Mickey Drexler: The Art of Selling with Retail's Merchant Prince

0:00What I do, I have a photograph in my mind. I go into a shop, it paints a picture or it doesn't. One bad color in a great painting, that changes, throws off the whole painting. It's like the wheels, the ugly wheels on a Mustang. And I mean that every car now has ugly wheels. I can't get over it. You know, you see the wheels. It's like having a bad button on a sweater like this. This is one of our best sellers. And if you put an ugly button on this, that's what you notice. And I say never give a customer a reason not to buy something.

0:56Welcome to The Knowledge Project. I'm your host, Shane Parrish. In a world where knowledge is power, this podcast is your toolkit for mastering the best of what other people have already figured out. Most people think retail is about selling things. Mickey Drexler proved it's about selling dreams. As the CEO of Gap and J.Crew, he understood something profound about the American aspiration. People don't just want clothes. They want to become someone through what they wear. A boy from the Bronx who transformed into retail's merchant prince, Drexler could walk into a room with 100 samples and instantly spot the three winners because he saw what Americans wanted to become before they knew it themselves.

1:45From advising Steve Jobs on Apple's retail strategy to building Old Navy from scratch, Drexler's career traces a remarkable journey of seeing opportunities that others missed. In this conversation, he shares the insights and instincts that let him repeatedly predict and shape American taste. Whether you're building a brand, leading a team, or trying to see around corners in your own industry, you'll learn how one of the retail's greatest minds thinks about the psychology of consumer desire, the principles of brand building, and the art of knowing what people want often before they do. It's time to listen and learn.

2:31Let's start at the beginning. You said your father was a model of what you didn't want. He didn't fit my job description of what I thought a good father should be. Yeah. I didn't know what I wanted then. I didn't know. You know, when you're a kid, like you moving all over the place, you don't know what's right and what's not right. You learn over time. What was that relationship like? He was, it wasn't good. He wasn't a sensitive guy. He had no emotion. He didn't treat my mom well, who died. You know, she had cancer the year I was born. And what was it like? I didn't know any better at all. And I thought, this is what a father is like.

3:22And over the years, I learned that this is not what a good father is like. and he was an angry, bitter guy. He was not successful. And he always talked. He wanted to be a big shot. So in my family, he acted like a big shot with my mom's three sisters and my seven cousins. And by the way, the irony is none of them liked him because he wasn't a warm, fuzzy, nice person. But I didn't know that when I was growing up. How did that affect you? I think my ambition comes from being the opposite of him, I think. I always lived in my fantasies, escaping where I am. And Peggy, my wife, said, you know, maybe that's where your creativity comes from.

4:16I don't believe it came from that because I think creativity is part of your DNA, and I don't think it can be taught. But, you know, it affected me. He never took any pleasure in my success. And he just never did. Was there a moment when you realized he wasn't a big shot? Well, I'll tell you. It's an interesting story. I used to work. He worked in a garment coat company. He worked buttons. He had kind of a low-level-ish job, although I didn't want to face that.

4:55And they asked me to take the payroll. I was 16. He said, take the payroll to the bank. What do I do? I duck out the freight entrance on West 37th Street and 8th Avenue, go into the neighboring freight entrance. I look through all the pay stubs or whatever it is. he was one of the lowest paid people there relative to his peer group who he would always put down and whatever. That was a reality for me. So it was a cold reality. So my thoughts of him being whatever disappeared then. And as I grew, he wasn't a good dad. So when I lived there, I was going to City College. I was miserable. And I was, you know, I just got subways, Long Island Railroad.

5:50And I'd had to escape from the house. So I luckily got into, I didn't know where to apply, State University of Buffalo. Some guy I knew went. He wasn't even a close friend. I got in. So I escaped to Buffalo for two years. But it was, you know, never took any. He was competitive with me in an ironic way. And I was getting a lot of press when I worked 12 years in the department stores. And then I was very lucky, fortunate. I was called to run Ann Taylor then in 1980. I was a young guy. I don't know. I said, OK, because I didn't know what I would do next after 12 years in the department stores. Because I couldn't find the stimulation and the excitement, or whatever you call it, of the organizations.

