Estée Lauder: A Success Story [Outliers]

25:07She went to every department in the store and she gave samples to all the women working in the other department. She matched hats to lipsticks. She went and did a full court press with the local journalism. She went all in. And it didn't matter if these stores were in New York or in the middle of nowhere. She was there. She was there for a week and she gave it 100%. No community was too small for my attention. My absolutely full effort, she would later recall. Consider this. She once wrote a bus for six hours to open a tiny store in Corpus Christi, Texas. When warned that no one would pay$115 for a cream, she didn't lower her price.

25:44She raised their curiosity. Her advertisement simply asked, what makes a cream worth$115? Come meet Estee Lauder and find out. Her answer was pure Estee, of course. Why do you spend so much for a Picasso? The linen under his painting costs$2.75. Each jar of paint, perhaps$1.75. You're paying for creativity, for experience, for something that works for you. This isn't royal jelly with a bunch of wax thrown in. It's 26 pure ingredients blended to make you look your loveliest at any age. This was Estee Lauder's genius in action. Never underestimate any woman's desire for beauty. Never let other prejudices limit your vision.

26:25And never ever stop finding new ways to reach people who might not even know what they're looking for. Like I said, Estee didn't just work the counter, she worked the entire store, and this was part of her genius. Every department, dresses, hats, shoes would receive her visits. She would give all the saleswoman gifts of makeup and cream. This wasn't generosity. It was telewoman amplified and to tell every woman. If I could make friends with a saleswoman selling hats, she explained, she might suggest to her customer that a free makeup at Estee Lauder counter would enhance the new hat immeasurably.

26:57She was building an ecosystem when she spotted a magnificent velar hat with a coral rose. she'd give the hat saleswoman an Estee Lauder lipstick that matched it perfectly. When you sell the hat, she suggests, why don't you show your customer this lipstick? Soon, the woman buying hats would find themselves at her counter, discovering not just the perfect lipstick, but a world of other products they hadn't known they needed. Even disasters became opportunities. At Detroit's Hemohatch department store, she found herself with only hand cream and two shades of lipstick, deep red and pale coral. Instead of panic, she saw possibilities.

27:31She began demonstrating how to blend the colors. If you apply the darker color over the lighter in the evening hours, you'll have the most exquisite mouth in the world. Result? 144 tubes of hand cream and every lipstick sold in one day. Those unsalable shades became Detroit's most coveted colors. But her real masterpiece was how she trained her saleswoman. The saleswoman was my most important asset, she insisted. She has to be a walking advertisement. Her instructions were precise. Never leave the counter empty. Use wooden spatulas, not fingers for cream. In the summer, talk about your liquid diet for the face.

28:08In the winter, emphasize protection against the cold. Above all, she demanded honesty. When a customer asked a sales girl at the Estee Lauder counter if a lipstick would come off when she ate, the well-meaning sales girl told them, oh no, it's almost indelible. Estee quickly intervened with a smile. Madam, If it never came off, I'd be out of business. During each week-long store opening blood, she would also visit every beauty editor at every local magazine and newspaper. Samples, makeovers, beauty advice. She wasn't just selling products. She was building relationships. I promoted beauty, made friends everywhere.

28:44I made friends, she said. If they had never heard of me when I arrived in town, she would say with pride they knew my name by the time I left. It wasn't just about selling products. It was about building relationships, creating an experience, transforming not just faces, but the entire retail landscape, one relationship at a time. Success, however, has a way of revealing its own limitations. After her triumph at Saks and Neiman Marcus, Estee faced a new challenge, scale. Making individual contacts with each department store worked, but it was agonizingly slow. Weeks, months, sometimes years could pass before convincing a single buyer, one single gatekeeper to stock her products.

29:25I started late, she would recall. I didn't have time for waiting, nor I guess the disposition. This wasn't impatience, it was urgency. She needed a way to multiply her efforts to turn single victories into massive breakthroughs. She knew her product worked, but she wanted to increase the velocity. The answer came in an unlikely form, buying offices. These central bureaus purchased products from many stores throughout the country. What Estée saw wasn't just an administrative convenience, it was a lever that would move mountains. One successful presentation to a buying office could accomplish more than months of store by store negotiations.

30:02She had discovered something crucial about business. Sometimes the system can work for you. That's how she found herself at nine in the morning in the waiting room of the American Merchandising Corporation, a buying office that could open doors to department stores across the country. She was the only woman in the room. And this is one of my favorite stories in the entire book, and it shows you what a badass she is. Here's how she tells it exactly in her autobiography. I want to get this word for word so you can feel what she's feeling. I'd like to see Miss Mary Weston, the cosmetics buyer, please.

30:36I ventured to the receptionist. She's very, very busy was the answer. Why don't you come back another time? Oh, I don't mind waiting, I said. Really, I don't. I'll just sit here quietly until she has a free moment. I waited and waited. Male salesmen for other companies were asked to come in. I waited. What's in your cream? I asked a salesman who was also waiting. What do you mean in it? He asked back. How should I know what's in it? They tell me what it is. How many ads we're going to run. They tell me it works. That's all I have to know. I didn't answer. Inside my mind was whirling. My salespeople will know what's in a product they're selling if I ever get that far.

