Kenneth Cole: Kenneth Cole

Kenneth Cole launched his shoe business out of a forty-foot truck in midtown Manhattan and quickly became known as an up-and-coming designer with an eye for street fashion. In 1986, he made a bold move by associating his nascent brand with a controversial issue at the time: the AIDS crisis, and the vital need for research. Through the 1990s and 2000s, Kenneth grew the company into a $500M brand, leading it through downturns, department store consolidation, an IPO and a return to private ownership. Throughout, he stayed committed to AIDS research and many other social causes. Order the How I Built This book at: https://smarturl.it/HowIBuiltThisSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 0:45Guy Raz?

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• 1:30Guy Raz?

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• 4:21Guy Raz?

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• 5:06Guy Raz?

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• 5:52Guy Raz?

  or by visiting howibuiltthis.com or guyrazz.com. And thanks.

• 6:03Speaker 01

  What happened in '94 was the landscape changed. When I started my business, there was maybe 70 or 80 department store chains in the United States.

• 6:13Guy Raz?

  Wow.

• 6:14Speaker 01

  All of a sudden, 10 years later, there's maybe 15 or 20.

• 6:17Guy Raz?

  Consolidation.

• 6:18Speaker 01

  After consolidations and some bankruptcies.

• 6:20Guy Raz?

  Yeah.

• 6:21Speaker 01

  And I said to myself that these guys are going to need to find economies. I thought at a certain point, they'd buy similar shoes under their own labels and I'm not in business anymore.

• 6:32Guy Raz?

  You didn't think that they would just continue to buy Kenneth Cole shoes and sell them?

• 6:37Speaker 01

  I didn't. And if you don't see my design, it's like a tree in the forest. I'm only as good as you know me to be.

• 6:42Guy Raz?

  Right.

• 6:43Speaker 01

  And if I'm not out there, then I don't exist.

• 6:52Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 7:04Guy Raz?

  I'm Guy Raz, and on the show today, how Kenneth Cole launched his shoe business out of a 40-foot truck in midtown Manhattan and grew the business into one of the best-known brands in the fashion industry.

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• 9:51Guy Raz?

  There's a basic principle in business when it comes to politics: stay away, far away. But the past four years have tested that view, especially because lots of consumers want the brands they support to take a stand on issues they care about, things like racial justice and voting rights and climate action. And it's meant that a lot of big companies have increasingly been doing that, even at the risk of alienating a certain segment of their customer base. But long before it became fashionable to weigh in on controversial topics, the shoe company Kenneth Cole was doing exactly that.

• 10:33Guy Raz?

  In 1986, when the AIDS crisis was just coming into focus, Kenneth Cole began to take out full-page ads in magazines promoting AIDS awareness and research. And this was at a time when many people in America refused to even acknowledge the disease. In that same year, 1986, the company ran a campaign calling for strict gun control. In 1992, for strong abortion rights. In 93, for equal civil rights for members of the LGBTQ community. And throughout all those campaigns, the brand kept growing. In fact, by the mid-2000s, the company's revenue hit over half a billion dollars.

• 11:15Guy Raz?

  Kenneth Cole, the company's namesake, started out with very little money, but he managed to turn the brand into one of the best-known American fashion labels. Kenneth was born in Brooklyn in the 1950s. His dad was in the shoe business, but following in those footsteps was not part of Kenneth's plan. Instead-

• 11:37Speaker 01

  I was going to be the shortstop for the New York Mets.

• 11:40Guy Raz?

  Were you really?

• 11:41Speaker 01

  Yes.

• 11:42Guy Raz?

  Like, mostly kids in your neighborhood, probably, right?

• 11:45Speaker 01

  And then I'd wake up every other day, once a day, and I realized that was not likely to happen. Actually, my first job was selling peanuts at Shea Stadium. I don't know if you know that.

• 11:55Guy Raz?

  Wow.

