kind of did, you know? And, and so in that way, I would say the thing we didn't do great was that we didn't ever ask for help. We never asked for money. You know, we never went through the private equity piece of this. Had we gotten tens of millions of dollars earlier, the downside would have been somebody would have owned 50 % of our business. That would been true and we could have done that.

1:10:59The upside would have been, we would have been able to build this much more efficiently and much quicker. And so we look back and wonder, you know, we know that that was a good decision not to have done that piece. So that part is true, but it was just like, it took us every dollar we made, we reinvested into this business. So even though we were making millions and millions of dollars and we used to make hundreds of thousands of dollars. So this This wasn't a little bit of an upgrade financially. This was a massive upgrade financially. And that's because the combination of being on national television and – because I have to assume, by the way, and I think we should just be straight about this.

1:11:40A lot of people don't realize that most people in reality shows don't actually get a lot of money, get paid a lot of money for shows. Right, that's true. And certainly documentaries. Now, this may be different because this is a massive show and probably over time. It really wasn't all that different. I mean, we made money from the TV side of this business, but everything else dwarfed that. And that honestly became, again, all these conflicts that were brewing because our production company cared about the television and the production elements. And you cared about running your business. We cared about the clients and the business and the project, and it had to be done right.

1:12:17All these things were complicated. It was nobody's fault. Like we never sued our production company. Our production company never sued us. And we look back in the rearview mirror and we're like thankful for that production company. But it was – we thought we were all pulling in the same direction and we found out soon after that we were in fact – there were two different objectives. The priorities are different, right? Because you guys have a business and the production company is a show that they want to make a hit. 100 percent, yeah. And they want more of your time and you can only get limited amount of your time.

1:12:51A hundred percent. And the cart was out of whack in the sense that which came, you know, the cart before the horse. And but that's what's beautiful about success. You know, as we continue to be more and more successful, the production company became less and less powerful in that relationship. And we didn't know that. I mean, you talk about bluffing through all of these experiences. We didn't know that they were not the boss of us because nobody sits you down and says, hey, this is an incredible success. You guys are doing great. Here's these things. They almost want to hold that from you to some extent.

1:13:23How did you know? When did you start to think, you know, this could be bigger? We could have a media company. We could have a whole line of products, which is going to come later. But was there a conversation or a grand strategy or did that all just kind of happen over time in the way it happened? We didn't have a strategy. I knew I had a dream. I had a dream of one day I'd love to partner with Target. I also love retail. That's what I started at in 2003. So I knew I wanted that to be something that was like the main thing of our brand. I thought, oh, I want it to go back to the roots, which was home decor, candles, all the things that you fill your house with.

1:14:02I think those are the two dreams I quietly had in my heart. We found out really quickly, and again, thank God, that the construction business was the means to the end. I mean, the other things were the much bigger opportunities. I thought as it related to this show. You thought you were going to be developing properties, building buildings. I would tell Joe things like our pillow talk started consisting of, Joe, you watch. I'm going to be the largest home builder in Waco, Texas by the time this is done. But it turns out that that wasn't not going to be the core of your business at all. Well, it was going to be about design, about products, about our construction company.

1:14:39Modern day, we still have a construction company and it's exactly as big as the construction company that this all started with. I've got the same 12 guys. We do about the same 12 to 18, 24 projects a year. I mean, we haven't gotten any bigger and we hadn't gotten any smaller from the very beginning, but everything else in every other category that she heads has dwarfed that little construction company by 10x or more. And that was just totally unanticipated. Totally unanticipated. When we come back in just a moment, one of the most powerful dealmakers in TV pays a visit to Waco, Texas. Stay with us.

1:15:20I'm Guy Raz, and you're listening to How I Built This.

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1:16:59Hey, welcome back to How I Built This. I'm Guy Raz. So by 2016, Chip and Joe have grown Magnolia way beyond home construction. They've launched a magazine, published their first book, put out a line of furniture and home decor and paint, and they've just opened The Silos, a gathering space in the heart of Waco. I think the vision even of The Silos at the time was how do we create an experience for a guest? That creates a moment for them to pause, to have a meaningful moment with their family. And so when you see the silos now, you see those setups like everywhere where there's nice moments to pause.

