Michael Kors: Michael Kors - Transcripts

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I was writing payroll checks for my personal checking account. I went around to Fabric Resources and begged them, please, will you give me credit? I had no office. The first time I got a phone call and the New York Times said, oh, we have a reporter who would love to come and look at the clothes, and I said, well, they can't come here. And they were like, well, what do you mean?

And I said, well, I'm literally, you know, sewing in my bedroom. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Roz, and on the show today, how a kid from Long Island turned his name into a global brand with designer luxury apparel and accessories under the label Michael Kors. If building a fashion brand is hard, turning that brand into a global one is really hard, especially because names like Nike, Adidas, Louis Vuitton, and Gucci take up so much market share. If you look at the 50 biggest global fashion brands, only a handful are the names of actual living humans. You can probably guess some of them, Ralph Lauren, Tommy Hilfiger, Calvin Klein. And if you go to Bangladesh or Dakar or Chicago, you will likely find some kid wearing a shirt that says Tommy Hilfiger or Calvin Klein. And you may wonder, why? Why is a black t-shirt with the words Calvin Klein such a desirable article of clothing? Well, the answer, of course, is branding Calvin Klein, Tommy Hilfiger, and Ralph Lauren figured out how to turn their brands into aspirational products. And they didn't become global brands by accident. It happened methodically, carefully, and strategically.

So Carl Anderson took on a new last name and then a brand new first name as well. So I was going to be Kors. And I think that at the time there was sort of this, okay, well, we want to use the initial M to commemorate my great grandfather, and my mom said, you know, what name do you like? And I said, Michael, I want to be Michael.

So I changed my trajectory. I know that your mother was a model, and so she would do like catalogs and things like

that? Well, it's funny. My mother started modeling when she was 17. She did some advertising. She was sort of a runway model in local fashion shows. And I think because she was tall, she said she was always the bride in a fashion show. So she wore a lot of bridal gowns. And then she was sort of modeling in showrooms. So she was on 7th Avenue in the fashion district. And then by the time I was four or five, Revlon, the cosmetic company, they opened a place here in New York that was called the House of Revlon. And I think it was meant to be their sort of salon. And they needed sort of the in-house hair models.

sort of guinea pig for whatever they wanted to do to your hair. Wow. I mean, did you grow up, would you describe your sort of upbringing as middle class? I mean, your mom was a model, but she wasn't like a, it was a different era.

This was before supermodels and, you know. Oh, no, no. She was pounding the pavement. She was definitely not, you know, Linda Vangelista or Bella Hadid. She was getting out of bed for less than $10,000 a day. She definitely was. I grew up at that point, what I would say would be a comfortably middle class.

Middle class with some perks.

And you, as a little boy, were also a model, like you learn like advertisements for like Lucky Charms, I've read, for example.

Yeah. I think when I was around four, I went to a birthday party for a friend in the neighborhood. And so a bunch of kids were all at a birthday party and the adults are there supervising. As it turned out, the boy whose party it was, his uncle was there and his uncle produced television commercials. And he started talking to my mother and said, you know, I think he'd be great on camera. So she asked me if I was into the idea. And I said, sure. And the first thing I did was, in fact, a Lucky Charms commercial. I did a lot of things that, in fact, got tested in different markets. You know, Snapple, for instance, of course, now we think of Snapple as iced tea. Yeah. I did Snapple apple chips, which that did not happen.

Yeah. And as a kid, there's a photo of you as a kid and you were a really handsome boy and still are handsome men. But as I was looking at you as a boy and you look like, I'm trying to think who you look like. You look like Christopher Atkins from the Blue Lagoon, you know, in the movie, with Brooke Shields, right? Like you have this curly blonde mop of hair as a kid. And you looked like that through your teens and your teenage years were the 70s. I mean, that was when you really kind of came into your own. And I wonder as a kid already, were you interested in fashion already as like 10, 11, 12 year

old movie? I think that I was bitten by the bug even earlier than that. I grew up around people who loved clothes. They loved clothing and they loved the whole idea of getting dressed and looking great. My grandmother, although she was an assistant principal, she got dressed for work every day like she was going on a fashion shoot. My grandfather loved clothes. My aunts all loved clothes. So that was part of the conversation. Plus, I actually loved growing up, I loved to draw. So I was constantly in my room drawing and reading. And when I was growing up, it wasn't just fashion. I would sit and doodle houses, cars, all of that.

So it was definitely something that was always there. Michael, when you were a teenager and in sort of the world you inhabited, would you have considered yourself a socially active kid, like did you have lots of friends or did you get teased? I mean, you were into fashion and obviously you're a gay man today, but back in the 70s it was a different world.

What do you remember about just being you at that time? The funny thing is, although here I was sitting and sketching women's fashions, totally obsessed also with theater and music, so I'm definitely not on the Little League team. I was obsessed with how I was dressed. I would have spent my last dime on getting something that was probably more outlandish than anyone else was wearing. There were comments for sure, but at the same time, I don't know, I think my family imbued me with this sense of confidence that, you know what, you're not the same as everyone else and that's actually going to be a plus. So I'm very lucky that I had that situation. A lot of kids don't feel that in their home. I think for a lot of kids, if they made a proclamation that they wanted to be a fashion designer, their family might say, well, what is that? What does that mean?