• 11:56Speaker 01

  It was also a creative endeavor getting that job because it was during the World Series in 1969.

• 12:01Guy Raz?

  69, yeah. The Miracle Mets.

• 12:04Speaker 01

  Yeah. And there were no lights, so there were no night games.

• 12:08Guy Raz?

  Right.

• 12:09Speaker 01

  And they needed kids to work during the day. And the city was very tough, so they insisted that the students all had notes from their principals that they could take that time off from school. So I got my principal to give me a note saying that he thought it was a worthwhile cultural experience, and he endorsed my employment at Shea Stadium.

• 12:29Guy Raz?

  So you got to see the Mets play in the 1969 World Series?

• 12:33Speaker 01

  I did. And I also, by the way, leveraged that job to get one at Madison Square Garden where I got to see, well, then again, Ranger games.

• 12:41Guy Raz?

  And tell me a little bit about your parents. First of all, what did your parents do for a living? Did they both work?

• 12:48Speaker 01

  No, my mother, for a little bit, did some charity work. My father was an entrepreneur. He was in different businesses. Later on, he was in the shoe business. He had a small shoe factory in a very tough part of New York at the time called Williamsburg.

• 13:02Guy Raz?

  A tough part of New York called Williamsburg. Wow.

• 13:05Speaker 01

  Yeah.

• 13:06Guy Raz?

  Not so tough today.

• 13:07Speaker 01

  Interesting how things have changed.

• 13:08Guy Raz?

  Yeah. And what was the name of the factory?

• 13:11Speaker 01

  El Greco.

• 13:12Guy Raz?

  Does that mean the Greek?

• 13:13Speaker 01

  It means the Greek in Spanish.

• 13:15Guy Raz?

  Yeah. And what was that name? Where did that come from?

• 13:18Speaker 01

  I don't, I think he had acquired a small business, and I think that's what it was. And eventually, he assumed it. So, he made shoes and sold them in department stores at the time, women's shoes. But the last thing on my mind was, the last thing I would have imagined myself doing, and the least masculine thing I could have imagined myself doing, was going to the women's shoe business. So, it wasn't something I ever contemplated.

• 13:43Guy Raz?

  What was your relationship like with your dad?

• 13:45Speaker 01

  It was good. He was a tough guy. He was a Marine.

• 13:50Guy Raz?

  World War II veteran?

• 13:51Speaker 01

  World War II veteran.

• 13:53Guy Raz?

  Was he deployed overseas?

• 13:55Speaker 01

  He was. He served in the Philippines. He was a gunner.

• 13:59Guy Raz?

  Wow.

• 14:00Speaker 01

  And it was on several missions. And he was relentless. He was very determined. I learned a lot from him in many ways, what to do, and in some cases, what not to do. He was always, he was working much more than he wasn't. And I always often reflect upon that being generational, because I made a point to be the opposite with my kids to the degree I was able to. But work came first and second, and we were often third.

• 14:28Speaker 01

  But he was focused, he was determined, and he was relentless.

• 14:35Guy Raz?

  So, when you set out to go to college in the early 70s, you went to Emory. I take it, like, you didn't really contemplate eventually working with your dad?

• 14:46Speaker 01

  No, truthfully. I went to school thinking I'd probably become a lawyer, and I studied political science. And law was something I believed would create interesting alternatives for me going down the road. So I was admitted to a couple of law schools, I did apply. And then that summer, my father had his superintendent, who was running the factory at the time, resigned to go into competitions. And that factory was the proverbial hand that fed us. So I felt an obligation that summer to immerse myself in it and to learn the business to the degree that I could.

• 15:23Guy Raz?

  What your dad said to you, he said, I need you to help me out at the factory.