31:12How could he sell something so blindly? I knew what was in my cream all right. I knew what was in every last drop of it. I could immediately tell a woman what was in it and how to use it. He was a fraud. Still, he was called in. I waited. He came out. We're going to lunch, said the brusque receptionist, and then Miss Weston's schedule is impossible. Really, I think you better come back another day. Monday would be perfect. Well, thank you, I said, but I'll try waiting a little longer, as long as I'm here, if you don't mind. Two o 'clock, three o 'clock, four o 'clock, I waited the whole day, feeling invisible.

31:47I was close to tears. At 5.15, Miss Weston herself came out, looked at me in disbelief, and asked, are you still here? Well, do come in, and let's have a look at what you have. Such patience must be rewarded. It wasn't just a look at what I had that was called for in this moment, it was the experience of what I had. In two minutes, I opened my box of cosmetics, made up her face, then showed her how to use the back of her hand to feel the rich softness of her lotterized skin. She liked it. Of course she did. I was lucky to find a woman buyer so that the demonstration was possible. If it were a man, I'd have demonstrated the creams anyway, but on the back of his hand.

32:24After he had noted the difference between his two hands, I would have given him some cosmetics for his wife, hoping she'd sell my product to her husband. Miss Weston was impressed. That was the good news. The bad news was there was still no room for me at any store. Try us again, said Miss Weston. I'll try you again, I promised with a smile. The smile disintegrated the moment I reached the sanctuary of my home. I remember weeping that night with such despair and frustration. There was to be no rocketing into glory. Joe comforted me. Don't cry, honey. You got in to see her, didn't you? That was a miracle.

32:58She'll come up with a store eventually. Remember, we're in this to stay. He was right. I called to thank her for seeing me. I was always careful to be polite, cheerful, and generous with understanding. Eventually, Miss Weston was able to get me a store for my line. And then Miss Mullins at another buying office found me another. I wasn't exactly riding a meteor, but the stone I was pushing was beginning to roll. Wow, what a force. Can you imagine sitting in that sales room with no appointment? I'll just wait. I'll wait all day. I got to be polite. All these guys around me have no idea what's in their cream, why it works, how to apply it.

33:36I'm the only one who knows. They're all frauds. Finally get in to see her, demonstrate it. She loves it. She has no space at the moment. S.A., steel face, takes it stoically, gets home, unloads. Her husband, partner. Your partner is so important when you're going through these moments. Her partner comforts her, says, don't worry, we're in it for the long haul. You got to see her. That was a miracle. The story is the spirit that transforms the small family business into a global empire. The same persistence that kept her in that waiting room all day would drive the company's expansion across continents.

34:12The same attention to detail that had her knowing every ingredient would ensure quality as the product line grew. The same refusal to take no for an answer would open doors around the world. Years earlier, when she and her husband Joe were just starting out, their accountant and lawyer had taken them to dinner with grave concerns. Leonard, their son, though young at the time, was included in this crucial meeting. Don't do it, was their advice. The mortality rate in the cosmetics industry is high, and you'll rue the day you invested your savings and your time into this impossible business. They did it anyway, because that's what all entrepreneurs do.

34:50They believe in themselves. They can't be talked out of their ideas. If you can be talked out of your idea, you're not obsessed with it. You don't believe in it. As Leonard, the future CEO of Estee Lauder, would later say, accountants and lawyers make great accountants and lawyers. We need them, but we make the business decision. It was a philosophy straight for Mark Twain. Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you too can become great. Innovation often starts with a question. For For Estee Lauder, that question came at a dinner party, staring at three unopened bottles of perfume gathering dust on a dresser.

35:29Why don't women use their perfume? She asked herself. The question seemed innocent enough, but the answer would reveal not just what was wrong with the perfume industry, but how to revolutionize it. Society had trapped perfume in a gilded cage. It was a gift to be received, never chosen, preferably from a romantic partner. A woman might buy an inexpensive cologne, but proper perfume? That would be almost scandalous. The result? Millions of dollars of fragrance sitting untouched across America slowly evaporating while waiting for special occasions that never arrived. To Estée, this was nonsense.

36:06She'd always chosen her own sense, but she understood something crucial. You couldn't just change a product. You had to change how women thought about themselves. For months, she became a fragrance scientist. dozens of tiny bottles, endless tests and adjustments until she found something that pleased her enormously. The result was sweet, warm, and diffusive, meaning it would intermingle easily with flesh and water. The last part wasn't just chemistry, it was strategy. Youth Dew was a branding masterstroke. She positioned it as a bath oil that happened to double as a skin perfume. It also established Estee Lauder as not just a skincare company, but a fragrance house, which added an aspiration to the brand.

36:50Youth Dew wasn't just a scent, it was a story. It was sold as an experience, a luxurious ritual for women to pamper themselves. The genius of Youth Dew wasn't just what it was, it was what it represented. By transforming perfume from a gift into a personal purchase, Estée didn't just launch a product, she created an entirely new market. The numbers tell the story, from 50 ,000 in sales in 1953 to over 150 million by 1984. That was just for Youth Dew. But the real story wasn't just in the income statement, it was in the lives of the millions of women who suddenly felt free to choose their own scent, their own style, their own definition of luxury.

37:34The impact went far beyond sales. Women who bought youth do weren't just buying a fragrance, they were buying independence. Every purchase was a small declaration. I don't need to wait for somebody else to make me feel beautiful. This is what true innovation looks like, not just making something better, but making something possible that wasn't possible before. Just as Henry Ford didn't just build a better horse carriage, but gave people a new way to think about distance itself. Estée didn't just make a better perfume, she gave women a new way to think about luxury and self-worth. Sometimes the biggest opportunities don't lie in competing in existing markets, but in creating new ones entirely.

