Millard Drexler: "Surround Yourself With People That Get It"

so I am build me and I'm a full-time lecturer here and and I actually when I heard Miki was speaking I asked to introduce him and so it's a real honor to be introducing Miki he is the truest American icon of fashion casual fashion and retailing and he's also been a bit of a friend to me and a role model for creativity and leadership for just under 20 years now Miki and I have something in common which you won't guess we both went to high school in the Bronx and he went to Bronx High School in science which if you're from New York knows that that means that at 14 or 15 Miki was a very smart young man who started who studied very hard after college he apprenticed at three of New York's great department stores Abraham & Straus Macy's and Bloomingdale's and when we were in the waiting room he told us that he hated his first 10 years of work at 36 he was hired by an tailor which was the first fashion chain that he led and soon transformed it in 1983 you joined the gap gap to join Inc where he at that point was a few gap stores where you could buy records and Levi's and he turned it into America's first great casual apparel chain he later turned around a small set of stores called Banana Republic and turned it into the Banana Republic you know today created Gap Kids and then created inbuilt Old Navy which was really the first fashion value chain in our country he was president Gap Inc from 1987 to 1985 and he was CEO until he left in 2002 in 2003 he became director chair and CEO of j.crew which was then quite a moribund brand instead of apparel he took it to a very strong turn around and took that tired and focused brand and turned it into the very vital and successful two billion dollar chain that is today in addition he has been a director of Apple for 19 since 1999 and though Steve Jobs isn't with us with us anymore you could have charged admission I'm sure to conversations between Mickey and Steve I too I more than anybody else if you look around the room Mickey Drexler is the reason almost all of you are dressed the way you are every kaki every piece of denim every shirt every sweater was either created by Mickey or one of his people or reshaped or recolored in some important way before I turn it over to Mickey I'm going to share just a few brief personal observations I was at McKinsey for thirty years and only so I can position Mickey against them I will mention that amongst the CEOs I serve were Bill Gates Steve Ballmer Steve Jobs albeit when he was it next John Chambers Jim Coulter TPG Katherine Graham punch souls burger Howard Lester who was the I don't think he call himself this the Mickey Drexler of William Sonoma and several others who were also excellent leaders but don't have the brand name panache and so my introduction to Mickey is that he was and is at his best and even at his average the most creative inspiring smart and I might add the most demanding of all of them and easily the most fun creative inspiring smart and demanding his ability to understand consumers to see color shape and texture to which most of us would be completely blind to understand lifestyle indeed the mindset of each successive generation this is truly distinctive well known but he was and is also a great businessman and a leader while he was no accountant by any means I never heard Mickey come up with a fashion idea that structurally was not ready to make a lot of money what's the most volume of an item you've ever ordered well gee I'd have to think about that but a million Oh easily yeah ten million well it's a long story but you just camille yes so hundreds of thousands I mean just imagine deciding that you know next spring absolutely hundreds of thousands millions of dollars are those sweaters but it takes you know there's a story about how it starts oh okay guys moving outside okay no I got to finish the compliment okay go ahead but you weren't an accountant but he always knew how to price goods and remember he is called the great merchant Prince and a merchant above all knows how to make money now in my career I had no thrill greater than spending two hours with Mickey in the first Old Navy store in Manhattan as he went around and toured it and looked at every object every business process every piece of apparel there and the way you could see that he could see and understand and integrate all the elements of fashion retailing and to do it with the most engaging monologue that you could ever hear so with great personal and general enthusiasm on behalf of the business school I welcome Mickey Drexler what was beautiful you know I was a little concerned about this being taped but now I'm very happy after that introduction bill and I he didn't say we go way back we fought a lot he was actually was a gap for many years off and on and he was really part of the team and too long too many arguments and too many disagreements that I even care to think about but it's really nice to see him here today and that was probably the best introduction I've ever had thank you very much that was really nice I don't have an agenda a set a speech I asked my hosts and hostesses what I'd like what I should talk about and every time I said something like I didn't like my first 10 years of life in business they don't say that when there's no perfect job oh say that oh I didn't learn much for most of my bosses oh say that the the way I learned to buy goods by the way was interesting this bill reminded me and I don't have hours tonight but I was a young baby buyer blooming those was my first job Bloomingdale's after school and ended up buying well this doesn't know if it sounds like a lot and how many of you were actually in retailing or worked in retailing raise your hands so not a lot anyone I work with here I know there's two or three people that Stanford undergraduate one whose mom works here and one embarrass you works at Stanford and someone I met in the store today where are you whoever works at j.crew now raise your hands for full disclosure they didn't show up okay that's good they said they'd be here anyway my first big buy was actually at Bloomingdale's where I had a fight with the whole line of command up into the CEO about buying a t-shirt that I wanted to buy more than they've ever purchased before but I kind of learned mostly on my own about being a merchandiser and being a business person and learning from people who who maybe didn't teach you buddy told me how not to do what are they taught me how to be argumentative and I always like to argue I argued bill over many many things over the years and and I learned over time to kind of follow my own internal judgment now at your stage in life you don't follow the internal judgment as much as one does when they get older more wiser make many mistakes in your life and business but at some point now and especially now where I love what I do and he didn't say I was fired by the way which I don't know he knew that very well because he's probably part of the reason I was fired Kinsey comes in you know McKenzie comes in they say oh I think it's