#288 Ralph Lauren

Ruff Lauren has built the most successful apparel company in the United States. His favorite declaration about himself is what you see is what you get. When he describes his work, he insists that it does not constitute trendy fashion and that his customers care more about well-made clothes than the latest party dresses from Europe. He takes such distinctions seriously. Once, when I lumped him together with a handful of other designers during casual conversation, he snapped, "Don't put me with those designers. My business is not compared to anybody else's." This is an unauthorized biography. I knew before starting this project that Ruff Lauren was guarded about his personal life. I knew that he rarely appeared at society dinners. This reserve is due to shyness, not modesty. In practice, Ruff Lauren is a tough, intensely ambitious businessman who thinks his work has never received the recognition it deserves. He has always possessed immense self-confidence. It is central to his character, an asset as valuable as a sense of color, fabric, and style. That explains why Ruff has always been willing to break the rules and to do things his own way. At different times in his career, he has refused orders from top retailers. For years, he griped that the retailers he did do business with didn't display his clothes with enough elegance. Finally, he decided he was going to do it himself. Today, Ruff Lauren lives in a fifth avenue duplex, owns a 12,000 acre ranch in Colorado, a home on log island of Villa and Jamaica, and a 200 acre estate in Westchester County, New York, as well as a fleet of antique cars. He jets from home to home in his own Gulfstream. Ruff Lauren is one of the richest self-made men in the United States. This is the story of how Ruff Lauren built his business and why it succeeded. It is also the story of what that success has done to him. That is an excerpt from the book I'm going to talk to you about today, which is Ruff Lauren, the man behind the mystique, and is written by Jeffrey A. Tratchenberg. For a few years now, I've been looking for a good biography on Ruff Lauren ever since I saw this documentary, I probably watch it, I don't know, maybe two years ago. It's called Very Ruff, and it's on HBO. In less than two hours, the documentary gives you a fantastic overview of the very unique life and career of Ruff Lauren, but one thing that was in that documentary stuck out to me, and it made me want to learn more about his approach to work and how he thought about building his business. It's the fact that Ruff Lauren started out selling ties, and just like if you listened to episode 199 where I covered the biography of Coco Chanel, her empire that still makes billions and billions of dollars in profit to this day started out with hats. And what Coco and Ruff have in common is they were insistent to do things their way. And so the part of the documentary that stuck out to me was the fact that Ruff didn't grow up at a lot of money. He's a young man in his 20s. He's trying to get started as a designer. He is selling ties. He goes to Bloomingdale's. They say, "Yes, we love what you're doing. Do me a favor, Ralph. Take off your brand name, put on our house brand, and you got to deal." And Ruff immediately packs up his ties and walks out the door. It's one thing to turn down an opportunity when you're already rich. It is something completely different. He needed that. That was a life-changing order for him. At the time, he's a young man. He's got no money. He just got married. In fact, and the documentary that the wife talks about, the fact that they had nothing. They slept on a mattress on the floor and the L-train ran above their head. And yet he still refused to deviate for what he wanted to do. He's like, "I'm not building up your brand. I'm not building up your company. I'm building up mine." And so ever since I saw that, it's like, "Okay, I'm definitely reading a biography. I'm definitely making podcasts on him. I have to thank my friend Matt Russell, Matt's the CEO of Colossus, which is the podcast network I'm on. He's the one that actually told me about this biography. This is a very old book. This book is almost 40 years old. It was published in 1988. In the book ends, the company is about 20 years old and it's doing about $2 billion a year in sales. The documentary comes out 30 years later, Ralph's in his late 70s, and he's still working on his business. Okay, so I want to jump into the book. I'm going to start out of order. Most of what I found really interesting about the book was Ralph's early life and then how a lot of my highlights have to do with the fact that his company almost went bankrupt in the 1970s. I personally found him fighting his way through that, very inspiring, and I thought so that there was a lot of good ideas. But something that was always shocking to me was how rich fashion designers seemed to be. Something I had read about previously was the fact that a lot of them got so rich because of licensing. There's just one paragraph I'm going to read to you and I'm going to tell you how David Giffin actually saved Calvin Klein from bankruptcy. So it says, "Few outsiders understood fully how lucrative the licensing business had become." Ralph would have been a successful designer in his own right. However, he would have never qualified as one of the world's richest men without licensees willing to pay him five to seven percent of sales. So that switch from manufacturer to licensor, to switch to licensing, is actually what helped him save the company from bankruptcy in the 1970s and next decade and a half is where he built all that wealth where the book opens up saying, "You know, this guy's got like five estates everywhere, he's got his own private plane, he's got a fleet of antique cars." So you can imagine when you're reading biographies, you come across all kinds of really surprising and interesting things. Like two years ago, I'm reading this fantastic biography called The Operator. It is a biography of David Giffin. It is episode 111 if you haven't listened to it yet. It is a book I'm going to reread in the future because David Giffin's career is very unique. But I want to read this paragraph I came across that just shocked me. And this is going to mirror what's happening with Ralph Lauren. It's almost like him and Calvin Klein went through the exact same thing. So Calvin Klein and David Giffin wind up becoming close friends, although their approach to business was vastly different. Giffin is an animal who's a very formidable person. And so I'm going to read this to you. His privately held fashion empire was on a brink of bankruptcy. Giffin surmised that the company should be transformed from a manufacturing firm to a design, marketing, and licensing company. This is exactly what happened to Ralph Lauren too. You guys stink at manufacturing, he said. You need to get out of that business. Instead, Giffin continued. The company needed to focus on what it really knew. How to design and market the Calvin Klein brand name. Calvin, you should only be focusing on the aesthetics Giffin said. You should just be designing the clothes and overseeing the marketing and advertising. Giffin reprimanded Klein and Schwartz. I think this is clients like one of his executives might be the CFO. Giffin reprimanded Klein and Schwartz for excesses. They could not afford. Among other things, he told them to sell their company jet, would cost them 2.5 million a year to maintain. He also told Klein to fire his chief financial officer and helped him hire a top executive from an accounting firm that Giffin himself used. Here was the fixer in action. Giffin was now involved in kind of problem solving that energized him more than anything else. So remember that part for later, when you and I go over when Ralph Lauren made the switch from a manufacturing company to a licensing company. Suscovers early life, Ralph was the son of immigrants and had to grow up wearing hand-me-downs. He grew up in a small two-bedroom apartment with a tiny bathroom, so he shared a room with his two brothers. He was born. So Ralph Lauren is obviously not his real name. And you'll see that it was smart to change the name, because he was born Ralph Liftschitz. His dad plays a large role in his life, and in fact, his dad is someone that changed the name from Liftschitz to Lauren. Frank Liftschitz was a house painter and a muralist. He saw himself not as a craftsman, but as an artist. He dreamed of becoming another Picasso. His feet were on the ground, but he wanted to soar into the heavens. And so unfortunately, he wasn't able to soar into the heavens because he had the realities of his life. And his young kids, I think him and his wife emigrated into the United States from Russia when they were like 16 or 17 years old. So it says his feet were on the ground and he wanted