• 15:27Speaker 01

  He didn't say that, he was too proud. But my mother kind of encouraged it and he welcomed it. And I wasn't thinking that this would be something I would jump in with both feet. But I knew, once I started doing it, I also knew that I needed to commit to it, to learn it and to quickly have the respect of the people I was working with. And I did, I learned it. And I kept, I was fascinated by it and I kept gravitating towards the sample room where I watched all these components, this piece of leather and plastic that was the heel or wood and then a metal shape of a foot that was the last and how all these things put together in a certain way became a shoe.

• 16:09Guy Raz?

  How was it that your whole life, you were around this world and exposed to it? And then, because I agree, I would find it fascinating to just see the pieces of cut leather and the wooden heel and people sewing the pieces together. But why do you think you began to see it that way at the age of 22?

• 16:26Speaker 01

  I think I wanted to understand not just what my father did, but what was behind the curtain and how did this work and what made it so distinctive and why was he able to do it differently than other people? And so I was, and I realized very quickly that what distinguished what he did from what everybody else did was what happened in the sample room. So that's where I spent much of my summer that year. And I learned how to make patterns and how shoes were constructed and how they were crafted.

• 16:56Guy Raz?

  And by the way, I just think of this as a dad myself. Like if my kid joined my business, which I don't want them to, I want them to do their own thing, but I would be so proud, which is like just gushing, you know, it'd be amazing. Was your dad, it doesn't strike me that your dad was that kind of guy, but he must have been pretty proud that his kid was there in his company.

• 17:16Speaker 01

  No, he was, but he, you know, he pushed me as hard as he felt he could in the way that he would.

• 17:23Guy Raz?

  Well, how would he push you?

• 17:25Speaker 01

  It was always how big is big and how good is good? And he was careful with the compliments and the encouragements. But I, but I know he was proud and I learned how to make shoes in his factory for our company.

• 17:42Guy Raz?

  In that six-year period where you worked for your dad's business and really start to understand the business, like two years in, you were involved in launching a whole new line of shoes. I think they were called Candies, designed and just for targeting young women. What was that initiative? How'd that come about?

• 18:01Speaker 01

  So we were making shoes in Brooklyn and there were 100 steps that went into making the most simple shoe. And the slightest thing that would go wrong, if you're missing any of those 100-plus components, we're not in business anymore. And in the best case scenario, you can only make so many pair of shoes. In the worst case, you're out of business, you have nothing. So that business model, I struggled with. And then we went over to Europe and bought some shoes and started selling them here in the United States.

• 18:36Guy Raz?

  What was it? Yeah, what did it, was it like a Mary Jane?

• 18:38Speaker 01

  Like? It was a piece of leather that was stapled onto a polypropylene bottom with a high heel. And it was what Olivia Newton-John wore in the movie Grease.

• 18:49Guy Raz?

  Oh, yeah. And what you identified, like you, you found those shoes in Europe and you said, hey, we should sell shoes like these?

• 18:55Speaker 01

  Actually, I think my father and I found them. And then- We came back and I started to sell them and.

• 19:03Guy Raz?

  But you weren't making them. You were still importing these shoes.

• 19:06Speaker 01

  We started importing them. And then it became very clear that in that sort of a business model, if you do a lot of business, you make a ton of money. If you do a little bit, you make less. But you don't have all the overhead that we had in a domestic shoe factory. And it was very compelling. So we converted the business eventually to that. That became the business because it grew very quickly.

• 19:26Guy Raz?

  So he shut down the factory part.

• 19:28Speaker 01

  He did.

• 19:28Guy Raz?

  And focused on importing shoes and then reselling them.

• 19:31Speaker 01

  Correct.

• 19:32Guy Raz?

  When did that happen? Do you remember what year?

• 19:35Speaker 01

  So if I joined the business seventy six, maybe seventy nine, eighty.

• 19:41Guy Raz?

  So this was the new model and you were now focused on importing shoes that you could identify mainly from Europe, I guess. And it actually boosted the business. The business grew as a result of that?

• 19:52Speaker 01

  Exponentially and very quickly. So initially, the factory became a warehouse, the existing factory. And then eventually we moved to a bigger facility and then left and vacated those offices in Williamsburg.