I didn't have that situation. What does that mean? Yeah. I didn't have... I'm curious because, I mean, obviously your mom was a model, so she had done runway things in Long Island and locally. Did you have access to great clothing on Long Island or would you go to the city? I mean, obviously New York wasn't New York today, but even in the 70s, it was still a fashion capital in the world.

Well, I mean, for me, from the very, very, very young age. I grew up loving movies and The Wizard of Oz was... When I was growing up, that was just the ultimate magic and I really did think of Manhattan and New York City as Oz. And so there was never any question that I would be a New Yorker. So my heart would pound by the time I was a teenager and I'd be saving up to go to Bergdorf Goodman or to go to Saks Fifth Avenue and buy something and it would just be the greatest thing in the world for me to have that special piece and I always wanted something that other people didn't have.

I never really wanted to be just like everyone else. Yeah. There's a famous photograph of Bianca Jagger on a horse and anyone who knows anything about Studio 54 in the 70s knows that photo because it's so iconic. She celebrated her birthday on a white horse in Studio 54 and it just tells you everything you need to know about New York in the late 70s. You were there. You were actually at Studio 54 that night as a high school student, like just out dancing,

right? Once again, I go back to the idea that I really never wanted to be like everyone else. Instead of going to my senior high school prom, that was in fact the night that I first went to Studio 54 with a friend. We went into Manhattan. We went out to dinner. I didn't even actually think at the time that it was so special that we were able to get in or why did we get in? We were 17 years old. Who knew who we were? But we had youth, I guess, and energy on our side and maybe I had Christopher Atkins' hair from Blue Lagoon, who knew? And I somehow knew instinctively that this was a remarkable moment in time, the magic of being in a room and seeing all the fashion people that you look up to and worship, Halston and Liza Minnelli and all of these people and then Bianca Jagger comes in on a horse and you say to yourself, well, this is the place I want to be. It was that moment that can happen that often.

If it happened all the time, it wouldn't be as special. Yeah. So you knew already you wanted to go to fashion school and to become a fashion designer and you did. You went to the Fashion Institute of Technology in New York, but you were only there for, I shouldn't say only, but you were there for about nine months before you dropped out. Tell me about why. I mean, did you get there and say, you know, I think I just want to start working.

What happened?

Well, I think that I thought that I would do the expected trajectory. I'd go to school, I'd get a job when I graduated, hopefully working for a designer who I admired. I'd learn the sort of inner workings of how it all worked. I'd pick up pins, I'd fetch coffee. And while I was in school, I was working at a boutique on Fifth Avenue and 57th Street called Lothars. And I got a part-time job there selling the clothes that they carried at the time, which were sort of, I don't know, you maybe call it the gap for the uber rich. It was jeans, t-shirts and down jackets all made in France. A lot of it tie-dyed. And we had remarkable celebrity clients from around the world. So we had Cher and Diana Ross and Goldie Hawn, Rudolf Nuryev, Jackie Kennedy, I mean, it was amazing. And I was 18 years old. Wow.

themselves with fashion. Yeah, I was knocked out. So you're working at Lothars and obviously learning about a retail store and how to sell and how to help customers, but also on the side and at home, just sketching your own designs, which you'd been doing since you were a teenager. What kind of things were you sketching? What types of apparel were you drawing?

I think if I describe it now, everyone will say, well, I guess it's pretty similar. Everything was sort of timeless, but not classic, luxurious, but not ostentatious. So a lot of it was all about versatility. I always thought about comfort. I think I learned about that also, being in a retail store and watching people trying things on. So that idea of sort of sporty glamour, that's definitely been my focus since I designed

at Lothars and since I started designing on my own. When you thought of, you're working at Lothars, but in your mind, did you think this is really just this kind of holding pattern before I make my own mark? Or were you intimidated by the idea of trying to become a fashion designer? You knew the names of the famous people. You knew who they were.

Did you think I could do that too, or did you have some self-doubt? I don't want to sound that I was overly confident, but even though I didn't finish school, even though I didn't really know the mechanics of really how the fashion industry truly worked, I knew that I wanted to do my own thing, have my own business, my own collection. And I had a very defined point of view. Funny enough, at the time, I was still at Lothars and I had started designing the clothes that were in this store. I was also doing the visual merchandising, so I was doing the windows. The staff reported to me, the selling reporting came in to me. So this was a lot for someone who was 20 years old. But I still for a minute thought maybe I should go to work for someone else. I'll learn something if I go to work for someone else. And we had a lot of fashion insiders shop in the store, and there was a woman at the time who was a designer, who I admired, who she shopped in the store. Her name was Adri. And Adri, I said to her, I said, you know, I think that there is a possibility that I I could go to work for Halston and I love what he does.

And you at that point should do your own thing. Right, right. So you were, I mean, you're 20, 21 years old working at Lothar's and also designing pieces that they sold, like what, jeans? No.

Shirts, button-downs? No. Shirts, button-downs? No, what happened at Lothar's was funny. As I said before, if it was really initially the sort of European, French gap kind of for basics for the very rich, it was a very, very specific look. And as the 70s ended and tie-dye and hippie and all of that disappeared, we suddenly, we were left with the wrong product. And so I started designing really a full range of different clothes for the store, which included, you know, women's jackets that were more tailored, a more polished look. The 80s were starting to happen where people were gonna be a little bit more dressed up.

