Lunch with the FT

December 23, 2010 10:46 pm

Lunch with the FT: Leonard Lauder

The beauty patriarch is happy to be the ‘moral centre’ and ‘chief teaching officer’ at Estée Lauder
Illustration of Leonard Lauder

A few weeks before I was supposed to have lunch with Leonard Lauder, the beauty patriarch and philanthropist, he sent me the following e-mail: “The question is, where? Power: the Four Seasons. Media: Michael’s. The Art World: the Whitney.” Up to you, I responded. He picked the Four Seasons. Then, the day of our lunch, his secretary called me. “Can you speak to Leonard Lauder?” she said. “We’re scheduled for lunch today,” he began. Yes, I said, at the Four Seasons, I confirmed it with your secretary.

“Wait!” he said. “Listen to where I’m going with this. I was there yesterday, and it was dead. Dead! We should go somewhere buzzy. Let’s go to Michael’s. There will be action.” OK, I said, and duly showed up at Michael’s a few minutes early because I like to get places first when I am doing an interview. But Lauder was already there, in a blue seersucker suit, tie and paisley pocket square, seated at a prime table in a window bay, bathed in early autumn sunshine, from which he could survey the entire room. “I was here first!” he said, delighted, and nudged me. “I didn’t want that Marc Jacobs thing to happen to me.”

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Lunch with the FT

“That Marc Jacobs thing” was a reference to a Lunch with the FT I had done with the said designer, which began with a story about his being late. In other words, even before we had sat down to begin eating, Lauder had demonstrated that: (1) he was very concerned that I have a good time, even though he was the guest; (2) he could get a fabulous table pretty much anywhere he wanted at very short notice; and (3) he had done his research.

As a demonstration of the strategy of “I’m going to do the best I can to make this work to my advantage, and I know you know I’m doing this, and you know I know, but we’re not going to talk about it because we are both smarter than that”, it was most impressive. He managed to flatter and control at the same time – which, when you think about it, is a pretty good description of the abilities that successful beauty industry executives need (or for that matter, any executives). Except that Lauder, who is 77, is no longer a beauty executive.

“I’m retired!” he laughs, waving away the waiter who appears with the bread basket and then, when the waiter moves to me, saying, “No, no, she doesn’t want any either.”

Actually, I say, I do.

“Really?” He looks surprised, then scolds himself: “You’re thin, so I assumed you didn’t want any.” He orders a salade Niçoise with no olives, an extra plate and extra dressing, and leans in close. “Every morning, I eat one fat-free yogurt with a sliced peach when peaches are in season, and one thin slice of wholewheat bread. The same thing. I don’t want to get fat. And I want to keep my fitness.” He pokes himself in the stomach and pauses a beat. “Do you think I’m Type A?”

Actually, what I think is: if Leonard Lauder is retired, I’m a nuclear physicist.

“Well, now I’m chairman emeritus,” Lauder says. “And Dick Parsons [the former chief executive of Time Warner], who is head of our compensation committee, said to me, ‘You have to go off regular compensation. What should we do?’ So we talked about it and he said, ‘How about a per diem?’ and I said, ‘OK’. And he said, ‘But we have to cap it.’ I said, ‘Fine’, and I worked for six months, and that was my per diem for the year, so now I’m working for free,” he laughs.

“Of course, I’m also the biggest shareholder, so I’m doing fine for myself. But I always said I would pay to do what I’m doing. Why would I say a crazy thing like that?” I open my mouth to respond but he has already continued: “Because this is the most interesting time of all in my business. It’s multi-ethnic, multi-brand, multi-dimensional, multi-country! It’s never been so much fun!”

Lauder would know. He’s been in the business officially since 1958, when he took over the company his mother Estée started in 1946, though unofficially he’s been in the business since he was born, save for a two-year stint in the navy. He has seen it grow from sales of $800,000 in 1958 to $5bn, from a presence in one country to a foothold in 140, from one brand to 29. He has taken it public and transformed it into one of the top five beauty companies in the world (behind mass-market companies such as Unilever and Procter & Gamble). He has passed it on to his son William, who is now Estée Lauder’s chairman. Coincidentally, William is also at Michael’s, and comes over to say “Hi,” to his father and discuss dropping off one of his daughters at the University of Pennsylvania.