38:11It's not about taking a slice of the pie, it's about baking a whole new pie that no one else even knows exists yet. Now came the real challenge, revolutionizing how women thought about fragrance itself. Sometimes the smallest changes have the biggest impact. While French perfumers sealed their bottles with cellophane and gold wire, Estée did something radical. She left Youth Dew accessible. Any customer could unscrew the cap, which she knew was exactly what they wanted to do, and smell it. It was the most elegant trap ever set. Once a customer opened that bottle, the essence would get on their hands.

38:46They might leave the counter, but Youth Dew will go with them. And that lingering scent would do what no advertisement could. It would make them come back. Even the chemistry was strategic. Youth Dew was a revolutionary process that released fragrance molecules gradually throughout the day. While other perfumes faded by lunch, Youth Dew kept working its magic. Every hour was another subtle reminder to return to the counter. Women didn't just dab it on their wrist, they poured it into their baths with abandon. When one woman wrote that her husband was bored, Estée's response was pure genius. Put a little Youth Dew in your bath and you'll see how bored he is.

39:22The woman later credited Estée with saving her marriage. She would go on to challenge other perfume myths. Why should a woman wear just one signature scent? Why didn't women have different personalities for day and evening? Why shouldn't they have a fragrance wardrobe? The only rule, she insisted, was that no fragrance should be overpowering. If a woman's perfume preceded her entrance and didn't arrive with her, she was wearing too much or the wrong perfume. Estée had discovered something fundamental. Fragrance exists in the mind, not just in the nose. She wasn't just selling a scent. She was selling hope.

39:57Success, however, has a way of attracting competition. Not all of it welcome. The spy network, as Estée called it, was sometimes comically obvious. Like the young man who applied for a factory position telling Joe Lauder, I'll love working for you so much you don't even have to pay me. Really, young man, Estée would later write with characteristic dry wit. How altruistic of you. But the industrial espionage was no laughing matter. Charles Revson, founder of Revlon, had turned copying into a science, literally. His Bronx laboratory was an arsenal of analysis. Spectroscopes breaking down colors, infrared and ultraviolet machines decoding fragrances, atomic absorption equipment, reverse engineering formulas.

40:40The game became almost absurd in its intensity. When Estee Lauder launched a product in a dark brown box lined with brown, Revlon would follow, down to having workers hand paint white edges brown for weeks. But the Lauders had learned a crucial lesson about protecting secrets. Sometimes the best defense isn't a wall, it's a maze. They created an elaborate coding system for their formulas, turning each recipe into a string of meaningless numbers and letters, 007 ZHR13BFXZ. Pure gibberish to outsiders, but pure gold to the family. Then came the master stroke. No formula was ever complete till the final moment.

41:19When a fragrance was 95 or 98 % done, a member of the Lauder family would personally deliver the last crucial ingredient, the 2-5 % that made each creation unique. Only a Lauder knew the complete formula. It wasn't just security, it was family tradition turned into a competitive advantage. Sometimes the hardest part of winning isn't knowing what to do, it's knowing what not to do. This lesson came to life one morning when Leonard Lauder burst into his mother's office, brimming with enthusiasm about entering the nail polish market. He was about to learn that timing matters more than opportunity.

41:55I don't want to get started with him, Estee's voice was quiet but firm. She didn't need to say the name. Everyone in the industry knew Revson as the nail man. I don't know who him is, Leonard pushed back, and I really want to go in and start selling nail leckers. Then came the lesson, not just in business, but in strategy. Look, Este explained, right now he doesn't take me seriously. He thinks I'm a cute blonde lady who is no threat to him. He's always nice, gives me the big hello, and even if he does send spies into the factory, the moment I put something up on the market that competes seriously with him, He's going to get upset, get difficult.

42:29We're not big enough to fight him yet. So this was a lesson in positioning. You need to know which battles to pick, when to pick them. You also want to move in silence. You don't want to alert your competitors to all the things that you can do. I think that that makes a lot of sense. They built their strength quietly and invisibly until they could compete on their own terms. And the brand positioning that she chose, which was different than Revlon and Elizabeth Arden at the time was Elizabeth Arden owned pink, you know, as their branding color, Revlon owned sexiness, but Estée Lauder went after something that nobody had ever gone after before at scale, elegance.

43:07Only once did she break her rule of restraint. When Revsan's Ethira tried to challenge Clinique later on in the future, Estée authorized an ad in Women's Word Daily, the quoted phrases from an upcoming campaign taken directly from his confidential internal memos. The message was clear, two could play a corporate espionage, but such direct confrontation wasn't really her style. That was just a shot across the bow. I didn't thrive on fighting, she would later write. I much preferred to remove myself from the fray, remain a lady at all costs, stay out of the scandal and limelight, and stick to my business, not anyone else's.

43:43That's a crucial lesson for business too. Stay in your lane, you know, stop looking at what other people are doing, and just do your own thing. The commitment to elegance wasn't just branding, it was strategy. Years later, when competitors rushed to put movie stars and designer names on hasty products, Estée remained focused on authenticity. The name had to describe the scent and the woman who would wear it, she insisted, not another woman, a glittery personality. This commitment to elegance would prove more than just good manners, it would become Estée's secret weapon. While competitors chased celebrities and headlines, they built something more valuable, a reputation for substance.