to soar into heavens. The realities of his life of raising a family, he was an immigrant, and this was the depression. As a result, he was glued to these realities, but he wanted to soar. In that way, he was altogether different. He had dreams. His son is going to realize the father's dream. This is what you and I talk about almost every week, I feel. The story of the father is embedded in the son. This is why I'm reading this to you. He was glued to the realities, but he wanted to soar in that way. He was altogether different. He had dreams. Frank was also the one who changed his name to Lauren. He thought if he were an artist called Frank Lauren, it might help him. If Ralph has these qualities now, meaning an eye for taste and an eye for color, Frank is where they came from. Frank took his work very seriously. As you'll see, Ralph is going to take his work extremely seriously. You don't work until you're 80, you know, well, decades after you're already unbelievably wealthy, unless you take it extremely seriously. Ralph's parents raised four children on a salary of 50 to $75 a week. There wasn't much left over for clothes. For restaurants or for nights out with the kids, neither was there money to move into a larger apartment. And so there's several notes that it took while watching the documentary for the second time as research for this podcast that's going to jump out to you. Some of them are said by Ralph. Some of them are said by people that knew him when he was younger. He used this the fact that he knew he grew up in a bad situation. He's like, I'm going to be rich. Wait until you see what he leaves as one word. He describes this future in one word in his high school yearbook. And the book starts off talking about his greatest asset. One of his greatest assets is the fact that he had excessive amounts of self-confidence. That's brought up in the documentary again. It says he's very competitive. He's very confident in what he wanted to do. This is him. There's describing him when he's a kid. He had a belief in a passion what he wanted to do. Some would say that he is cocky. He wanted to be bigger and better than where he came from. His wife talked about the fact that they lived in this crappy apartment. They had nothing that they had a vision board that they would actually put up on the wall. They'd take out pictures of like English estates and wonderful cars and all this stuff. Stuff that was an idea in Ralph's mind that he made real. And then something that's also apparent if you watch the documentary or if you read this book. It's in there as well. He's extremely obsessed. and dedicated to his job. One would think it's somebody as famous as him and in the chosen profession that, oh, he's an expert. He's very introverted. He talks about the fact that he's such a head work and family and he says, we were not very social because I never had the time. I wanted to be with my family. He talks about when he's kids were little. He's like, when I'm not working, I spent a lot of time with my kids when they were really small. But he also had a form of resourcefulness even when he didn't have money. So he's wearing like hand me downs, he's shopping like thrift stores, but he was able to combine things that other people donated or gave away and he would combine them into unique looks that no one else had. And so it says we made them different. Even when he was a kid, was that he would show up dressed in outrageous outfits. He'd wear these like preppy crew necked sweaters and bright colors, but on him they look great. The ones he wore when he was a kid are the same crew necked sweaters that he sells today. Ralph and his high school friends wanted a better life. The 1957 graduating class listed their aspirations in their yearbook. One wanted to be a pharmacist, another wanted to be a scientist, third wanted to be a physician. Ralph didn't put a profession beneath his picture. Instead, he chose the single word that best summed up everything he wanted in life. The word was millionaire. So it made thesis of this podcast is that everybody learns from somebody, they all study the people that came before them, they take ideas from them, they take these ideas, they combine them with ideas of their own and they create something new. Ralph Lauren is no different than this. A lot of the, his early designs, he said, he was, I just took them straight out of movies I loved from the 1930s and 1940s. And he's like, I saw them in the movies, but I didn't see in the stores. And so I wanted them, so I just had to make them for myself. And so the book goes into one of his main influences was the fact that he starts discovering these really fine men's stores. He's in his early 20s at the time. And so Burke Brothers is gonna be a huge influence on him. So it says he discovered fine men's stores like Burke Brothers and Paul Stewart. The stores sold such clothes that peddled the image of Old England. They were selling the world of gentlemanly clubs, good service, fine breeding, and the customers who shopped at Brook Brothers shared and enjoyed the fantasy. So that idea, he repeats over and over again, he's like, I do not sell clothes, I sell a lifestyle, I sell an image, I sell an idea. In fact, the way he speaks about this, I merely thought of what I read from the Coco Chanel Diplography on episode 189. Coco Chanel, I'm gonna read this quote from here. I'm gonna read this quote to you rather. She said this in 1935. That is before Ralph Lauren was born and it's the same exact idea. And she's talking about the fact that she puts on a story for her customers. When my customers come to me, they like to cross the threshold of some magic place. They feel a satisfaction that is perhaps a trace vulgar but that delights them. They are privileged characters who are incorporated into our legend. For them, this is a far greater pleasure than ordering another suit. Ralph was gonna use that idea to build his business. Burke Brothers is using a variation of that idea in peddling Old English lifestyle, gentlemanly clubs, good service, fine breeding. The problem was, Ralph couldn't find quite find the clothes he wanted. So it says as classies and as classies, these clothes were, he decided that they weren't quite right. They needed more flair. They needed more tailing. Since Ralph didn't see what he wanted, he designed it himself. Ralph didn't fantasize about becoming a fashion designer. He became a designer to fulfill his fantasies. And then he starts meeting other people in the stores, other people in the industry. And there's gonna be a quote that I have written on several pages throughout this book. It's one of my favorite things. I mean, Charlie Munger said a lot of things that I like, but one of my favorite things is that you need to really need to try to work in a field in which you have an intense interest. He didn't say, oh, a field that you're interested in or kind of interested, he said intense interest. Intense interest sounds a lot like this. Nobody was as interested in style as Ralph. He would talk about clothes, the way others talked about plays and books. So he starts working at Burke's Brothers, then he drops out of college. And this is an important decision because while working at Burke's Brothers, it says this is where Ralph would get his first lesson in how to sell to the upper middle class. Those were the lessons that college could never have taught him. So they switched to a job working for a manufacturer as a salesman of men, men's and women's gloves. And we're gonna see in a minute something that people said throughout his life, Ralph was just different. Everywhere he goes, I was like, this guy is different. The job required patience and strong legs and then getting into the office early, learning which buyers were in a town and then hustling the rest of the day to make the sales. What he lacked in experience, he compensated it for an energy and enthusiasm. Back to Munger's idea, right? That's another example of Munger's idea, work in an area where you have intense interest. He is enthusiastic about selling gloves. He is 22 years old and listen how he's talking. He's talking with his fellow, the people he's working with. Ralph used to tell me about his big dreams and how his traditional look was going to be big. He also tells the same person. He's like, listen, you really don't understand what I'm talking about. This is something he repeats over and over again that no one really understood the ideas that he had. So from that job, he goes to another one. Now he's working for a Boston tie maker. That is important because like I said earlier, he gets his start making his own, designing his own ties and the owner of the business for some reason sees something in Ralph. They're like, oh, he's unusual. I like this guy. His name's Abe Rivitz. Abe Rivitz had noticed something about Ralph