Bartiromo Q&A: Entrepreneur Herrin talks about workplace for women
President-elect Donald Trump's economic plan is expected to give a boost to business, which has been pressured by what some consider a tight regulatory environment and high corporate taxes. That potential for a rollback in regulation and a corporate tax rate of 15% are reasons the stock market has reacted so positively to Trump's plans. But what about entrepreneurs and emerging businesses? Will this area still be the growth story it's been? And where will the jobs and growth come from in the coming years?
I caught up with serial entrepreneur Jessica Herrin, CEO and founder of Stella & Dot (and before that weddingchannel.com back in the 1990's), who's created what she calls a modern-day Mary Kay, where she relies on specialists or stylists to get her accessories to customers. Our interview follows, edited for clarity and length.
Q: Stella & Dot is the second company you've created. How tough was it to start these two companies?
A: I first started my career in technology and quickly realized that you could create professional success without really creating impact and happiness. And I became motivated to start another business that would really make a difference on something I was passionate about, and that was creating more flexible work for women. I began in my living room, while I had another full-time job and I was pregnant, and wanted to reinvent what the on-the-go business opportunity could be for the modern woman that would be about great product, use of technology, and really putting profits in your pocket by reinventing the model.
Q: Tell us about Stella & Dot and how it works.
A: Stella & Dot is a family of brands that has grown into two accessories brands, Stella & Dot and KEEP Collective. And we're also a platform that launched a skincare brand. So these are three separate teams that share products through social marketing and word-of-mouth. what we've been able to do in mid-priced accessories with Stella & Dot, we've taken a couture design process and applied that to affordable luxury. So half of our product line iss under $50, and it really is style made simple. Our stylists are really a personal shopper that help girlfriends who get together and try it on at home, or shop online. But really find the right looks for them that just make it easy to get dressed in the morning for that busy woman who wants to look pulled together but just needs a little bit of help to do it.
KEEP is a more memory-based line which makes the ultimate personalized gift and is something that's a keepsake that people collect. Our skincare brand is creating a good-for-you product that gives results.
Q: You started The Wedding Channel back in the '90s.
A: I was always the kid with the lemonade stand. I always look at the world and see the way that I want it to be instead of the way that it is. And I have the irresistible urge to go out and create it.
Q: So how did you do it?
A. Wedding Channel had a very non-sexy start. I was working at a tech company that was bringing together price and availability information to help make assembling computers easier. I applied that basic thought to bring together the information of where people were registered for wedding gifts and make it easy for people to shop for that online. This was during the birth of ecommerce. So instead of having consumers go into a store, they could easily check out in minutes by searching on a couple's name, finding the different stores they were registered in, and purchase a wedding gift. So it was really about taking technology and creating a very simple solution to a large-market customer problem.
Q: A lot of people have great ideas, but they don't know execute them. What did you do to round up the things you needed – like funding or anything else – to put the company together.
A: I just wrote a book, Find Your Extraordinary, that chronicles my entrepreneurial journey. And it really talks about the entrepreneurial spirit. Because for most people, having an idea, or even access to capital, isn't enough. It's about the motivation and will to be tenacious enough to actually get an idea off the ground and turn it into a viable business.
Every overnight success story takes seven to 10 years. It's harder than you think. For me, I had to drop out of business school and raise venture capital and that's how I started Wedding Channel. I was very convinced that I wanted to do Stella & Dot differently so that I could keep control of the mission and run the business for impact instead of profits. That meant that I had to bootstrap. I had another full-time job and I didn't take a (Stella & Dot) paycheck for six years.
If you believe passionately enough in the mission of the business, that's what makes you persist down the bumpy path that is the road to creating something. So you have to embrace fear and failure to make something real. You have to stick with it. It's about finding the right people that can partner with you, who are experts in the area that you need to know about. And then it's about being productive and getting the right things done.
Q: What about the money end of it?You found venture capitalists easily for Stella & Dot?
A: I went back to the people that had been on my board at Wedding Channel. That was productive because we had a working relationship, so they invested seed capital into this business. It's definitely a Silicon Valley anomaly, that we spent $2 million to get to profitability. And that's compared to the hundreds of millions that other companies of our size have raised, and they're not necessarily even at profitability yet.