44:19As they prepared to expand globally, this focus on quiet excellence over loud confrontation wouldn't just distinguish them, it would define them. If you place your products in a lesser atmosphere, Estee would say, they'll be tainted with second-class citizenship. This wasn't just pride, it was strategy. And in 1959, that strategy led her to an audacious goal, conquering Harold's London's most prestigious department store. The first break came through an unexpected channel. Sir Richard Burbridge, Herald's owner, asked his friend Alan Gimbel about exciting new products in New York. Gimbel's response was memorable.

44:58He described a cosmetic line owned by a woman who could sell a defunct railroad line in about five minutes. Soon after, Estee's tiny office on East 53rd Street received a call Sir Richard would like to meet. But what seemed like Destiny's door opening turned into a lesson in corporate bureaucracy and protocol. When Estee approached the Herald's buyer mentioning Sir Richard's interest, she discovered her first major international mishap. She's gone over the buyer's head. I'll never tell salespeople to do that again, she would later write. See the one directly responsible for the cosmetics department, not the boss.

45:34Let the buyer get the credit. Undeterred, she applied the same strategy that had worked in New York, just with a British accent. For a month, she worked London's beauty editors, building relationships, generating press coverage. The articles appeared. The Herald's buyer didn't call. The buyer's response remained the same. No space, no need, no interest. Then came a test. Selfridges, another London department store, offered her a counter space. It was a good offer, a safe offer, an okay offer. An offer that would have given Estee Lauder its first foothold in Europe. She turned it down, not just because she was stubborn because of what it implied.

46:12If she couldn't be in the best space, she'd rather be nowhere. This moment deserves a closer examination because it reveals something fundamental about building brands. The easy path was right there, Selfridge's counter space, ready customers, a foothold in London. Most professional managers would have jumped at it. Most advertisers would have called it smart business. Most investors would have demanded it. But this is why most companies don't become Estee Lauder. Look at this through the lens of second order thinking. Let's ask ourselves, and then what? The problem wasn't Selfridge's itself. The problem was what it would do to everything that came after.

46:46Start in a second tier store and you become a second tier brand. Your prices have to match your location. Your image follows your prices. Your future shrinks to fit your beginning. Estée knew this instinctively. She'd seen it play out in America. The cosmetics counter wasn't just a place to sell products. It was a stage, a theater, if you will. The store wasn't just a location. It was a statement about what your brand meant, who you're associating with. And once you made that statement, you couldn't take it back. So she said no to Selfridges. She went back to London the next year and the year after that.

47:19Finally, the Herald's buyer cracked just a little. She offered her a tiny space, not with the prestige cosmetics, of course, but with the toiletries. Oh, I quite understand, S.A. replied, nearly bursting with joy. Wherever you say will be just fine. Then she did what she always did. She turned a foothold into a fortress. She visited every beauty editor again, but now with a crucial difference, they could tell readers exactly where to find her products. The results were exactly what she'd waited three years for. As demand grew, so did her counter space. Soon, Estee Lauder wasn't just in Herald.

47:57It was the largest cosmetics company in England. Starting with the best hadn't just worked, it had worked exactly as she had planned. France would be another story. France wasn't just another market. It was the market. In France, they thought they knew everything and had everything they needed, Estée recalled. Nothing that America had would interest a French woman. When Galleries Lafayette, the famous French department store's buyer, wouldn't even see her, Estée decided that if she couldn't get an invitation, she'd create her own opportunity. This should surprise no one by this point in the story.

48:32What happened next, of course, becomes legend. While showing Youth Due to a sales girl, she accidentally spilled some on the floor. They said later that I did it on purpose, but I'll never tell, she would write. You could hear that smile in her words. So what happened? For days, customer kept asking about the magnificent scent. The buyer passing by again and again, couldn't ignore the constant inquiries. Soon the impossible had happened. And Estée Lauder was in France at the Galerie Lafayette. Estée treated each market like a puzzle to be solved. In Canada, she turned consignment into conquest.

49:06When they ordered bath oil only, she sent them creams too with an innocent note. You certainly wouldn't want to have to say no to any woman who asks if you have anything else in this line, right? In Italy, she saw past the obvious. While everyone was focused on competing in eye makeup, she introduced skincare. The logic was beautiful. give those smoldering Italian eyes a perfect canvas of clear skin to match. By the time she finished, Estee Lauder products were sold in 75 countries. Yet her greatest international achievement wasn't measured in dollars or distribution, it was transforming how women worldwide thought about beauty.

49:42Reflecting on her success in France, she noted, Perhaps it sounds immodest, but I have no doubt that I've expanded the perfume market significantly by convincing women they don't have to wear perfume only on special occasions, but could wear it every day of their lives. This helped the elegant French perfumers as well as me. It was the Estee Lauder philosophy going global. Never compromise on quality, never settle for second best, and never stop until you've changed not just where people shop, but how they think about beauty itself. Many people view the market like a pie, each person wondering how to get the biggest slice.

50:16Governments think this way too, constantly deciding how to divide resources. Large bureaucratic organizations operate similarly. But outliers see things differently. Instead of fighting over slices, they ask, if we can make pie, why not make a bigger one so everybody gets more? When Estet entered perfume, she didn't just ask herself how to get a 5 % market share taking a slice from others. She grew the whole pie by redefining how perfume was used and calling it bath oil. The whole industry expanded as a result. This ability to see beyond conventional market definitions would become her signature strategy.