Lauren that he liked. Ralph was going to be somebody special. He told the other salesman, nobody at the company ever believed him. In fact, everybody else at the other company thought Ralph was full of shit. And part of that was because of the way he dressed. Here he was, 20 years younger than anybody else in the company. And he wore the damnest clothes to work. And this differentiation, I love, I just read, I think it's episode 282 maybe. When I read Jeff Bezos' shareholder Letters for the third time, he said something in those that I absolutely love. He said differentiation is survival. Ralph was so differentiated that he got written up in trade papers before he was Ralph Lauren. So it says, people outside the office began to talk about Ralph and his clothes. A reporter for the Daily News Record, which is really important, like Trade Magazine, hunted Ralph down in 1964. This is like four years before he starts his own company. And wrote up a full page, dried up in a newspaper about Ralph Lauren's wardrobe. And so his coworkers is like, what the hell is going on here? The crew at Rivitz, this is where he's selling ties, was days since when did Ralph Lauren give interviews? More to the point, who cared what Ralph Lauren thought about clothes? Ralph was different, says Mel Creadman. So this is the guy, this is Abe Rivitz. Abe owns a company. Abe is going to pass away in a few years, unfortunately. Abe believed in Ralph. Mel takes over the company. Mel's his son-in-law. Mel does not believe in Ralph. He doesn't want to change anything. He's like, no, there's no design business in ties. You just sell ties, like we've been selling forever. What is wrong with you kid, right? And Ralph's like, oh, I have to leave here. I can't get my ideas out into the world. This isn't going to work. And so, says Ralph was different, says Mel. If everybody was clean shaven, Ralph wore beard. When the industry was selling skinny ties, Ralph had to wear a white one. And so, fortunately, the founder of the company, the owner of the company, dies. The one that was supporting him, says Abe Rivitz died on the same day that Ralph and Ricky Lauren married. So I think Ralph was around 24 years old at this point. When Abe died, I went back to Mel and said, Mel, I'd like to design the ties. And he said, there's no such thing as a designer in our business. Mel thought Ralph was an amateur. What bothered Mel the most was that he thought Ralph spent too much time talking about clothes instead of selling ties. He was supposed to be a network salesman for us. But I found he was spending a lot of his time talking to tailors. Ralph could spend hours talking about the location and dimension of belt loops on trousers. Are the size of pocket flaps. Why the hell is the kid talking to somebody about belt loops? You know what popped to my mind when I got to that paragraph? One of my favorite quotes ever. It is a quote that I try to live up all the time. Meteority is always invisible until passion shows up and exposes it. Mel is mediocre. He doesn't give a shit about the business that he is in. He just inherited it from his father-in-law. Ralph is coming in with energy, enthusiasm, passion, and new ideas, and he's hitting a brick wall. This, I think, ties to what the author's point was in the introduction, you need this excessive, almost delusional levels of self-confidence. 'Cause that's what the world is gonna throw up to you over and over and over again. Brick wall after brick wall. And Ralph's like, fine, put up a brick wall. I'll dig a hole under it. I can't dig a hole, I'll jump over the wall. If I can't jump over the wall, I'll knock it down with a sledgehammer. He is constantly pushing. This is one of the best ideas that Ralph has. It's the fact that if you know what you want, you've got to try to move yourself in the position to do it. And he had this relentless, constant, very calm pressure. And he does this over. This is the first time we're gonna see how he gets what he wants. He just constantly just hits, like I said, just tapping at the wall over and over and over again, till false. So it says Ralph wanted to choose which colors were used. Ralph was so persistent that eventually Mel said, enough, do it, leave me alone. Again, let's go back to the previous page. Mediocrity is always invisible until passion shows up and exposes it. Ralph is exposing Mel. This is what Ralph said. The other guys in the company didn't understand what I did and they didn't know how to budge. I scared them. I'd color some ties and they say, why are you doing this? You're killing our image. Ralph didn't see it that way. Ralph also became fascinated with why ties is super important because this is gonna be his first product that he makes for himself. He also became fascinated with why ties. They were making ties like that in Europe. Ralph had seen them and said, let me do it, he pleaded. That was Mel's limit. Ralph was over the top. Why ties, this is what Mel said, it's actually kind of funny. Why ties looked absurd? A man might as well wear a bib to work. And that's actually funny. Frustrated and angry, Ralph began looking for a new job. And really he decides to just create his own job. And so this is where he's gonna start his company. And really he picked up, he's a master salesman by the way. And that's very, one of the best skills you could have is entrepreneur. Think about entrepreneurship is sales. I always think of what the founder of Trader Joe's talked about this in his book, Beautifully. It's actually episode 188 if you haven't listened to that podcast already. And I'd buy the book, Becoming Trader Joe's. That's absolutely fantastic. He writes the book, I think he's like 80 something years old, publishes the book and dies the next week. So he literally catalogs everything that he learned, building up Trader Joe's over multiple decades, puts it into book for our benefit for the. benefit of future generations of entrepreneurs. And then, you know, sadly, passes away. But he talked about in the book, he's like, listen, most of my career is just selling plans of actions. You have to sell your customers. You have to sell your vendors. You have to sell your investors. You have to sell your employees. And so he says one of the things that differentiated him, Trader Joe, and early in his career is the fact that he's just been aware from the very beginning of the need to sell everybody. And we see that with Ralph Lauren as well. Ralph was now searching for potential backers, telling them that he intended to make wide, elegant ties, remissant, reminiscent, excuse me, of the 1940s. Why investors? Because Ralph didn't have any money to start his own company. His parents couldn't lend him any money, and neither could his brothers. Ralph was a natural salesman. Ralph sold himself. He sold his taste, his taste level, and he sold his personal commitment. And here's the thing, if you currently have a job and you're telling other people about your desire to start your own company, to leave, to start your own company, they're going to tell you not to do it. Why? Because they're not founders. They're not entrepreneurs. Only founders can understand founders. It is the weirdest job in the world. And we see that. So he's like working at a time maker, and he's telling about this. And the guy's like, his name's Blake. Blake thought Ralph was naive and perhaps deluding himself about his abilities. Look, Blake counseled. You've got a hell of a good job where you are. Stay here. Ralph Lauren was not discouraged easily. And what's amazing is Ralph is going around, giving away his ideas, telling people what he's going to do before he does this. Let me just read this quote. What Ralph was talking about, we've really pushed him and got him through this time. Why I think delusional self-confidence is so important. What I had was enthusiasm. I believed in what I was saying. So he's going around and he's saying, hey, you guys can't just think, okay, this is what the time market is. Like we can greatly expand it. We can make more money by increasing the prices. He believed that he could actually expand the market. That you're not just like, I'm not jumping into the tie, business, and maybe get 5% market share because the total amount of ties sold is stagnant. And he's like, no, I can increase it. Like if you make a more desirable product, people will buy it. And then if it's more desirable and it's better design, they'll pay more for it and therefore you will make more money. And so Ralph is constantly trying to push up, adding in more of quality and value into the product so he could push up the prices. That's another main theme throughout the book. And he said, "Build value into the shirts and raise your prices. Give men more styling." Not the same traditional looks year after year. Be aggressive. So he's talking about to a shirt and suitmaker, but he's also going to apply his ideas to his own ties. Be aggressive. The customers would pay for the best when they were given chance to buy it. I wanted to change the prices too. Ties were then inexpensive. They were $3 or $4 each. The ties I wanted to sell started at $750. And I think they start, I think what Bloomingdale's does do the order later on. 