Kalika Yap, an Entrepreneurs' Organization (EO) member in Los Angeles, is founder and CEO of both Citrus Studios, a branding and design agency, and Orange & Bergamot, a creative agency for female founders. As the host of EO's Wonder podcast, Kalika recently interviewed Kendra Scott, the CEO of her eponymous line of jewelry stores valued at more than $1 billion. Kendra Scott joined EO two years before launching her stores nationwide. Kalika asked Kendra about her entrepreneurial journey. Here's what she shared.
Designing for a good cause
Kendra Scott's first business, started at age 19, was making hats. When she visited her stepfather, who was hospitalized for brain cancer, she met women with chemotherapy-induced hair loss who wanted attractive hats. So, being young and idealistic, she started making them. She'd always loved fashion, and this was fashion for a good cause.
"In my brain, I was like, `OK, maybe we can get hats to come back like it's 1940 again, and everyone will wear hats, and it'll be this amazing thing, and I'll open hat stores all across the country,'" she said. But it never happened. Hats never came back.
On the side, she'd been making jewelry, mostly for family and friends. The pieces she brought into the store would sell immediately, but she didn't see it as a business.
"The answer of my future was right in front of me, but I was so hardheaded that the hat thing was going to work that I didn't see what was actually working," Scott said.
Hitting rock bottom
After five years, she closed the hat store--and hit rock bottom. Her savings were gone, and she had no idea what to do next. But people kept calling about her jewelry. Some wanted earrings to go with necklaces they had purchased. Others wanted pieces for a sister or friend.
She wallowed in despair for a little while. Then, she remembered what her stepfather had said before he died: "There will be times in your life that are going to be really, really hard, but you have to look for the open window and pay attention to it."
Finding the open window
Jewelry was the open window, but she didn't see it quite yet. She got a job at a travel company in Austin, writing articles for the firm's magazine--which meant traveling to gorgeous places, alone. She spent much of her free time sketching jewelry.
"To me, jewelry is the icing on a cake," Scott said. "It can make you feel good. If you're in jeans and a t-shirt and you put on an amazing necklace, you feel like a queen in just a second."
Then, she became pregnant and was confined to bed rest. No more travel. She stayed off her feet and did what she loved: made jewelry. After her son was born, she strapped him into a carrier, put her wares in a wooden tea box she had gotten as a wedding present, and went to sell them.
The first buyer dismissed her. She almost gave up. But she had spent $500 on materials, and she was determined to get it back. The next buyer placed an order. So did the two after that! The fifth buyer had a fashion show coming up and bought all the samples she had, right there and then. She went home with $1,200.
"I was like, `OK, we're in business!'" Scott said.
Navigating a recession
That was 2002. Over the next six years, she added new customers by the dozen. She didn't want to open a store after her experience with The Hat Box. Letting others sell her work was fine, and everything was up and to the right--until 2008. Week after week, the financial crisis wiped out more clients. She shipped a $25,000 order to a retailer that had been in business for 100 years. Ten days later, the chain filed for bankruptcy.
"For a small entrepreneur, that's a death sentence," Scott stated. "I didn't have investors. I was doing this all on a line of credit and with credit card debt."
She had no choice: She had to open a store.
"I knew we had to connect with our customers at the point of sale," Scott recalled. "I realized I was letting the other retailers speak for me. They had the power. I had to connect with my customers."
Scott opened her first store in 2010 and put the corporate office right above it. Employees walked through the retail space on their way to work every day.
"It was our laboratory to learn and to grow," she said. "That's when we started to see rocket growth. The minute we stopped making safe choices and weren't afraid to take a risk--but also weren't afraid to learn--was when we started to excel."
Finding her tribe
Scott joined EO in 2006.
"Being an entrepreneur can be lonely," she said. "EO provided a network of entrepreneurs who were going through exactly the same things." Some people knew more than she did, and some less.
One of the best lessons she learned from EO: To think in three-year chunks. "Trying to look beyond that can be daunting--three years gives you a reasonable goal."
"I'm not making decisions for where we are today. I'm always making them for where we're going in three years, because if I don't, I won't get there," Scott said. "I think that's such an important lesson. Once you know the destination, you can create the map."
The three-year strategy has paid off. Kendra Scott LLC has more than 100 stores, and, based on a recent round of investment, the company is worth more than $1 billion.
What about the next three years? Scott sees an expansion beyond the US. She sees more stores here, too. Mostly, she wants to surprise and delight more customers.
And she has no plans to sell hats, ever again.