50:52In 1964, she turned her attention to what seemed like an impossible market, men's cosmetics. Toiletries for women, scoffed one interviewer after the launch of Aramaze, their men's division. Estee's response was characteristically sharp. Do you use shaving cream, sir? A shampoo? A soap? And tell me honestly, after a day's sale, when your hands are rough and redden, Haven't you ever crept into your wife's side of the medicine cabinet and borrowed her hand lotion? The inspiration came from an intimate observation, watching her husband Joe come in from winter walks with his face raw and red. Here I'm turning into a cosmetics tycoon, and my own husband's face hurts, she would lament.

51:32When he refused her creams, most would have seen stubbornness, S.A. saw opportunity. Well, what I knew was skin, she would say, and skin was genderless. Estée dove in with her typical obsessiveness. For 18 months, Joe, Leonard, and eight other men in the firm became living laboratories. Every formula, every texture, every possible combination was tested. Their bathroom shelves became research centers. The first launch in 1965 failed. But the thing about the Lauders is they don't abandon a good idea. They refined it. In 1967, the relaunch wasn't just a retry. It was a revolution. They created the first complete men's skincare line.

52:10everything from iPads to aftershave and moisturizers. The packaging was distinctive as well, a tortoiseshell, a design Estee insisted on despite committees warning it was too busy. The$250 ,000 investment at the time wouldn't show returns in the first year. But one of the advantages to being family-owned is that they can think in decades, not just quarters. Sometimes the best ideas look like mistakes. In 1968, right after the relaunch, Estée announced a new venture that seemed to break every rule in cosmetics. She created a high-priced, fragrance-free, allergy-tested line at a time when fragrance was what sold cosmetics.

52:49She launched 117 new products at once when conventional wisdom was to start small. She created a new brand instead of using the Lauder name when brand recognition was everything. The industry didn't just think she was wrong. They thought she'd lost her mind. But Estée believed in herself when other people didn't, and she saw something that other people missed. The future of beauty was about science, as Mark Twain wrote in words that would become Clinique's motto, do what is right, it will please some people, and astonish the rest. But just before the launch came a crisis, months before a letter arrived, another company owned the name Clinique.

53:27The packaging was already printed, the marketing was ready, everything was in place, except the right to use their own name. Leonard Lauder offered$5 ,000 for the rights. Denied. $50 ,000. Denied. Finally,$100 ,000. A fortune in 1968. It was a risk and a king's ransom, S.A. would later recall, but we knew we had to chance it. They bought the name. The launch of Clinique was pure theater. Everything screamed scientific authority. 40 computer stations throughout Saks Fifth Avenue provided personalized skin analysis. In an era when most women had never touched a computer, this wasn't just shopping, it was the future.

54:08Consultants in lab coats with green stitching and silver buttons moved through the store like scientists carrying silver pen lights to examine customers' skin. The message was clear. This isn't beauty. This is medicine. Even the packaging had to make a statement. While Lauder was blue and gold, Clinique needed its own identity. But not too clinical or people would think it was only for problem skin. The breakthrough came unexpectedly. Someone brought in a swatch of tiny flowers. Instead of just using it, they kept enlarging and enlarging it until each package showed a different section of the pattern.

54:39The lack of conformity made some people nervous, Estee would write, but she loved the uniqueness of it. Even the decision to launch independently from the Estee Lauder brand was strategic. As Leonard explained, they didn't just want customers thinking Lauder was launching a hyperallergenic line because there was something allergenic about the main products. More importantly, they understood that combining two different lines under one umbrella wouldn't allow for each to grow strongly as a separate entity. The market's response revealed something profound. While analysts saw Clinique as a niche product for sensitive skin, Estée had seen a larger opportunity.

55:14Countless women were using fragrance products, not because they wanted to, but because they had no choice. Remember, this is a time when every product sold had a fragrance in it. So the market wasn't small. It was just waiting to be understood. The competition scrambled to catch up. Charles Revson, who had dismissed hyperallogenic products as a drag, rushed out his version of Clinique Ethere. Within two years, over 180 copycats appeared worldwide. But as Esté noted, they all missed the point. It was not a marketing device. It was just an honest service. The commitment to honesty transformed even their advertising.

55:50Working with legendary photographer Irvin Penn, they created stark, practical images, a toothbrush and a pristine glass. No models, no faces. The pursuit of perfection was relentless. Hundreds of glasses were bought and discarded before finding the right one. The result, their ads didn't just sell products, they ended up in the Museum of Modern Art. When industry experts predicted$5 million in sales, the lotters just kept quiet. They just kept building. Why attract attention? By 1985, sales had reached$200 million. Turns out it wasn't such a small market after all. In the end, you can focus your attention on dividing the pie in front of you or making more pies.

56:28The Clinique launch, like Youth Do launch, showed it's much more profitable to make more pies than worry about the size of your slice. Business is a magnificent obsession, SDA would say. I've never been bored a day in my life. Her success wasn't just about selling creams and perfumes. It was about building an empire on principles that would stand the test of time. Here are some of the core principles that she mentions in her book. I'm paraphrasing a little bit here, but they're founded at the back of the book and it's a really good encapsulation of the book itself. Her principles are deceptively simple, but what was Charlie Munger's quote, right?