I wanted to fund the business off of sales growth, and not be in the business of turning a dollar into a dime, but really doing something that would be sustainable. And that took bootstrapping. It took a lot of sacrifice. But it was worth it because now our business isn't about who needs a liquidity event and who's trying to post profits for the quarter for Wall Street. It's truly about serving our business owners and making an impact on the workplace for women.
Q: What was the initial investment you received from outside investors?
A: I had invested myself and was funding the business until I brought in partners. I think our seed round of capital was about $250,000. And that was maybe a year or so into the business when we already were generating about that much in revenue. As we went to grow and hire people, then we needed to raise another couple of million dollars.
Q: So you had to bring in these partners. Was it hard for you to accept that you aren't going to be the only sheriff intown? You were bringing in partners that would have a say in how and where you take the business.
A: Bringing in people and partners is essential for success. And I needed other people to care and have skin in the game. So I didn't think about it as giving up ownership. I thought about it as gaining another person who cared as much as I did about driving the business to succeed in order to serve the mission. And if you pick the right partners, you're gonna feel that way too. So to escalate my own commitment, I paced getting that investment around the birth of my two daughters, and knowing that I was ready to commit to other people around the trajectory of the business. I've always looked at my partners as welcome seats at the table who care as much as I do, and are equally responsible for creating the success. Blythe Harris, who's the chief creative officer, joined a couple years into the business and became a partner. She also invested in the business. And that was essential for our success. So there are dominoes and lynchpins along your path of who are the people that shape the course of the company.
Q: You've recently expanded to three different lines. Tell us where the business is going.
A: Each of our three brands is only at the beginning stages of its market potential. We're very focused on broadening our impact on how many people we help earn flexible income, often on top of another full-time job. So for many, this is a side gig where they'll get fast cash for the holidays or pay for the extras in their life.
So our focus is using our three brands in the six countries that we're in to capture all the untapped demand that's out there for the $30 billion accessory market in North America and the multi-billion-dollar skincare market where we feel we really have disruptive products that people love.
Q: And the way you do it is different, sort of like a Mary Kay or an Avon lady, right?
We have a very modern approach to our business. We're living in a modern world. Our sellers drive their business through social media and mobile technologies as much as they do person-to-person contact. And we have a very pro-profit model for them in which there are no quotas, they're not carrying any inventory. We ship direct to the customer. We offer free returns and guarantee our quality. So we really make this business something that works when they work it, and they can do that at their own pace, as much or as little as they want.
Q: You are up to 500 employees at your home office?
A: Yes and just over 50,000 independent business owners that work across one of our family of brands. And we produce our goods in the U.S. and in Asia. And it really depends on what type of artistry we're using. So you'll do embroidery in India. Our skincare products are made and billed in the United States. And some of our jewelry is made in Vietnam, China and Thailand, based on skill.
As an entrepreneur, you're not an expert in everything. But if you're a creator, you've gotta be a connector of experts to your mission. So it's about going out and meeting as many people as you can and finding the best people that are experts in marketing or production or technology or whatever balance of skill you need as an entrepreneur. I really understood technology and company building and marketing and sales, but I needed someone to help with product design and production processes and (working with) individual business owners. So I went out and sought that expertise out in partners. And then they had a network of people that were experts.
So I did ask myself, "What is it that our company needs to be excellent at?" "Okay, now who is the executive that's gonna join this team and be highly invested in the company and able to bring that strategic skillset to the table?"
Q: Do you expect the Trump administration's economic plan to have an impact on your business? Lower taxes and lower regulations?
A: Well, we're also potentially expecting tariffs to go up. So we're in a "let's see what actually comes to fruition and gets put into law versus what might have been part of a campaign rhetoric" mode. I believe in what we do and why we do it. I believe that people need flexible income. So from our perspective, I'm optimistic about the continued growth because we make great products and we do it for a great reason. But from a general economy perspective, I do believe that when you lower corporate taxes you give businesses the ability to invest. there's just more capital that you can then redeploy into the business. So if businesses are operating responsibly, and they're focused on job creation in the U.S., that will be good for the economy.
Maria Bartiromo is the anchor of "Mornings with Maria" on the Fox Business Network weekdays 6-9am ET and 'Sunday Morning Futures' on the Fox News Channel 10am Sunday's. Follow her on Twitter @morningsmaria @mariabartiromo