Foundr Magazine publishes in-depth interviews with the world’s best entrepreneurs. Our articles highlight the key takeaways from each month’s cover feature. We spoke with Kendra Scott, founder of Kendra Scott Jewelry, about how she overcame failure and built her billion-dollar business centered on the customer experience. To read more, subscribe to the magazine.
It was 2008. Kendra Scott was sitting in a bank office in Austin, Texas, waiting for an appointment with the president.
Her luxury goods and jewelry business had become a household name in Austin due to her work in the community and the disruption of the wholesale space. But overnight, the phone numbers for his wholesalers were discontinued and the stores he had partnered with closed their doors.
“All my eggs were in that basket,” says Scott. “It was a devastating moment.”
Scott’s savings were depleted, and his business survived on a line of credit that needed to be paid off in less than six months. He went from investor to investor, but no one wanted to talk.
“I was on the kitchen floor crying, thinking, ‘This is it,’” says Scott.
But it was not like that.
Today, Kendra Scott Jewelry is a billion dollar retail business with more than 100 stores in the United States. Annually, the company hosts more than 10,000 fundraising and awareness events, provides more than 2,000 volunteer hours, and donates more than $4.5 million to local and national causes. Scott just published her book, born to shinea business memoir where he shares leadership lessons from his successes and failures.
His passion for community stems from two decades of business twists and turns. Much of that hinged on that fateful meeting with a bank president in Austin.
a fundamental failure
“The recession was the best gift wrapped in a yellow bow,” says Scott.
The president of the bank Scott reported to was a woman and a customer, and she listened to Scott’s plans to save the business. Being exclusively a wholesaler created a distance between the Kendra Scott brand and her customers, but Scott knew she could reshape her business by moving into retail and creating a customer-centric jewelry experience.
“I need him to say ‘I need Kendra Scott’ when he walks into a department store.”
“That’s when the magic happened,” says Scott.
Scott’s infatuation with the customer experience comes from growing up in the small town of Kenosha, Wisconsin, where he dreamed of a career in fashion. His aunt Joan was a fashion designer, and Scott spent hours in her closet trying on dresses and jewelry and watching slideshows of his aunt’s trips to Paris, London, New York, and Milan.
“You could be whoever you wanted to be. It really transformed you,” says Scott. “I knew I wanted to be a part of that industry.”
Scott started his first business, Hat Box, at age 19. He says that his idealism was the driving force behind the company. His stepfather was undergoing chemotherapy at the time, and he realized how hats could inspire patients suffering from hair loss.
With Hat Box, the goal was to make hats that make women feel beautiful and comfortable. So Scott dropped out of college and opened a retail store, hoping the Hat Box would one day be in cities across the country.
She wanted to change the world, but the world didn’t change with her.
Five years later, despite his tireless efforts, the store closed. She was a failed business owner and a college dropout. What was next?
“At that time when that store closed […] it was the framework and the foundation for what was going to work next,” says Scott.
At the Hat Box, Scott made jewelry and sold it as secondary merchandise. The products were always sold out, but he never took jewelry seriously until his main business failed and requests kept coming in from former customers.
Scott took his savings, just $500, and invested in supplies and materials. He started small, going from door to door with his newborn baby in a baby carrier in one hand and a tea box filled with jewelry in the other.
“I wasn’t out this time to change the word,” says Scott. “I was just going to try to be a great mom to my little baby, get back into fashion, which I loved, and try to help generate income for our family.”
Demand for her jewelry continued to grow, but she remained cautious about going all-in on the business.
“I was afraid of what they would think,” says Scott.
“Having confidence after a failure is one of the biggest challenges for an entrepreneur.”
But momentum kept building for his products no matter how little he tried to project that he was back in the business world.
“It wasn’t me who started telling people. They were my clients; they were my best friends; it was my family,” says Scott.
He realized that he was not a commercial failure with Hat Box: he was targeting the wrong product. He gave her the confidence to do better next time.
if you build it
Scott’s father told him never to be intimidated by men in suits.
“But I was,” Scott says.
In 2005, the company was growing, but Scott was having trouble finding investors.
Scott says that in those days before social media, venture capitalists in Austin invested primarily in technology, not luxury goods.
“Everyone told me you need an angel [investor]Scott says. “And I was like, ‘Where do these angels hang out?'”
In a time before online investment resources, especially for women entrepreneurs, Scott was forced to pitch her business in boardrooms.
“I felt like they were laughing at me,” says Scott.
One of his mentors told him to stop wasting energy finding investors and instead build the best business possible.
“They said, ‘If you build it, they will come, and they will come aggressively.'”
She decided to focus on building the best business she could build and risked everything to make Kendra Scott Jewelry a success.
“People started noticing and didn’t call them anymore,” says Scott.
Time to shake the snow globe
After three years of building Kendra Scott Jewelry into a successful business, Scott was on the verge of another failure.
The pressures of the recession and the loss of the wholesale business forced her to make a decision she never thought possible: she returned to retail.
Together with her team, she put together a business plan focused on the ideal experience they would want as jewelry retail customers. They knew they had to be disruptive, so stores would have a fully immersive experience, treating customers to cupcakes and champagne as they watched jewelry being created in front of them.
“Something you’re doing that’s scary to someone else could be magic,” says Scott. “That change, that ‘snowball toss’ moment, forced me and my team to have to think differently about how we were going to run the business.”
The switch to retail in the midst of a recession did not scare the bank’s president. She agreed to extend the line of credit. In return, Scott promised that her new model would pay him back tenfold.
“Sometimes just having the belief of other people around you gives you strength you didn’t know you could have.”
Scott and his team moved their offices above their first retail store in Austin to ensure they were as close to the customer as possible.
“It was unlike any jewelry shopping experience that has ever existed,” says Scott. “It was like a nightclub.”
Lines began to form around the block as more and more customers engaged in the Kendra Scott experience. Stores were opened in nearby Houston and Dallas. There was an undeniable rush of excitement around the brand.
“I’d hear the roar of the people, the laughter, and the community, and I’d think, ‘This is working,’” says Scott.