6:49And I don't think they're much different. Political suck up. I didn't know how to articulate this. But I think in most big companies, people are always sucking up to their bosses. That's my own experience. And these develop over time because the boss reviews you, the boss promotes you. I've learned over the last number of years the best judge of a boss is the person who works for the boss. Tell me more about that. Well, it's my own thing. I think in corporations and, well, look at all the CEOs out there. I don't know all of them, but I think safe. They went to the right schools. I couldn't care less where anyone goes to school.

7:41I like to see a college degree, but I also like to see a work history. But if you're a safe choice, and, you know, it's, again, it's an editorial on what I think people would argue if they went to a fancy school here and a fancy school there. And now it starts, and I was guilty when my son was five years old going to a nursery school. I didn't have any connections. I thought it was a fancy one. It wasn't a good choice. But I think if you look at people, you know, like everyone, all these earnings reports, this, I know the public relations people write that. They script them. And safe, you have a good education.

8:25You don't want to take a risk on picking the wrong boss or senior executives. And I think there's a lot of self-interested people in this world, plenty of them. Why do you think we're so risk-averse? Well, I can't answer for others. I think, you know, why? I think you have to be creative to move any business forward, any institution. and that's what I think and it's really based on my own personal experience and also in the in the in the sector I'm in fashion and all that creative drives the engines and so why are they it's a good question that well salary they don't want to risk that they don't want to risk that I get very wealthy these days becoming a CEO.

9:24When you transformed the gap, you renovated all 430 stores at the same time with no focus group, nothing. Oh my God. If you take over something, you got to get rid of the old merchandise because it ties up a lot of cash. And Don, bless his heart, was nervous about the earnings. I get emotional. You know, my stomach speaks for me a lot. But, you know, business got tough for the first year. The stock dropped probably 50%. You know, I never, I worked hard and I was scared after a year, I'll never forget. We were talking about, it was a year and a half, we were in Carmel. and we're sitting there, we come up with kind of a bankruptcy plan.

10:15That's when I started to get nervous. And I've been there a year and a half. Don redid the 400 plus stores. I redid all the merchandise. I threw it all out, and that's where he was concerned. But you've got to take and you've got to get the cash out of bad goods. It's like rotten fish or whatever. So we redid the stores. What gave you the confidence to do that? I mean, this was like a, what was it? We're basically going to go extinct. So that's the base case. Those two or three years, even when it turned around, was like, uh-oh. But I worked my ass off. I kept, no one taught me how to run Ann Taylor.

11:05I just did it without any supervision because the headquarters, it was a$25 million business. But I just went in there day one. And, you know, corporate, a lot of people, they leave you alone or they don't leave you alone. But there I was. And the threat was if I don't turn this, I was under pressure. I didn't make money there. They didn't pay me. I didn't negotiate, whatever. But it is what it is. So I always depended upon my gut, my instinct. And in hindsight, I did. I knew who was a good person, not a good person. I knew who was full of it and down to earth. And in the department store, it was 12 years.

11:55I kept looking for the right place to go. You mentioned you could tell the difference between who was a good person, who was a bad person, who knew what they were talking about, who didn't. What are the tells? How would you teach somebody to do that? You can't teach anyone. I am a huge proponent. And I never could say, like, Jesus, they're the president. They're the CEO. They're the this. And I'm thinking I'm not impressed privately. And I can name drop some of the big shots of the time in the retail business. And I would say something like, not a merchant. And they look at me that I could tell.

12:45And because I was a merchant, I guess, my first second day at Bloomingdale's, they put me in charge of a department because the buyer barber was on maternity leave. Stan Stern, who I love dearly, he was a great boss. I was on my own. And I just did it. What does it mean to be a merchant? What it means to me is, and it's not a lot, I think, It means to know from what's going to sell well, from what's not going to maybe sell well. Focus, make sure it's on brand. Now, this is what I do. No rear view mirror. Most people do rear view mirror, and they say, well, we sold last year this. Sometimes it's going to go this way a lot.