And I was just going by my gut, my instinct. And all of that, I mean, because a store like that today would mostly sell brands, right, from other designers. Oh, yeah. And maybe they might have their own line, but it's super inefficient, right? A small boutique designing its own line and then just making a few pieces of, you know,

like maybe 20 or 30 pieces. Oh, no, we didn't even make 20 or 30. We'd make 10. Oh, sometimes I would make two.

Wow. But was that common for a store, a small boutique,

to have its own line of clothing thing? In-house designer? No, not at all. I mean, you know, was I in the right place at the right time? The people who owned the store, they knew that I, you know, understood the customers and I was a designer. So the next thing I knew, I was set up with a little workshop in Manhattan. So I first, you know, for the first time in my life, I had people who were making the patterns, following my sketches and actually making the clothes. So I started buying fabric and buttons and zippers and I mean, it was literally, I kind of learned about being reactive. So I don't know if my windows had colorful dresses and it was, you know, April and I had colorful dresses in the window and suddenly it started raining cats and dogs every day and it was pouring rain. I said, okay, well, you know what? People are gonna need raincoats. So I would literally run and buy some material and figure out what kind of cool raincoats was I gonna make and I would put those in the window.

which was, you know, incredible way to learn. Incredible and also just, I mean, again, like the, you know, in order for that store to survive, they would have had to have sold those pieces

for just a fortune. It was expensive. I will definitely acknowledge that what we were making was for a very rarefied clientele, but I think people also absolutely loved the fact that they knew they were not gonna see, you know, if they bought that raincoat that I put in the window, they weren't gonna see, you know,

everyone on the street wearing it. I guess that they're, I mean, you're in the store. Obviously, celebrities are going there. Your designs are in the window. Like some of the clothes they're selling are designed by this kid, Michael Kors, and probably some people asked and more and more people start to find out about this. And I guess there was one person named Don Mello who had a big job at Bergdorf Goodman who noticed your designs. And what, is that what happened?

She noticed your designs and said, hey, let's talk. Well, I was actually doing the windows. I was physically in the window on 57th Street and Fifth Avenue. I think I had pins in my mouth and I was dressing a mannequin. And this very, very stylish woman walked into the store and she started talking to me and she said, these clothes that are in the window, they don't look the same as the tie-dyed French Lothar's clothes that, you know, we had seen in the past. She said, who designs these clothes? And I looked at her and I said, I do. And she said, but you're doing the windows. And I said, well, I do the windows and, you know, I design the clothes and I'm on the selling floor. And she introduced herself and she said, my name is Don Mello. And at the time, I think she was the fashion director at Bergdorf Goodman, which was directly across the street from us. And she said, if you ever have a collection on your own, give me a call, I'd love to see it.

and I didn't know if this would really work out. Yeah, by the way, were you worried that the Lothar's people would be like, hey, you're our guy, what are you doing?

Oh, yeah, absolutely. I was, this was all very clandestine, but again, I didn't really know, is this gonna actually happen? So I didn't wanna leave my job. So I kind of very quickly, quietly went across the street on 57th Street to Bergdorf Goodman. Nervous, quietly doing this. Yes, nervous. I had no idea about any of the logistics. How was I gonna produce any of this? How do you cost it? How do you figure out your profit margin, your markups, even like my style numbers? I had no idea. So I thought style number one, style number two, style number three.

And they were dresses, they were suits, for women, just in making women's fashion, right?

For women, just in- It was only women's fashion, no accessories, no shoes, no bags. It was a small collection of luxury women's separates. You know, what we in the fashion industry say sports wear, a lot of people think that means jogging clothes, but it really boils down to sort of this American invention of clothes that are versatile, separate pieces that you can wear different ways. And that's what I brought to Bergdorf Goodman

back then in 1981. Okay, so you bring it to, this is 1981. You don't have a business yet. You're not Michael Kors- I'm nothing. You are, yeah. And what was the response? Did you show it to Don Mello

or did you show it to somebody else at Bergdorf?

I'm nothing.

I mean, you are, yeah. Well, I walked in and there was Don Mello waiting for me. And she was with a group of women who were the sort of buying team and the decision makers at the store. I brought a friend with me who would model the clothes, because I was a firm believer that everything had to be seen on. So I started the process and started showing it to them.

And I think I was literally at the third piece. Do you remember what the piece was? Was it trousers? Was it a dress?

I did a lot of leather and suede back then. And I think I had this long black suede. At the time we said gaucho pant that had an overskirt and this big wide Obie belt, very dramatic, very expensive for 1981. And everyone in the room looked at me and said, could you excuse us? And could you leave the room for a minute? I thought, okay, this is over. So I left the room and about two minutes later, Don Mello said, we really think the clothes are terrific. And we think they're perfect for Bergdorf Goodman. And we want to be the only store in New York to carry the collection for at least a year. And we'd like you to come back to us and tell us, is there anything you need from us? And I, of course, I had no idea how I was gonna do any of this. I didn't know what to say, what to do.

prepay for some of their order, actually produce.

And I said, okay. And the following day, I call the Don Mello at Bergdorf Goodman and I said, here's what I need. And she listened very carefully. And she said, we're good with all of that. If you stick with us, we'll stick with you. Wow. And the next thing I knew, I had people sewing in

my apartment on 7th Avenue and 23rd Street. How many pieces, by the way,

how many pieces of each garment did you have to make? And I probably produced anywhere from, I would say, a dozen to three dozen at the max, but two dozen of most things. I had people sewing in my apartment. I was dragging bolts of fabric in taxis and up the elevator and we were cutting the clothes, all of the fabric and all, we were cutting everything. My apartment was so small. We used a friend's apartment upstairs to cut things out. And somehow then I think, I didn't even really understand how people delivered clothes to a store. I didn't know that there was UPS. I wanted to hand deliver all of the clothes. I was afraid they'd wrinkle and crease. So I delivered them in the backseat of my aunt's car.