The business has made him rich – this year Forbes named Leonard Lauder number 212 on the list of the world’s billionaires, with a reported net worth of $4.2bn. He has a duplex penthouse on Fifth Avenue filled with art, and houses in Florida, in Switzerland and in upstate New York. With his money, he has co-endowed (with younger brother Ronald) the Lauder Institute at the business school of the University of Pennsylvania, his alma mater, which is also sort of the Lauder family academy (William went there; so did Ronald’s daughter Aerin, senior vice-president and creative director at Estée Lauder). Along with his wife, Evelyn, he helped create the Evelyn H Lauder Breast Center at Memorial Sloan-Kettering Cancer Center in New York. In 2008, he gave the largest gift ever to the Whitney Museum of American Art in New York ($131m; he was chairman from 1994-2008 and remains chairman emeritus). And in 1998, he founded, with Ronald, the Institute for the Study of Aging to help turn Alzheimer’s research into commercial drugs.

When I ask him how he would describe his current position in the company, since it has no official description, he says, “Moral centre.” Given the general perception of big business these days, which tends to be seen as a bunch of robber barons out for their own bucks, I think this is an interesting statement.

“I don’t think there’s anything wrong with being paternalistic as a company,” Lauder says. “We are very paternalistic. We have a very good health plan – we take care of people.” As our salads arrive and Lauder starts moving slices of Parmesan off his and on to the extra plate he requested, I ask what he means.

“One senior sales rep had cancer and her doctor told her she could die from it. She called me, sobbing, and I got a doctor I know to see her, and then got my secretary to go pick her up in a limo and take her over to see him, and she’s alive and well today,” he says. He looks sternly at me. “You are only as successful as the people who work for you want you to be,” he says.

Another way Lauder describes his current position is as “chief teaching officer”, and he is clearly aware of passing on nuggets of wisdom he has honed over time. One of the things he still does at the company is hold various classes for employees. He holds one, for example, about “what went right with other companies, and what went wrong”, where they look at case studies such as Krispy Kreme, Starbucks and Home Depot. The first thing he does in the seminar, Lauder says, is to pull products out of a paper bag: Chanel No 5, Clinique, Ritz crackers, Nabisco or Coke, for example. Then he asks the class what the products have in common. He asks me, pausing only a second before saying, “I’ll tell you! They didn’t monkey with their logo or their colour code.”

In his courses, he has Ten Commitments, and a list of Don’ts. He likes to make signs. One says, “Just say no.” That’s in reference to retail partners who might want a Lauder salesman to do something Lauder doesn’t want to do. Lauder wants his people to understand that the absolutely most important thing if you are a luxury brand is controlled distribution. “Last Friday I had a meeting with a group of Clinique senior executives, and I gave a talk about power,” he says. “Power is winning the battle over who owns the customer: the brand or the retailer. If they worry that they will upset an important partner, I hold up another sign: ‘Blame it on Leonard’.”

Lauder is a performer – there’s an old vaudevillian “badda boom badda bing” to many of his statements that reminds me of Bob Hope, or of the way that those who are used to many years of others appreciating them act a bit as though they are on stage all the time – but it’s a role he has grown into. People who knew him back in the day often describe him as “shy”. When he talks about his younger self, he says: “I didn’t realise how good-looking I was until about 50 years later.”

He leans in close: “You know, I had a 34in waist when I was in the navy, and now it’s 35 or 36.” He says the navy was transformative: “It made me a leader.”

When he came back, he had an idea; turn his mother’s company into the beauty industry’s General Motors. “In the beginning, selling to the US market was the simplest thing in the world. We sold to aspirational women. There were new suburban malls opening up every day in the 1960s. They were our customers. But I had another idea. I wanted to go into the international market.”

He picked the UK. People told him he was crazy – that “the English were cheap. They wouldn’t pay our prices”. But he had been in London in 1953 and “nothing was happening, it was dead,” and then again in 1957 with the navy, “and I saw a huge transformation, so I knew they were wrong. And I thought, ‘If you have a good idea, don’t let anyone talk you out of it’.”

He took the same drive to the USSR in 1989 – “People said to me, ‘How can you sell to the communists?’” – and China in 1993. Going public, which he did in 1995, was motivated primarily by family concerns – he says there were some members who needed access to more liquidity – but he talks about it with a slight tinge of regret. His personal life is easier now but his business life is harder.