13:39So you chase what's over in post peak. It means to me to be a merchant is having a sense of what's going to sell, knowing that like I always had an instinct, I guess, on what I loved. And I learned later on if I think it is non-negotiable. The word that comes to mind, though, is like taste. Well, that's a good question. What's the difference between? Well, you know, for me, I use that word a lot, but it's in the eyes of the beholder. I have a friend, he's very successful. I was talking about the ugly merchandise in one of the companies he's involved with. He said, well, to the customer, it's not ugly.

14:27To me, it's ugly. Now, I know what I know, and I don't know where my eye came from, but it came from somewhere. But taste and style and fair value and moving forward and having a vision, those are the key ingredients that I think. Now, when people say, well, look how good that company is doing, I said that's not what I like to do. I like to be proud of the merchandise. I like it to fit my standards. I don't say it that way, of what it is, vision. And I can always tell when something's not on brand. I remember in some of my jobs, I remember looking at something. It was a big tell. And I said, uh-oh.

15:20And I didn't follow my instinct. And it really hurt one of the companies, you know, there's people involved. But it means to be a good merchant is you can't define it, but you know when you know. You know it when you see it. So if we were to walk outside and walk in a store, and you had five minutes to walk me through how you evaluate the merchandising. That's all it takes. Five minutes. Three minutes. What would you look at? The picture painted. Because when I just always – it's a really interesting question because I don't know how to explain what I look at. But I look at colors very important.

16:04And when I did Gap, I had a list of styles. I was trying to start something. I was looking for my vision. I always admired Ralph Lauren, but I couldn't afford his clothes. He was a Bronx guy ahead of me. And he always had a point of view. And I admired him. I used to buy his clothes wholesale. Why? Because a friend of mine's cousin was his secretary. So I got it half off, whatever. But I always liked his taste. And it's still the same today. And there's not a lot of people who do that. So it's interesting. Coming back to your friend's comment about, well, the customer is deciding what we sell.

16:48If you're selling, if your game, I guess, is to sell the most product at the lowest prices, you're going to be selling the same thing that everybody else was selling. But you're telling me you wanted to create a different vision, one that escaped the competition in a way. What I do, I didn't say this is my plan. I look for white space. This is in hindsight. So Ann Taylor was hugely successful. I left after four years because my bosses were bureaucrats, and I didn't like it there. I also was at a stage in my life where I had to have something I wanted to do where I could feel not compensated the right.

17:30I was very happy with what I earned. But I faced the realities of living in Manhattan. Anyway, I always had. Ann Taylor was purely instinctive. But I did learn there that I didn't want to sell brand A, B, C, D. And today, you can get every brand at a discount. And TJ Maxx, my friend there, Carolyn, she's the best. You can go to TJ Maxx and trust, but they're the biggest customers of most brands. So I didn't want to carry, because Alexander's taught me the lesson. I was maybe 25 years old, and I said, Jesus, something's wrong here. And, you know, I'm self-taught, and then I'm also very curious.

18:22When I joined Ann Taylor Brooks Brothers, and I saw it decline dramatically then because, you know, no merchants running it, the quality, they would take quality out to maintain price. But they had a protective device about competitors. They owned their name. They didn't sell wholesale. No one could take a mark down. So what I did at Ann Taylor is we did, you know, I found some manufacturers. Today you get your own, but who can make goods? We designed them with them. And we had Ann Taylor Studio label. Now, no one told me to do that, but, you know, do, do, do. It's the white space. Well, yeah, and then I don't have to worry about meeting the competition.

19:16What's going on in the business today, by the way, is if you look at pricing, first of all, everything's on sale. I always give advice when I'm on whatever. I say, before you give them the credit card, Google the item you want to buy. You'll find it somewhere most of the time. Let's go back to the gap before we get to the end of the gap. So you were the CEO from 1995 to 2002. How did you prevent the bureaucracy from building up over those seven years? Well, the bureaucracy is I'm all over everything. I took every call from a customer, and they'd be surprised about, you know, and I say if I can do it, you have to do it.

