Johnson Says There’s No ‘Magic’ to Business Success


The basketball legend-turned-entrepreneur answers Inc. Twitter followers’ and Facebook fans’ questions about life on and off the court.

When you hear the name Earvin “Magic” Johnson, Jr., the first thing that comes to mind is basketball. Yes Johnson is a former point guard for the Los Angeles Lakers with five NBA championships, three MVP awards, and an Olympic gold medal. But the basketball hall of famer is also a philanthropist and savvy businessman.

After retiring from the NBA in 1996, he focused his attention on the Magic Johnson Foundation and Magic Johnson Enterprises (MJE), which includes a portfolio of funds to finance revitalization projects in underserved communities. He is notorious in business for having owned over 70 franchises of Starbucks and the only franchisee to own a 50 percent share. Although he recently sold his Starbucks in 2010, as well as his share of the Lakers, his name and brand is still associated with AMC Magic Johnson Theaters and 24 Hour Fitness Magic Sport centers. Johnson recently became chairman of VIBE Holdings, a multi-cultural media company that includes Vibe magazine, Uptown magazine and Soul Train brands. He is also leading the charge in bringing a football team back to Los Angeles.

Taking a break from March Madness, Johnson talked to Inc.com’s Tiffany Black about managing multiple businesses, the keys to a great comeback, advice for start-ups and minority businesses, and his love of music.

In one of your Dove Men’s Care commericals that started running during the NCAA tournament, you talked about how the statement “I can’t” motivates you. How do you motivate others?
I tell people to look at me and understand that everybody first told me that I couldn’t be a 6-foot, 9-inch point guard and I proved them wrong. Then they told me I couldn’t be a businessman and make money in urban America and I proved them wrong. And they thought I couldn’t win all these championships and I proved them wrong there as well. I motivate others by making sure that they understand to go after their dreams and don’t let anyone tell you, you can’t. If you are motivated enough and put the work in that you can achieve anything in life that you set your mind too.

You also talk about the importance of a team when it comes to winning. How can those concepts be applied for some of our readers who are one-man start-ups?
They may be a one man operation in terms of them starting their own business, but at some point they will have a team of people. When you are a successful business person, you are only as good as your team. No one can do every deal alone. I make sure that I have people who want to win, who are about winning, who are competitors, and that understand the brand and how to grow the brand. Other entrepreneurs should define what winning is to them and then tell their management team or their company what they expect and what he or she wants to see happen—and that everybody has to work as one. In most of the corporations I know that’s what happens.

You have multiple businesses and you are the personality or spokesperson for so many of them, how do you manage it all?
Again, it’s putting together a great executive team and great people who work to manage the businesses. That’s No. 1. No. 2, I do very few deals. I turn down more deals than I actually do. They have to be the right deals. They have to be the right corporations. Like this campaign I’m doing with Dove, I was already using the product before they called me. So this was a no-brainer for me to use Dove Men + Care products because I was using the body wash and the deodarant already. That made it easier for me to go ahead and do the campaign because I was already excited about the products.

Why did you sell your franchises of Starbucks?
People didn’t understand I had a contract with them to sell at that time. So it wasn’t that I did it randomly. It was an agreed upon exit at that particular time. I had a great, great time with Howard Schultz and Starbucks. We made a lot of money. We put a lot of people to work. And I want to thank Howard Schultz for that opportunity. But it was an exit that was already agreed upon.

Drew Lawrence from Facebook and @AaronMazor from Twitter asked about how your bid to bring the NFL back to LA is coming along given the current NFL lockout.
We are still working on it but we have to wait until the labor agreement is finalized by the players and the owners. So we are at a standstill, on the outside looking in, just as everyone else is to see when they reach an agreement. Nothing can happen until that happens. But I’m excited, very excited about the possibility. LA deserves a team. And everybody that lives here in Los Angeles is very, very excited about the NFL coming back to Los Angeles. It will be a great day if it happens. We already cheer for all the other teams. It’s a shame that on Sundays now we gotta go to sports bars and peoples homes and cheer for somebody else, not a team of our own.

Paul Shively, one of Inc.’s Facebook fans, asked what are the key factors to a great business comeback because you came back big time?
I think reinventing myself was really key for me. I have reinvented myself several times. I’m a guy who really understands who I am and what I want to accomplish. I think the comeback is just about staying the course and then also never getting down. Because a lot of people, when they fall down, they stay down. I’m a guy who gets right back up and says, ‘Okay, there is more I can do. There is more that I can achieve and I’m gonna go after it.’ And then you gotta have a plan. What’s your plan to comeback? You probably have to work harder than you have ever worked in your life to come back. Just look at Donald Trump, who was down and managed a come back—look at him now! So there’s a lot of people who have been down, but they came back and they came back strong because they had a plan. And because they didn’t let their prior situation keep them down.