'Cause you know, he first turns or dies like nope, I'm building my own brand. They come back around. And I think the ad, I think he sells them to him for like $750 and they sell them to the customers for $15. Remember, he's just like, the retail prices on these things were three to four bucks. My are $15. So throughout Ralph's career, he goes to a bunch of different partners. Sometimes they're business partners. Eventually he buys out all of his own partners. He wants to run his own show. Then he has like a hell of a time finding the right level of executives. He has to go through so many people. So the part where I get to start writing out the names, like this is so much to keep track of. So he's gonna get to started with a partner. This guy's name, last name is Browr. The name is not too important other than he's the one that helped Ralph get in business. And eventually he's gonna talk about why he let Ralph leave. And I thought it's inside there was actually interesting. So we'll get through there a minute. So Ralph's gonna walk into Mills office. Like yeah, I'm outta here. And Mills, I guess great. I was happy because I wasn't gonna have to fire him. So this is where he starts polo fashions. Eventually this is gonna turn into just a Ralph Lauren corporation. I think it's a technical name now. And this is, I thought it was interesting how they got the name. So he's talking to his brother Jerry. And it says Jerry suggested polo fashions. Polo was a rich man's game and it conveyed money, style, and exclusivity. The same quality as Ralph wanted his ties to have. Ralph thought polo was a terrific name. Now this is hilarious. Ralph is broke right now. He's got no money and that you have a broke guy starting an exclusive high priced brand. And so one of my favorite quotes that I've ever come across in any of the books, it comes from James Dyson's autobiography. The first one, the one I covered on episode 200. It'll also be on episode 300 when I reread that book. But he says James is talking about his business philosophy that he had from day one is very similar to what we're gonna see with Ralph Lauren. He said difference for the sake of it in everything because it must be better. From the moment the idea strikes to the running of the business, difference and retention of total control. That is the advice that Dyson has to you and I. So we see this here. More than the price was different. So this I already said he's charging $15 for ties at a time we can have for three bucks. Ralph made hand made prints in bright colors. He used wild exotic fabrics. And this is why Ralph said he was in a hurry. If he used everyday ordinary fabrics, nobody would have paid attention. James Dyson had a very similar thought. He said like when you saw the Dyson vacuum cleaner in a store you may not buy it. But you definitely notice it. You'd walk by and you'd see there's six different vacuum cleaners all next to each other. One is not his unlike all the others. So maybe he's like hey I'm not gonna pay four extra price or three extra price or whatever it was, but at least you paid attention and you were aware of its existence. And so I'm sure there's people that saw Ralph's ties that said hey that guy's wearing a bib and maybe they hated the way he looked, but they noticed it. And so he starts out just selling to small but very high end stores. His goal is like if I'm gonna do volume I gotta get in like the Bloomingdale's, the Macy's, the Sacks, he's not there yet. I'm gonna get to the point where it really jumped out to me where they have this meeting and he's just like no I'm not building up your brand. But something that Ralph knew from the very beginning is the nothing that draws a crowd like a crowd. That is a famous quote from PT Barnum. And so Ralph has a small brand at this time but he's trying to figure out ways to make his small brand appear much larger. He was also a showman and he understood that to build his business he needed more exposure. So after trying he finally gets to meeting with the buyers at Bloomingdale's, they like the ties or okay this is the story I talked about earlier. Bloomingdale's agreed to buy Ralph's ties. If Ralph would put a Bloomingdale's label on them, it was a generous offer selling to Bloomingdale's would have given Ralph Lauren credibility. It would have increased his sales at a time when he badly needed it. Ralph said no. So in addition to putting on the Bloomingdale's name they also insisted that he narrowed the ties by an inch. Ralph said no. The way he saw it, if he narrowed his ties and took off his label, he wouldn't stand for anything. Ralph wanted to make money but he wanted to do it his way. So I've come across an experience like this before. A very similar to this is the founder of Sony, Akima Rita wrote this fantastic book. The book is called Made in Japan. It's autobiography. It's episode 102 of Founders. If you haven't listened to it, Akima Rita is very important to study. People like Jeff Bezos and Steve Jobs have talked openly about learning from ideas and using ideas that Akio used to build Sony and to build Amazon and Apple. And so in the early days of Sony, they had the same thing happen. They're trying to sell these like little radios. They have no money. No one knows who the hell Sony is and they turned down an offer for 100,000 units. It said the people at Bolova like the radio very much and the purchasing officer said, we definitely want some of these. We'll take 100,000 units. 100,000 units, I was stunned. It was an incredible order. It was worth several times the total capital of our company. But then he told me there was one condition. We would have to put the Bolova name on the radios. That stopped me. I had vowed that we would not be an original equipment maker for other companies. We wanted to make a name for our company on the strength of our own products. We would not produce radios under another name. When I would not budge, he got short with me. Our company name is a famous brand that has taken over 50 years to establish, he said. Nobody has ever been heard of your brand name. Why do you not take advantage of ours? And then this is a crazy response. I understood what he was saying, but I had my own view. 50 years ago, your brand name must have been just as unknown as our name is today. I am here with a new product and I am now taking the first step for the next 50 years of my company. 50 years from now, I promise you that our name will be just as famous as your company name is today. And so the note I left in that book, the first time I read that, it's actually a good note. If you know why you're doing what you're doing, the hard decisions become easier. A keo and Ralph knew why they were doing what they were doing. So Ralph Pax up his ties has to find another way in. And this section is the power of the cold outreach. In Ralph's day, it's the cold phone call. Today would be like a cold email or maybe the cold DM. I've had a few conversations with incredibly successful people in the last like seven to 10 days. And this subject has come up. And when I've told them that I have never since a cold email or DM or anything in my life, they thought it was the dumbest thing ever. And there's this huge asymmetric opportunity. And so Ralph, and so we see a young Ralph Lauren was way smarter than I am. And he reaches out. One of the first people he reaches out to was actually the men's fashion editor at Playboy, which was one of the most, if you wanted to have somebody on the side, on your side is a young fashion designer. This is one of the few people that it'd be life-changing to get on your side. So it says one of Ralph's earliest boosters was Robert Green, who was the men's fashion editor at Playboy Magazine. Ralph called me and he was very young, says Green. He was this nervous little voice on the telephone. A voice so nervous that I immediately became sympathetic. I admire your directness I told him. And you obviously should be seen. He wanted me to look at his neck ties. I said, I'll tell you what I'll do. I'm on my way to something and I'll drop in. I don't want to spend a lot of time. So if you lay out your things, I will tell you right away whether I have any interest. And he brings up the fact that he goes over and he's like, Ralph was doing something that nobody else is doing. This is so bizarre and great way. He's like, I went berserk. I said to myself, now you have to relax because you have something here that is very important. I was completely surprised. And this is