When we come back in just a moment, how Michael moves out of his apartment and into stores across the country. But about 10 years into the business gets into a bad partnership that leads to bankruptcy. Stay with us. I'm Guy Roz, and you're listening to How I Built This. I talk with so many business leaders who use Squarespace as they're all in one platform for building their brand and engaging customers online. Squarespace lets you easily create a dynamic website and sell anything, your products and services, and even content you create. Squarespace makes it really easy to get started. With best-in-class website templates for all types of businesses that can be customized to fit your specific needs. Squarespace also provides the tools you need to run your business smoothly, including inventory management, a simple checkout process, and secure payments. Whatever you sell, Squarespace has merchandising features to make your products look their best online. And with Squarespace email campaigns, you can build a community of email subscribers and customers. Start with an email template and customize it by applying your own brand ingredients like colors and logo.

Yep, every piece. And then I packed it all myself. I delivered it all myself, the windows. I knew which day they were gonna go in, and I was standing on Fifth Avenue at two o'clock in the morning, driving everyone crazy. And I think they made a huge exception at the time, and they let me come in and go into the windows and sort of fidget and fuss with the mannequins. And then the New York Times advertisement came out. I had no office. The first time, I got a phone call, and the New York Times said, oh, we have a reporter who would love to come and look at the clothes. And I said, well, they can't come here. And they were like, well, what do you mean? And I said, well, I'm literally sewing in my bedroom. But in fact, the New York Times did come, and they sat in my bedroom and looked at the collection.

Yeah, I mean, to the seamstresses and stuff. Yeah. I mean, did you know how to do basic accounting,

for example? Not really, I mean, yeah, I mean, not really. I mean, I figured out how to figure out my profit margin and how I should price things. And so I did do that, but it became very apparent very quickly that there was no way

I was gonna do this on my own. Yeah, I mean, here you were, and I'm assuming you thought of yourself as an up and coming designer. You were a young designer. This was, you were a creative, but at the same time, the Bergdorf Order was financing the founding of what would become your business. And you probably didn't think of it that way. You probably didn't think, okay, I'm starting a business. I'm founding a business. But you were, you had to do some of the things that you had to do to start a business. And I guess there was a guy named Jack or Cooley. Am I pronouncing that correct? Or Cheley, or Cheley. Or Cheley, that you brought in to help you

kind of build this business? Who is Jack? Well, yeah, or Julie. So I started down the traditional route. I talked to a lot of different people who were already on 7th Avenue producing clothes. And what I immediately saw with them was that they had a lot of rules about how they thought things should be done. And I said, you know what? I think I'm going to go about this a different way and look for someone to be a partner in business who isn't necessarily in the fashion business. And I met someone who worked at Bergdorf Goodman at the time. And she said, my husband is in the real estate business. He is not in the fashion business, but he is definitely intrigued by it. And we met, and in we jumped.

Because after a year, you didn't you weren't only committed to Bergdorf. You could sell any.

Suddenly, I was in Minneapolis. And I was in Nashville. And I was in New Orleans. And I was

in Los Angeles. And I was, you know, I was traveling and at specific stores at the big like

Saks, Saks, and even Marcus Bloomingdale's Saks Fifth Avenue, Neiman Marcus. But also, a lot of my initial business was really built in specialty stores, where they really had these remarkable relationships with their clientele. So you were almost you know, if you went back, let's say to Dallas twice a year, it was kind of seeing, you know, clients who became like friends. Yeah. And you started to really learn how how these women lived. Where did they go on vacation? What were the restaurants like in their city? Did they work or did they not work?

It was a crash course in consumer knowledge. And what made your line appealing, I guess, was that it was elegant, but practical, like it was everyday clothing. I mean, obviously you do you make gowns and evening water, but mainly what you were making then was like everyday

clothing that was also elegant. That is a very sharp and clear assessment. I think women found the clothes to be easy to wear, versatile, long lasting, glamorous, but accessible. That was and then also we we we seem to have started even back then in the 80s with this very, very wide, broad range of different kinds of customers, different ages, different sizes. I would go to do a personal appearance and we could have three generations in one family. We'd have the granddaughter, we'd have the daughter and we'd have the grandmother. All wearing it. They'd all wear it and they'd all find their own way to wear it.

Yeah. And I think that's the key, right? That cross-generational brand. If you can hit that, if you can get those three generations wearing your line, that's kind of like the holy grail,

I guess, of fashion. Definitely. It's also years later, of course, when I was doing television, I was doing Project Runway, I would sometimes listen to some of the designers on Project Runway and they'd say, well, you know, I don't really design for people that size or I don't design for women that old. I was always perplexed listening to them thinking, well, wait a minute, if you're good at what you do, you're a problem solver. You're solving the puzzle. So you should be able to design in such a way that you get your message across, but at the same time, you have that possibility to be democratic, whether that's just in size or age or even how a woman or a man puts themselves together. Because not everyone wears the same thing the same way. They want to be able to put their own spin on it.