What advice do you have for minorites who have a passion for something and want to start their own business?
We have got to, first of all, start owning our own businesses. It’s what makes Harlem go or Chicago go or any community go. It’s not enough to be passionate about it—the No. 1 thing you have to do is research to make sure there is a business there. No. 2, make sure there is demand for what you are going to have your business in. I was able to build my company because demand was already there. You also have to understand the competition and what they are doing. Make sure that you don’t have a ‘good’ staff or a ‘good’ management team, but a great one. I would encourage all minorities to start their own business. Especially because we have so many talented young people out here today. It’s really crucial for the growth of our communities. And when we own our own business then that dollar touches a lot of hands in our community because that money stays in Harlem, for example, instead of somebody owning a business and taking it out of Harlem. That’s why it’s importantto keep it in your neighborhood because you can give people jobs in your commuity. It also sends a great message to young people that they can dream to one day own their own businesses in their community as well.

Is there an opportunity for small business owners to utilize the Magic Workforce Solutions?
Yes, small business owners and small businesses [use the program for staffing]. They tell us what they are looking for and we train the people to do that job. We also manage those people on site if they need us to do that. It’s worked out very well for us. It’s in seven or eight states including Ohio, Texas, Georgia, and Michigan. It’s a business that we look forward to growing. Any businesses interested can go to the website to contact us.

I live in Harlem, New York and we have a Magic Johnson theater.  Any chance you will open a 24 Hour Fitness Magic Sport center in Harlem?
I would love to do that. As you know I love Harlem. What I love is that the people are so great and they really support your businesses. Harlem is definitely one place that I hope to expand because of the theater and Starbucks that I built there. We have a community empowerment center there. So yes, Harlem is a place that I will be looking to do a lot of business.

You already have movie theaters. Have you ever considered owning a movie studio or distribution company like Tyler Perry? John Riddick, through Facebook, noted that minorities have so few outlets for our films.
Great question. First I congratulate and salute Tyler, he’s doing a great job. Would I think about it? Of course, I’ve been thinking about it. But right now as you know and I know the studios are cutting back on producing movies. They are not doing as many movies as they used to do. I’m doing my research and homework but I don’t know if I will ever get in to it or not. If I do, hopefully the timing will be right. But if I don’t, we have Tyler. I agree that we need more because we need more minority-based movies. Tyler does a wonderful job but the problem is he may give us two movies a year and we need more than that. Minorities are underserved when it comes to family entertainment and movies.

Continuing with entertainment, you’re now involved with Vibe Holdings LLC. I told my Mom and she was so excited that you might bring Soul Train back. What are your plans with Vibe and Soul Train, in particular?
Tell your Mom that’s a great question and tell her yes we are working to bring Soul Train back. That’s No. 1 because we all grew up and learned how to dance every Saturday morning watching Soul Train. And that’s not just people of all colors. I have had people of all colors approach me about this and it’s really amazing. I didn’t really know until I bought it how people love Soul Train. Then when you think about the library, it is truly amazing the content that we have. And we have already talked to a lot of companies who want to license the content and the library and we are going to start that soon. When you think about over 300,000 photos and I wouldn’t tell you how many shows, it’s unbelievable. Soul Train has a really unique and special library. And then Vibe has always been for the young people. I’m excited about Vibe as well, and Uptown is for the wealthy and affluent African Americans. My company is going to start buying other companies as well so this is just the beginning.

Here’s a question from Kirsten Peck and Mark Myrick from the Inc. Facebook page. They love your New York Times Bestseller 32 Ways to be a Champion in Business. They want to know when are you going to do a book tour?
I will probably go back out pretty soon. Maybe in the fall or so. We have to look at it because after the NCAA Tournament then of course is the NBA Playoffs and then you never want to do a summer tour for a book or anything.  So it would probably have to be in the fall.

@MusickEd asked from Twitter if you ever played an instrument or if you could play an instrument what would it be?
No, I haven’t played an instrument. And I think it would be the bass because that’s how you dance, to the bass. I’m the biggest music lover in the world. I mean I have seen everybody. I went on tour with Michael Jackson and the Jacksons four or five times. You name them, I’ve seen them and probably a hundred times too. So when you think about Magic Johnson and the thing that relaxes me or gets me going or gets me on that dance floor, it is just some good music. I still love to dance even though I can’t do it as long as I used too. But that’s one thing I’m really passionate about, good music.

By Tiffany Black (Inc. Magazine)

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Zappos: The Online Shoe Retailer Promoting Customer AND Employee Happiness


Welcome to the rather wacky world of Zappos.com. It’s an online shoe and merchandise company where “business as usual” is anything but.

At a time when many retailers are struggling, Zappos (derived from the Spanish word for shoes, zapatos) is thriving, thanks in part to a unique company culture – and its 36-year-old CEO, Tony Hsieh.

“Our whole belief is that everyone’s a little weird somehow,” said Hsieh, “and so it’s really more just a fun way of saying that we really want people’s true personalities to shine in the workplace.”