the end result. Playboy with me. would become the first National Magazine to feature Ralph's ties, others noticed and slowly Ralph began to build a following among a very small but influential group of customers. Ralph finally got into Bloomingdale's and then once he's in, there's this line that's just fantastic. I found it in the 700-page biography of Charles de Gaulle that I read for Episode 224. And de Gaulle's talking about his absolute refusal to back down and to make sure that France remains a free country, even after it was taken over by the Nazis, and then he's trying to help Churchill and Roosevelt defeat them so he can get his country back. But he says, "In Transigence is my only weapon." In Transigence is my only weapon, so I had to look up that word. It means they're very refusal to change one's views or to agree about something. I think some of the best entrepreneurs have high levels of in Transigence, because this guy, first of all, he goes to Bloomingdale's right, he wants to sell their ties, they're like, "Okay, you know, it has to be our house, Brian." He's like, "Nope, I'm out." Then he finds another way in. Then they make an order. Then he's like, "No, the prices aren't high enough. We have to build this ultra-exclusive brand. The quality has to be really high." His in Transigence at the time, no one really knows who Ralph Law are, you know, small amount of people do. No, who he is. He's still in Transigence. It says Ralph insisted on quality. He also insisted on the prices, which I thought were too high. This is the people at Bloomingdale's. I told him that even Bloomingdale's in one of the most affluent neighborhoods in the city, so this is in Manhattan, couldn't sell polo ties at $15. I was wrong. This was the start of a marriage between Ralph Law and Bloomingdale's that would last more than 20 years. And so this is still his first year of business. It doesn't have a lot of money, and he's still turning away business. Ralph had turned away wallets, one of the fastest growing men's specialty store chains. I didn't want to sell to them, he said. I didn't think they were the right image for me. They didn't have the customers I wanted to sell to. It would kill the exclusivity. I was the consumer, and I understood exclusivity, so he's someone I was a consumer. He repeats this over and over again. You should be building products for yourself. He's like, I don't know what other people want. I know what I want. So I just make what I want, and I assume there's other people that are going to like what I like as well, especially if I can sell the story to them and tell the reason why. And this is a great line here about the fact that, you know, this guy's in the very beginning of his company's turning away money. And it says, it was one thing to like Ralph Lauren, understanding him was something else. So in the documentary, Ralph says, listen, this sounds looking back. It sounds like a master plan. He was not like a master plan. People like my ties, and then they would naturally say, hey, what else do you make? And Ralph starts making shirts. He starts making suits. Then he expands out to this entire lifestyle, like redecorate your entire house, your entire closet. He'll influence the kind of cars you buy, even if he's not the one making them. And the reason I bring this up to you is because this is when he decides he's got a switch business partners. So he's going to leave that guy told you earlier. Just remember his name, Browys. We're about to leave Brower. We're about to link up with this guy named Norman Hilton, eventually he's going to tell Hilton that having a partner was like having, like being tortured or something like that. I'll read the highlights to you in the future. So he's going to leave Hilton later as well. But he has to link up with Hilton because Hilton's got the money needed to start creating things other than ties. And so Browys saying, like, why didn't you fight this, like, why did you just let Ralph go? And he says, I let Ralph take the name for two reasons. First, it was his idea. Second, we didn't think we could move forward without him. A lot of people later asked how we could let him go. Today, I wouldn't. But who knew what was going to happen back in 1968? And so then this speaks to Ralph's comments, like, you know, it sounds like a master plan. It wasn't a master plan. Ralph Lauren, tie maker, had now become Ralph Lauren, menswear designer. So Hilton tries to get Ralph to set up shop where all the other designers are. And so I just had somebody send me a quote that I was very interesting. I don't think I said it, but it was like their interpretation of something on an on an on an episode, talking about Charles the Gaul and Henry Singleton consciously avoided their peers. So they wouldn't mimic what their what their behavior was. I think there's actually a lot of wisdom embedded in that idea and we see this with Ralph here. Hilton wanted Ralph to move to 1296 Avenue where there are other menswear companies had sheriffs. The manufacturers crowded into one building because it made it easier for out-of-town buyers to shop the different lines. Everybody thought this was a good arrangement. Everybody that is except Ralph Lauren. The first thing a buyer did was walk into the lobby and run his eye up and down a directory of hundreds of manufacturers. Ralph didn't want his company name on that directory. Polo stood for something special, something unique. So this is important. The next, let's see, decade and a half, maybe decade, he is a manufacturer. Manufacturing is going to cause him to almost go broke. And so as he expands out into ties, he has this idea, he's like, hey, we're actually the only thing what we're doing. This is the first, the mention of this idea is like, oh no, we're marketing a lifestyle. And it's a lifestyle based on Ralph Lauren himself. Since Ralph dressed one way at work, one way at home, and one way on the weekends, he assumed the customers did too. This was the start of his lifestyle marketing. And so he realized he didn't want his clothes sold the way everybody else's was. So like, you walk in a department store now, right? And you'll have like these individual brands, they almost, they have like these stores within the store. But Ralph was the first menswear designer to do this. There's so many ideas in this book that seem so, like they're obvious to us now or maybe like they're just the experience we've had because this has been like this since ever since I stepped inside of a department store. But there's so many times where Ralph was like the first one to do it. So one example I don't think I'll talk about on the podcast, which blew my mind was that there was no such thing as like a menswear designer at the time. All the famous designers, a lot of them were men, but they made women clothes for women. Women bought their clothes from individuals, like Oscar De La Renta or whatever, or Christian Duor, and men bought them from like brands, like Brooks Brothers. And the only relationship you would have would be with a relationship with like your tailor. But Ralph started just selling men's clothes and not it was like one of the first men's designers. And what was also interesting is that he operated in the opposite direction. So you're supposed to everybody before Ralph Lauren would start designing clothes for women. And then if that was successful, they could move into designs for men. Ralph was the first to start with men and then move into women. And at the time, people said, no, you can't do that because you just want to start with women first. He's like, why? Because weird opportunities just hidden in plain sight just because people are acting out of routine or the way it was always done. And so you see the same example here where he's the first people to go to say, no, I need my own store inside of Bloomingdale's. And so just because another mens designer hadn't done this yet, that didn't stop Ralph from pushing the issue. So he's going to push this issue with this guy named Frank Simon, who works at Bloomingdale's. Hey, I need a shop. Ralph told Frank. He was selling an image, a way of life, and he didn't have the money to advertise, which meant he could only tell his story through his own store. Simon thought that this was a dumb idea. And he wanted to group Polo's clothes inside the men's department. Finally Ralph said that if we didn't build him a store, he'd go somewhere else, so Simon, that's Ralph. He's a good, cool negotiator, and he's consistent. So this is what I mentioned earlier that if you know what you want, you got to work your trying to work your way into a position to actually accomplish what you want. And the way Ralph did this, he just consistently pushes. He's not like yelling, but he's perfectly fine. If you tell him no once, twice, three times, he's just going to be very consistent. And