time for a new CEO you know what happens so right he told me to get out and by the way I was trying to get out because it's because it's no fun running a company that doesn't have much growth left and mostly in America in my opinion everything I say is the opinion of its personal editorial here in fact they went on the loudspeaker today I was flying out from New York this morning and I said everyone says Sky Bowl is a must-see I said personal opinion is the most overrated to long movie I've ever seen in my life and so tacky and then I said by the way flight got great reviews the movie I said it was a horrible movie and what airplane flies upside down and doesn't crash so I've learned that the world doesn't have the kind of quality it needs to have that they keep they keep and I mean this they keep referring to old things to try to make them new I saw the preview of watching sky ball and Saturday was die hard again and you know the world one thing being on the board of 14 years with Steve who I miss tremendously is the fact that you move forward you figure out where things are going and then you make a very you base your risk and investment on upside and downside when I buy goods and we buy goods it's the same thing so I started my career with Bloomingdale's why because I got a job offer at a and asked where I had a summer MBA job they offered me ten and a half thousand dollars a year I'll never forget this and these are all little signals about your life and about where you go so I recommended a friend of mine who was a finance guy from from my class and they offered him 11 thousand a year so I'm speaking to him and I said he offered you 11 me 10 and a half thousand they knew me I worked there for three months I was furious and pissed off and to me it said a lot more than the $500 which was important when you don't have money and then 500 probably worth 3,000 a year or whatever it is today and I said I'm not going to work here I went to work at Bloomingdale's thank God and Bloomingdale's n was kind of becoming what it became and now it's not any morges most department stores at discount stores to me today but I think it's you start to figure out and learn from all those little things you see in your life and then I always quote Steve on this from his Stanford speech and see I like to take credit for it but since I'm at Stanford I can't say you connected that's backwards because you'll probably know I don't know but anyone know that that's what he said in this speech you can so I use that all the time it's very true about life you can't figure it out at the beginning stages as you're in but you figure it out and you look at where your career goes or where your life goes or other things go and then you connect it you kind of connected backwards so I went to work at Bloomingdale's I was very lucky to work for a woman in those days women were like sometimes not seriously taken but the Gress I work with eight out of ten women on their senior executive level eight of ten of them are women because I actually like working with women more so no offense against men because we have some men in finance and some men and merchandising so on and so forth but I learned from Katie Murphy may she rest in peace who died at a much too young age about you buy what you like you figure out what's happening color is important style is important and all that's important now if you kind of look at it same thing with Apple by the way it was always the same factors about being creative figuring out where the puck is going as Wayne Gretzky said so so my first few years I love my first year and a half at Bloomingdale's and then I became an executive I was a buyer merchants you buy the goods you argued in the sense I bought 30,000 t-shirts they wanted to buy 6,000 and you're figurin if a day in February you can sell in cold weather and this is East Coast only X amount of t-shirt so what does that mean for a full day or a week or a month in May or June it's complicated so I won't get into detail on that I spent I spend six years at Bloomingdale's didn't really I can say didn't really well some of my bosses might hear this they roll nice and some missile friends I didn't really learn anything other than what I kept teaching myself what Katie in the early year or two would teach me when to work and then Macy spent a year and a half here and said this is really not good and suck up is important what you wear is important I think that's true in a lot of corporations today and then I went to a and s and that was it I spent four years there and I got a job offer at at Ann Taylor and I wasn't going to take it but a friend of mine said I'd rather you go as he was ten years older much more successful I said I have a problem was twelve years old or in fact and he was kind of a role model we don't talk anymore by the way he just is one of those people that after while you had enough of him but in those days he gave me enough information he said I would take that job in a second you're running a company you have an opportunity and I went to Ann Taylor when I was 35 and spent three or four years they were taken over by a big bad company within six months allied so on and so forth that's my story I went to gap I moved out to California and want to ever leave New York and then spend eighteen years there got fired for whatever reason I thought it was the best thing to ever happen and been a j.crew since having a lot of fun building an important team partnering with TPG and Leonard green we went public first we parted with GPG we went public and then we went private last March of 2011 and that's where we are that takes you through my entire career now any questions okay cuz I'd rather just tell you what ask me what you want to learn I did say I think and it's the individual not the degree and I think here is a powerful important group of people who get a great education great networking so on and so forth but people I admire it's not and I'm not a big one for test scores I don't care where people graduate from college I think taking a test and see I got into science I took a test and I did well it had nothing by the way thank God I went there because if I didn't go there I would've went to what is now ranked as the worst high school in the Bronx and I started to see kids a lot smarter especially the scientists I was always good in math and you do need math to run a business but but I was very lucky I went there because it exposed me to a whole new world outside of my zip code 100 whatever it was in the Bronx and that was important so that's who I am to have a lot of fun doing what I do it's never a straight line upwards it's always a lot of angst you get knocked down a lot you have to come back you get knocked down and people I know where success will have this will keep moving forward and not be well some of them are arrogant about it but after while they might earn the arrogance but in my business every single day I was flying out here this morning I said you know I've been coming out here for 10 years since I moved back to New York same trip every three months to Mars and