1:17:39Yes, there's a retail store there and some cottages that have shops. But at the end of the day, we love seeing people just on the lawn lingering. And I think with the silos, I want to talk about the silos for a moment because this is – I visited there earlier today. It's an amazing property. It's literally two giant cotton seed oil silos that are disused. And I guess most of it was a parking lot and dirt. You bought it. You've renovated it. It's a beautiful space with shops and cafes and a wiffle ball field and just places for people to hang out and food trucks. And the thing that struck me when I was there was when I was younger, Waco, Texas was associated with the Branch Davidians and David Koresh and that horrible thing that happens.

1:18:23And most young people don't even know what that is today. Now, if you ask the average person about Waco, they would say Magnolia. I mean, tourists come from even overseas. I think about the idea that we have inadvertently rebranded a city, and it means a lot to us. Because, you know, I joked about this, and I really am being facetious, but we were in a thing in New York, and the lady said something about if you can make it in New York, you can make it anywhere. And I just kind of like hilariously and quickly quipped. I was like, I'd like to counter that thought, which is if you can make it in Waco, Texas, you can make it anywhere.

1:19:00Because if you're in New York, you've got all the money in the world at your disposal. You've got all the resources available from an academic standpoint. The attention, the media attention. Oh, my gosh. And the media and all the things, et cetera. We didn't have any of that going for us in Waco. And yet and still, we had opposite of that. We had a real negative persona. And yet people would come from Alaska, come from Tennessee, come from Dallas or Houston or Austin, great cities in their own right, and come to Waco, Texas and be like, wow, this isn't at all what I expected. That coupled with the magazine, coupled with our television show, it almost immediately became very clear that something extremely unique was occurring.

1:19:42but I guess my biggest insecurity is you keep alluding to, was there this grandiose plan, this big idea? And sadly, I'm just like, this stuff was just happening. I don't think sadly. I don't think it is sadly. To me, that was like - But why do you say not sad? Because I will say I've got a big chip on my shoulder and I would love to remove it. But when I think about the Mark Cubans of the world and the Elon Musk, it's like they had these beautiful plans. They executed these things perfectly. I feel like there was more luck mixed into this than I would like to admit. No, Mark Cuban started as a bartender and then he got into selling computers and then eventually started this business, Broadcast.com, which he then was able to sell to Yahoo and sold his stock in time.

1:20:27Like he could not have planned that out. I see. So he would argue like us. Of course. These things were not preemptive. These things – I mean he wanted to be successful for sure. Yeah, okay. He was ambitious, but you can't architect it out. So, I mean, as you become more famous, there's more scrutiny and people start to look at, you know, even where you go to church and, oh, the pastor said this and must reflect on. So all of these things, all of the things that are personal for most people that you don't – that aren't public. You know, I have an argument with my wife. You know, I love my wife.

1:21:00We've been together for 20 years, but we had an argument two days ago. That's not public, right? Sure. It's in our house. But now because you're so visible, it changes. It means that the scrutiny is different. How did you begin to – and maybe it's still hard sometimes when you see things that are critical or that are – accuse you of saying or believing something or being the kind of person that you don't recognize in yourself. How do you manage that? I think in the beginning when it hit, it was like a, it was such a surprise to us. Like, wait, what? Like, you know, you don't, you don't even realize like people care about like what's happening right now.

1:21:47And so when the first one hit, I mean, I remember thinking, man, I hate being misunderstood. Yeah. But I also felt this. This was in like 2016. It was a BuzzFeed article about the church that you're members of and that the allegation was it was anti-LGBT and all the, and so this became kind of. It just became a bigger story about personal beliefs that no one knows. No one sat with us. Even Joanna, because she spoke to this a little bit earlier, but she just remembers that little girl and sort of being less than to someone, being a little bit other. And she has always just had an enormous heart for communities that feel that kind of way because she can understand what it feels like to walk into a lunchroom and feel like all eyes on you.

1:22:33And for that to be misconstrued and for Joe to really feel like, and again, Joe has dear friends that are in the LBGTQ community. And she just didn't love the fact that it was very difficult for her to try to articulate to the world actually who she was and what she stands for. So I can spend time over there arguing and or even trying to be understood for even a second. but then that takes away from my actual job, which I feel like is to find beauty, to highlight that because that's, you're never going to win there. And I think, again, we are complicated humans. We're all complicated. So to just peg me as a this or to peg someone as a that is just like, come on, we're way more complex.

1:23:21It's interesting because I think when we are, when you are, when somebody is the target of these things, it becomes amplified in your mind, right? And the irony is there was that story in 2016, and then there's been a recent story where you had a same-sex couple on one of your shows. And some evangelicals and Christians were upset with you because you are Christians. But it's interesting because overall, the overarching brand, like 99 % of people who come to Waco to come to the silos or who are fans, my sister-in-law who happens to be Korean is a massive fan. They don't, those things don't matter.