Tony Hsieh so believes he’s learned how to create both passion and profits that he’s outlined his philosophy in the book “Delivering Happiness: A Path to Profits, Passion, and Purpose” (Business Plus).

Source: CBS

Business Report: TeenNick Chairman Nick Cannon


Cannon on being taken seriously as a young mogul on-the-rise

Multi-talented actor, comedian and entertainment industry executive Nick Cannon shares his story with host Caroline V. Clarke [2] on this week’s edition of the Black Enterprise Business Report [3]. Named to the Black Enterprise 40 Next [4] list of achievers under the age of 35, Cannon is America’s youngest television executive. As the chairman of NickToons [5], he’s charged with guiding the future of the brand from green-lighting programming to promoting shows and boosting ad revenues.

Among Cannon’s successful programming credits is the network’s HALO Awards [6], for which he’s the creator and talent. The show outperformed the network’s average ratings among teens (12–17) by more than 27% and total viewers by 36% in its time slot. The self-professed “Entrepre-tainer” simultaneously runs his own entertainment company and hosts a morning radio show on CBS Radio and NBC’s hit reality show America’s Got Talent.

Master of the Brand: Bernard Arnault


On a crisp late October afternoon in Paris Bernard Arnault, Europe’s richest man, is talking about his upcoming trip to one of the fastest-growing outposts of his LVMH empire: Mongolia, of all places. “I like to see the reaction of the people in the shops,” says the 61-year-old mogul in lightly accented but supple English. Dapper and slim, he wears a navy suit and matching tie made by his flagship fashion label, Christian Dior, and handmade black loafers by Berluti, one of the lesser known but most exclusive of the 60-plus brands in his stable. “I also like to see the competition,” he adds. “I am quite competitive. I want to stay ahead and increase our advance.”

Ahead he is by a long shot, not just in numbers–LVMH stock rose 60% in the last year, vaulting his net worth to $39 billion–but also in global reach. Arnault has long made a crusade of bringing haute couture to the developing world, to places like China, where the first Louis Vuitton store opened in 1992, and India. Now he is staking a claim in central Asia, better known for yurts, nomads and yak milk than Fendi bags and Guerlain perfume. But last year LVMH Moët Hennessy Louis Vuitton, as it is formally known, opened a store in Mongolia’s capital Ulaanbaatar, a metropolis of 1.1 million, 120 miles from the Russian border; weeks ago it set up shop in Inner Mongolia’s Hohhot, within the borders of China. The first store is already profitable.

In early November Arnault visited six Asian cities in seven days in his private jet, accompanied by two close advisers: daughter Delphine, 35, number three at Dior, who oversees the stores; and Dior chief and longtime consigliere Sidney Toledano. At the end of the month Arnault will return to Asia with his son Antoine, 33, communications head of Louis Vuitton. The days will be long and focused on details. “Sometimes he adjusts a bag on a store shelf by 5 centimeters,” says Antoine. “At 10 p.m. he’s still going. He’s got an energy that’s just amazing.”

He will need it. To maintain LVMH’s blistering growth–and its perch as the world’s largest purveyor of luxury goods–Arnault must continue to push into more remote regions of the globe. Among its 2,468 retail stores there are now outposts in Ho Chi Minh City, Vietnam; Phnom Penh, Cambodia; Yekaterinburg, Russia; Macao; and Abu Dhabi. (Under consideration: Lhasa, Tibet.) “Today it’s clear that the world is driven by the growth of Asia and emerging countries,” says Arnault. “Vuitton has always been a pioneer. We were the first to arrive in China. There were only bicycles when we opened there, no cars.” Now there are 35 stores in China. While Asia (excluding Japan) has accounted for 25% of total revenue this year, its growth rate outstrips every other geographic area. Operating profits in places like Brazil, China, India and the Middle East hover between 20% and 25%. That’s less than in Europe and the Americas, where spending power is mightier. But “saturation rates are higher” in the West, points out Allegra Perry, who covers luxury goods for Nomura in London. “So [LVMH] keeps spending in emerging markets, which are on the forefront of growth.”

But they’re also risky territory. Luxury goods follow cycles, and the industry has been in an upswing, despite the worldwide blues. That’s partly because the economies of developing countries–Mongolia, Lebanon, Poland and Vietnam among them–have been on fire. LVMH has been a pioneer in such markets, “starting with the millionaires and going down and down and down,” says Luca Solca, a retail analyst at Sanford C. Bernstein in Zurich. Arnault has enjoyed the fruits of first-mover advantage, planting his brands in the best retail locations at relatively low costs.

Scalding economies cool. As its GDP galloped along at 9% or 10%, the People’s Bank of China recently raised interest rates to calm inflationary fears; a jolting pullback in consumer spending could hurt LVMH. “If China has a cold,” opines Solca, “luxury goods get pneumonia.”

Arnault is well prepared. He has survived recessions and the consequences of terrorist attacks and SARS scares. He is battle-hardened from many corporate fights. He has put in place a creative management group that thinks long term.

