The Disciplined and the Divine: An Unlikely Partnership

This might be the least likely partnership in business. It's turning a little jewelry maker called Alex and Ani into a very focused--but still very groovy--powerhouse.
Go, Go, Go: CEO Giovanni Feroce, a former Army officer, is all about operational efficiency. Carolyn Rafaelian, the company’s founder, provides the aesthetic vision.

Courtesy Company

Make It: Assembly work at Cinerama, in Cranston, rhode Island. Cinerama was founded by the father of Alex and Ani’s founder.

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To understand the momentum behind Alex and Ani, begin with the conference table. Shaped like a horseshoe, it is a replica of the one in the war room of the United States Central Command. On Monday mornings, executive staff members convene around it to present their sitreps (situational reports): detailed operational updates similar to those used by the U.S. Army. The position reserved for a four-star general is occupied by the CEO.

Embedded in the table--and in all the company's tables and desks, as well as in the Sheetrock of the walls--are crystals. They are meant to deflect negative energy and were installed after a shaman's ceremonial cleansing of Alex and Ani's new headquarters, here in Cranston, Rhode Island. Providing extra spiritual protection, the company's door handles bear the Atlantean symbol worn by the archaeologist who led the excavation of King Tut's tomb.

The martial and the metaphysical. The disciplined and the divine. Credit Alex and Ani's strange hybrid culture for its kudzu growth, which drove sales from $4.5 million in 2010 to $80 million last year, and head count from 23 to its current 642. Behind that culture is a surprising collaboration between two people who shouldn't even be in the same movie. Founder and chief creative officer Carolyn Rafaelian is an ethereal, blissfully optimistic designer with a quadruple bottom line that includes karma. CEO Giovanni Feroce is a solid, systems-hugging former Army officer and Rhode Island state senator who talks in directives to everyone but Rafaelian and prefers a succinct "wilco" in response. Together, they are transforming a diminutive jewelry company into what they hope will become a lifestyle brand on the scale and scope of Ralph Lauren.

If you haven't stumbled across Alex and Ani, you probably will soon. By year's end, the company will have opened 57 boutiques, from Massachusetts to California. Its products are sold in department stores such as Nordstrom and Bloomingdale's; in hundreds of independent gift shops; and in kiosks at airports, in hospitals, in casinos, and on cruise ships. Major League Baseball, the Disney parks, the armed services, and dozens of colleges and sororities sell Alex and Ani products through licensing agreements that brand Alex and Ani jewelry with their logos. Nonprofits work through its Charity by Design division to create original products for fundraising.

Alex and Ani is not a demure partner. Its arresting point-of-sale displays in retailers can occupy up to 120 square feet of wall space. Salespeople trained by the company may spend an hour or more helping a single customer choose the appropriate charm for her necklace or bangle. Getting into a relationship? Cupid's heart represents love, joy, and light. Getting out of a relationship? The skeleton key represents power, choice, and liberation.

The Paper Store, a gift chain with 36 locations in New England, has spent more than a million dollars rearranging floor plans and building stylish black-and-white stores-in-stores to accommodate Alex and Ani's practical and aesthetic specifications. The investment has paid off. "People who have never been to our stores are coming in because we carry this brand," says John Anderson, the Paper Store's vice president. "It is driving huge amounts of traffic. And the Alex and Ani customer is a nice customer. A special customer. They come in to buy something that has meaning."

Rafaelian says the brand's popularity has only superficially to do with jewelry. On this overcast morning, she sits beside Feroce in her deco-lush office, where business awards jostle for space with enlightenment cards and books on angels. As she speaks, her fingers worry a nubbly hair scrunchie. Touching it tethers her to this reality, she explains, so that her thoughts don't wander off to other worlds.

"I always knew that the company's purpose was to create meaning," says Rafaelian, the cascade of bracelets on her arm tinkling with every gesture. "Helping people realize their potential, escape the negativity--that's my purpose in life, and this company is an extension of me. But Giovanni helped me understand it on a different level."

 

Feroce, bald and bangleless, recalls the moment that happened, during an informal staff dinner at Rafaelian's house not long after he arrived at the company in 2010. "I was standing out on her balcony overlooking the Providence skyline, and I see a billboard lit up," he says. "This was right after the BP oil spill, so I was thinking along those lines. And it hit me: What we sell is energy. Positive energy. I went into the kitchen and told her, 'We're going to be the largest energy company in the world.' "

Rafaelian raises her hands and eyes to the ceiling. "And I said, 'Hallelujah!'"