1:24:00Those controversies seem, they matter to a tiny number of people, but their voices can't really amplify. Tens of thousands of people in a moment can feel like the entire world. It can. Really, and to your point, and I think we've learned a little bit about that. And the fact that the BuzzFeed thing started it out with us and that we got categorized as sort of like anti-LBGTQ and how inaccurate that was. And then to flip the script, and now we've had a couple on one of our shows that we executive produce that was in the community. And now we're being rebuked. Now we're being rebuked by the Christians that we adore and love and have grown up with in so many ways.

1:24:40And then it's just like, yo, we're not going to be all things to all people. We're just not. And we don't want to be. And we're okay with not being what we really prefer is a big, huge table with lots and lots of people with lots of diverse opinions. And we all get better as a result of those conversations. But when I think about all of that, it's like, here's the issues that sometimes, you know, that come up. And I think about the result of being, what's the word, added, whatever, like we're going to come at you. Almost reprimanded. If I were to talk to a therapist, I don't know, I probably should go to a therapist.

1:25:16But if I were, I wonder if some of the top issues are this feeling of abandonment and shame. Like if there's a top five fear, I don't want to feel abandoned and I don't want to feel shame. And if for a second we feel that, we feel like, oh, no, they're abandoning us or we should be shamed right now. And if I feel that and then I take that to another layer of a people group and then they feel abandoned by the church or they feel shame, it's like the God I serve is the opposite. He brings you in and he invites you in with his love. And so if it is a feeling of abandonment or shame, then that's not what I want to be a part of.

1:25:54I want to ask you about a decision you made in 2018 to end your fixed rep at that time to stop making that show. A lot of people were sad because the show was averaging like 19 million viewers a week. From your perspective, I mean I understand the dynamics were tricky because you're a production company that won one thing and you guys were moving in a different direction. But was a part of you scared or worried that by not doing the show every year, your business might suffer, your brand might suffer? Were they considerations that you ever had that crossed your mind? I saw sincere counsel to that exact question.

1:26:36And I would say it was unanimous that if you leave this television show, all of these things that you've built are going to cease to exist. But that's what I love about my experience before that, which was I want to stay home with my two babies. I'm going to shut the shop down. And I felt like God had said, this will come back in a bigger way just because of your active faith. It comes back. We have a renown in the silos. We have a show, all this stuff. And even though everyone was saying, don't shut it down. If you shut it down, no one's going to know you. You're going to be out of people's minds.

1:27:08Totally. Your business is going to suffer. That's right. Everybody's going to buy your stuff. But I felt, we felt the confidence that we've seen this before. When you let something go, it doesn't mean that may go away, but it doesn't mean, it just means you feel in your heart, it's time to stop something and you move forward with that. There's something good that comes from that, even in that no. But I would say that those risks that we made along the way, those bets that we made on ourselves, that it was like, we're going to trust that we believe that we're supposed to stop moving forward with the show Fixer Upper.

1:27:44I mean, it allowed us to do much greater things, but we would have never known that at the moment. And truly, we stopped. We took a year off. We didn't do any meetings. We took a full 12 months off. We didn't even want to thank you. No. Nothing. We were done. No real even meetings with anybody about what was quote unquote next. You know, there's been several iterations, kind of rumors like you're describing of like what exactly, and that we knew that David Zasloff and we were going to do this network together. You did not know. Did I ever dream of a network? No. We never dreamed of it. This was David Zasloff who runs Discovery.

1:28:19He came to Waco. And he came here and you started to talk about, well, maybe we do something together where you actually – because you didn't have presumably equity in that previous show. You didn't have ownership over your own show. Right. And now you have an opportunity to own something. Yeah. And every other conversation we had was, hey, will you and Chip do a show for X, Y, or Z? And for us, we were like, we're not sure we want to do a show again. When we sat down with David, he's like, what do you want to do? What do you love? And so I remember we were saying, we love the magazine because we can highlight other people's stories.

1:28:52We love that. And then he started brainstorming about this idea of a network. He said he and Oprah had done it maybe 10 years prior. And obviously the own network, Oprah Winfrey Network came of that relationship between he and Oprah. And he kind of laid out a bit of a roadmap that would be some similar version to where we would essentially take over a network we didn't know at the time, but it ended up being the DIY network. And we rebranded that the Magnolia Network. And that was a bit of a collaboration between me, Joanne and David just on the fly. He was like, it seems to me that you guys love the business of television.