20:06You know, but today, you know, it doesn't always work. I tell every story, customer stories. I would call customers. If they, anyone who called me, I got back to them. And, you know, now I do that. It's a little bit of a payback because I never had anyone like that. What were the key learnings from the gap? Like what are the key lessons that you took away? Oh, every day the key learnings. Oh, you must have a vision. You must be whatever's defined as a good merchant. You must be spot on and be a pain in the ass because the best bosses. And I always say, hire your boss because that's the one. And I never had bosses who I thought were the best, especially in, yeah, but I became the boss other than Don was my boss there.

20:59And I had to play that game with him. Because if you do what I do, and I wish you Steve does, and you do what maybe all these other people do, you are always competing. You have to be competing. It's relentless. And it goes with it. And if you're not, a lot of people don't compete. I know friends who run companies. They're bureaucrats. I know because I know them. So Old Navy, you know how I started that? It's my favorite, one of my favorite stories. So in the New York Times, I used to read it when it was a decent paper, business section, I always liked to read about business because I wanted to be who they all were.

21:49And then I realized, well, I didn't realize for a long time who they were, but not what I wanted to be. So there was a little article buried on page four or five about Target. Now, it was then called Dayton Hudson. Very bureaucratic company that I knew that they did a lot of research and a lot of this and a lot of that. And then someone was quoted as saying it's pretty much going to be a cheaper version of Gap. week the store opened I flew out to Mall of America that week I didn't even tell anyone yeah but I said well fuck them yeah you know and I went out Mall of America I walked in the store I was there no more than five minutes and I said to myself you know you gotta you know Only the Paranoid Survive.

22:48Well, that's interesting, right? Because it's a story of only the paranoid survive. And Andy Grove is the one who wrote that book. But it's also a story of making sure that you're touching the medium. So when you're talking to customers, there's no filter between you and the feedback. When you're flying to the store, there's no filter. But you're looking at the terrain. Somebody's not telling you what it is. In corporations, most of the brass, they're in their ivory tower. I remember in the department stores. They're so far disconnected. Go on the selling floor. Speak to someone. Plus, it's decent.

23:24You know, people, for me, I identify with those people who aren't the fancy people. You know, a funny story about this. I bought an Xbox for my kids. It must have been, I don't know, seven years ago for Christmas. And we're opening it and we're setting it up on Christmas. And I was like, the person who designed this Xbox experience doesn't have kids. It took an hour and a half to play a game. From the time we plugged it in and turned it, it's like, first, you got to do updates. Second, you got to sign up for all these accounts. Stupid is the greatest lesson. My first week at The Gap, I put up signs, keep it simple.

24:08I took out the stupid. Every desk in the corporation. people would talk a language to me. I didn't know the language. I'll never forget this. This one woman, she's in charge of whatever, planning and something. I didn't know what she was talking about. And I just said, keep it simple to the point. You have to bring everything to its simplest common denominator. And the best way to do that is to actually use your own product. Yeah. Yeah. We did the P. Jimmy's pajama thing, which is a really fun thing. It's going to be very good for him and us long term. And they call a boxer short. Well, their name for it was a short pajama pant.

24:59And they show me their new version. Now, it's the third after the pant and the pajama set. But they're calling it the short pajama pant. Number three seller. And they show me this thing that they're changing it. Now, this is typical of what goes on. And I said, it's the third best seller. You want to change it? I said, and it's called a boxer short. It's not called. I get a little impatient a lot. And then I do a little survey. I go around just to – I say, what do you call this? It's a boxer short. When you say the word boxer short, you don't have to describe it. It is what it is. Everybody has an idea of what it is.

25:51Of course. Everyone knows it's an elastic waist. And I said, continue that, and you're not doing this whatever it was. And that's what I do. Yeah. And it's funny. And they call things, I like to name things that say what it is. And I go through this all the time. They confuse people. I said there's certain names that you know what it is. Everybody wants to come up with something new. They don't know, but they're not logical. So what happened at the end of the gap in your tenure there? Steve Jobs, just to frame the conversation here. So Steve Jobs is on the board. He calls you. Yeah. Take me through this.