this, in this case, he just gives him an ultimatum, and he's like, well, I know I'm going to do this. And I want to do a blooming, but one way or another, I'm doing it with somebody. So it says he had the dream, but he wasn't big enough yet to do that himself. It was the first time the men's department had given a designer his own boutique. So then we get to what was the most interesting part of the book for me because it goes in great detail over a ton of pages, just about the fact that he had experience of rapid growth. And because he's having to manufacture so many different pieces, he doesn't have the experience, he doesn't have any of the cost controls in place. He doesn't have, he's about to hire like the first quote unquote finance guy. He finds himself in a position where he's got an unbelievably popular brand sales going through the roof and literally no money, no credit, and on the precipice of bankruptcy. And so he hires a finance guy, it's guiding Michael Bernstein. And Michael is promised like 10% of the company. He's going to be Ralph's partner. And from the very first day, it's like, oh, wait, things from the outside, it's like this guy's winning design awards, his ads are everywhere. We're lined up and blooming deals to buy his stuff and he gets to the office. He's like, okay, this is kind of weird. Unknown to Michael Bernstein, Polo's unsecured loans to the first national bank of Boston on the date of his arrival amounted to over 300,000 dollars. As he walks in the office the first day and he finds it's like, oh, we're up to our eyeballs and debt. No one's really paying attention to stuff. And they're having all these manufacturing issues where they can actually fulfill and actually create their product, which is huge, which is obviously a drastic mistake. From the date of his arrival amounted to over 300,000 dollars, more than Polo's earnings for the fiscal year that ended in 1971. And so Ralph's in his early 30s while this is going on. This is where he buys out his partner, but you see, oh, it's like, wait a minute, we're buying out your partner, but you don't have any money. What's happening here? How can you not have any money? He was tired of being shackled to Norman Hilton. Ralph no longer made his clothes in the Hilton factory. He didn't ask Hilton's advice and didn't use the Hilton name to do business with major department stores. The original $50,000 that Hilton put up had long since been repaid. Hilton still owned half the business. So Ralph sends this new guy Bernstein, like, hey, figure out how much, like how we're going to buy out Hilton. And so he asked him at lunch, he's like, okay, how much do you want for your Polo stock? $750,000 Hilton responded. That's too much said Bernstein. Hilton shrugged. He thought $750,000 was a nominal price to pay considering that he had put Ralph in business. And you're also negotiating with somebody that doesn't want to sell. So it says, the seller was a man who lacked incentive. I didn't want to go said Hilton, I never wanted to leave Ralph, but he wanted me out. I recognized that I owned half the corporation, but I didn't own half of Ralph's brain. There was no law that he said he had to work for that company. It was his talent. His talent was the entire thing. I said to Ralph, I don't want to go. And he said, and these are his words. It's torture being a partner to somebody you don't want to be a partner with. So Hilton eventually agrees. He actually sells for $633,000 instead of the $750 that he initially asked for. Hilton later used the money to buy himself a vacation home on Sea Island, Georgia. This is the house Ralph built me. He would tell his guests smiling. It was a hollow joke. Hilton had remained a partner in polo today he could own 30 houses on sea island. Ralph paid Hilton 150,000 in cash and signed notes for the remaining 480 grant. Now here's the crazy part. The fact was Ralph's company coffers were so bare that Ralph had to borrow the 150,000 in cash that he needed. So he's in debt for the entire 683,000. And so this outside guy that's actually the president I think of one of or he's like the one that's in charge of the polo account from one of Ralph's creditors. He's got named David Goldberg. It's going to do this like thorough investigation of the finances of Ralph Lauren's company. And that's where they realized oh my god they're almost insolvent. And so it says polo had problems. They needed established better controls, cut overhead and move Ralph Lauren out of manufacturing into licensing. And so it's so crazy to people that haven't experienced that. You can have so much growth when you're manufacturing physical goods that that can actually bankrupt the company. This is very similar. If you read Phil Knight's uh fantastic biography shoot dog the early days of Nike were so they had so much growth and he refused to slow down that he constantly was on the edge of going out of business too. And so this is what it sounds like when that's happening from a financial standpoint 1973 started badly for polo and rapidly got worst sales for January and February fell behind plan because key contractors refused to make and ship merchandise unless they were paid cash his credit essentially just contracts. And so then he is so his supplier is holding his merchandise hostage but he needs that merchandise to make more money. It's his vicious cycle. Uh polo's own factory mutiny the Andrew shirt company refused to release 400 dozen shirts until its invoices were paid polo's board called a special meeting devoted to the commissions that Ralph received on the sale of certain polo items those commissions were in addition to Ralph's regular salary embarrassing as it was polo could not afford to pay Ralph any money instead he had to step up to the table stepping up to the table for Ralph met handing over his personal checkbook he had a hundred thousand dollars in his account and he had a pledge it to the company Ralph began having trouble sleeping at night and so his controls were so nonexistent that even though in one year they go from 3.8 million in sales right to 8 million Ralph had thought they were making a profit they actually had a loss of like 45 thousand dollars and so the fact that his CFO the guy that's supposed to be running this was stunned by this pro forma that is made by one of Ralph's creditors this guy David Goldberg that actually cost uh Bernstein Ralph is gonna fire Bernstein but difficult is like they were like childhood friends there like they'd hang out like with couples like this was like firing you know one of your best friends I says we're really stunned we're really stunned Ralph was Michael Bernstein's astonishment at the losses this is not what Ralph wanted to hear if Michael Bernstein did not know whether the company was making or losing money while was Ralph paying him to be the company CFO this was more than an ordinary firing Michael Bernstein had been one of Ralph's closest friends they socialized together their wives were friendly they were partners and what's crazy is wow from the inside right no one knows all the like the how close Ralph is to bankruptcy right on the outside he is still winning awards check this out so one night it says Ralph won his second Cody award for menswear so that's like one of the the most important fashion design awards right he does that on a Thursday night wins this award for you know best designer the next day Friday he could not meet his payroll whoa near lunchtime he said uh I got a home and change I'm having lunch with Marvin Troll Marvin Troll was then the president of Bloomingdale's the reason he was having lunch with Marvin was that he needed to ask Blooming dale's to advance him money on fall merchandise this is in June this is very unusual it's like I need the advance on the stuff that's going to happen you know five months from now if Marvin says no Ralph does not make payroll Marvin said he would make an exception in advance Ralph the money he needed Ralph made his payroll with the check Bloomingdale's gave him so he's going to find a way out of this vicious cycle like if his creditors caught off credit then he has no merchandise sell he can pay them back so this is the company needed a hand holder for the creditors because it's books were a mess there were no systems and no sophistication in terms of accounting procedures credit procedures returns even administration such as fringe benefits holiday salary reviews and sick days the first day I walked into the offices there was a lawsuit on my desk from Burlington industries a major peace good supplier they wanted money money that that Ralph Lauren did not have buying Norman Hilton stock remember a few minutes ago I was just saying he didn't want to have partners was a catastrophe because it wiped out Polo's net worth there were the financial these were the financial realities