From One Room to 20 Stores: How Kendra Scott Created a Jewelry Empire

5 minute read

Kendra Scott’s entrepreneurial career was launched out of a spare
bedroom in Austin, Texas. It was 2002, and Scott had just given birth.
Bored and on bed rest, she withdrew $500 and bought the materials to
make earrings. At this point, she’d been making jewelry as gifts for
friends for years, as she was frustrated that the only available options
at retailers were bookended by high-fashion, expensive pieces and
trendy, low-quality pieces with nothing but blank space in between.

image

Why
not, she thought, go about filling the gap? “I put that first jewelry
collection in a tea box, put my son in a baby Bjorn and we went store to
store writing down orders,” Scott says. At the last store she visited,
she had to sell her original samples in order to buy the materials to
make the orders she’d just filled. During those early days, Scott sold
her car and took out multiple personal loans, funneling the funds into
her nascent business.

image

A single mother raising two boys, nagging
worries often kept her up at night. “There were so many times I was
afraid I was going to lose everything…I remember negotiating with my
landlord on when I could pay rent. I had nothing to back me up,” she
says. “Failure wasn’t an option. I had to succeed for them.”

It
wasn’t clear at the time but all those sleepless nights were worth it.
From its humbling beginnings in a tea box, Kendra Scott Design has
become a multimillion-dollar business. Last year, the company took in
$75 million in revenue and is on track to take in more than $110 million
this year. Meanwhile, Scott predicts her employee count will mushroom
from its current 350 to 500 by late 2015 as more stores open (currently
there are 20, but by the end of the year, there will be 38 retail
locations.)

These days “I sleep a lot better at night,” Scott says.

A distinctive style

At
first, the business’s growth was continuous but slow. In 2008, Scott
finally had the resources to design and cut a uniquely shaped stone: The
Danielle earring, a large, distinctive slab, was born. Still one of the
company’s best sellers, the earring, retailing at $60, was an instant
hit. “It was the tipping point,” Scott says.  Like other brand
trademarks, such as the Tory Burch flat or the Longchamp nylon tote,
the Danielle earring is instantly identifiable. It started showing up
in magazines and on red carpets, worn by celebrity fans such as Mindy
Kaling, Brooklyn Decker and Sofia Vergara.

image

In
2010, Kendra Scott Design opened its first retail store in Austin,
Texas. After that, growth accelerated rapidly: Revenue exploded from
$1.7 million in 2010 to $24 million in 2013, while the number of
locations grew from one to nine.

Related: Beanies, Tees and Steez: How Shaun Neff Built a $100 Million Business Out of His Backpack

Going
from being the only employee to managing hundreds of people has been
something of an education by fire: “Every day I wake up and I’m running a
company bigger than it was the night before,” she says.

From the
beginning, Scott’s philosophy was to aggressively seek out advice from
people she admired: “A lot of people think it’s a sign of weakness, but
the greatest sign of strength is asking for help. And it’s a natural
instinct for people to want to help other people.” She approached big
names “thinking they would say no,” including Bill Fields, the former
CEO of Walmart, with questions about manufacturing, and Cynthia Harris,
the ex-head of Gap North America, for insight on selecting retail
locations. Despite their status, both were generous with their time.

Scott
has worked hard to fill in her blind spots with smart hires. In 2010,
with the company on the precipice of hockey-stick growth, she hired Lon
Weingart who came with extensive retail experience, as her CFO despite
pushback from the company’s HR director, who was concerned that they
couldn’t afford him. She stopped paying herself, in order to bring
Weingart onboard.

Of course, as with any business, there have been
missteps. In 2011, the company opened its third retail location on
Rodeo Drive in Beverly Hills. “It was a vanity store,” Scott sighs.
Despite a glitzy celebrity-filled opening party, there wasn’t enough
sustained interest, and the store closed shortly thereafter.

Now
when selecting a new market, she makes the decision based on where her
customers are, judging from online and wholesale purchases. The brand
enjoys the most brand recognition in the South (particularly Texas,
where 10 of its stores are located) but is slowly expanding outward,
with stores launching in major markets such as Washington D.C., Chicago
and Los Angeles.

Related: How Canada Goose Went From Small Outerwear Company to International Luxury Brand

Scott
is also considering a New York City location for 2016 but first she
needs to get the word out to the East coast state, something she is
working on.

DIY design

In March, Scott
did a pop-up Color Bar store at 50 Varick St. in Manhattan. Bowls of
sparkling jewels were arranged by color around a central table, as
cheery attendants in white lab coats circulated, helping guests use the
large touchscreens arranged around the room to custom design rings,
earrings, bracelets and necklaces from 26 stone colors and 23
silhouettes. These one-of-a-kind designs cost anywhere between $45 and
$350, although most items fall inside the $50 to $75 price range. While
the New York City Color Bar was a one-night only operation, it exists
permanently online,
as well as at all Kendra Scott’s existing retail locations. (Once a
design is finalized, it is set in-store, meaning that shoppers can
customize a piece and wear it home within minutes.)

The pop up Color Bar in New York CityImage credit: Kendra Scott Design

The
goal is to make shopping an interactive experience. Each store has its
own full-time events coordinator, and Scott estimates that about 10
percent of revenue comes from the Color Bar, while 15 percent of
in-store revenue is made via private group events. “You’ll hear the
champagne popping… there’s always something going on at our stores.
That’s a very big driver of our business,” she says. “In today’s retail
world, you’ve got to create reasons for people to come in. Just opening
your store and waiting isn’t going to do it.”

Eventually, Scott
would like to apply her personal aesthetic and shopping philosophy
beyond jewelry. In 2016, she plans on launching new products that will
move the company towards becoming a bonafide lifestyle brand.

Family values

In
line with these grand ambitions, Scott just signed a new lease on a
43,000 square foot space in Austin for the company’s corporate
headquarters.  "Vogue meets Google" is the envisioned setup for the
office, which translates to a sleek design plus tech-like perks such as
free yoga and a juice and manicure bar. Beyond aesthetics, Scott wants
the office to be inviting for babies and children; there will be a
designated breast-pumping room, a TV nook reserved for cartoons and a
wall dedicated to pictures of employees’ babies. She estimates that 95
percent of her corporate staff is female, many of whom have young
children – and she never wants anyone to feel as if they need to choose
between work and family life.

If anything, Scott feels that her
success proves the distinction between work and family life doesn’t need
to so rigid. She wants to meet her employees’ families; she wants to
meet their kids.

“Yeah, bring your baby to work with you!” she tells new hires. “I got to do it, so OK, now you can too.”