26:38Well, Steve Jobs joined the board. He was recruiting me to join his board about a year. Steve is very seductive. He doesn't give up, like a lot of people who do what he does. And he called me one day, and he said, I'll join the Gap Board if you join my board. Deal. Because I knew Steve. You know, there's no such thing as an independent director. You know, there's a litmus test, not a relative. They don't do business with you. But they ought to have on the test not a close friend, not a college roommate, not a cousin, not whatever. Unless it's, you know, if it's a controlled company, you can do what you want.

27:26But independent directors. So I said, didn't even think, deal. I knew he would be Steve Jobs. He's irreverent. He challenges things. He might be late, but I love the guy. What was he like as a board member? He was a troublemaker because he brought up things. I'd sit there, thank God. But he alienated people because it's okay to alienate people. But he really wasn't a very paid attention board member. But I didn't care. So he was on the board only about a year in Yale. He wasn't very popular, but I just, you know, the guy was ill. He was dying. I just so admired him. And I really admired him a lot.

28:19And Johnny Ive was his lunch mate, and I had, you know, Johnny and I became good friends. And Steve was whatever. So there's a board meeting. I knew there was something going on. People, all of a sudden, you know, and you have a corporate, and they don't, first of all, I never had a director who really understood the goods. You know, and, you know, if they came in, they didn't like the name Old Navy. I got it off a bar in Paris. I was driving to the airport. I was fortunately in the back seat on the left. I'm looking out. I said to Maggie, she was in marketing. I go to power. You know, you go to shop, you get ideas, creative.

29:05So I see Marquis with a lot of neon lights, and it says Old Navy. I said, Maggie, that's the name. We needed a name for Old Navy, which, by the way, is about$11 billion business today. Yeah, it's huge. That's the name. They didn't like the name. Long story short, two naming. I don't like agencies, and I don't like consultants. And the Old Navy, by the way, that was started. It's a whole other story. So let's go back to the firing. So Jobs is calling you. Okay, so this is, we had a bad year. So Jobs was not at that board meeting. I presented at that board meeting the turnaround assortment. Right.

29:52I looked at Erick. Banana Republic, Gap, and Old Navy. It was a tough year, I think, in the marketplace. They weren't looking at me. I get home about nine. He says, Don just told me you're getting fired. They had to tell him. He said, they didn't tell me until now because they were worried I would tell you. And of course, I would tell you. But nine was the deadline they had. for whatever. And I called Don. He brushed me off very quickly. Come in at eight o 'clock, dot, dot, dot. It's a board meeting the next day. He hands me a OneNote, whatever. That was my last day. So you end up going on the Apple board.

30:41Steve recruited you. He seduced you for over a year to join the Apple board. Yeah. And I say that would all fondness for him. What was the Apple board meetings like and what contributions did you make to retail there? Well, you know, I designed the first store with him because he designed an ugly store. And we went in and I told him, get a warehouse, build a store so we can design it together. So we did a gap. You have a store, before you open it up. So I went in. It's very simple. I said, it was too tchotchke. He said, It's simple, a screen to show the movie or whatever it is. So we designed the store, and that's the store.

31:32It's still the same store today. And the stores became iconic. What's the difference between the first version and the one that we sort of— Oh, no, the first version never opened up. No, but I mean the first version you saw. It's like comparing apples and oranges or tomatoes. But I always like to talk about this because we always see sort of the end product. We never see the messiness of the... What I do, I try to explain this. I have a photograph in my mind. I go into a shop, it paints a picture or it doesn't. One bad color in a great painting, I'm not a big art collector, I love nice pictures, but that changes, throws off the whole painting.

32:16It's like the wheels, the ugly wheels on a Mustang. And I mean that every car now has ugly wheels. I can't get over it. You know, you see the wheels. It's like having a bad button on a sweater like this. This is one of our best sellers. And if you put an ugly button on this, that's what you notice. And I say never give a customer a reason not to buy something. It's one of my rules, you know.