Apple board meeting I'm going the Stanford Shopping Center I'm going to San Francisco Center I said I've been doing this for so long and every single day I learned more I learned what's wrong what's right what we need to do better how do I learn it by talking to store people talking to customers and having very curious might and surrounding yourselves by people who I have to words get it very hard but if they get it they get it and if they don't they don't and no one will teach you I don't think of the business school what get it means it's in the eyes of the beholder I interview everyone in the company now who's not an IT I know finials in technology even though I'm on the board of Apple I know nothing and I don't know what they say and what they mean so but I interview I into everyone else in the company because it's very important I have an obligation to like someone and like their future and especially in merchandising and marketing and and all those things that a customer sees I see it and and I have an opinion on everything right or wrong and then I want people who can disagree and say what they think okay questions yes I never said it like that okay well you know here's Israel I feel about business school I think and I have weird experience in retail and I don't know if I'm right or wrong and by the way I think the job market is extraordinarily difficult today and I also think and I don't know if this is right if you live and work out here go to school out here you see a little different view of the world from what we might see cuz out here you have all these young billionaires running around a lot of them run very overvalued companies a lot of them get the right jobs I'm sure some of you were here maybe you made a lot of money and you just hanging out for a few years but I think the real world is not what's in Northern California so I don't know if that applies to Stanford or not I have happened to be someone who ever went to fancy schools which is why sometimes I'm angry at fancy school people you know it's just natural but I also think that the people I know who are very successful and success to find is not being the CEO of a big corporation because I think a lot of CEOs get there because they're good at sea owing they're good with boards of directors I know a lot of CEOs today not that I know them personally but I look at their business as I say they shouldn't be employed I also think that retailers should run retail companies I think car men or woman should run car companies and I think so on and so forth I'm always a little astounded when someone comes in to run a company who has no expertise in that category I've been going to school now for 3540 years on doing what I do and trying to keep learning and being focused and and I don't think a lot of companies or maybe CEOs realize that first of all if you're a CEOs is practical you all want to how many of you want to be a CEO here raise your heads I'm curious the truth raise your hands the truth of a small company of a big company so when you get that job and Bill lived with all of them in most cases and he named a group that didn't get there this way I think you get the private jet trust me it's really a great perk and most most no I don't I I had one a gap I have my own now so it's not because I didn't want to have to have a company thing you get that you get overpaid like crazy you get long-term compensation which is always more than you earn you get stock win or lose the company you win on the restricted stock deals right because it's worth whatever so why give up the job if you have five or seven years tenure and you and you and you retire wealthy as opposed to people who take risk who have their own money we have 18 people a j.crew I can do this at Gap we have 18 people who have cash in the business I put 1/3 of my value we went profit but one-third in the business so I bought 10% of the company because I think there's nothing like and it's all relative because when I was younger I had no money and by the way I didn't have any money I was 44 years old so I want you to know that I had no money until I was 40 for now on Silicon Valley it's no money until you're 28 but but the rest of us don't grow up that way unless you inherit it and some of us in this room I'm sure have inherited it but the fact of the matter is you get those jobs you don't want to take the risks necessary this is all my opinion to build to invest to take the risks of maybe losing your job I look at the auto companies in America maybe someone will start to pay attention to the cars and what they look like one of them I think is doing that in America the other two irrelevant what the cars look like it's it's an accountant who's running it's just that get a great car designer like John hire Johnny I've had Apple I should hope that doesn't happen but get a great car designer to design a car you know how many they'll sell of that car but no it's all a matter of and most of the cars look alike to me on the road I remember the days where cars were unique they were different or just do something that's not just black white and gray do a cool color I went visited Ford Motor Company we started Old Navy which is by the way named after a bar in Paris the Board of Directors hated the name but if you name your child or even I'm getting a dog in two weeks easily she lives out here we named it Dorothy no one's going to tell me it's a better good name Dorothy the dog same thing when you start a company no one's going to tell you if the company is a good at bad name we hired to naming companies a gap because someone didn't like the name Old Navy what's the difference you put a name on a person or on a business and it becomes what that name is but in fact so so you have to figure out where the business is going to go and you have to take a position most CEOs today I don't think and Bill would know this better or willing to take the risk to bet something on the company and and who have risk at stake you look at one retailer I won't mention it out there today it's a little Stanley or what's going on see is the part I can't talk about because it's because he's a friend of mine so I won't talk about that anyway what so your questions on MBAs no no your question is on MBAs the fact of the matter is it's who you are not what your degree says and I no friend of mine moved from Indianapolis to New York he's very successful shopping center developer the biggest in fact and here's the deal we had lunch Friday and he's saying I don't know what to do in New York every kid starts and this is how many of you from New York Manhattan manehattan how old we started taking the SAT lessons $4,000 a week or something right he says I'm from Indianapolis you can figure out who it is and he said my kids junior and they're starting to take the tests and in New York they start his freshman it's it's a race to do well on tests which is not an indication of how successful you'll be in life now most people who get into schools test well or they have wealthy parents let's call it what it is or they have philanthropic parents so they know