Capturing developing countries is just one piece of LVMH’s strategy. Arnault sees unexploited possibilities in richer countries, too. That insight is driving new store openings or expansions this year in Paris, London and Dusseldorf, in Santa Monica and New York. “They look at pockets of wealth,” says Antoine Belge, who covers LVMH for HSBC in Paris. The company is also keeping its eye on the U.S. immigrant population, Belge says, because “people of Hispanic and Chinese origin spend more on luxury goods.” So, apparently, does the population at large. During the worst of the downturn last year, he adds, “some American women decided they would spend less on food or travel and buy a Louis Vuitton handbag.” Proof : While sales slipped 0.8% from 2008 to 2009, to $23.5 billion, and profits dropped 7.6% to $2.7 billion, net profits and revenue in the first half of 2010 have snapped back 53% and 16%, respectively, as LVMH earned $1.4 billion on sales of $12.6 billion.

Capitalizing on familiar territory, LVMH recently announced it had paid $2 billion for a 17.1% stake in Hermès International, the highly profitable maker of silk scarves, ties and the top-selling Birkin bag–and long a target of Arnault’s acquisitive desires. The investment (at a bargain-basement $112.50 per share, thanks to a derivative contract called an equity swap) is a coup for LVMH; as one of the few remaining stand-alone luxury brands not owned by a conglomerate, Hermès would have been the golden fleece for competitors Richemont and Gucci. Though LVMH quickly denied it would try to take control of the 173-year-old Hermès, the stage is clearly set. It may be a long drama: Three-quarters of the company is still in the hands of 200 Hermès family members. Winning them over could take decades.

That’s okay; LVMH is built to endure. Its dozens of iconic wines and spirits (including Moët & Chandon and Veuve Clicquot), fashion and leather goods (Vuitton and Dior), perfumes and cosmetics (Givenchy and Guerlain), jewelry and watches (including TAG Heuer) and duty-free shops span mid- and high-priced goods, mass and class. Prices range from $12 for lipstick at Sephora to around $2,800 for the popular Lady Dior handbag and $21,000 for a Hublot watch. All divisions have performed well since January, especially the fashion and leather group, where sales popped 20%, and watches and jewelry 29%.

For Arnault these are not just products with plump profit margins (50% for Dom Pérignon, 40% for Vuitton). They are living artifacts of a great nation. “I see myself as an ambassador of French heritage and French culture,” he proclaims. “What we create is emblematic. It’s linked to Versailles, to Marie Antoinette.” And beyond. Among his massive collections are a hat worn by Napoleon and a 1951 fashion sketch by Christian Dior. At the same time Arnault infuses many of his brands with a cutting-edge hipness.

He transformed Louis Vuitton, known as a sturdy, if hopelessly staid, trunkmaker. When Arnault finally took charge of LVMH in 1990, after an acrimonious, three-year-long struggle, he brought in American fashion designer Marc Jacobs, who introduced a ready-to-wear Louis Vuitton fashion collection and collaborated with high-profile contemporary artists like Takashi Murakami. The Japanese artist redid the brown-and-tan LV logo in bright colors and manga cartoon figures, in a special line of bags that scampered off the shelves. At Dior Arnault hired bad-boy Brit John Galliano to shake up the grandmotherly label.

Arnault is said to get along famously with the eccentrics he hires to make over his brands.(“I remember precisely the first time I met [Galliano] in my office. My assistant said, ‘There is a very strange guy in the lobby with rasta hair and a T-shirt.'”) But in an interview he comes across as reserved, preferring to sit in an antechamber rather than inside his more comfortable, spacious corner office on the tony Avenue Montaigne. “The key to success is this duality–timelessness and the utmost modernity,” he says.

Another expression of Arnault’s allegiance to modernity is his vast corporate collection of more than 1,000 works of modern and contemporary art, which he’s decided to showcase in his audacious new museum designed by Frank Gehry and built at a reported cost of more than $200 million. Set to open in late 2012 in the middle of a fabled Paris greenspace, the Bois de Boulogne, the giant glass-encased structure will look like “an iceberg dressed in a cloud,” as Arnault cultural adviser Jean-Paul Claverie has described it (see p. 72). Known officially as the Louis Vuitton Foundation for Creation, the museum complex will also have an auditorium and restaurant and will serve as a monument to Arnault’s role as global arbiter of taste, while telegraphing his corporate brands’ commitment to art and high culture.

How to keep all this going, controlling LVMH’s image and quality along with hundreds of products moving through the vast circulatory system of suppliers, manufacturers, retailers and marketers, keeping 76,000 employees focused on and proud of their work? Force of character–there is a superabundance of that–drives a lot of it. But that’s clearly not enough. “One key element of management of a group like this is decentralization,” says Arnault dryly. “You need the right team of inspired managers.”

