A gem of a business model—Kendra Scott Design

By Jason Myers

I was instantly charmed by Kendra Scott when I heard her keynote presentation at MAPCON, a conference put on by the Women’s Chamber of Commerce of Texas every year in the Spring.

As an entrepreneur myself, I listened intently (on the edge of my seat actually) when she told her story about starting with $500 in her bedroom, peddling jewelry designs to local stores, caring for a newborn.

Four years later, Scott received a call from Oscar de la Renta, who had seen one of his employees wearing her design. The next day, she was on a plane to meet him in person.

Now in its fifth year, Kendra Scott Design (www.KendraScott.com) is exceeding all expectations, and fashion accessory editors from the likes of Vogue and InStyle are calling her to inquire about upcoming trends in the fashion industry.

How did she do it? What’s her secret?

I had to know—after all, she makes this whole “starting a business thing” look easy.

Her enthusiasm is infectious.

This down-to-earth Austin jewel certainly has a gem of a business model.

Business District: How did you got started—why jewelry?

Kendra Scott: I started this business in the spare bedroom of my home. I was married, and I had a newborn. Before my baby was born I was working for a magazine as their director of advertising and traveled all over the world, sometimes gone weeks at a time. I knew that I did not want to be away from my family so I had to figure out my next step and was itching to start another business.

Growing up in Kenosha, Wis., my aunt was a fashion director from Milwaukee, and I remember her stories of traveling to shows in Milan and Paris, putting together trend forecasts, and wearing great clothing. She is a phenomenal woman inspired to go after my dreams.

After my son was born I wanted to start a business in the fashion industry.  I realized that a clothing line would be a much bigger challenge, I thought jewelry would be a better place to start and I wanted build a brand with something that I love. I taught myself how to make jewelry and with my own two hands started Kendra Scott Design.

Business District: You started this with little money, right?

Kendra Scott: I bought $500 worth of jewelry stones, chains and tools. At the time I made a promise to my husband, who was also in transition in his career, that I would bring home $1000. It was very risky at that time to take $500 out of our account when we had a mortgage of $1200.

I literally put my collection in a tea box, and carried it from store to store and wrote orders. I ended up having to sell my sample set, because I needed money to fulfill the orders that I just wrote. I brought home $1200 and bought more stones and materials for my orders, made all of those, and that was literally how it started. I couldn’t be any more basic. I still own 100 percent of the company and have not yet needed to go and get outside capital; so far the business has been self-funded since the very beginning.

Business District: That’s a great story. And you certainly make this entrepreneur stuff look easy. But I know this wasn’t your first venture. What did you learn in your first venture that carried through to your current company?

Kendra Scott: (Laughing) Not to be in retailing! My first venture was a hat store (called the Hat Box), which I started when I was 19. I kept it going for five years, and eventually had to close it down. I never made money, and it wasn’t a great success. I felt like I had failed because I had big dreams for the business. But I learned a lot about inventory, markdowns and overhead. And I started gravitating towards the wholesale side of the business.  It is great for me to have had the retail side of the business under my belt when I started KSD because I am able to really relate to retailers and buyers from a first hand prospective.

Learning from my mistakes was the biggest gift I was given. The hat store was five very long years, but I had a lot of energy back then.  The best lesson I learned is that when you think it can not get any worse, pick yourself up and know that the last hour is always the toughest, somehow it always turns around.

Business District: You still seem to have a lot of energy now! So what challenges are you currently facing, and how are they different than the early days?

Kendra Scott: Every day we are continuing to grow, and it still has its challenges. But it’s not the days of pinto beans and Top Ramen. Some of those days seem so dark when you are starting your business, and you get so discouraged because you’re thinking “what am I doing?”

I think a lot of entrepreneurs get discouraged when that happens. But somehow, you work through it, and the next thing you know you get a big order, and you’re right back. So I’ve learned to ride those valleys and peaks and know that when we hit a valley, we’ll soon be back to a peak.

Business District: How long did you work in your current business before it really started taking off?