57:04Take a simple idea and take it seriously. Estee took these simple ideas and she took them seriously. So her first principle, quality wasn't just a standard, it's an obsession. Being family owned meant they could do what public companies couldn't, discard entire batches of product if they weren't perfect. Try that with a thousand shareholders, she would say with a knowing smile. If it wasn't perfect, it wasn't Lauder, even when no one else would notice the difference. Sounds like Steve Jobs, right? On the inside, he wanted the motherboard to look beautiful. Only he would know the difference. Only Estee would know the difference, but it matters.

57:38Principle two, details weren't just details. They were the whole game. When launching Beautiful, Estée orchestrated a symphony in pink. Every flower in Paris bought and arranged napkins, tablecloths, dyed to match the packaging. Even her own dress coordinated precisely. Everything must be treated with infinite respect and care, she insisted. This wasn't just showmanship. It was part of her strategy. Principle three. Identity wasn't something you can compromise on even once. when the siren song of discount stores promised quick profits, she didn't just refuse. She doubled down. We don't do that.

58:15We do the best skincare products available today. She understood the credibility was like crystal. Beautiful, but impossible to prepare once broken. Principle four, think small to grow big. While others chase size, the lotters broke operations into small units. You can do anything if you're small enough, Leonard would say. They'd rather have a few department stores who love them than a thousand who merely stalked them or just liked them. Principle five, respect the customer. Their ads showed whole women, never just lips or eyes. When competitors sold sex, Estee continued to sell elegance. My women were too fine and more important, too smart to be taken in by crudeness.

58:54Principle six, the standard is excellence. Sales training happened in remote locations where focus was total, not exciting cities where attention might wander. Everything had to be perfect all the time. These weren't just principles. They were the foundations of success. Each one explained why some brands flash and fade while others endure. Each one taking a long-term view over a short-term view. At the heart of every lasting business lies a truth about human nature. For Estee Lauder, that truth was deceptively simple. Touch a woman's face, she would say, and you have her. This wasn't just about makeup.

59:29It was about understanding what makes us human and connecting with people at their deepest level. Her wisdom revealed itself in unexpected ways. Anger never went into writing because written words can't be taken back. When competitors copied her, and they did endlessly, she chose to see it as flattery rather than theft. You get more bees with honey was her motto. She never lost her grace. What looked like simple business rules were really profound life lessons. Stay private and stay true to your vision. Trust your instincts, but verify with research. Be tough without losing your grace. Never compromise on quality, but be generous with everything else.

1:00:05These weren't just business principles, they were the philosophy of life. I am what you would call a stern taskmaster, she once said. I expect perfection, and then a little more perfection when perfection is offered. Like her grandmother making soup, who would perfect a recipe and then add just a touch more, Estée understood that excellence wasn't a destination, it was a journey. She built more than a company. She created a template for how business could be both elegant and effective, how standards could be maintained while constantly innovating, how principles could remain steady even as the world changed.

1:00:37But perhaps her greatest legacy was proving something fundamental about business itself. That the most powerful force in commerce isn't technology or marketing or even money. It's human touch. That, in the end, all business is personal. and that the greatest companies aren't built on products or strategies, but built on a deep understanding of human nature.

1:01:02All right, let's get into my reflections and afterthoughts. This is something we normally reserve for members. It's a little more off the cuff than what we're doing in the show. And so I'm going to offer some thoughts here. First, what a badass Estee Lauder is. oh my God, I think more business schools need to study her and learn from her. And more young women and young men need to look up to her and try to emulate what she did. She did it with grace and style and determination and persistence. One of the things we didn't cover was Estee's brief divorce from Joe in 1939. A lot of people put this sort of on her ambitions and drive.

1:01:39I'm not sure. You know, her book goes into it a little bit, but, you know, soon after she did have second thoughts and they remarried. So they were apart for about three years. They remarried in 1942. And it was a key turning point for the company as well, because Joe would eventually work in the back office in the business. Estee might've been the face of it, but he was a steadfast behind the scenes partner. They also had another son, Ronald in 1944, I believe. So Estee Lauder, the company officially launched in 1946. Estee was 38 years old. I think of this fact often And when I think of people who say that they're too old to start a business, Ray Kroc, you know, he bought a local hamburger chain that would turn into McDonald's as we know it today when he was 52.

1:02:26Kentucky Fried Chicken started with Harlan Sanders and he was 62. Arianna Huffington started the Huffington Post when she was 55. Sam Walton started the first Walmart at 44. I could go on and on. Another interesting thing is when she got the Saks deal in 1947, Estee bet the company. Not only did she and Joe go all in on the factory, that sort of abandoned restaurant in the middle of New York that required six months rent in advance, but she also shut down their small salon business, the concession stands, and went all in on Saks, literally all in on that$800 order, which it was risky, but it played out like a masterstroke because she wanted to be associated with those high-end stores and the brand got instant credibility and cachet.

1:03:17So she knew she couldn't be available everywhere if she's going to be available in the very best stores. Two things I think, you know, she instinctively knew that they wouldn't want to carry her if she's in these salons as well. They want people coming to Saks, obviously. And the second thing, we saw this with the Selfridges thing later on. She didn't want to be associated at the time with anything less than the best. Once she got into the best, there was no going back. And getting into Saks, you know this wasn't just luck, right? She made this happen. She had people go there and ask for her products.

1:03:51I'm sure she was telling women to go to Saks and sort of subtly hint that they should carry her products. And every time she was in there, I'm sure that she would do the same thing and ask, oh, do you have Estee Lauder's face creams? And I think she's genius. She's a force. Once in the store, she took an obsessive approach. And I think this goes unappreciated or underappreciated today. She rolled up her sleeves and she went to the front of the line. She traveled to every new store. She found, selected, and trained the saleswoman. She showed them exactly what to do, what to say, how the displays should be arranged.