of running a business that was nearly bankrupt the daily personal embarrassments were worse people stopped Ralph in the street in the showrooms and at lunch what is wrong with your business they'd ask how many people have you laid off Polo fashions had been so hot so successful and Ralph had been so cocky so full of himself now Ralph Lauren was getting hit so it's talking about the the perception of people that you know did not like that he kind of skyrocketed you know rather quickly now it's like good he's getting what he deserves right there was fear in the showroom there was fear in the factories there were fear in the design studio many of those closest to Ralph quit for better jobs this I've seen a bunch of times like you may see that this is why it's it's weird we're we're companies like oh we're a family no we're not family we're a team because what's about to happen here is people first of all he considered family he had a fire including his brother but his his partner Bernstein right but also like some of his closest employees this happened to Jeff Bezos when he had that drop I think his stock went from like $181 down to like seven or something if you read the everything story talks about like this mass exodus out of his company people forget that because they see what Amazon is today right they didn't realize how close he came to losing everything the fact that when that happens the normal human reaction is for everybody to abandon you even people you thought would never abandon you and you thought were really close to you this just happens over and over again for us to think that it's not going to go out for a bit hopefully I like what Charlie Munger said like two weeks ago or last week maybe wins wisdom is prevention wisdom is prevention I really like that line it's like okay if you're really smart like you should avoid the problems not just have to solve the problems when they pop up and so hopefully we can avoid this fate but if we were you know gonna experience some kind of contraction it's likely that the people that we thought were you know writer dies people that would stay there forever are going to leave they just have pops up in the books too much to not realize this is just something that's repeatable through human nature fear many of this closest to Ralph quit for better jobs and so there's this guy named Sal's sorry I don't he's I don't know how to pronounce his name but this one hurt really bad to Ralph each resignation was a personal rebuke it was Sal's departure though that hurt most of all Sal left me when I was choking and he opened his own showroom says Ralph then a year later Sal called my interior director interior decorator Tom and hired him that killed me I had always loved Sal after all that he pulled out and left me he didn't believe in me and then he screwed me I needed somebody to help me somebody to stay it was a very frightening moment Ralph would walk into a peace good showroom so supplier right look over the line and write his order then before you could leave a salesman requiredly but firmly explain that his credit wasn't any good Ralph Lauren was a design award winner but he had to pay cash this is how Ralph learned polo fashions was two companies there was the design business the business that dependent on his eye his taste his feelings this is the side of the business he's running then there was the business side where nobody cared about his eye nobody cared about his taste or cared about his feelings only money counted not dreams when I got to that paragraph what popped out on me I think it's episode 227 it's the essays of Warren Buffett you can also find it in Warren Buffett shareholder letters and Warren says when bills come do only cash is legal tender do not leave home without it he's talking about the reason that him and Charlie said on mountains and mountains of cash people constantly trying to get to them to chase a better return with the cash is like nope we've seen this play out over and over again when bills come do only cash is legal tender do not leave home without it and he's talking about the fact that let me read the the second part of this paragraph because I actually think that was interesting Warren's writing says this is the reason for our conservatism which may impress some people's extreme it is that it's entirely predictable that people occasionally panic but not at all predictable when this will happen though practically all days are relatively uneventful tomorrow is always uncertain that is why you always have to have a mountains of cash right for your company to survive and so his points like you know every day almost every day we experience a relatively uneventful but you have these one or two days that come along every so often and everything changes asset prices change and he says I felt not any talks about this I felt no special apprehension on December 6th 1941 the day before per harbor or September 10th 2001 and if you can predict what tomorrow will bring you must be prepared for whatever it does again how does he start that when when bills come do only cash is legal legal tender don't leave home without it we see this playing out in Ralph's life you know luckily he survives this now he's I think 83 years old but this is him in his 30s you know if Ralph made a bad move here we don't know who Ralph Lauren is and so he's realizing that's side of the business they don't care about your eye your taste your feelings any that do you have the cash or not and so luckily Dave Goldberg one of his creditors comes in it's a very simple plan it's going to be very similar to what Geffen told Calvin Klein there's a there's a way to make money here and you guys are doing it the wrong way it's amazing he's essentially the same business but this change of business model takes him from the precipice of bankruptcy to one of the richest self-made men in America that is wild and it does so within 10 years Dave but Dave Goldberg insisted polo fashions had to do four things to survive they they need to license the women's wear business which was a cash train that's the first thing they have to do Ralph had to invest more cap find more Alright, yeah, okay. capital to invest in the business. That's the second thing. Third, Polo needed to work out a deferral program on 500 grandadows, this other company, which is the company that makes it suits, or 'cause they need those suits to sell, right? So that's the third thing. And finally, number four, Polo also needed to renegotiate the repayment terms of the nearly half a million dollars at own Norman Hilton. Ralph did all of these things. And so in the next two years, they create this remarkable turnaround doing all these things, transitioning from a manufacturing company to a licensing company, watching their costs. Again, gentlemen, watch your costs. I think it's an angel Carnegie that said that, the importance of paying attention to the expense side of your business, where most people just focus on the sales side, which is crazy to me, is the most common theme in the history of entrepreneurship. And we see that Ralph was doing that. He was focusing like, what do you talk about? We just ate million revenue. How the hell could we not be losing money? 'Cause no one is watching the costs. With its overhead reduced and its other businesses, I'm gonna skip over the brand names. Licensed out, Polo began to make money. Ralph Lauren could even buy peace goods on credit again. This made me think of, I so wish, Sam Walton was still alive. I mean, you can read, I read his autobiography, I think two times, I'll probably read it seven times. Throw my life in fact, I just had dinner with somebody that has dinner regularly with Peter Teele, and he said something that was very fascinating, that Peter had mentioned at dinner, you know, an idea that he found through the seventh reading of some book. And I just made me feel so much better. 