Yeah. In those first few years, you're selling first to Bergdorf and then you're going around and selling the boutiques around the country, small boutiques, and even your line is even in Saks and Bloomingdale's and other big retailers. Just to get a perspective, did that mean that you guys were just making tons and tons of money or not? I mean, because I think the assumption would be, oh, Michael Kors, he's everywhere, but actually the reality is a little bit different,

right? He's very different. It is mom and pop, roll up the sleeves, the hands get dirty, you're doing everything yourself. And yes, each point as the business grows, you can take on a new employee. Suddenly, you have a public relations person. Suddenly, when stores or magazines or the press come to visit your office, you can offer them something to eat a cup of coffee. But you're definitely not rolling in the dough. You need things to build, you need to learn, you need to see things grow at a rate that it's the right thing at the right time.

Right. You mentioned that this was very much a small business and it was still about traveling around the country to boutiques. And meanwhile, your partner, Jack, is I guess manning the shop and running the books and stuff, and you are the face of this brand. But I imagine to really start to scale it, there are things you have to do in the fashion business. And one of the things inevitably, and you did this in 1990, was to launch a lower priced line. And it was called Kors, by Michael Kors, and you started to work with a licensee, I guess an Italian company. First of all, before we get into what happened, is that true? I mean, in order to really grow the business, you kind of have to create a lower priced line. Maybe have to is not the

right word, but you... I don't know if it's... I don't know if it's necessarily that you have to create a lower priced line, but you have to have something to sell that can have a broader appeal. Now that doesn't take anything away from someone who is very comfortable and very happy, keeping their business small, tight. We were saying before, I might not have played Little League as a kid, but I am definitely a competitive player. And so I think if you want to scale to the next level, doesn't mean that you have to have a lower priced line, but you have to have something that can have a broader audience. But for me at the time, back in 1990, I think I was at Saks Fifth Avenue at the time in New York, and it was the day that the store went on sale, so to speak. And I happened to be there and watch this, and I saw women who were kind of at the sale racks loving my designs, and I realized that this was a whole different audience of people

who I was not speaking to. Because a garment might cost at that time $250, and it was on sale for $100, too. Oh, exactly. And presumably, I mean, you kind of alluded to this, some designers have an aversion to this, because inevitably there are compromises that come with that. You've got to manufacture it more efficiently. It's got to be cheaper to make. Absolutely. You can't sell something. It's got to be more like $75 to $100 rather than $400 to $5,000, right? And so inevitably, it means that there are different approaches to it. Did you have any fears about that? Because imagine every designer has to think, if my stuff is going to be at TJ Maxx eventually,

is it going to devalue the brand in the minds of consumers and not sell? Absolutely, absolutely.

I think that how I approach it is this, everyone has a different budget. So what's inexpensive to one person is expensive to another. So I think how I approach it is, is it the best designed, best quality thing at that price? Yeah. That's, to me, the trick. And then I feel that whoever is buying it, they're getting the best thing that they could buy and that works for their life. So whether it's $79, $790, or $7,900, is there integrity to the way it's designed? Is it the best quality you could find at that price? And then it's the right piece. It's just the right

thing at the right price. All right. So you struck a deal with a licensee in Italy, a company to make this Coors line, and that ultimately proved to be, I guess, didn't work out, right? That's a nice way to put it. Disastrous? What happened?

That's a nice way to... Well, no, at first it was tremendously successful. So here's the first time in my career that we launched something and it just shot out of the cannon very, very quickly.

And it was an immediate success story. And these are what were they making? T-shirts that said,

Michael Coors on men. No, it was a full collection, again, of women's sportswear,

jackets, trousers, shirts, dresses, everything. And this is what's known as, I guess, a bridge

line in the fashion world. Back in those days, they would say bridge, which was a bridge between more affordable and designer prices. It's turned into contemporary, affordable designer, whatever

it is, to me it was just a more accessible product. And presumably this Coors line is probably really fueling your business, right? This, I guess, very quickly becomes the biggest driver of revenue.

Absolutely. Unfortunately, what happened, the company that we licensed to, we were really their first great success with licensing a designer name. And I think they were so successful with us that they suddenly said, well, wait, this is easy. We can do this with other people. And they went out and they started gathering other designer names that they said, oh, well, if we did this with Michael Coors, we could do it with you. We'll do it with you. And they overextended themselves. And it turned into this sort of perfect storm where we were chugging along with the royalty checks and expanding. And as I said, really building up our infrastructure. And the next thing you know, you've basically started relying on someone else. And they ran into complications with some of the other lines and collections that they were licensing. And the next thing you know, they went bankrupt and they ended up owing us considerable amount of royalty money.

Which is like, yeah, I mean, you were, it sounds like, you know, 60, 70, maybe 80% of your money was coming from this one source, which is always dangerous for any business.

For any business. And also, let's be honest, spending the money before it comes in. It's the combination of being too dependent on one thing, not diversified enough. And quite honestly, putting all your eggs, so to speak, in one basket. So at the time, I think I thought to myself, first off, how could this happen? If I don't have my own business, who am I? We have to figure this out and sort our way through this. And I have to say, at first, there was never any question. We weren't going to close, but we were going to have to cut expenses dramatically.

And you had to declare bankruptcy.