someone so I so it's not against MBAs well it's true right no it's true so I'm not against MBAs I'm all for people who make a difference and a willing to have some vision take a risk and it's not easy when you're young and I call all of you younger some much older at 40 years old you're probably not as young anymore but so that's that's it it's not against MBAs just people who have reasonable expectations and don't think as they have a degree it means that going places now I know works in banking I assume it's very important in banking I think in McKinsey it's important right and but I think common sense logic and I call the most important things I see is IQ and EQ and street smarts and an instinct so and it takes time to develop that okay what other questions keep going yes you reportedly had quite an explosive personal personality and apparently you sort of you know countdown at j.crew and Steve Jobs you know had the same issue and we're taught here in the business school you know this very humanistic approach to management where you have to you know take care of or all your edges not to be in any way you know violent other people I was wondering what are you have to be what did you say violent no no I didn't say aggressive I'm sorry my English probably no not too and so the question was what are your thoughts on this like transformational CEOs like Steve Jobs and like you are transformational because of or despite of their explosive personality well first of all I would ask you I don't know what explosive means here was already defined Steve and I are different very different may he rest in peace were very different personalities and I admired him more than any business person in the world and remember what Steve did and no one says it's the last seven years of his life he was fighting a disease that was probably fatal and and you watched what he did and it was extraordinary you know what I consider I think it's all not being full of that's so if you call that explosive if you look at someone and say what I think or you look at the goods first of all the goods speak the ideas speak and if someone didn't how many people actually say what they think you read earnings reports I see all these earning reports and stop giving me BS just say it wasn't the weather just say maybe we didn't have the right goods maybe we didn't have the right the right team and of course you have the pressures of quarter court I don't believe I was explosive I could not tolerate people who didn't get it I was short on on patience but if you're running a big company you must be short on patience the winners whoever said I was explosive I probably fired right no I don't know who was it but the winners respond to honest passion in a business I'd like to see those guys that I say they're all men who run the car companies they're always so cool about it you know they're always here's the earnings here's this or this that and the other thing there's nothing wrong with showing passion by the way most of us who are like that don't do well in companies I didn't do as well in a department store business because first I couldn't stand having to play a role but your first look my first 10 years I had to make a living I never could afford not to make a living because it just wasn't in the cards so you had to be right you had to play it right and you can't be explained and I don't think I was explosive Steve was purely emotional and wasn't always the most polite guy in the world and by the way at the board meetings it wasn't that easy being with Steve but at the end of the day when I look back and I connected that's backwards Wow you saw the world as it was I think young people love people get mad who are passionate and who are honest and don't sit back and don't care that much so I I defined all that as a critically important issue in people run successful companies now if you're a corporate CEO you've all worked for them I've worked for them in the beginning they are really cool they don't sweat they come down the escalator in the store like this and they don't care that much and they don't say hello a lot of the time and and everyone has feelings and I always say look if this is the way I am that's the way you have and by the way I think as long as you're respectful so I've always been respectful but in my early days when you're in your 30s or 40s you're running a company that's being drained like gap you have to get mad the ship's going down at j.crew we came there with seven or fifty million dollars in debt and you're there and you have to save the company and you have to take care of the people who don't meet your standards and I think most companies have a very hard time firing the higher-ups who in fact should be fired because it's not them that's being hurt it's all the people underneath them who are not respecting them or quit because the boss ain't great so but how do you transform you get older you get a little richer you don't really you know and you're cooler about things but but that's what happens and I think I respect people who just it's a passion thing for me all right what else and turning around j.crew what stories did you tell internally and externally to motivate people it's kind of drive the change what what stories did I tell ya the company's story how do you remove eight people well you know it's kind of connected to this at some point in your life you realize the people you want working for you just want to hear what it's like I love I got my review at Apple on the board the other day I got a call I'll say this I you know I got a that you know we have these reviews I got so I had not the chairman art Levinson who I love but Bill Campbell calls me on the phone two weeks ago he says you're doing a great job you know we have these self-evaluation he says but and the but was your on you do email during the board meeting and I said you know bill it's taking twelve or thirteen years for someone to say that it sounds like I'm so happy you said it and he was dancing around it I like the feedback he used to give me feedback about me being a CEO it I'd gap now gap was a particularly interesting dynamic family involvement and you're always tightrope walking here or there but I find that if you tell someone where they stand especially now I'm older I got a review older I then sent an email to the board and I said thank you for the feedback I was waiting for someone to stop me I'm obsessive about getting back on my emails but it's what happens someone tells you what to do and when you're younger and I was older it's fine you listen you absorb it's not personal its business and as long as it teaches you and motivates you the story I told outside and inside was exactly the same story now I've been through it a number of times the more you do this the better you get I've been practicing my craft as a CEO for 33 years so when you practice your craft and you get better at it and you get better you realize people put a premium on honesty directness and success and one thing you have to worry about if you're me going into new job is that lip-reading too much