 

Workers at long tables incline their heads over intricate beadwork. Numbered wooden drawers crammed with floral brooches and flag pins stretch to the ceiling. The Cinerama factory, half a mile from Alex and Ani's headquarters, hasn't changed much since 1966. That was the year Ralph Rafaelian began producing patriotic jewelry and other costume pieces studded with rhinestones and crystals. When Carolyn and her siblings misbehaved, they spent long hours here, attaching earrings to card backs by way of punishment. (Ralph Rafaelian died in February 2012. Carolyn's sister Rebecca Rafaelian now runs Cinerama.)

Rafaelian never intended to join the family business. But after studying marketing, then slinging pearls on Fifth Avenue for a few months, she returned to Cinerama in 1994. "I thought, I'm just going to quietly go in there and do my thing," says Rafaelian. "My father left me alone." She bought up stones and crystals from struggling local companies and designed her own pieces, starting with five glamorous cocktail rings.

A cold call landed Rafaelian a meeting at Barneys, where the buyer gently informed her that she needed a whole collection to be taken seriously. Undeterred, she signed up with a showroom representative who admired her work and appreciated that she had a factory behind her. Under the Alex and Ani brand--named for the first two of her three daughters--she was soon designing pieces at prices up to $500 for high-enders such as Nordstrom and Henri Bendel.

Alex and Ani juiced Rafaelian creatively. But the vast majority of her sales were private label: She designed for such brands as Victoria's Secret, Chico's, and Express. Cinerama was struggling at that point, under prolonged assault from cheap Asian imports. Rafaelian's private-label sales kept it afloat. "Within months, I'm getting $100,000 orders on the fax machine that can keep the family business going," she says. In 2002, Ralph Rafaelian handed ownership of Cinerama to Carolyn and Rebecca.

Meanwhile, Rafaelian was bulking up Alex and Ani's offerings with jewelry that cost less (a ring now goes for $88) but still looked at home in Nordstrom. Vogue, Allure, and other usual suspects swarmed, and soon the line had its own New York City showroom. Eager to establish Alex and Ani as a pure expression of her aesthetic, Rafaelian spun it out as an independent company in 2004. That same year, Saks awarded the brand a two-page spread in its holiday catalog. In 2009, Rafaelian opened her first retail store, in Newport, Rhode Island.

By the time Disney and other brands came calling, Rafaelian found herself atop a $2 million, multichannel business, wholly unsupported by systems or experienced staff. "I said, 'Thank you, God, for all the opportunities,' " recalls Rafaelian, who is Armenian Apostolic but down with all religions. "Now, I need someone to help me navigate."

God, or serendipity, intervened. Following a University of Rhode Island homecoming game in October 2009, members of Rafaelian's old sorority and Feroce's old fraternity converged on the same restaurant for cocktails. Rafaelian chatted with Feroce, who at the time was running a retail eyewear business and developing software for managing optical companies. Intrigued by the numbers Rafaelian trotted out, Feroce visited Cinerama and the Newport store. By spring of 2010, he was CEO.

A U.S. Army major with 24 years in the military--including a stint as an operations officer at U.S. Central Command--Feroce marched into Alex and Ani like Patton intent on cleaning up Woodstock. Most of Rafaelian's 23 employees were friends of friends whom she had hired without so much as glancing at a resumé. Within a year, 21 had left--just two involuntarily.

On the way out the door, some called Feroce a bully. Nevertheless, Rafaelian says the exodus was largely devoid of drama, as employees found themselves increasingly out of their depth. "The woman who was handling Disney came to us with some contracts, and we changed some of the language on them," says Rafaelian, by way of example. "She said, 'I can't go back to Disney and tell them we're making changes.' Giovanni asked her, 'Why not?' She said, 'Because they're Disney.' He said, 'We're Alex and Ani.' She didn't believe we had the strength to do that. That's when she left."

 

The new staff is a mix of big-brand veterans from such companies as Ann Taylor and American Eagle and young people, many of them native Rhode Islanders in love with fashion but not eager to relocate to New York.

It goes without saying that they work hard. Feroce speaks with contempt about people who leave at 4:59 p.m. Alex and Ani employees are expected to produce those sitreps and to acknowledge, then act swiftly on, instructions. The discipline is both effective and less stressful than it sounds. Whenever Feroce walks into an office, its occupant knows instantly the purpose of his visit and efficiently dispatches with the business at hand. The two then spend a few moments chatting and joking.

"It's a completely different company now," says Joanne Larsson, Alex and Ani's comptroller and one of just two survivors from the old regime. "We have the weekly reports, and we've learned to speak the lingo. Sometimes I joke with Giovanni by answering, '10-4.' But he's taking us places we never even imagined."