For Arnault that means a small group of a half-dozen trusted generals, most of whom head up his flagship brands, augmented by two of his children. They include Yves Carcelle, chief of Louis Vuitton; Toledano, who leads Dior; Pierre Godé, LVMH’s vice chairman; Philippe Pascal, in charge of watches and jewelry; Christophe Navarre, who runs wines and spirits; and Nicolas Bazire, chief of development and acquisitions. All of them, besides Antoine and Delphine Arnault, have worked with their boss since the mid-1990s, some longer. Arnault meets with each member of his inner circle at least once a week, going over performance figures and plotting strategy. It was Arnault who suggested to Carcelle that Vuitton hire Mark Jacobs in 1997 and who chose Galliano for Dior, moving him from Givenchy in 1996.

Arnault likes to see the company “on the ground.” He constantly prowls LVMH retail stores, firing off memos when he thinks the music is turned up too loud or the thermostat is set too low. The memos also include praise of employees he finds especially helpful or solicitous.

“He’s like a helicopter,” says Toledano. “He has a very big picture, but he can also go on the floor and see a product.” Less hands-on with the beverage group than he is with the fashion and retail side of the business, Arnault nevertheless tracks the progress of all the Moët-Hennessy brands, which include wineries in California and Australia. He has daily contact with cultural adviser Claverie. Arnault says he wants all his managers to take charge of their divisions as though they were family enterprises. “Louis Vuitton should be run as if Yves Carcelle owns the brand,” he says.

Ownership certainly applies to kinship. “Our goal for the group is to remain a family company,” Arnault declares. Though Delphine and Antoine say they were never pressured to work for their father, they felt included in the business from an early age. When Arnault was wrestling for control of LVMH in 1989, Antoine, then 12, remembers, “He was always explaining to me what was going on.” After he took over the group Arnault spent Saturday mornings in Paris, taking his son and daughter to visit LVMH-owned shops.

“He always said, ‘If you want to work with me, you have to work harder than the others and do well in school,'” recalls Antoine, garrulous and model handsome and, like his father, clad in a Dior suit, matching tie and Berluti loafers. After earning his M.B.A. at Insead, Antoine spent two years launching, then selling, an Internet venture and toiled for three months as a sales assistant at the huge Vuitton store on the Champs Elysées selling handbags, before taking a management post responsible for 13 stores outside Paris. Delphine also labored in the LVMH retail trenches, as a perfume salesgirl at the Paris Dior boutique. She studied at the London School of Economics and worked at McKinsey before joining her father’s company in 2000. (She is married to Alessandro Vallarino Gancia, who runs his own finance company and serves on Dior’s board.)

Unsurprisingly, both young Arnaults express reverence for their father. “I think he’s a visionary, one of the most visionary of his generation,” says Delphine. A strikingly tall, slim blonde, more shy than her brother, she was still in her office at Dior headquarters at 7:45 p.m. on a Thursday evening. “I feel very lucky to be part of what he is creating.”

Arnault has three other children from his second marriage, in 1991, to Hélène Mercier, a French Canadian pianist: Alexandre, 18, Frédéric, 15, and Jean, 12. These days Arnault does his Saturday morning retail tour with Alexandre, who has already expressed interest in joining LVMH.

Patrimony has deep roots. Arnault was raised to go into the family business, a construction company called Ferret-Savinel in the northern industrial city of Roubaix. At age 7 he visited building sites with his grandfather, learning the importance of hard work and giving Arnault “the flavor of entrepreneurship.” After earning an engineering degree at Paris’ prestigious Ecole Polytechnique in 1971, he joined his father, taking charge of the company at age 25. In the early 1980s he spent three years in the U.S. trying to establish a branch of the family business as a developer of Florida real estate. The venture didn’t work out, but Delphine and Antoine learned flawless English. Arnault brought home an aggressively American approach to taking over and running businesses. It has made him a terrifying competitor.

In 1984, when the French government was looking for someone to take over a bankrupt textile and disposable-diaper business called Boussac, Arnault convinced Lazard Frères to add $80 million to his $15 million of Arnault family money. The bedraggled company included one jewel, fashion house Dior, and Arnault quickly stripped away the other businesses. Dior had earlier sold its perfume brand to Louis Vuitton Moët-Hennessy (the result of a 1987 merger). Arnault coveted the label, so he used the $400 million from selling off Boussac’s assets and, backed by Lazard, took advantage of dissent within the Louis Vuitton Moët-Hennessy ranks, siding with Vuitton Chief Henri Racamier to oust Moët-Hennessy’s Alain Chevalier. Then, buying up sufficient shares and exploiting the courts to amend corporate bylaws, Arnault deposed Racamier and seized the entire company in 1990.

He took charge immediately, sweeping much of manufacturing and distribution under his control. In order to extend LVMH’s reach across a range of high-end brands, Arnault turned into a binge acquirer. Throughout the 1990s he paid billions of dollars for fashion labels that included Fendi, Kenzo and Thomas Pink; jewelry and watchmakers Chaumet, Zenith and TAG Heuer; and retail chains like DFS and Sephora. He also bought a handful of ultrahaute boutique companies like Berluti, which makes custom men’s shoes.