and the last thing you wanted people to lip read but it's it's a style it's a finesse it's how you do it but it's always direct the best thing is be direct and let them know you care as much as they do when you're there to support them and I always blame myself first for every mistake and and if you do that by the way I like people who blame themselves first for every mistake they make because they care the most I know if that answers it but there's the same story always because you can't make up different stories now if you're a public company's CEO and I see this going on a lot some of them tell stories that I look into and I say wait the the quarter was but the other thing that's kind of odd is if you make expectations the press makes it sound like you're doing well or they lost 30 million instead of 40 oh they beat expectations and you read the thing say wait they lost money that doing horrible but it's what we deal with in the public markets it'll never change yes obviously you were very familiar with TPG Judy her previous experience but what was your rationale for and good to go private second time and how are you going to create values for your private equity investors well um the the reason for the buyout is now because there was a lot of one there was one person who kept writing bad things but I'll never forget it but you don't probably don't know who it is anyway Hawaii who have since kind of apologized to me anyway the reason was that TPG and Leonard green thought that the company was undervalued now when you run a public company especially in merchandising in fashion the stocks I always say you know they have what is it called they they say it's a what's that thing in growth a hockey stick growth that's not like go to where the pucks going everything's hockey terms it's like you've got no company goes like this and retailing it's more like a w in a sense when the stock went from we went public at 20 and I'm just just background public at 20 up to 57 down to 8 when not 2008 up to 50 down to 20 up to 30 TPG and Leonard Green said you know this is a coming with a great future and Wall Street could not care less about long term I don't care what you say it's trading it's it's all that machine trading or whatever it is it's hedge funds trading no one cares except the management have come you owns the company and whether you own it or not you care passionately about the long term because you could compromise any business in the short term so they've made an offer there's a lot of talk about it we got sued immediately which happens every time were you in the business of like private equity or anything tbg see there you go gave it away that's called EQ okay so so anyway and they made an offered 4550 then it came down to 43 50 no one else offered so they bought X percent I bought 10% and the shareholders by the way what's interesting you know this the David deals announced all your shareholders sell the stock the only ones holding the stock are speculative buyers no one cares less about except for a nickel or a dime etc etc but the rationale was they thought to quote Leonard green company we're in the third inning of a nine inning game they felt it was great potential we're relatively a small company in the world and they a lot of faith in the management and for me the most important thing was keeping the management together and us having investments in the company how do we create value it's very simple you grow your earnings in a high-quality way over time and having been with TPG fruit now a long time and they were directors of the company I felt they were going to be great partners I didn't want to take on the debt but I felt very comfortable because one of my friends said to me you will worry as much with debt or without that and I said well then we're going to do the deal and that's why we did it creating value is purely creating earnings profit and a good future for the company in a my leadership perspectives class we have a lot of CEOs come through and they say a good leader will ultimately make themselves replaceable whether through hiring I don't believe that by the way I don't believe it with us in the US yeah yeah there was no investment with Leonard you know without Mickey Drexler there's no j.crew without making tracks um well here's where I think I don't believe that that's who said that the leadership class that's not your class bill is they don't know by the way I don't really believe that I also don't believe companies go on forever I'm not making a political staying by saying I'm not sure we should support companies or the banks that go bankrupt I think companies get too big and they lose their edge and they become total bureaucracies so if I look at the bank's JP Morgan or Goldman this so big that they're so none quick there's no Matt look that when JP Morgan ago and they do those things you think the CEOs know what the hell is going on now gloy Blanc finds a friend of mine I don't know if they know what's going on in those large companies I find most CEOs above it all because they have this huge bureaucracy they're running I don't think most leaders are in fact replaceable now the fact is if you look at great companies they don't last forever nor should they but what happens in retail now there's international so to speak the cost of money is nothing you can go on a you know more about this than I do you can go on managing a business because it doesn't cost it is that there's no risk I mean money's really cheap but I don't think that company's succession planning I always thought even when I was a young guy in the business I always just to laugh cuz you know it's like six plan succession from Pablo Picasso okay plan succession now I said publicly you know Tim Cook is following Steve Jobs and by the way I think in any business it takes five years to do your job well as a CEO and I've been doing this for ten years I can't believe it's ten years and every day we're building and building and building it never stops now succession planning in a case like woohoo like I stay Lord is an interesting case I think they did well they had family now they have a professional manager I for me and by the way we each have our own mission in a business for us its quality its creativity its taking care of the customers in a nice way a lot of companies out there don't care so much about that they care quarter-to-quarter but but it's a long philosophical discussion I don't believe in it because I've been listening to it for 40 years now and I look at companies and I don't know where you can say there's been a seamless fantastic person take over maybe I don't know about the banking business it's probably easy to do the banking business and it is to do the art business if you're a painter if your retailer has a sense it's probably more difficult to have succession Costco which is a great company probably is less difficult because I think the two founders they did a spectacular job it's a great company I think it depends on each individual company I know there are no rules and regulations and any of this stuff that people say