William P. Lauder opened the WWD Beauty CEO Summit at The Breakers in Palm Beach on May 11, paying homage to the legacy of his father, Leonard A. Lauder, who was the opening speaker at the first CEO Summit in 1997, while addressing key topics confronting the industry today.
He was speaking before the announcement Thursday that merger talks between the Estée Lauder Cos. and Puig had ended – and immediately addressed the speculation by saying he was unable to comment.
But when asked if companies need scale to thrive in today’s environment, Lauder, who is chair of the company founded by his grandmother, Estée, responded: “We’re in a really fascinating industry. The barriers to entry are virtually zero, but the barriers to scale are still fairly significant.
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“You can launch a brand in certain markets and stay within the market and do well, but as soon as you start going across an ocean and trying to do business in different parts of the world, it’s not as simple and easy as it appears to be. That’s where scale and market knowledge matter, because what is a successful retail format in one market is not necessarily a comparable successful format in another market,” he continued.
“Being able to tailor your brand to be relevant in the market is a very important part of being successful on a broader basis. So there are opportunities for smaller brands to do well on their own, but usually you find that they hit a wall at certain points, and that’s where companies such as ourselves come in,” Lauder said, “where we can make a big difference and transform these companies in a way that perhaps the founders didn’t imagine.”
He believes, though, that there is still space for both big and small deals.
Lauder also spoke movingly and extensively of his father’s legacy. Speaking of his father’s role at the company as chief teaching officer, William Lauder said his dad never stopped teaching — even at home.
“Learning from my father was a brilliant thing, but he taught me something really interesting, which is, he said, ‘I want to be remembered as somebody who listened.’ But really, it’s never stop learning, never stop being curious. I think Ted Lasso was right. Be curious. If you always are learning, you’re going to see things in a different way and learn from people who might not necessarily see things the same way.”
The younger Lauder is also a teacher who has conducted a class at Wharton for second-year MBA students for 14 years and brings in a different guest each week to discuss leadership.
“I try to create an interactive environment for the students. What’s really interesting is we always learn something from these students who have different backgrounds, who come from different parts of the world,” he said.
The Estée Lauder Cos. also has a reverse mentor program, where more seasoned leaders learn from younger executives to see things from a fresh perspective. “It’s so important for us to not be jaded with a certain set of blinders because, ‘oh, we have experience, we know the answers,’ but to really learn from those who see things differently,” said Lauder.
“I believe at some point, my father and his generation were learning from those of us who were younger. And the truth is it’s an important part of how we evolve as leaders, because we’re only as successful as the people whom we lead, and we can only be successful if we give them the right value systems and vision of where we want to go, and then leave them to be their very best.”
Leonard A. Lauder would sometimes recall how his mother and the company’s founder, Estée, could be tough on him during meetings. Asked if his father was tough on him, William Lauder said: “We had our moments…this is a quote from my father, and this is interesting. He said, ‘You have to be comfortable speaking truth to power.’ He was really comfortable being able to be the one who was in power to speak truth to others in power, but he wasn’t always as happy to hear from others about the truth he needed to hear. And I was very comfortable saying, ‘Well, I’m going to tell you what it is straight up, not what I think you want to hear. And you can be comfortable with it or not, but the truth is, if you don’t hear it, then you’re just going to get a version of “The Emperor’s New Clothes.” And I said, ‘I don’t think that’s what you want.'”
William P. Lauder believes his formative year as a retailer working at Macy’s gave him insight in how the Estée Lauder Cos. needed to evolve distribution channels.
He noted that when he first joined the family firm in 1986, within about a year, 60 percent of the U.S. department store market world was either in bankruptcy, on the way into bankruptcy or on the way out. That fact helped shape his strategy for the future.
“And I said, ‘There may be another way. We can’t be just dependent on this one class of trade,'” recalled Lauder. “When we started Origins, we decided to do our own stores. There was a lot of uproar inside of our company. ‘How are we going to do that? What’s Macy’s going to say? What’s Bloomingdale’s going to say?’ And I said, ‘They didn’t ask permission when they declared bankruptcy and stopped paying our bills. So maybe we should find another leg of the stool where we can reach our consumer, because there are other ways we can do that.’ That was controversial, but I felt part of my role is to set the groundwork for the future.”
On if he always wanted to be in the business, he actually wanted to be an airline pilot or a hotel manager and he also did well in his law classes. “My law professor said, ‘Oh, you’re going to be going to law school next year.’ And I went and said, ‘Introduce me to a happy lawyer,'” he recalled to laughter in the room.
After Lauder left Macy’s and joined the Estée Lauder Cos., his first job was the company’s factory in Melville, N.Y., packing boxes, before joining Clinique as a regional marketing manager. He later created Origins and eventually moved into corporate management.
“Starting a brand is one of the most energizing, tiring and exciting times of your life,” he said of founding Origins. “Creating something that nobody knows about, doing something that you think is going to make a difference, the fear of ‘Will they notice me?’ and ‘Will this make a difference?’ And at the same time, the fun of putting together a team of like-minded people, each with a different discipline and capability and expertise. I had the best time,” Lauder said. “It was really fun, and I still look back fondly on that time.”
On what was it like to follow in his father’s footsteps and carve out his own path and create his own identity in the company, he said: “It’s very important for anybody who is following a meaningful leader who made a big difference to mark their own path and make a difference in their own way, where they can demonstrate both respect for the past, building on the shoulders of the giants who came before them, and understanding what’s really good and what needs to change.
“When I joined our company, we were a family of four brands, of which two brands did 85 percent of the total business. Today, we’re a family of over 30 brands, of which six, seven, eight brands contribute meaningful amount of the business, so we’re not as concentrated regionally and from a brand perspective,” said Lauder. “And I thought that was an important thing for us to be able to do to ensure a future where we had the tools, brands, to reach consumers in different areas and different perspectives.”