There have been spectacular busts. After failing to bag Sotheby’s, Arnault paid a reported $97 million for Phillips, a distant number three auction house, in 1999. Hurt by the plunge in business following Sept. 11, Arnault dumped Phillips in early 2002. His one attempt to create a fashion brand ended badly. Founded in 1987, Christian Lacroix–an eponymous label whose strategy was to start with couture items to grab attention, then introduce a ready-to-wear line–never quite clicked. Arnault unloaded it in 2005; it filed for bankruptcy last year. Most dramatically, Arnault tried and failed to turn a minority stake in fashion house Gucci into control of the company but lost to French billionaire François Pinault’s Pinault-Printemps-Redoute–setting up a rivalry on several fronts (including fashion and art collecting) that persists today.

Until his latest move on Hèrmes, Arnault contented himself with emphatic and creative brand extensions, infusing classy labels with a sense of contemporary cool, carefully controlling quality through his trusted aides. At corporate headquarters on Avenue Montaigne, which houses Paris’ biggest Dior boutique, Delphine oversees the haute couture atelier on the top floor, where three dozen seamstresses stitch triple silk organza, hand-painted with purple flowers, that will adorn a one-of-a kind gown designed by John Galliano that might cost $35,000. Each dress is fitted to its own custom-made white muslim dressmaker’s dummy, labeled with the client’s name, many of them the wives of Middle East oil barons.Though the prices for these creations seem high, the labor costs are astronomical. It can take several hundred hours to produce a single garment. A loss leader for LVMH, haute couture underscores Dior’s image as the ne plus ultra in French fashion. It also supplies the costumes for the twice-a-year catwalks in Paris that generate excitement and new customers.

Antoine has made his own splash by convincing his father to run an arresting series of ads with luscious photographs shot by Annie Liebovitz of such familiar but surprising faces as Mikhail Gorbachev and Keith Richards. Arnault père resisted at first. After Antoine explained that Gorbachev would be shown with the Berlin Wall, he won over his father. “When I said, ‘It’s almost an homage to what he did,’ then he’s like, ‘It’s your business,'” recalls Antoine. Keith Richards was a tougher sell. “He didn’t know who he was,” Antoine smiles. An accomplished classical pianist whose favorite composer is Chopin, Arnault hadn’t heard the name of the Rolling Stones’ guitarist. The latest campaign, featuring rock star (and Forbes Media shareholder) Bono and wife, Ali Hewson, disembarking from a plane in the African bush, was also Antoine’s idea.

LVMH’s management team and family strategy are working well for now. One day, Arnault hopes, his three younger sons will step into the business. Who will succeed him? Whoever turns out to be best suited for the job, he always says. Don’t look for Dynasty-like intrigue. “I think we’re smarter than that,” says Antoine, leaning back in a leather chair. “We have a good 20 to 25 years to think about our future. He’s not going to step down anytime soon.”

The immediate future isn’t quite as clear. While an October Bain & Co. luxury market report forecasts continued growth in the sector of 3% to 5% in 2011, so much depends on the global economy. LVMH’s expansionist approach in markets like China holds huge prospects–and some peril. A significant slowdown means fewer customers for Lady Dior bags (that brand’s bestseller in China). Other hurdles loom. While China is the number one market for Hennessy cognac, Moët-Hennessy managers say they must contend with a feeble distribution system and prohibitive import taxes that can run as high as 50% in China and an astronomical 200% in India.

The puny recovery in Europe and the U.S. is another worry. There will be no more stimulus plans to hand extra dollars to consumers, as there were last year. The West still feeds LVMH two-thirds of its revenue. Arnault shrugs. “Right now we have a good equilibrium,” he says, referring to the three-legged revenue stool of Europe, the Americas (Brazil is a big growth market for the group) and Asia.

Economic calamity, corporate battles, self-made setbacks–Arnault has lived through them all before and emerged stronger than ever. As Vogue Editor in Chief Anna Wintour puts it, “I think he’s pretty much unstoppable.”

By: Susan Adams and Hannah Elliott (Forbes)

How I Did It: The Story of Roxanne Quimby and the Burt’s Bees Company


Building a company has been a lesson in balancing ambition and compromise for the co-founder of Burt’s Bees.

The story of Roxanne Quimby is the stuff of entrepreneurial legend. A divorced mother living without electricity, she teamed up with Burt Shavitz, a reclusive beekeeper, and in 1984 began selling items made from beeswax. Over the years she built that crafts business into Burt’s Bees, a leading natural personal-care brand. Last fall Quimby, who’d bought out Shavitz when he retired, struck a deal to sell 80% of the company to AEA Investors, a private-equity firm, for more than $175 million. She plans to donate half the proceeds to a land trust to establish a national park in northern Maine and is now even weighing a run for that state’s governorship.