and you know look at General Electric was it a bank I never knew what Six Sigma was ever does anyone know what Six Sigma is you might know I never understood it my whole life and I listened to the Six Sigma and I listened to Andy Grove once at a talk Andy made sense Six Sigma I didn't understand so if I don't understand something I say then it's not right but but it's part of by the way being logical and not being intimidated by what you hear is the right thing to do it takes a long time to really say what you think in fact I never would have said Skyfall was a crappy movie now I can say whatever I want to say you know and I think with CEO succession but you tell me give me the great examples of CEO succession this place is named for Phil Knight I don't think there's been great succession there Phil Knight who I didn't know person it was an extraordinary business builder so I don't know I think things change time will tell time will tell and and and what you do what Steve Jobs does you'd hate to follow him into a job let's face it's much easier to take over a company that's not doing well you know what I mean instead of one that plays the game that way time will tell on that and it will be who knows how much time okay who someone was put you're in charge of the questions okay good I was wondering if you could talk about the potential that you think the fashion industry could play in addressing some of the biggest issues facing the world such as poverty and have you seen any exciting business models or interventions from brands in the fashion industry that are addressing these issues or have some promise there well you know that's not my paygrade because I think in terms of addressing poverty I wouldn't even know where to begin because you can say fashion industry car industry any industry you can say the values in America you could say the tax system you could say sharing and I don't want it to me it's it's not it's not the fashion industry's job except to increase employment and increase the economy have thethethe tax system being fair why should private equity pay 50 percent or hedge funds I don't have an answer it's really not my paygrade but I think and by the way I think it's critical I don't think anyone pays much attention that or how about education because poverty comes perhaps from lack of education and but I think the world is in a place that maybe it needs to be changed in that regard I think the priorities have to be changed in America you saw the campaign and whatever but I don't know how the fashion industry can do that without the world changing its we're just a very tiny piece of it I don't know if that answers it but TFA what about it so well no I'm on the board of Teach for America but trying to get funding even for Teach for America I love Teach for America I love Wendy Kopp and and for me for me personally my wife and I we support poor kids who need an education I identify a little with that growing up in the Bronx but I think education today is the most politicized thing in the world now I'm not an expert but but you're dealing with lots of issues that maybe people afraid to stand up on I think the priorities are so miss spent in America you know so rich people pay more taxes big F and deal right and I don't know Bill would know better if in fact having rich people pay more taxes means that it's not going to grow the economy as much so people can't buy 50 million-dollar paintings I don't understand that but it's not my paygrade all right so lately we've seen quite a few brands and retailers that have begun and exist entirely online so is there anything to talk a little about oh yeah I'd love to well online to me is a hugely disruptive force by the way I never heard of until today uber taxi you guys all know about it you know what I've been saying in my business and but if I'm going too long and it's just cut me off because whatever what I've been saying in my industry when I was a buyer at Bloomingdale's there was no online with discount stores and when you bought a brand let's say what is Nike or whatever I bought women's sportswear and swimwear and t-shirts if you bought a brand and it was at the discount store down the road you had to was our policy meet their price now fast-forward 30 plus years online is disrupting the world as it is right now and I find that and and when I was when I went to gap and sakta Dan Taylor in 19 I went to Ann Taylor 19 it's a long time ago 1980 yeah 1980 we started to create I took a model of Benetton and Brooks Brothers Brooks Brothers had the same parent company as we did allied stores disaster no it was actually a Garfinkel Brooks Brothers and I said gee here's Brooks Brothers they don't have to worry about carrying any brands at people marking down and I don't know you know you connected that's backwards I don't know if in my head it was wow they had 16% pre-tax earnings and it was again I it was connecting it backwards said well I want to be like Brooks Brothers because I don't have to worry about buying all the brands at a discount and then it wasn't like it is today you go online right now Best Buy probably won't be in business I don't think but I don't know what you all think about that so so for me my whole career is based on exclusivity or controlling your distribution now Steve Jobs when I first met Steve 15 years ago he said I want to be like Gap and have my own stores I thought he was nuts because I knew we did it because at Ann Taylor we started to go to our own label and Taylor studio because I didn't want to have what everyone else had and it's happened dramatically today different I mean the world has moved forward that way so much where everyone has the same goods and then I went to gap and a gap they had 20 different names leave Isis one-third of the company's volume and Levi's was low margin and everyone carried Levi's everyone discounted I didn't know any better I was a young guy I came in to run this public company the earnings always drop and I did say that to the guy we were talking about today that when you take over a company the first year earnings going to drop at least half they forecasted flat earnings the earnings will drop because you're cleaning out old inventory and you're betting andrey betting the company so so with GAAP we went to GAAP only we had 20 different names in the survey said this by the way I don't do research on what the customer wants I'm sure some of you you're in the research business I don't know if you are not I find it no one will tell you where the puck is going they'll always tell you where it is I went to Ford Motor Company in 1994 and visited with the then CEO side a friend on the board we want to do a little Navy truck they brought out these very cool trucks they said the customers told us they didn't like them and then they were telling us colors that the customers did not like now I'm thinking this is bizarre anyway GAAP we had GAAP brand and we controlled it completely Levi's finally said they didn't want to sell us I was all nervous I said fine you know something is opportunity in the midst of adversity Steve