Kendra Scott’s entrepreneurial career was launched out of a spare bedroom in
Austin, Texas. It was 2002, and Scott had just given birth. Bored and on bed
rest, she withdrew $500 and bought the materials to make earrings. At this
point, she’d been making jewelry as gifts for friends for years, as she was
frustrated that the only available options at retailers were bookended by
high-fashion, expensive pieces and trendy, low-quality pieces with nothing but
blank space in between.
Why not, she thought, go about filling the gap? “I put that first jewelry
collection in a tea box, put my son in a baby Bjorn and we went store to store
writing down orders,” Scott says. At the last store she visited that day, she
had to sell her original samples in order to buy the materials to make the
orders she’d just filled. During those early days, Scott sold her car and took
out multiple personal loans, funneling the funds into her nascent business.
A single mother raising two boys, nagging worries often kept her up at night.
“There were so many times I was afraid I was going to lose everything…I remember
negotiating with my landlord on when I could pay rent. I had nothing to back me
up,” she says. “Failure wasn't an option. I had to succeed for them.”
It wasn’t clear at the time but all those sleepless nights were worth it.
From its humbling beginnings in a tea box, Kendra Scott Design has become a
multimillion-dollar business. Last year, the company took in $75 million in
revenue and is on track to take in more than $110 million this year. Meanwhile,
Scott predicts her employee count will mushroom from its current 350 to 500 by
late 2015 as more stores open (currently there are 20, but by the end of the
year, there will be 38 retail locations.)
These days “I sleep a lot better at night,” Scott says.
A distinctive style
At first, the business’s growth was continuous but slow. In 2008, Scott
finally had the resources to design and cut a uniquely shaped stone: The
Danielle earring, a large, distinctive slab, was born. Still one of the
company’s best sellers, the earring, retailing at $60, was an instant hit. “It
was the tipping point,” Scott says. Like other brand trademarks, such as the
Tory Burch flat or the Longchamp nylon tote, the Danielle earring is instantly
identifiable. It started showing up in magazines and on red carpets, worn by
celebrity fans such as Mindy Kaling, Brooklyn Decker and Sofia Vergara.
In 2010, Kendra Scott Design opened its first retail store in Austin, Texas.
After that, growth accelerated rapidly: Revenue exploded from $1.7 million in
2010 to $24 million in 2013, while the number of locations grew from one to
nine.
Going from being the only employee to managing hundreds of people has been
something of an education by fire: “Every day I wake up and I'm running a
company bigger than it was the night before,” she says.
From the beginning, Scott’s philosophy was to aggressively seek out advice
from people she admired: "A lot of people think it's a sign of weakness, but the
greatest sign of strength is asking for help. And it’s a natural instinct for
people to want to help other people.” She approached big names “thinking they
would say no,” including Bill Fields, the former CEO of Walmart, with questions
about manufacturing, and Cynthia Harris, the ex-head of Gap North America, for
insight on selecting retail locations. Despite their status, both were generous
with their time.
Scott has worked hard to fill in her blind spots with smart hires. In 2010,
with the company on the precipice of hockey-stick growth, she hired Lon Weingart
who came with extensive retail experience, as her CFO despite pushback from the
company’s HR director, who was concerned that they couldn’t afford him. She
stopped paying herself, in order to bring Weingart onboard.
Of course, as with any business, there have been missteps. In 2011, the
company opened its third retail location on Rodeo Drive in Beverly Hills. “It
was a vanity store,” Scott sighs. Despite a glitzy celebrity-filled opening
party, there wasn’t enough sustained interest, and the store closed shortly
thereafter.
Now when selecting a new market, she makes the decision based on where her
customers are, judging from online and wholesale purchases. The brand enjoys the
most brand recognition in the South (particularly Texas, where 10 of its stores
are located) but is slowly expanding outward, with stores launching in major
markets such as Washington D.C., Chicago and Los Angeles.
Scott is also considering a New York City location for 2016 but first she
needs to get the word out to the East coast state, something she is working
on.
DIY design
In March, Scott did a pop-up Color Bar store at 50 Varick St. in Manhattan.
Bowls of sparkling jewels were arranged by color around a central table, as
cheery attendants in white lab coats circulated, helping guests use the large
touchscreens arranged around the room to custom design rings, earrings,
bracelets and necklaces from 26 stone colors and 23 silhouettes. These
one-of-a-kind designs will set customers back anywhere between $45 and $350,
although most items fall inside the $50 to $75 price range. While the New York
City Color Bar was a one-night only operation, it exists permanently online, as
well as at all Kendra Scott's existing retail locations. (Once a design is
finalized, it is set in-store, meaning that shoppers can customize a piece and
wear it home within minutes.)
The goal is to make shopping an interactive experience. Each store has its
own full-time events coordinator, and Scott estimates that about 10 percent of
revenue comes from the Color Bar, while 15 percent of in-store revenue is made
via private group events. “You'll hear the champagne popping… there's always
something going on at our stores. That’s a very big driver of our business," she
says. “In today's retail world, you've got to create reasons for people to come
in. Just opening your store and waiting isn't going to do it.”
Eventually, Scott would like to apply her personal aesthetic and shopping
philosophy beyond jewelry. In 2016, she plans on launching new products that
will move the company towards becoming a bonafide lifestyle brand.
Family values
In line with these grand ambitions, Scott just signed a new lease on a 43,000
square foot space in Austin for the company's corporate headquarters. "Vogue
meets Google" is the envisioned setup for the office, which translates to a
sleek design plus tech-like perks such as free yoga and a juice and manicure
bar. Beyond aesthetics, Scott wants the office to be inviting for babies and
children; there will be a designated breast-pumping room, a TV nook reserved for
cartoons and a wall dedicated to pictures of employees' babies. She estimates
that 95 percent of her corporate staff is female, many of whom have young
children – and she never wants anyone to feel as if they need to choose between
work and family life.
If anything, Scott feels that her success proves the distinction between work
and family life doesn't need to so rigid. She wants to meet her employees'
families; she wants to meet their kids.
"Yeah, bring your baby to work with you!" she tells new hires. "I got to do
it, so OK, now you can too."
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