Kendra Scott: I was surprised at how quickly we took off. Within a few months, we caught the attention of a Dallas-rep who had heard of my line because it was outselling hers in some of the Austin stores. She asked, “Who is this girl, and what is her story?”

She set up a meeting with me to see the line. After beefing up the line for her presentation, she wanted to represent it. So I said, “Great! Let’s write some orders!” Of course, I had no idea how we were going to do it.

Not too long after that, Harold’s viewed the line, and I remember the rep telling me not to get my hopes up—that they always take samples and never write orders. But knowing that I had nothing to lose, I met with the buyer; she liked the line and asked for samples.

I packed everything in beautiful tissue and tied it with ribbon. We went over the top. I’ll never forget when she called and said, “We got your samples, and they’re gorgeous! We’ve picked six items for our catalog” which was over 5000 units! The order was over $70K and we had seven weeks to deliver. Getting choked up, I told her on the phone, “You’ve just changed my life—thank you!” And she actually got choked up too and said, “No one’s actually told me that before!”

As of that day, it became real to me that we had a viable business.

Business District: So how did you fulfill that order?

Kendra Scott: One of my friends connected me with a manufacturing operation in China. But, it was during Chinese New Year, and all the factories were shut down. We had to beg people to stay. Somehow, everything worked out, and the order came to my living room. Every family member and friend that I could convince ticketed and tagged 5000 units in my dining room until UPS came and took it off my front door!

Business District: Tell me about meeting Oscar de la Renta—how did that come about?

Kendra Scott: Oscar is a fashion icon. He saw one of our necklaces on an employee that was working for him and was interested in the design and color.  That got me in the door which was an amazing first step.”

The next day I was in New York and met with him and his design team. I was given the opportunity to design for his collection and our team worked countless hours over the next few days to make it happen. We sent off the pieces and crossed our fingers…. He loved it! Almost every piece made it on the runway which is a big accomplishment in this industry. It gave us a lot of credibility—and for him to give a designer from Austin, Texas the opportunity to design for him was remarkable. It was a great honor, and something I will never forget..

We got lots of press coverage and it created a huge buzz. I thought it was a good opportunity to launch our own collection line which came out this year.

Business District: What are some of the things that you do to stay connected in the fashion industry and really keep yourself ahead of the curve?

Kendra Scott: People laugh when I introduce them to our Trend Forecaster--But it’s a critical component of what we do here. In the beginning, I was looking at trends—now, we are actually forecasting trends. We look at everything from home and automotive colors, to appliances and necklines—not just fashion. You don’t ever want to sit next to me on an airplane because I’m always ripping things out of magazines.

People ask me, “Why did you cut out the car and the blender pictures?” And I say, “Because I saw this same infused orange in both of these, and we need a line with this color.” That’s how we do our color combinations, and we’re known for it.

It’s very important because we are a “fashion forward” company and we are trend-based. It is amazing to me because now we actually have the accessory editors of magazines calling us for the upcoming trends!

Business District: Is that unique?

I think the way we mix color is unique. For our bridge line, we don’t necessarily have a look. Every season it’s different, so it’s always about what’s coming next.

Business District: What advice do you give to other people trying to start businesses?

Kendra Scott: I consistently recommend that people look at who else is playing in your sandbox. Analyze their strengths and their weaknesses. Figure out what is the one thing that will make you special. Pick a niche. Sometimes we cast the net a little broad because we aren’t focusing on who we want as a customer.

Write down your goals, both personal and business. What does success mean to you? Then you ask—How am I going to get there?  And then you can figure out the steps. Success is defined differently for everyone.  Some of us want more money, others want more time. Figure out what makes you happy and then make a plan to achieve it.

Giving back to the community has been a tremendous part of our company. In fact, fashion, family and philanthropy are the core philosophy of Kendra Scott Design. I’m currently on the board of Lifeworks and I believe that it is a leader’s duty to give back to our community in some way—and I’m not talking just about dollars. What you get back internally is more than you’ll ever put into it.