We went into Chapter 11 bankruptcy, but the right away we made the decision, we're not going to stop producing our collection. We're going to continue to ship it to the stores and we're going to continue doing business. Maybe we won't be able to have an advertising campaign. Maybe we have to cut staff. Maybe we have to no longer have an extravagant fashion show. We're going to do what we have to do.

When that was happening, you're 32 and you're in bankruptcy, were you... was it part of you was a part of you feeling like I failed.

Like, I'm not gonna, I might not recover from this. Initially, I thought, even though I understood the circumstances, it's hard not to question yourself and what did I do wrong? What did I, you know, what mistake did I make? But then I saw that, you know, I don't think my confidence flagged ultimately once I brushed myself off. And that definitely, between the fact of, of course, cutting expenses and pushing up the sleeves and getting dirty and doing everything yourself, a few years later, we were out of chapter 11

and then we got back onto solid ground. When we come back in just a moment, Michael comes out of bankruptcy with a new gig and some new ideas about the beauty and the business value of accessories.

Stay with us, you're listening to How I Built This.

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and then you also became an employee of Celine. Well, fashion sometimes is like, it's really an athletic endeavor, and you're getting to the next step. Can I lift more weights? What can I handle? And the last thing that had ever crossed my mind would have been that I was gonna design a collection in Paris and have a fashion show in Paris, and it was really nothing I ever thought of. But I thought, you know what? I owe it to myself to try this. It's definitely a lot of juggling. Also, I was, for the first time, my eyes opened at Celine to the power of accessories, handbags, and footwear, which was the bulk of their business. It taught me, really, the power of accessories, how democratic something can be if it's well-designed, if it's the right bag, the right shoe, the right pair of glasses,

and that was a whole new category for me. I wonder, Michael, and this might be a dumb question from somebody who's not an insider in the fashion industry. How did you know what pieces to design for Celine and for yourself? I'm thinking to myself, wow, I've designed something, and I'm blown away by it, and I wanna keep it with my name on it. You know what I mean? I wouldn't wanna give that to Celine, but, of course, you also work with them.

So how did you figure out what goes where? What goes where is a good question. Well, of course, to a certain degree, you also start competing with yourself. Right, yeah. You are competing with yourself. The thing that really helped me, when you start designing, inevitably, you actually have too many ideas, and often, you might fall in love with an idea, but you say, you know what? It doesn't really fit. I'm gonna have to get rid of it. So you edit it out. So suddenly, I had more opportunity and more places that I could actually use an idea or use a design, but also Paris by nature is an indulgent city. It's a more indulgent approach to getting dressed. New York is a much more practical, pragmatic kind of space.

So that was kind of how we split the two. Yeah, they obviously, LVMH, they deepen their relationship with you. They bought a stake in Michael Kors, I think, in 1999. Yes. About a third of it. And so that was an infusion of capital into Michael Kors. And by that time, I have to imagine Michael Kors is, you know, it's not what it is today, but even in 1999, were you on a better financial footing at that point

when they made that investment? Absolutely. We had an investment from Edward Koshiyama, and we had the investment in 99 from LVMH. Definitely put us on much more stable ground to grow the business and to launch Michael Kors accessories

in the early, I think it was 2000, actually. This was like the perfumes and...

Fragrance came, fragrance came. It was really my first foray into products that were not clothing-based. So I launched my first fragrance. We signed a license for shoes, sunglasses.

We broadened our product mix for sure. How did it change how you operated the Michael Kors business? Because you'd kind of been burned earlier with licensing, not with licensing, but with like how much you spent and becoming super dependent on these licensing revenue streams. When you went back to it, you know, you've got now fragrances and shoes and other things in the early 2000s. Were you guys more careful about how you operated the business?

Well, I think we definitely learned diversity was important. So you weren't relying strictly on one product. Yeah. You had a broader range of products. And you also were watching your spending, not that you were not spending the CapEx that you might need to spend to get to the next level, but you were not overspending because we had been burned. But I think it was really the diversification that we went from having all of the money from a license initially before chapter 11, which was, you know, from one revenue stream to suddenly having licensing money coming in from shoes, coming in from glasses, coming in from fragrance. We were selling bags. We were doing our own menswear. So there was more diversification to the business,

which is healthier. So this kind of leads to the next really big turning point in your business, which is 2003. Two new investors acquired about 85% of Michael Kors, Silas Chow and Lawrence Stroll. And from what I gather, you sought them out. You wanted these investors to come in, buy out the shares owned by LVMH and the Japanese company and even your business partner. And I imagine you did this because you thought that with their ownership and their partnership, you could scale the business even more.

Was that the thinking? Absolutely. And I felt that I was, at the time, we were doing well, but we were treading water. And I really wanted to see the business go to the next level. Silas Chow and Lawrence Stroll became involved with Tommy Hilfiger's business. And they really took Tommy Hilfiger to a very, very different level than when Tommy had started. And I felt that I had enough experience and enough knowledge at that point to be able to see it

taken to the next level. Yeah, I wonder, I mean, you mentioned earlier, you weren't on the Little League team, but you were also competitive. You were a competitor and you're looking around. And I wonder if you were looking around and seeing the Tommy Hilfiger's and the Calvin Klein's and the Ralph Lauren's as these international brands

and thinking, I should be there too. Absolutely. Ralph Lauren and Tommy Hilfiger and Calvin Klein and brands like that, suddenly they were not strictly American brands. These were global brands. And I definitely thought by that point, I had had my experience working with Celine and it was really time to find the situation