1:04:31And she even showed them how to demonstrate the products on customers herself. These women represented the only touch point that the customers would have with the brand at the store. One bad experience would multiply everything by zero. She made sure the entire store knew about her products. She gave samples to all the ladies. She mentioned lipstick that would match what they were selling. And if that wasn't enough, she blitzed local media, making sure everyone knew about her products and where to get them. She didn't just ask people to write stories. She showed them her products and they wrote stories.

1:05:03And she did this for every store. It wasn't just a flagship store. So often we see people today and they're too busy to do this stuff. But she did this for years at every store opening. And it didn't matter if it was New York or the middle of nowhere. She would go and she was on the front lines and she knew the business inside and out. So I think of map territory a lot when I think of this, which is a lot of people sort of run their business on the spreadsheet. They get the map. And Estée had the territory. She's talking with customers. She's interacting with them. She's interacting with the salespeople.

1:05:34She's interacting with the stores. She's getting a dose of reality that you can't just see on the spreadsheet. The gift with purchase, the little sachet of perfume or like the tiny jar of cream was revolutionary for its time. But it became the standard as we learned more and more about psychology. And you can read Robert Cialdini's book on why reciprocation is so effective. At one point, Leonard noted that a free sample was the basis on which Estee Lauder was built. I don't think he's wrong. I don't think that's overstating it. I think that he nails it. That really was a key. She didn't have a marketing.

1:06:10She didn't do it because she knew it would work. Psychology would later prove that this is one of the most effective things you can do. It's why one of my good friends, Peter Kaufman, has this saying. He says, go positive and go first. And you unlock human nature to work for you rather than against you. And if you really deconstruct that principle into what it means, you understand that the best way to get what I want in life is to help people get what they want. What happens when you help people, when you go out of your way to help somebody get what they want? They have the natural reciprocation.

1:06:41They want to help you. They look for opportunities to help you. Estee turned her customers into advertising. They would try the products, love them, and tell their friends. This was the birth of Tell-A-Woman. and I love that name as she calls it. Estee stepped down from CEO and appointed her son, Leonard Lauder, as the CEO in 1973. She remained active with the company until she passed away in 2004. So at the time of her passing, the company that she started with just a few hand creams had over$5 billion in revenue. There's a legendary anecdote about how she got into Neiman Marcus, the famous store.

1:07:20And the story goes something like this, and it's familiar from the book, but it'll sound familiar because it sounds like some of her other stories. So I think it's believable. The store's cosmetics buyer was skeptical, and Estee managed to arrange a meeting with Neiman Marcus co-founder Stanley Marcus in the store. Rather than pitch her line, which would just make her another brand, she arranged for the entire meeting room to be set up with fine linens and flowers, as if it were for a fancy tea party. And at the end of the meeting, she did two things. She gifted Miss Marcus's secretary a bottle of youth dew bath oil.

1:07:54And as they left the room, she spilled a few drops. And soon the entire area was filled with the intoxicating aroma of her fragrance. Women who passed by were asking, what is that smell and where can I get it? Both impressed and amused, Stanley Marcus placed an order on the spot. Estée knew how to get things done. She wasn't just persistent. She had this flash of theater and showmanship to her. We saw a little bit of that in the Eaton's episode. We're going to run into this over and over again, including with Rockefeller. You know, he inherited a little bit of his father's showmanship as well.

1:08:33SDA became known for her marketing. You know, she was one of the OGs that sold lifestyle and not product. She was selling an image. She was selling aspiration. She was selling hope. She took these two things that are rarely found together, the personal touch and the obsession of a shopkeeper and even the entrepreneurial mindset, and she blended them together and got something stronger than any of them individually or any of them added. They became so much more valuable when combined together. And there's something about combining skills that are rarely found together that gives you a huge edge.

1:09:08The company decided to go public in 1995 after nearly 50 years of private. the company's market value at IPO was$2 billion. Leonard Lauder noted that going public was one of the best things that ever happened to us. We're smarter, tougher, more competitive because we're under the scrutiny of the public. There's a lot to be said about going public and it's really interesting. I mean, part of the reason that Estee Lauder was so successful at the time they went public is because they hadn't gone public before. Private companies, we learned about this a little bit in the conversation with John Bragg and we're gonna talk about it more coming up.

1:09:42There's a lot of advantages to being private. You can take a long-term view. You think about the quality standards she had where she's throwing out batches, where she's being patient, where she's saying no to self-reaches. All these instances would be incredibly difficult as a public company and almost impossible with professional management and not a founder at the helm. There are also pros to being public, which there is sort of a forcing function to be a little bit tougher, a little bit more efficient. While you might take a little shorter term view, you also have more access to capital. You can raise money in various different ways from debt covenants to shares to just pure debt.

1:10:22There's a lot of different things at your disposal. And if you're opportunistic, as we're going to see in an upcoming episode with Henry Teledon, if you're opportunistic, you can use the public status to work for you. One of the reasons that quality was so important to Estée is that she lived or died on repeat sales. She knew that her empire was built on recurring purchases, not one-time sales. One-time sales sort of encourage you to fleece the customer or to take the last time. You can engage in a win-lose relationship when you're only going to have a customer once. So I win, you lose. But you can't get repeat sales in a win-lose relationship.