Burt’s Bees was a result of having my kids. I’d been an artist, part of a generation that was very critical of capitalism. When I was 25, my husband and I bought 30 acres of land and built a cabin in the Maine woods. I washed diapers in water heated on the wood stove. I lived that way because I didn’t want to compromise; I didn’t want to be part of the problem. It was difficult–there was an amazing amount of hauling things–yet I loved it, because it was a chosen challenge. But after my marriage broke up, I realized my informal vow of poverty was limiting my children’s choices. I had traveled; my parents had given us a great education–my sisters are both M.B.A.’s. To give my kids opportunities I had to start a business.

At 36, I met Burt. He was selling honey on the side of the road. I stopped to buy some on my way to my waitress job. We became romantically involved, and I started helping him with the bees.

Immediately, I saw a business opportunity. Burt was selling honey in gallon jars for 12 bucks. You could get more money by selling it in smaller containers to tourists. So I took over the business end. I put honey up in cute little beehive-shaped jars. I made pretty handmade labels and started making candles out of the beeswax. Then I took them to the little craft fairs in the little towns. I’d make $200 a day. It gave me such a sense of accomplishment. Nobody told me what to do, when to be there, and how long I had to stay. That wonderful sense of independence was just intoxicating. And I thought, This is for me.

At the fairs, I focused closely on what sold the most and tried to figure out why. I didn’t know it then, but it was like having one focus group after another. I learned, for instance, that when people pick up a candle, they turn it over. For some reason they want to see the bottom, so I made sure the candles were nicely finished with a sharp knife to smooth the mold.

In the early years, I had some midnight-of-your-soul type of times. Once, I came home from a fair and found the window in my cabin blown in. Snow was all over. It was 20 below and 3 in the morning. I hadn’t made any money and the car had just barely made it there. I really believe that success is just getting up one more time than you fall. It doesn’t come from one brilliant idea, but from a bunch of small decisions that accumulate over the years. And you shouldn’t underestimate the amount of work that’s involved, the amount of fear that’s involved.

I’m not sentimental about products–they perform or they don’t. We tried lots of different things. One was beeswax lip balm. It was clear, very early, that people bought lip balm 10 times faster than they bought beeswax furniture polish. Next was a moisturizing cream. It sold better than the polish too.

Success doesn’t come from one brilliant idea, but from a bunch of small decisions.

By 1993, we reached $3 million in sales. That’s when I realized I had to leave Maine. The disappointing thing was leaving my employees, mostly moms who’d been on welfare. But I never lost sight of the fact that the business needs were most important, that we needed to go to somewhere more business-friendly.

I think Maine has a chip on its shoulder when it comes to businesses. Once we were investigated by the Department of Labor. The investigator visited all the home workers. He went to see this lady who had a preschooler. She was rolling up sheets of wax into candles, and in between each sheet was a piece of tissue paper. He goes, “Does your child help you with this?” She says, “Well, I have her take the tissue out.” She did that to keep the little girl busy while she rolled candles. We got fined $10,000 for a child labor infraction. Though I won on appeal, these things take an enormous amount of time and mental energy. I thought, This is ridiculous, and I’m not going to stand for it.

We looked at a lot of states. We chose North Carolina, which had an aggressive business-recruiting machine. In Maine we paid 8% unemployment tax. In North Carolina, it’s 1%. But I didn’t anticipate one big difference. In Maine, I’d start people at $5 an hour. In North Carolina, nobody would work for less than $10 an hour. Immediately, I had to get rid of any item that was handmade, including candles, which were half our sales. It was like lopping off your arm. I didn’t know if we would survive it, but it was the right thing to do.

I tend to be very uncompromising. My dad was a despot, and I got that from him. Though I used to see it as an attribute, I’m trying to modify this “my way or the highway” attitude. For instance, we put our product in cases of six, and Target wanted them in two. We’d be using three cardboard boxes instead of one, which I opposed. I kind of said, “Screw you, I’m not using three boxes.” I felt I was right because we were drowning in waste on this planet. Now I think there was probably a way to have worked through that. Many times there’s a solution buried in there if you just take away the layers and keep after it.

I always knew I’d sell the company. I took on all comers. Some were more serious than others, but they all wanted to play the game. The negotiation would always break down over price, so we hired an adviser who has her own company. She was entrepreneurial, and we figured we’d be more important to her than to a big investment bank. After we brought her in, it took a year to make the sale. I’ll continue on as CEO because I don’t think the company would survive my leaving right now.

What motivates me to keep building the company is not money. I live a simple lifestyle; rice and beans and the little Maine town I live in is fine. I’m in it for the challenge; it’s about the game. The money is just kind of the score. I’m still very curious about how far I can push this.

By: Roxanne Quimby (INC. Magazine)

John H Johnson: The man behind Ebony Magazine


John H. Johnson, who used his mother’s furniture as security for a $500 loan to start the business empire that eventually included Ebony and Jet magazines and that made him one of the nation’s richest and most powerful black businessmen, hear his story….