that would allow me to take that step to scale it up. There was a quote from Lauren Stroll at the time and he was asked, why are you making this investment? And he said, the reasons why Michael's business isn't bigger today is that it hasn't had a big insert of cash or aggressive management behind it. And we intend to bring both. So they were gonna bring cash and aggressive management. And by the way, as I said, they spent $100 million in about 85% of the brand, which would prove to be an incredible investment. I mean, they would make a lot of money off that investment. But now you are, I mean, you are still a minority shareholder in your company, but it's, you know, you've got bosses and there are expectations. And how did that change how you operated that? Did that, I mean, did that deliberate you to do

or did that put more pressure on you to deliver? Well, I mean, once again, if you do the same thing every day with no variance, maybe some people are very comfortable with that. I think I was ready and curious to try new things and with people who are experienced and curious the same as myself. Now, are there bumps in the road? Absolutely. You know, I remember the first, I think it was my first spring season with Michael Michael Kors and the women's apparel that season. I had always done for Michael Kors, we made a lot of sweaters. So I had a lot of sweaters on the collection and all these sweaters get shipped all across America to department stores and they look great. I think they look great. And they end up not selling very well. And I couldn't understand why don't they sell well? And then someone said to me, well, they're not machine washable.

what's next. Michael, I'm curious about how you cultivate a sense of luxury and also, you know, an affordable price. So for example, you can buy a Michael Kors t-shirt for 60 bucks. And you can also buy, you know, a beautiful halter jacket, women's halter jacket for $1,800, right? But was there a conscious decision with these new partners? Like, okay, we need like soccer fans in England wearing Kors shirts. And we also need to appeal to, you know, high fashion customers willing to pay $1,800. But how do we cultivate that sense of luxury, you know, in less expensive streetwear?

Was there, is there a playbook on how to do that? I think the big playbook is never talked down to the customer. So whether it's a t-shirt or an evening gown, it's thoughtfully and intelligently designed. And we also have to remember in a world that is casual, the richest person in the world does not fill their entire closet with $1,800 jackets. No. And vice versa, someone who has a very casual life and doesn't have that kind of money to spend, they do have the pieces that they buy that are their splurge piece. So, you know, you might on a daily basis say, you know what, I live in leggings or jeans, but I'm gonna sort of stretch and buy the handbag

and the watch that make my jeans and leggings feel special. Yeah. Meantime, the business is growing and eventually you're opening stores all around the world and the United States, Michael Kors stores. One of the things that's interesting to me is that over time, like within a sort of a decade or less, you know, a few years of your partners coming in and joining you as investors, the biggest part of your business started to become accessories. It wasn't clothing, it wasn't apparel, it was accessories. And you alluded to this, but I have to imagine that that came from your time at Celine as well, having seen how big a part of their business handbags and shoes were that must have had an influence on your thinking.

Absolutely. I think even when I was a teenager, if I sat and doodled in class in high school when I should have been paying attention to the teacher, I would sit and doodle shoes and glasses. This was just, if you looked at my notebooks or I would sit and doodle, the MK logo that we use is something that I started doodling back when I was 15. So I always loved accessories, but I didn't realize that accessories were the ultimate democratic items in fashion until I spent six and a half years at Celine, that, you know, it didn't matter what the weather was. The same handbag worked in Stockholm and Rio de Janeiro. Yeah. You know, the same watch was great in Jakarta and Chicago. You could be 17 years old or 75 years old. That's kind of the magic of a great piece of jewelry, a watch, glasses, shoes, belt, bag. Also, because I am practical, I particularly, I love bags because I love the fact that we all need the functionality of, you know, where are we gonna put our stuff? So it's this practical necessity that also makes us feel a certain way when we use that bag.

I've always wondered, is it, are the margins better on things like handbags and shoes and accessories

than they would be on apparel? Well, the thing we have to remember about apparel versus a handbag, handbags don't have a size. Right. In clothing, invariably, and we all know when we go shopping, if you wear a size 34 jean and somehow you go to the store and they've got a hundred pairs of jeans, and where is the 34? Why is it gone? You're not, right, right. So you're upset, whereas the handbag, if you fall in love and they have it, it's your size. So just from a business vantage point, it is more expensive to, you know, have that big size range, you know, versus being able to focus things like you can

with handbags or glasses or fragrance. Yeah, and handbags are walking advertisement. I mean, people are walking with handbags, say Celine on them or that have a logo or Michael Kors or Kate Spade or whatever it might be.

I mean, and then other people see that.

Absolutely. The company went public in 2011 and still, of course, public no longer called the Michael Kors, now called Capri Holdings, because you've got several brands under that name. And so, you know, for the years that you were actively, you know, part of sort of the business, you still are part of it, but sort of in there in 2011 and so on, you know, you're now a public company with the volatility of the stock market. I mean, at one point, you know, the company was valued at $15 billion, the market cap was 15 billion, and then it goes down to eight and then 10 and then seven. And did that kind of volatility ever, did you ever feel stress or pressure from now having a publicly traded company

where you're accountable to shareholders? For me, as a creative person with a business head, I'm never actually, as a designer, you're never in the time you're in. You're always working so far ahead of time. You're always thinking about what's next. Fashion is not, you know, able to turn things around so quickly, you know, the way that it was when I was at Lothar's, where if it rained on Tuesday, I could make raincoats for Thursday. You know, there'll be times I have to admit that I'll be in the middle of a meeting and I'm looking at different categories of product and I will be loving or hating something and then I forget what season I'm looking at. And I'll say, well, wait a minute, this is for when? Yeah. But fashion is always about thinking ahead.