The culture shock hasn't been one-sided. Feroce was accustomed to leaders with vision. A leader who had visions was new to him. "The way I initially justified Carolyn's emphasis on numerology and using shamans and things was the success," Feroce says. "But I'm one of those guys who like to watch a CNBC special on the story behind Coca-Cola or Google. I realized it's pretty neat to be able to say we opened every one of our retail stores at a particular time and date prescribed by a numerologist. It lends us a sense of history."

"Plus, it worked for you," Rafaelian interjects. "Remember when you weren't feeling so hot and you came to my house, and I had some of my spiritual people working on you? You lay out on a love seat and they cleaned up some of the stuff that was lingering in your energy field, and, lo and behold, you're better now."

"You know I'm a Republican," Feroce reminds her.

"So am I," says Rafaelian.

"Conservative."

"So am I."

 

Alex and Ani's offices, in a suburban mall, are fashion-world chic, with vintage art and movie posters and pairs of black and white panthers prowling ledges and the tops of cabinets (more spiritual protection). At street level, a 1,600-square-foot store rings up $7 million in annual sales. "People talk to us about what's going on in their lives so we can help them choose the symbol that best represents them," says Ardriana Solitro, a salesclerk who has spent as long as 90 minutes helping someone with a $32 purchase. The salesclerks are informally known as bartenders, because they listen while customers pour their hearts out.

Next door to the boutique and accessible through the store is Teas and Javas, a coffee bar that Alex and Ani opened in November. The company is starting with six Teas and Javas in New England and hopes to expand around the country, with most attached to or near Alex and Ani stores. Each café will serve locally produced foods and be decked out in Alex and Ani memorabilia.

Teas and Javas isn't the company's only new venture. Last July saw the launch of Alex and Ani University, the rare professional-development program that is also envisioned as a profit center. AAU has three full-time and three adjunct instructors and offers courses such as The New Language of Leadership and Self Identity and Meaning-Making in the Workplace to Alex and Ani employees and the employees of business partners. Several outside companies have paid to put people through the program as well.

 

And Alex and Ani owns a media firm. In 2011, the company signed on with a small marketing business called Media­peel. Spotting fresh shores for the empire, Feroce acquired Mediapeel last year and, at Rafaelian's request, changed the name to Seven Swords, representing the seven archangels. Seven Swords recently bought a production house and an events company.

Such ventures haven't distracted Rafaelian and Feroce from their overriding mission: extending the Alex and Ani consumer brand. New product offerings bubble in the company's lab, where a chemist is developing a beauty line. A new R&D group is investigating, among other things, apparel and home furnishings. (A recent equity investment from JH Investments in San Francisco will fund some of the line extensions, as well as a distribution center and several international offices.) "At the end of the day, I'm building a department store," says Feroce. "Someday, you'll sit in an Alex and Ani chair. It will feel better. You'll eat off Alex and Ani plates. Your food will taste better. Why can't you have an Alex and Ani signature-series car?"

That optimism is apparently echoed by Wall Street. Feroce began making the grand tour in January, and his reception there augurs a public offering in 2014. "We're being viewed as in the same category as Michael Kors," says the CEO, referring to the luxury-goods brand that pulled off a dazzling IPO in 2011.

The success of this company is great news for Rhode Island's first-in-the-nation jewelry industry, which has been fading since the 1980s. Alex and Ani is loudly, proudly made in America and--to the extent possible--made in Rafaelian and Feroce's home state. Local mills, refineries, platers, fabricators, and other small, struggling businesses have added workers, shifts, and square footage to keep pace with Alex and Ani's orders.

Tri-Bro Tool, a 65-year-old family business in Cranston, manufactures specialized wire for Alex and Ani's expandable bracelets. In 2000, Tri-Bro laid off 15 of its 30 workers after losing 60 percent of sales to foreign competition--business it didn't regain until Alex and Ani took off. In the past 18 months, the company has hired 50 people. "It's been a big boost to the vitality of this company," says Tom Walsh, the president of Tri-Bro. "People are just so happy to have jobs, and lately we've been able to give them some overtime. Alex and Ani has had a big impact."

Rafaelian is especially gratified to help companies like Tri-Bro, with which Ralph Rafaelian did business for decades. "For years, I watched all these manufacturers he had relationships with going off, one by one," says Rafaelian. "It made my heart break." She honors her father's work by incorporating his original stones, jewels, crystals, and chains in a line called Vintage 66. "Bringing this industry back to Rhode Island is the secret mission in my heart.

"Manufacturing is alchemy," says Rafaelian. "It's magic."

 

 

IMAGE: Photographs by Steven Laxton
Last updated: Apr 8, 2013

LEIGH BUCHANAN | Staff Writer | Editor at Large, Inc. Magazine

Leigh Buchanan is an editor-at-large for Inc. magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture.




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