• 20:07Guy Raz?

  So clearly you catch the bug, the shoe bug. After six years of working with your dad, this becomes something not just interesting, but you see this as your future. You decide to leave in nineteen eighty two to start your own shoe company. I guess you were around twenty eight years old at the time. Why did you decide to leave your dad's business and go off on your own?

• 20:28Speaker 01

  He and I didn't agree on a lot of things and I didn't have the right to not be a hundred percent compliant and supportive. And I felt that I was young enough and probably naive enough that I could just go and do it and figure it out independently. So I woke up one day and said, that's what I'm going to do.

• 20:52Guy Raz?

  Did you and your dad argue a lot? Or was it more that your dad was my way of the highway and you didn't argue with him?

• 21:00Speaker 01

  I would argue, but invariably he had his way that he felt things should be done. And then I'd say to myself, why am I putting him through this and why am I putting this through it? So then at a certain point, I figured my relationship is only going to get better with him if I do this independently.

• 21:17Guy Raz?

  So when you told your dad you want to start your own thing and you're leaving, was he sad? Was he hurt? Was he supportive?

• 21:28Speaker 01

  He was too proud to be visibly hurt anyway. And he wasn't supportive, but he, at the same time, he was supportive, but he wasn't encouraging. Maybe that's a better way to put it. And when I did tell him I was gonna leave one day, which was shocking to him, he had said, "You'll be back. It's very hard out there, and you're gonna be back," was his message, at which point I knew there was no way that was gonna happen. So he says, "I'm gonna leave your office open for you, 'cause I know you'll be back."

• 22:03Guy Raz?

  So when you said, "Hey, I wanna start my own shoe thing," he didn't say, "How? I'll write you a check to help get you started."

• 22:09Speaker 01

  No, not just the opposite. And I'm not sure I would have taken it if he had either, because I became equally proud.

• 22:17Guy Raz?

  So you wanted to start your own shoe company. Obviously, you had experience now and some connections to factories, but how did you have... Did you have any money to start it?

• 22:28Speaker 01

  Very little. But what I did was, I went over to Italy, 'cause that's where I had been working with candies. And I found an agent who had a lot of credibility in the marketplace. And that agent, by nature of my relationship with that agent, I had probably more credibility than I was entitled to in the marketplace.

• 22:48Guy Raz?

  This is an agent who helped you find factories to make your shoes?

• 22:52Speaker 01

  Yeah. And everything was... I created everything at the time to be variable. And so the agent would get paid only if I did business, and to the degree of business, they would make more. And through this agent, I got open account, which was a big deal.

• 23:07Guy Raz?

  Like a line of credit?

• 23:08Speaker 01

  A line of credit. And I learned very early on in my career that it's much easier to get credit from a factory that needs business in Italy than from an American bank that doesn't.

• 23:18Guy Raz?

  So you go to the factory, and you could say, "Hey, I need to make this order, and I'll pay you in 90 days," or something like that?

• 23:24Speaker 01

  Yeah. And I had an arrangement with the bank where they were gonna give me 80% of the receivable once I invoiced it. So I would fly the goods to New York, and we'd ship them out, 'cause we had pre-sold them.

• 23:39Guy Raz?

  And who did you, by the way, who did you sell them to? The same places that you were selling candies to? The same department stores?

• 23:44Speaker 01

  Actually, more elevated. My first year in business, I sold Saks, I sold Macy's, I sold Bloomingdale's, I sold...

• 23:53Speaker 01

  Bergdorf's, I think.

• 23:54Guy Raz?

  You wanted this to be different than your dad's business. You wanted to make like higher end shoes that you would actually design yourself.