'Cause I'm like, oh, I can't believe, people are like, oh, it's kind of unusual that you reread books. It's like, why wouldn't you? Why, like the brain is like this amazing device to forget things. And not only that, the words change because you change as a person. So in between, I think it was like episode six, the first time I read Sam Walton's biography to episode 234, something like that. Like, think about how much information I've consumed. Like, I'm a completely different person. And so I just really wished Sam Walton was alive. I wish I could talk to him, you know, reading his autobiography is just, you know, the next best thing. But I just would be absolutely fascinating to be able to like, you know, have a conversation with that guy. But when I get to this section, I thought about one of my favorite things that Sam said. Sam said a lot of smart things since autobiography. But he said, it's like, you can make a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you're too inefficient. Ralph Lauren was brilliant. He's winning awards. He's creating new categories. He's increasing prices. He's being absolutely brilliant. But he was too inefficient and he almost went out of business. What did Sam just tell us? You can make a lot of different mistakes and still recover if you run an efficient operation. And so Ralph talks about in the documentary, like how dark an appeared this was. But the greatest thing, I love what Jeff Bezos says. He's like, plan B should be to make plan A work. The idea behind that is the fact that if you have a plan B, if you have something to fall back on, a lot of people fall back on it. For Ralph was like, no, there is no falling back. It's this or nothing. So it's like there's no moment as difficult and painful as it was as like I ever thought of quitting. And so this is crazy 'cause he had a single-minded purpose. This is a quote about Ralph. From somebody that Ralph fired. The thing that said Ralph apart was his single-mindedness of purpose. Everybody else moved from place to place, from trend to trend. He wasn't trendy. He stayed with it. It is the single most important thing about him. To this day, there are people walking around saying Ralph Lauren isn't that special. I could have done that. It is the weirdest thing. They couldn't be more wrong. Ralph is the most special guy in the apparel business and he said that after Ralph fired him. And so when Ralph finally finds a partner later on, this guy named Peter Strom, who I think they might be still partners to this day, I'm not sure if Peter passed away or not. But they were partners for a long time, if I remember correctly. And they're just talking about the condition of the business, the fact that my friend Patrick from the Invest Like The Best Podcast told me about this guy named Graham Duncan. And I started reading his essays. And then he told me Patrick told me to listen to Graham Duncan's episode on the Tim Ferriss Podcast. It's called Talent is the best asset class. I'll leave a link in the show notes as well, or you can just search on your podcast player. I love that conversation. I saved a bunch of clips because I liked a lot of things that Graham was saying. And there's like this idea that Talent is the best asset class. Ralph was an unusual talent, it says this. The truth of the matter is that the only great thing about Polo was Ralph. Everything else was terrible. And yet that's all you needed, a truly unusual once in a generation talent. So this is really where Ralph, as an entrepreneur, really grows up, the company grows up. It's amazing, this transition happens. It's like 180 degree difference in their financial situation happens in just two short years. So he's learning how to edit the team. It says Ralph had learned that he had to run his business like a business. This means that he even had to essentially get rid of his own brother. And then they go all in on this idea. Well, if licensing is where the money is, let's go into that. Says he was now on a roll by the fall of 1976. Polo's licensees included Tiffany and company, a fur maker, a shoemaker, a lingerie maker, a Japanese men clothing maker, a scarf maker, an eye-grat glass frame maker. Polo's volume, including sales from license products, was $18 million. He was now learning what would be the most important lesson in the fashion business. And almost did not matter how much money a designer made or lost producing his own collections, as long as he signed enough lucrative licensing deals. And then controlled the quality of the products made, bearing his name or logo. So there's another fashion designer that was doing this before. So this guy named Bill Blass and then Pierre Cardin. And they go over the numbers of just how different. Like all the money was in licensing. Bill Blass's licensing business, for example, brought in $100 million in 1976. The collections that he made himself did no more than $25 million. And then this is a punchline. Licensing would explain how the designers amassed such large fortunes so quickly. Ralph would show exactly how well he understood this when he signed what would be one of the most lucrative licensing deals. A deal that a decade later was still producing royalties of more than $5 million a year. So I put $5 million a year into the, like to adjust it for inflation. And today's dollars, that's $13 million a year. So let me just read that again in today's dollars. So 10 years from now, a deal that would still be producing, this is just one single deal. He's got a ton of licensing agreements. So now you can see how he afforded the golf stream and all the estates. A deal that a decade later was still producing royalties of more than $13 million a year. Ralph Lauren designer would become Ralph Lauren perfume seller. And so the history of business is filled with these unbelievable deals that individuals, and in many cases, two individuals come to mind. They're able to work out for themselves. So I think of Coco Chanel and I think of Michael Jordan. Coco Chanel, I covered this on episode number 199. She eventually gets I think 2% of all gross sales worldwide for all the Coco Chanel perfumes. Chanel number five being one of the most commercially successful products of all time. She was making like, this made her reportedly, the richest woman alive when this deal was going on towards after a halt she was. But she was making the equivalent of, so it's $25 million a year back then, which today's dollars, it'd be like, somebody paying you $300 million a year and her contract stipulated that the company had to pay for every single one of her living expenses. So she's got no bills and she's making $300 million a year. And then Michael Jordan's deal that he has with Nike was also in the news, especially in the last year or two because Jordan Brand is still growing so much. And I think he gets 5%. I think it was at 5% on $3 billion of sales. I think a year or two ago he was making 150 million a year just from that deal and he'd been retired for over 20 years. And so Ralph's royalties, the year this book came out, which is 35, around 35 years ago, says Ralph's royalties that year were $16 million in today's dollars, $16 million despite the fact that Ralph never invested a cent of his own money in the fragrance business. And then towards the end of the book, the author goes into, what is all this success done for Ralph? Like, why is he doing what he's doing? And what is it done to him? And another way to think about this is like, why is Ralph doing what Ralph is doing? What does it mean that somebody from the Bronx who starts out selling fat ties can build a fashion empire that stretches from New York to Paris to Tokyo? One would think that after all the awards Ralph has won and all the money he's earned, he'd be satisfied. Ralph is not satisfied. He's anxious and sometimes insecure. So what does he want? The answer is not more money. If Ralph wanted to cash in fast, he could triple his licensees overnight and boost his income without taking any financial risk. And he has not done this. Ralph hasn't expanded faster because growth still makes him uneasy. Some businessmen dream of building big, powerful businesses. Now Ralph, he wanted money. He wanted luxury. He wanted recognition. But he never aspired to manage a billion dollar company. As meticulous as he is about his work, Ralph has never spent hours plotting his next career move. And then he goes into something that will be surprising to people from the outside, but you and I have talked about a number of times. So much so that it should be expected at this point. This success, he says, I don't want to tell you it's lonely, but it isn't completely fulfilling. It isn't the need for celebrity that pushes him forward. No matter how much attention Ralph receives, it'll never be enough. And he probably knows this. What motivates him is fear. For nearly 20 years, Ralph Lauren has been at the center stage in his industry and he intends to stay there. He has fought hard to get to the top. He did not inherit money. He did not graduate from college. The stature and wealth Ralph has accumulated he earned. He understands. better than anybody else. He knows not only how hard it is to achieve success, but even more demanding how hard it is to maintain it. But is he going to slow down? Not likely. As he said, my soul is in what I do. It's Ralph Lauren's name on the door, on the ads, in the store, and he intends to keep it there. And if nobody ever gives him a crown, hell, he'll design his own. And that is where I'll leave it for the full story. Highly recommend buying the book. If you buy the book using a link that's in the show notes in your podcast spare, you'll be supporting the podcast at the same time. You can also go to founderspodcast.com. 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