1:10:59So if you think about this, there's only four permutations of relationships. There's win-win, win-lose, lose-lose, and lose-win. And only one of those relationships, win-win, will survive across time. And so it's incredibly important that Asday is delivering the highest standard product because she wants her customers to come back again and again. She doesn't want to just acquire a customer and have her buy one or two jars. She wants her to buy jars for life. And you think about SaaS and all of this stuff, and there's a lot of business models built on repeat purchases today. Apple seems to have learned a lot from Estee Lauder as well, right?

1:11:34If you think about it, they have a hands-on demo. So they guide you through it. They show you how their products work, how to use them. They focus on the customer experience with the packaging, even to the obsession of how it sounds when it opens and how the quality of the packaging is a million times better than almost anybody else's packaging. Because that's part of your experience with the brand. It's part of why you're paying more money for it. It's part of why you can command such a premium price. and they control how and where their products are sold. Sounds a lot like the Estee Letter Playbook.

1:12:07Some themes that emerged from me with Estee, you know, she had a passion for the product. She was relentless and persistent. She kept a low profile, you know, despite being out in the media and using the media to her advantage, she tried to keep everything pretty low profile. She didn't want people to know how much money she was making, what she was doing next. She didn't want a lot of attention outside of the business. She did everything high end. She never cut corners. She had uncompromising qualities. She was obsessed. She worked hard. One of my favorite quotes that I came across while researching her was, she didn't get there by wishing for it.

1:12:44I worked hard for it. And her story captures that. She had so many rejections and challenges to overcome, so many problems. But she learned to see problems as opportunities and just got to work, whether it was persuading a store retailer to carry her products for the 15th time or waiting all day to see a buyer without an appointment or spilling perfume because she couldn't just get them to even open the jar and smell it. She showed up every day and did the work. She also learned an important lesson in business. No often means not yet. No often means try a new approach. I try to tell my kids this, you know, we were knocking on doors the other day and we're shoveling driveways and they get rejected all the time.

1:13:27I kind of love it as a parent. You know, I'm a laborer, so I'll go help them. But they get rejected and it's about, well, why are they rejecting? Why are they saying no? Is it money? Is it something else? And how do we overcome those objectives? So it's interesting, kids, you know, they say no and they don't think to, oh, well, you know, why not? And we've gone through this iteration over years now and it gets to the point where my kids have been quite good when they want to be convincing people. So a lot of times people will be like, oh, I have a driveway service, I'll wait to pay for it. They're going to be coming by later.

1:13:59And my kids got to the point where they were like, well, you know, they're doing thousands of driveways today. Like they're not going to give you the care and attention that we can give your driveway. We're only going to do like five. So we can make your driveway the envy of all your neighbors. And you start thinking about little kids saying this and it becomes really hard to say no to them at that point. But it's all about overcoming the no. The first no is rarely a no when it comes to business. You just have to find a way around the wall. And Estee talks about this with persistence. She also never hopped on the latest fad.

1:14:31And I thought that was interesting. She just sort of did her own thing. She swam in her own lane and that's really important. And there's some takeaways too, like that you can use maybe today or tomorrow in this. If you're pitching a new client, you can find a way to make them experience the product. If someone says no, you can assume it means not yet and try a new approach and try an approach around that. The other thing is if you're a premium brand, you can't associate as a second tier brand. I ran into this the other day. I was in this gas station service center and I saw what used to be a premium high-end tea company.

1:15:06And I was just like, oh man, nobody's ever going to give these products away anymore. Now they're just a commodity before they were luxury, before they were the best of the best. and now they're in a convenience store at a gas station. Now I can't give this to anybody as a gift. Who's going to want to give a gift like that? So if you want your product to be luxurious and premium and elegant, everywhere it's available has to maintain that sort of elegance. One thing I love that I don't think gets enough attention, she imagined a world where every woman could feel beautiful and luxurious using her products.

1:15:39It's almost like a reality distortion field. and then she made it happen. In an era of sort of unicorns and rapid growth, she's a reminder of the fundamentals of business. Know your product, know your customer, work hard. Set the highest quality standards. Don't lie, think long-term. She didn't just break the glass ceiling, she smashed through it and invited every other woman to follow her. All right, as a reminder, these Outliers episodes are a format I'm playing around with. We're going to experiment a little over the next few months and then land on a format that I think works for everybody.

1:16:16If you have any feedback, just email me, Shane, at farnamstreetblog.com. That's F-A-R-N-A-M-S-T-R-E-E-T blog.com. This podcast is largely based on the 1985 autobiography, S-Day of Success Story, which is one of the best business autobiographies I've ever read. I came across it a few years ago, recently picked it up again. The book shares her journey. And if you enjoyed this podcast, you're going to love that. I think I'll end with this. Estee didn't just build a business. She built a philosophy and one that defied convention. She ignored experts. She redefined the entire industry. The takeaway, if you wait for permission, you'll always be behind.

1:17:01The real outliers are the ones who create their own opportunities, just like Estee Lauder did.

1:17:17Thanks for listening and learning with us. For a complete list of episodes, show notes, transcripts, and more, go to fs.blog slash podcast, or just Google The Knowledge Project. The Farnham Street blog is also where you can learn more about my new book, Clear Thinking, turning ordinary moments into extraordinary results. It's a transformative guide that hands you the tools to master your fate, sharpen your decision-making, and set yourself up for unparalleled success. Learn more at fs.blog.com. Until next time.

1:18:01The End