• 24:02Speaker 01

  I wanted to create aspirational shoes for that aspirational woman. And I also did not want to compete with him. And I called a handful of customers that his current salesmen were not calling on. And then my father said, okay, take them to footwear news, which is the only industry publication at the time. And I did that as well. And I met with this woman, Vivian Infantino, who was the fashion editor. And Vivian wrote a story about these first few shoes that I ever made. And she said, buy this, a new up and coming designer kennelschall. And I never looked at myself as that.

• 24:40Guy Raz?

  As a designer?

• 24:41Speaker 01

  As a designer. I created a little package of shoes I thought we could sell.

• 24:45Guy Raz?

  Yeah.

• 24:46Speaker 01

  I didn't even have a draw yet. I taught myself how to draw over the years. But at that point, I didn't.

• 24:51Guy Raz?

  Did you ever think of yourself as a creative person when you were younger?

• 24:56Speaker 01

  I think I had an interest in things that were creative, but I wasn't, I never really looked in the mirror and saw that in me.

• 25:05Guy Raz?

  You wouldn't look in the mirror and say, hey, I'm a designer. I'm an artist.

• 25:08Speaker 01

  It wasn't something that I had ever aspired to.

• 25:13Guy Raz?

  So you have this, you're designing shoes. And by the way, you have a co-founder, a guy named Sam Edelman. But tell me about Sam.

• 25:20Speaker 01

  Sam worked with me at Edelgreko. And when I left, Sam said, if you leave, I'm going with you because I'm not staying here. So I was, as much as I had, I knew how great, because Sam was also a good friend, I had, and how much fun it would be and how great it would be to have him. I was reluctant to do it to my father because I didn't want him to think that I took anybody or anything. So eventually, when Sam made it clear he wasn't staying, Sam joined me. And then we worked in my apartment on the east side, I don't know, for like several months. I don't think we went outside, except when I went to Italy to make the shoes. I took a couple of trips.

• 26:04Guy Raz?

  You worked in your apartment building the, like, creating the business plan?

• 26:08Speaker 01

  We were creating, you know, the brand. We were setting up people to connect with, I guess, when I got to Italy. Lawyers, finding a lawyer, finding an accountant.

• 26:18Guy Raz?

  And by the way, how many shoes, how many different designs were going to be in the first collection? Because this is going to be women's shoes only. And how many different, I guess, SKUs would you have?

• 26:27Speaker 01

  So maybe three constructions and each in maybe three or four or five colors.

• 26:33Guy Raz?

  Right. How many shoes did you, in total, did you need to make?

• 26:37Speaker 01

  So going into this process, I didn't have a sense of how many. I just knew that I could only show what I thought was great. I just wanted to create shoes that people wanted and hopefully have less than what the demand was, but enough to make it all come together.

• 26:53Guy Raz?

  Well, the 1982 version of Kenneth Cole is not inspiring a lot of confidence in me right now.

• 26:59Speaker 01

  So, but I was, but I knew I'd figure it out. You know, people said to me when I left my father, Guy, they said to me, well, what would you have done if it didn't work? And what I don't tell people, and I didn't tell people often, is that I didn't know what it was. I knew I'd figure it out along the way and that it might keep changing. I wasn't sure what kinds of shoes and I wasn't sure who I was going to sell them to. And I wasn't sure what the price would be, but I knew somehow I would find product that people would want and I would deliver it in a way that people would find compelling.

• 27:29Guy Raz?

  Tell me about, about the name Kenneth Cole. I mean, it's a great name. It's your name. Was that, was that the idea from the beginning to call it Kenneth Cole?

• 27:38Speaker 01

  No, I couldn't take the chance of a made up name and finding out many, many months or years later whether it was acceptable or not through the trademark process because we didn't have Google in those days. But I also knew you can usually get away with your own name, as long as it's your name. So I called it Kenneth Cole and I knew it would probably make my mother happy. So I did that. Then I ran to Italy because I didn't have credit and I figured I'd get credit from a shoe factory and I did. So I had a factory that agreed to do this. The factory was a single production line and then when the production line stopped at six o'clock when the workers went home is when Kaiser, who was the modelist who I worked with, and I would work all night long on the collections.