came when I met Steve and whenever this was he said I want to open up Apple stores because I can't depend upon distribution of my product at Best Buy who's still in business and named the rest of them are all gone and he couldn't control his image he couldn't control anything here comes online now you go online and I do this as a matter of practice and everyone in our company does this now if there's a brand you want to pay the best price Amazon ships really well cosmetics America ships it well target ships all of its in the box I called the CEO of one of my former companies I was a director and I said by the way your goods are one-third more than they are Target or Amazon oh we we didn't catch that brand you go look at a brand today I think they're all commodities every single brand is a commodity you got gilt you got all the discounts t.j.maxx raus stores are all selling goods at this count so what do I think of online it's a huge disruptive force just like uber taxi which I only a friend of mine I flew out with a friend of mine and he was telling me that he has an uber taxi app I never heard of that my life he says it's unbelievable I have them out here I guess they have them in New York and there's so many disruptive forces in the world so what I think of online it's going to keep changing the landscape dramatically and I think it's going to start to put a lot of people at risk in the business and it is right now because I don't ever want to be in a business where I have to wake up every day worrying about someone selling it for a better price because I know for me it's not what I want to do and I wouldn't be the best at it so now you got Amazon who maybe they can afford to have a 200 multiple and not make any money whatever it is they just announced last week to going after the peril business they're opening studios in New York so I think it's one of the biggest disruptive forces that in our business and I don't know about other business people aren't paying that much attention to or they're not admitting to it we go online and we buy a lot of stuff and my wife in cosmetics or whatever else she might buy and it's a matter of practice you shop right here you find out the best price it comes in the same box it gets delivered there's no servicing when I ask my fellow they're not really friends in mine they all don't like me that much in the department store business because I don't like the department store business because I say what do they do better than other people and all this stuff they sell is available somewhere else you look at every designer name every brand name and you will see it sold at a discount it's hard not to find it at a discount so I don't know how long it's going to take who knows but it's a hugely disruptive force and you probably know a lot more about that because you probably live more online than I do but we're very sensitive to that and that's why we don't want to build anything that's available a lesser price because at some point it's going to catch up and bite you hard I probably left some things out there but I don't know so that's what I think okay who else is next two things first arm fashion is such a small part you said and big problems actually I'm sure you wear fashion is actually the second most polluting in the industry that's most polluting in this matter world and not aware after oil and gas how do what survey tells you that well I think it's just this you know something I don't believe it until you show me the real affection let's walk through the whole value chain cotton growth I mean I'd rather take it for this purpose it pesticides ok chemicals cause dyes all that good so there's huge potential we can do in the fashion industry however my question was borne out to what you did padega in terms of Grambling because I think the way you reshape the gap but now also j.crew j.crew has come to a point you look at a male aisle you look at the website you look at any piece and it just looks consistent you know it's j.crew and i feel like how do you do that in a company that big that goes through so many consumer touch points how do you really good question point of view that you have succeeded to refine so well you know it's a really good question and isn't it's really not that big the company if you came and visited us you will see that's just i don't think it's that big and i think the focus and this is what a CEO does see I used to get criticized for micromanaging Steve is a terrible micro manager I look at everything you see and if I don't see it and it passes by me and I don't like it I'm furious because I I didn't partner in it I saw something online today I wasn't aware that we did and it drove me a little crazy but it's if you if if you hire what well I have a loud speaker by the way so Ike wherever I am I call out all over the world and and by the way it's is a thousand people at 770 I think every company shouldn't be allowed to have walls in their offices and they should have loudspeakers because I'm on the phone all day and if I go into Stanford today or San Francisco Center and I called out the fact that I thought the necklace is whatever and this is whatever but I am a micromanager on the finest detail on what you see as a customer then by the way it's not just me Jenna Lyons Diego Scottie Tracy the team you must have a sense of people who get it and understand the vibe of the brand that's really really important and it's it takes a lot of work to get the people who kind of move with you and get it and feel it but I say whatever customer sees is really my job in their job but but we go through every every email every if you look at the catalog I should have had the catalogs here I don't the brand new catalog we look at those as we're publishing a magazine every week every style every outfit every cover and by the way we screw up we screwed up why we're private cuz we screwed up two years ago on it was too late by the time I look at the catalog it's pretty much there I looked at the cover of July 2010 and I prayed I said holy we're in trouble and we all know they'll never forget there's this woman lying down looking very weird and undulate and and that's a really big issue but you do it because you know how to focus out all unimportant things in your life I don't spend time with IT people I spend time in the stores like crazy I look at everything vision when I look at all the styles in the company and I do that and I love what I do but it's it's what your job is as a CEO if the guys who ran I say the men they need some good woman in the car industry for style if the guys who were in the car cummings looked at the design of those cars and said why do they do this oh but look at the movie industry how do they allow those movies to go out maybe there's no vision or maybe they're trying to make the movies longer and they think they'll get more business I don't know I'm a big complaint on Treacher about that stuff but at the end of the day it's a vision following it being consistent I haven't seen Mercedes change that star in a hundred years I don't know what a GM car looks like