1:29:30You just don't necessarily love the being on television part and that he introduced us to a whole new universe that we honestly didn't even know existed. You become at this point owners finally of your own on the screen personas. Sure. Back to my point before, when the production company was sort of the boss of us, we just felt always like we knew that it was misaligned, but we didn't know how or why, where this felt like the alignment finally got correct. And we felt just extremely powerful. I mean, even the idea of being able to go and find shows that we're passionate about, that we want to showcase and highlight, I mean, it felt exciting.

1:30:11How do you decide – I mean, now you've got all of these many different businesses, right? There's the – you're still flipping houses sort of-ish, which is a smaller part of your business. But how do you decide which businesses to do? I mean, because the most valuable thing you have is your time, and your time is limited. Totally. And the demands are intense. So for example, if there's a project you decide to do and within two years, it's not – it might be really fun, but it's actually not making any money. Would you continue to do it? probably not i mean honestly for us you know the fun part is is making money you know and figuring out businesses that make sense and that have the opportunity to scale and when they don't they don't and that's all right you know but we usually gravitate away from those businesses but i mean a good example is the silos which i i visited is a beautiful space you can imagine you know on a saturday it's jammed but to maintain that place is is just to make it so beautiful to keep it beautiful costs a lot you could spend all of your time um you know having the the chip and joanna gains paint line and which could be you know a business that is a hundred times bigger than that yeah totally that's right yeah but the silos clearly something you're passionate about you love that's totally true yeah but i would say if it didn't make money and it wasn't viable i don't think we would do it forever.

1:31:44I mean, I don't think we do it forever, but we also get the, how everything plays together. There is a reason we do this. And so the silos is a place that we see people come together and we love that that's a thing that we can host. And so that feels like an honor. So last year kind of had this like weird epiphany that food is the easiest way to connect with people. And if we feel like right now, culturally connection is missing and people miss each other they miss that connection totally we can focus a lot on the retail side on selling a candle or we can focus here around food and getting people around the table and i think instinctively we felt like we want to grow food first time you're doing i mean obviously you have cupcakes and baked goods at the south but you are rolling out cookies and banana bread and biscuits yes cinnamon nationally yes chocolate frozen in like frozen in the frozen section um is it with it's it's going to be exclusively with target for a year um and so i i feel like with that it's just it's crazy because you know we've written i've written a design book homebody and then cookbooks the cookbook more people we thought homebody was going to sell outsell um any of the books because it's design and that's how people know me but the cookbooks proved otherwise.

1:33:02And I think because that there's a thing there that gets you, it's more attainable where I think design in a lot of ways can be aspirational, inspirational and intimidating. Following a recipe is possible. I can at least try this. Right. And so I'm in a nostalgic season of my life as my kids are going off to college. For me being in the kitchen, it grounds me. And I think the idea that all the work and effort I'm putting into it for that end moment at the table, it's like something I'm just, I just feel more than ever because my kids are getting older. Those times are limited now with all the kids driving and in sports.

1:33:38And so. And I don't think we know this in our 30s and 40s. I wonder if that's true. Maybe some people are insightful enough. But at 50 that I've experienced this year for the first time, it's like it's like this. I don't know. I notice these things that you're describing more clearly now than I ever have before in the sense that we don't have all the time in the world and time is not infinite. You know, it's fleeting. And I would just say we've become super particular about how we say yes. And I don't think we felt that particular or restrictive in our forties or thirties before that. But when you look out 10 years from now, where do you see the business going?

1:34:19I mean, it's already, You've got a TV network that your owner's in and the magazine and the shops and the line with Target and the new food line. And I mean the possibility – and you're probably pitched all the time. Hey, you guys, let's do a Chip and Joanna prefab homes or Magnolia prefabricated homes that you just built in a factory and are put on. And what do you imagine this will be in 10 years? I mean, do you want it bigger and bigger and bigger? Is that in the cards? I mean, I think if we're kind of in the daydreaming stage now, and I think about, you visited the silos today, take the very best pieces of that.

1:35:07So not all of it, but the very best pieces. And how do we take that to other places? there's a lot of places that we're always surprised because it's like these consistent cities and we're like what if we put something there like yeah we've got these cities that uh just seem like our people you know so i think the dream is again i mean chip and i i mean we've been doing this now for almost 25 years we've never taken a break and it hit us last year like we both physically felt it where we couldn't see past right here we couldn't see vision our team was asking what's next. We're like, what do you mean what's next?