“The hardest thing I have done is given up power,” he says. “It took me a long time. In 2000, I gave up the job of CEO and asked Fred Langhammer to take over [the current chief is Fabrizio Freda]. And we were talking about something, or arguing, and he said to me, in the kindest way possible, ‘Leonard, you are not CEO any more.’ In this case, I knew I was right, and they were wrong, but I had to let them do it anyway. I had seen this problem with my mother, who had a very hard time letting other people – letting me – do things, but at a certain point you have to accept that people may not do them quite the same way you do but that does not mean they are doing them badly.”

At which point, he orders an iced cappuccino and I order mint tea. “I have three cups of coffee a day because the guy who heads up our Alzheimer’s foundation found this Finnish study that says if adults have three to four cups of coffee a day, it helps prevent Alzheimer’s,” Lauder says. “Should we get some cookies?” he asks, and orders some. But when they come, he doesn’t eat any.

“Here’s where I think we’re headed,” he says instead. “The balance of power in this nation has shifted between big business and the consumer. The era of celebrity is leaving us, and the awe of the rich and famous is leaving us. What is emerging is the smart shopper, and the idea of cocooning, broadly defined.” He orders another coffee. “I see 10 years, 20 years ahead of everyone else. But I have to be quiet about that now.”

He sighs. No matter what he does, no matter how much he teaches, or how careful he is with his diet, he “can’t guarantee that in 30 years the company will be the same. In 30 years, I can guarantee it will be different.”

Then he whips out his schedule; he has to go. I ask for the bill. He looks surprised. “What a treat!” he says – though I had warned his office going in that I would pay. I know, and he knows I know, so even as he gets up to leave, I keep waiting for the wink.

Vanessa Friedman is the FT’s fashion editor. Read her Style column

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Michael’s restaurant

24 West 55th Street, New York

Cobb salad $36

Salade Niçoise $36

Two cookies $3

Mint tea $6.50

Iced cappuccino x2 $19

Bottle of Panna water $9

Total (including service) $144.22

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The Lauder dynasty: The next generation – Estée’s grandchildren

Who: William Lauder (born 1960), Leonard’s eldest son. Chairman of board of directors, Estée Lauder

Rise to power: holds a BS in Economics from the Wharton School at University of Pennsylvania and completed Macy’s executive training programme before joining the family company in 1986 as regional marketing director of Clinique USA. As group CEO from 2004 to 2009, he expanded the company into India, China and South Africa, and spearheaded collaborations with P Diddy and Tom Ford.

Out of the office: on the board of directors at 92nd Street Y, a non-profit New York Jewish community centre providing education, cultural events and health services to visitors.

. . .

Who: Gary Lauder (b 1962), William’s younger brother. Managing partner of Lauder Partners, a venture capital firm based in Silicon Valley.

Rise to power: the only one of Estée’s grandchildren not to work for the family company, Gary has a BA in International Relations from the University of Pennsylvania, a BS in Economics from Wharton and an MBA from Stanford Graduate School of Business.

Out of the office: Gary co-created Aspen Institute’s Socrates Society with Laura, his wife. The society aims to bring together emerging leaders from various professions “to explore contemporary issues”.

. . .

Who: Aerin Lauder (b 1970). Eldest daughter of Ronald Lauder, Leonard’s younger brother. Senior vice-president, creative director and board member, Estée Lauder

Rise to power: Joined family company in 1992 after graduating from the University of Pennsylvania. Aerin is widely seen as having assumed her grandmother’s mantle as the company’s public face.

Out of the office: Much-photographed fixture on New York’s charity circuit. In 1999 she served as youngest co-chairman of Metropolitan Museum of Art’s Costume Institute gala, a position previously held by Jacqueline Kennedy Onassis.

. . .

Who: Jane Lauder (b 1973). Second daughter of Ronald and youngest of Estée’s grandchildren. Global president and general manager of Origins and Ojon brands, Estée Lauder

Rise to power: Studied at Stanford University and began her Estée Lauder career at Clinique in 1996, having previously worked in advertising. Has also worked for BeautyBank, the company’s think-tank division. In 2006, she was made VP of global marketing for Clinique. Was appointed last year to the company’s board of directors.

Out of the office: Like her father Ronald, a former chairman at the Museum of Modern Art in New York, Jane is an art fan and philanthropist. This year she co-chaired the museum’s annual fundraiser, the Party in the Garden, which raised $3.8m.

Elizabeth Tyler and Susannah Butter

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