anymore or Chrysler anymore or a lot of other cars or the Toyota has that little thing like this or Audi or BMW or them me is a very well designed quarry from the Fiat has the badge its consistency and advertising and everything else you do I can answer this for hours but alright what's so you talked about how it took you until you were 44 to be 60 at least financially successful well it's all relative um so maybe 43 I think was 42 actually good alright then I don't I still have the check okay go ahead so a lot of us as a late bloomer go ahead it's okay a lot of us you probably don't want to wait until we're four I know that I know I know um I know and I think you know a lot of but you'll have to you have no choice if you look at it statistically but what's your name Henry were you from East Coast yeah I figured okay go ahead it's the money thing go ahead my parents they asked you go to this school at the West Coast you're supposed to be a billionaire by the time you're 28 and where you're from in New York I'm from Washington DC okay it's the same thing um not really go ahead so um you all could you talk a little bit more about certain key decisions setbacks key moments in your life in your career to making it to where you are today yeah and potential advice on those of us who are trying to become Billy okay at 28 versus well if by the way I never tried to get rich and I'm serious I only wanted to have a nice car have a home no see I grew up in the Bronx you know without a bedroom whatever it's all relative and and I think that's a really good question but it's again it's personally for me because I don't understand and nor should i what how you all think today or how my children think which is different perhaps and I thought because when I grew up you had to go to work unless well most people there weren't that many rich kids around then you know this you know I was the second generation whatever my grandparents are from Poland but I think today don't be disappointed because you won't be a billionaire buy you time you twenty or in this room when I went to college you say look to the left look to the right they still say that and not here there oh I see look to you but but I think one of the things about in your and you have a competitive school back east that's terribly arrogant about this you know who they are right but for me I had a different outlook and it wasn't like in 2000 ever forget running gap and all the cotton Silicon Valley had that bubble and I'm looking at these and by the way today also I think the hedge fund wealth is really out of control I think it's crazy is there an improvement see it's kind of how do you help poverty by having people trade stocks and not create jobs that's something that doesn't help I think when you build things like Google or you know whatever else gets built Facebook or great companies that hire a lot of people that creates jobs personally look I went to work at Bloomingdale's after two years had I don't like this anyway don't trust FOIAs I was making a living I couldn't quit and by the way I'm how many how many of you could afford to quit a job and not work I don't know how many can she's always looking for a job when you're working then I went to Macy's that was a real disaster I was there three weeks and I said oh god this is a mistake I didn't think about it cuz when you have an economic need you don't have the luxury of saying oh I'm going to quit and then I was worried about resume stuff you didn't want to quit that soon then I left Macy's I went back to federated which owned ans I got there and said this is another mistake then I got depressed I was always a little anxious during each day in each job and then I got a little depressed and said I'm now 34 years old I was making an okay living until by the way I looked over the desk and I saw some my cohorts one in particular was making thirty percent more than I was because he was hired from the outside I got furious and I said if he thinks you know I was like the ten and a half thousand to the eleven does those are all points in your life where you like mistakes and used some point realized if you're going to work in companies where they're judging you incorrectly then you shouldn't be there and you got to find the right place to work so I went to work at Ann Taylor I thought it was a big risk I was taking I didn't go for a big raise I went to work I ran a company I learned on the ground I was very lucky was a twenty five million dollar company then my bosses were all one only worried about his cleaning in Washington DC Brooks Brothers was base but Garfinkel Miller roads is based on K Street and what I'll never forget to go down there and the president the corporation only worried about his dry cleaning I swear to god this is true he'd say to his assistant did you get my dry cleaning today this is what he did it was a riot but they didn't pay attention because they own the department store here and there I had we taken over in six months I stayed for four years not for the money because there was no such thing as big stock options and then I had to get out I wanted to be in New York as I loved New York City I ended up at Gap why four that's a whole lot the long answer but I had setbacks and gap I was there a year I told my chairman to go F himself and then I called my wife said we have no money I didn't say it first I'm here in New York we don't have a place to live and I told him you know the fights I used to have with him right there's all these friendly lovely fights or whatever and and we ended up being great partners by the way my dad because it was ying and yang but I could name so many periods in my life when you get your ass kicked you don't feel that good and then you got to follow your vision you got to follow your path and when you connected that's backwards you realize you're doing the right thing but if you if you stay in your job and you get very comfortable most of the people I worked with my equals and peers I really it's a very small percent of the success ratio as I measure it is very small because no one took the risk of taking a position now I move 3,000 miles away and I paid a big price for it because I'm a New Yorker by birth by DNA it's like taking an animal out of the woods and putting him into a zoo whatever animals feel I don't know how they feel but I feel badly for them you know it was the same thing I had a terrible transition personally and professionally into an environment overlooking 280 and a cemetery and I was on 57th and 5th in Manhattan trying to be a big-shot so you pay the price but you know something it's over the long term that you make these kinds of sacrifices and it's never ever easy especially well it's normally never easy and don't plan on being a billionaire and by the way three or four hundred millions enough okay that's it so

Channel: Stanford Graduate School of Business

Views: 74,533

Rating: 4.8153844 out of 5

Keywords: Leadership & Management, View from the Top, CEO, J Crew, research, motivation

Id: m0ZVI_Kr2Ro

Length: 58min 27sec (3507 seconds)

Published: Thu Nov 29 2012