John H. Johnson

Mr. Johnson had major holdings in book and magazine publishing, cosmetics, television and radio and in 1982 was the first African-American on Forbes magazine’s list of the 400 wealthiest Americans.

He sometimes said he was in the business of inspiring people, heralding achievements like the first black woman to become a Rhodes scholar or the black man who sent three daughters through medical school. But his publications could also bristle with indignation over the sting of racial discrimination, as reflected by a 1965 cover: “The White Problem in America.”

As the magazines that Ebony used as models, Life and Look, slipped away, Ebony maintained a large presence in black households and last year had a circulation of 1.6 million. Mr. Johnson also published other magazines, including EM (Ebony Man) and Ebony Jr. His company’s Fashion Fair Cosmetics brand is among the leading makeup and skin-care companies for women with darker skin.

John Harold Johnson, the grandson of slaves, was born in Arkansas City, Ark., on Jan. 19, 1918. He was a boy when his father, Leroy, a sawmill worker, was killed in a mill accident. His mother, the former Gertrude Jenkins, married another mill worker.

He attended a segregated school, but the town lacked a high school for blacks. He repeated eighth grade rather than dropping out. In 1933, he and his mother visited the World’s Fair in Chicago and decided to stay. His stepfather later joined them.

The family lived on welfare, and then on what his stepfather earned in a New Deal public works program. Mr. Johnson got part-time work in the National Youth Administration, another New Deal initiative. He also starred academically at an all-black high school and was president of his class and editor of the school paper.

When he graduated in 1936, he spoke at a dinner held by the Urban League. Harry Pace, president of the Supreme Liberty Life Insurance Company, was so impressed that he offered him a job and a scholarship to attend the University of Chicago.

Mr. Johnson dropped his studies at that university, though he later took course at Northwestern University’s School of Commerce. He became editor of Mr. Pace’s internal company magazine. Since the insurance company catered to blacks, Mr. Johnson spent much time culling and digesting articles on blacks from other publications.

He married Eunice Walker in 1941. She and their daughter, Linda Johnson Rice, president of Johnson Publishing, survive him, along with a granddaughter. His son, John Harold Johnson Jr., who had sickle cell anemia, died at the age of 25 in 1981.

In 1942 while Mr. Johnson was still an employee at Supreme Life, he persuaded his mother to help him borrow $500. He asked 20,000 of the company’s policyholders for $2 to subscribe to what was still a nonexistent magazine. About 3,000 people did so. That June, he published Negro Digest, modeled on Reader’s Digest.

To get the magazine on newsstands, he got 20 friends to ask for it. The newsstands then called distributors and requested it. After his friends bought the magazines, Mr. Johnson resold them.

The same strategy was applied in other cities, and within a year, Negro Digest had a circulation of 50,000.

Inspired by his success, Mr. Johnson began planning a magazine with flashy covers like those of Life. He said that his goal was to “show not only the Negroes but also white people that Negroes got married, had beauty contests, gave parties, ran successful businesses, and did all the other normal things of life.”

His wife came up with the name Ebony. The first 25,000 copies immediately sold out.

Its advertising was distinctive among black publications at the time because it promoted general merchandise, as well as products like hair straighteners aimed at blacks. Ebony strove to glamorize consumption, at first with cover girls, and some suggested the effect was to play down serious issues at a time blacks were still excluded from many areas of American life. But many readers were glad for the uplift.

Mr. Johnson started Jet in 1951 to highlight news of African-Americans in the social limelight, politics, entertainment, business and sports.

In 1973, Mr. Johnson started the Fashion Fair Cosmetics line after models in the Fashion Fair touring fashion show, his wife’s project, had trouble finding dark makeup.

In 1990, Mr. Johnson told The New York Times that he was not altogether happy that 12 percent of the readers of Ebony and Jet were white.

“This is more than I would like to have,” he said. “I want to be king of the black hill, not the mixed hill.”

He also advised young blacks against joining a white-owned corporation unless they were satisfied with being vice president.

“But if, like me, you’re temperamentally unsuited to that and want to reach the top, do something else,” he said.

Source: The New York Times

NEWBOS: The Rise of the New Black Overclass


CLICK HERE TO WATCH VIDEO

 

It’s an American success story. Self-made black multimillionaires, many of whom grew up poor,
have made vast fortunes in the sports, entertainment and media industries.

The new moguls made their millions under the age of 40, primarily by taking more ownership and control over their brands than their predecessors. Collectively, black athletes in the NFL, NBA, and in Major League Baseball earned nearly $4 billion last year and the nation’s 20 highest-paid hip-hop entrepreneurs brought in more than $500 million.   Now, with their newfound wealth come responsibilities to their family, friends, and community.

Based on Lee Hawkins’ forthcoming book of the same title, NEWBOs: The Rise of America’s New Black Overclass examines the growing responsibilities of black celebrities in the Obama age. The project features personal stories and interviews with some of the biggest names in sports and entertainment.  It’s an inside look into how each successful NEWBO surmounted challenges to achieve the American Dream.

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