Yeah, I wonder, I mean, you had, you know, from the time you were at Lothar's to Michael Kors and really for probably the first 15, 20 years of your career, you were designing everything, but inevitably it's like being a chef. You know, when you got a Michelin three-star restaurant and then you have an empire, you cannot oversee every design. It is impossible. Today, you know, between, you know, all the collections of Michael Kors, there's no way you can design everything. And so how do you, how did you get to a point where you could let go and seed some of that control? Because inevitably there are gonna be things that are designed that you just simply, you don't have the capacity to oversee everything

that you might not like. Okay, well, I always say it's, well, first off, I'm not sitting and sketching every piece myself. Right. Am I touching every piece myself? I would say 95% of it, yes. I see it. So it's, which I guess would be the same as a chef. You know, you might have a chef who says, the last thing I want to do is put a Caesar salad on the menu. You know, everyone has the Caesar salad. Why do I have to have the Caesar salad? Well, can you make it the best Caesar salad? And can you put your own little spin on it to make it, you know, your take on the Caesar salad?

on Project Runway. Yeah, not even people with the best instincts are not right 100% of the time. And I wonder, can you think of an example of a design that you just didn't really love,

but you agreed that it could be made and produced and it turned out to be a hit? Well, I live in New York, so, you know, and I wear a lot of black. Right. And New Yorkers wear a lot, a lot of black. So sometimes, you know, I'll look at a colorful handbag and I'll say, well, I think that's going to look great in the photograph, but who really carries a colorful handbag? I don't understand. Then I always say, well, you know, it's great and we'll take a photograph of it, but I know it's not going to be that successful. And then I look at what's sold and I see that, you know, a pale blush pink handbag is at the top of our list and then I have to sort of hit myself and remind myself, no, we're not only talking to people who live in New York City, we're not only talking to people who live in London or Chicago or Paris. These are all cold weather cities in the winter. If you live in Tampa, Florida year-round, you are not experiencing the winter that someone in London or Chicago or Paris experiences. So you see things from a different perspective. So once again, I think it's always to remember how to be empathetic.

Michael, I know that you're the chief creative officer of the company, and so obviously you touch every design, as you mentioned, and the business today is massive. I mean, its market cap is over $8 billion. You own Versace, Jimmy Choo, and so obviously a hugely diverse brand, Capri Holdings. At this point, do you ever get anxiety about... I mean, you went through a bankruptcy in the 90s and when you're much smaller, but now are you at a point where you're just so big that you are not worried, that you feel like this brand is enduring and here to stay and nothing can kind of hurt it or damage it or topple it?

Well, I think that after 40, what are we? Oh my gosh, 42 years, 42? Yeah, 42 years. 42 years, we are definitely firmly cemented as a brand into so many people's lives and in their closets. And I've been with friends where, I don't know, we could be arriving somewhere and a car is waiting and they say hello to a friend thinking that the friend is Michael Kors or I've been at the airport with TSA. I had a TSA officer ask me what it was like to work for Michael Kors. And I said, what do you mean? And she said, how long have you been there? And I said, my whole life. And she said, oh, and then she looked again and she said, oh, you are Michael Kors, like there's a person. And I said, yes, so at a certain point, you get firmly cemented as a brand. But there's definitely a person here and a designer here and an individual who's still wrapped up in the thick of it and I enjoy doing it.

Like there's a- Yeah, when you think about your career and we've talked about it now for several hours. And where you came from and you always knew that you wanted to do this and you were competitive, you did have a drive and you were ambitious and you still are, how much of what happened to you? And where you are today, do you attribute to how hard you worked and

how much do you think has to do with luck? I'm not a believer in luck in the traditional sense of the word. I believe in hard work, I believe in experience, I believe in curiosity. But my version of luck is how do you make sure that you leave yourself open to possibility? I've always been curious about and never limited myself about what could be next. Yeah. Whether it was leaving school when I was 19 years old and saying, let me start working, starting my own business with no experience, running and figuring out how to go to Italy and sign this license. Get out of chapter 11 and deal with that and move forward. I've always really been willing to take an educated and

calculated leap into what's next.

Yeah, that's Michael Kors, founder and chief creative officer of Michael Kors. Thank you. My voice has definitely gotten huskier and huskier. I think I sound like a male version of Brenda Vaccaro.

I sound great, or what's his name? Actons from Blue Lagoon, Chris Atkins?

Christopher Atkins, it's funny, I've known Brooke Shields for forever and a day. And one year I took her to the Met Ball and I said to her, I said,

should I wear a long curly wig and we can read Blue Lagoon? Hey, thanks so much for listening to the show this week. Please be sure to follow the show however you're listening. If you're listening on Apple Podcast, just click the plus follow sign at the top. And on Spotify, just click the plus sign to follow the show and never miss a new episode. If you want to contact the team, our email address is hibt at id.wundery.com. If you want to follow us on Twitter, our account is at how I built this. And mine is at Guy Roz. And on Instagram, we're at how I built this and I am at guy.raz. This episode was produced by J.C. Howard with music composed by Ramtin Ereblue. It was edited by Neva Grant with research help from Sam Paulson.