1:35:42What about what's all here? Why does there have to be a next? We were like offended by it for some reason. I hate that question. I just asked you that question. I hate that question people ask me. But now we're in a healthy stage where I like love to dream. But last year, Chip was like, he called it and was like, we're going to take three months off. And in that three months, I think we regrounded ourselves in why we do this. What we're doing is creating these moments and memories, not only with our team and our family, but with also the guests and the readers and the viewers. And then when you ground yourself in that, then you can start seeing vision for what's next.

1:36:15Now it's like so many things we're dreaming about and we're like, okay, now we're probably scaring the team. They're like, oh crap, we woke them up. So who knows or not, or we just respect what we have here. We always mess with that or not thought is that, would we be satisfied if this were it? And we keep coming to this really beautiful conclusion. We really would be. The vision was always what you've seen. You know what I mean? I never thought about having, 50 restaurants across the country. I never thought about having multiple versions of this Magnolia market or Magnolia silos across the country.

1:36:48It was like, this was it. And when I say this was it, as if it's some kick in the pants, what a dream. What a dream. And especially coming from where we started 10 short years ago, broke. We owed a real bank, $500 ,000 of which we could have never repaid, even if we had sold everything. So then to ask the question, quote unquote, what's next? It's just like, what's next? What's not next? Joanna, when you think about this journey that you guys took, this guy goes to Mexico and says, run my business. And, you know, and here you are now, you know, 20, almost 25 years later. How much of all this do you attribute to the work you put in the grind?

1:37:36And how much do you think is just chance or luck? You talked about God. How much do you think of all this is that? I always think when I think about my kids and when they're older and they get the full story of like what this is. And, you know, I mean, I think they're still kind of learning and, you know, do they even care right now? I mean, they're teenagers. So they're like, what, what, you know, they think we're pretty dumb. They're humbling for sure. Probably not cool to them. But when I think about like, what do we, what's the story of Magnolia? The first thing I think of is it's a journey of faith and miracles.

1:38:11I feel like when I think about who I am as a person and the real Joe, she wouldn't have done any of that. when I think about Joe with God and obviously with Chip, I'll go to any mountain, I'll do whatever. And so for me, it's just showing how a risk averse girl can live a very adventurous, risky life with this guy. But I also think you got to work your butt off. He talked about our dads being grinders. We are grinders and that's who we are. And we find a great deal of fulfillment in that. Like I love work so much. Chip loves work. But at the end of the day, for me to be the CEO of Magnolia isn't because I am qualified.

1:38:54It's because I said yes to all the right things and I moved forward in faith and I'm like, wow, look what that got me. And I think that's the story I want to tell people is like, you know, the life I used to live was like, don't say yes until it makes a hundred percent sense. And, but I missed out on so many things because that's really how life works. Chip, same question for you. Luck, hard work, grind. I mean, I have my thoughts, but those don't matter here. No, I appreciate your insight. Even when I was sharing my insecurity about how this has come about to some extent, I feel like I've got a chip on my shoulder in the sense that I wished I had a business plan that laid all of this out.

1:39:35And then I could say, look, you know, we were really smart, but instead there was so many miracles along the way. Joe really said it best. All I can say to add to that is Gaines's were built for hard things. You know, we were built to do hard things. And I think that we believe that God is with us and that with him, anything is possible. And I just wonder about the next 10 years and I'm super optimistic and excited. You know, do you feel that? Do you feel that excitement and optimism about the next 10 years? I feel like the last 10 years kind of happened to us. And these next 10 years, I don't want to manhandle them, but I do want to craft it.

1:40:19Yeah, like Chip has always said, design the life you love, Joe. And I think in that way, it's like we want to shape it. We have the foundation set to do whatever. And so I'm excited about that. That's Magnolia founders Chip and Joanna Gaines. Guys, thank you. Yeah, thank you. Thank you. How much do we owe you for the couple hours of therapy here? Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at gyros.com or on Substack.

1:40:58This episode was researched by Chris Messini and produced by Katherine Seifer with music composed by Ramtin Ereblui. It was edited by Neva Grant. Our engineers were Kwesi Lee and Patrick Murray. Our production staff also includes Andrea Bruce, Alex Chung, Elaine Coates, Casey Herman, Noor Gill, Sam Paulson, Kerry Thompson, and Ramelle Wood. I'm Guy Raz, and you've been listening to How I Built This.

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