• 28:21Guy Raz?

  So, once the workers would go home, then you would basically rent out the factory for your line?

• 28:26Speaker 01

  Yeah, I mean, because he had a relationship to the factory, they let him have it and use it. And he felt bad for this kid from New York who was desperate to have a collection within 30 days because we were getting close to market.

• 28:40Guy Raz?

  Sorry, just to clarify, you had to have this collection done in 30 days?

• 28:43Speaker 01

  I did because, first of all, I knew that I needed to get to market quickly because I was going to run out of money if I didn't. And at the time, I think 60-plus percent of businesses, probably even more today, startup businesses fail in the first year. Because people underestimate the amount of time it takes before there's a return on that investment. So I knew I needed to get to market quickly and I knew that in December something, there was going to be a shoe show and I needed a collection by then.

• 29:13Guy Raz?

  This was Market Week shoe show in New York, right?

• 29:16Speaker 01

  It was, yes, it was Market Week.

• 29:17Guy Raz?

  So you know you've got this deadline, you want to preview your line of shoes at Market Week, which is this convention in New York. This is in December of 1982.

• 29:28Speaker 01

  Yeah.

• 29:29Guy Raz?

  So what's the story? You want to get there and do you meet your deadline? Do you get your shoes done on time for the show?

• 29:34Speaker 01

  So, yeah, I'm doing that, but in the process, I needed to be prepared to show the shoes because at the time, there were two choices. It was a room at the Hilton Hotel, not a lot of individuality, not a lot of creativity, plus not without significant cost because you had to take a room, you had to decorate the room, you needed models.

• 29:52Guy Raz?

  That was what Market Week was? It was a bunch of people with rooms at the Hilton Hotel?

• 29:56Speaker 01

  Yeah, about 1,100 of them. 30 floors, 30 some odd companies per floor. And the buyers would just come and they'd walk the floors. They'd go room to room to room. They'd go more likely into the rooms they knew, people they had done business with. And the alternative was a big fancy showroom within a two-block radius of the Hilton Hotel, which clearly I didn't have the money or the time to do that either. So neither alternative really worked. And on a whim, I spoke to a person who was in the trucking business. And I asked him, I said, if I could figure out how to park your truck on the corner of Sixth Avenue and 56th Street on December 2nd, 1982, would you lend it to me?

• 30:36Guy Raz?

  What kind of truck, like?

• 30:38Speaker 01

  A 40-foot trailer.

• 30:39Guy Raz?

  You asked him to borrow it, why?

• 30:42Speaker 01

  Because I was thinking that if I, maybe I could actually show the shoes and a truck on the corner, because everybody was going to be on that corner at one point in the process.

• 30:51Guy Raz?

  So instead of being at the Hilton or in a showroom, you would just have a truck parked there, a 40-foot truck, that people could go into the container of the truck and see your shoes?

• 31:01Speaker 01

  Correct. So I asked him, would you lend it to me? And he said, you can't park a bicycle in New York for 10 minutes, let alone a truck for three days. But if you could figure out how to do it, not only will I lend it to you, I'll help you decorate it. So I called the mayor's office. So how does one get permission to park a 40-foot trailer on the corner of Sixth Avenue and 56th Street? And the answer is, son, they don't. This is New York. We give permission only to two circumstances. If you are a utility company servicing the streets, or if you're a production company shooting a full-length motion picture, because we were going through an I Love New York campaign in the early 80s.

• 31:32Guy Raz?

  Right.

• 31:32Speaker 01

  So that afternoon, we went to a stationery store, changed the company's, the letterhead and kenneth oil ink, the kenneth oil productions, Inc. And then we filed for a permit, sent the letter to the mayor that afternoon, asking for permission to shoot a full-length motion picture called The Birth of a Shoe Company.

• 31:50Guy Raz?

  You filed a permit?

• 31:53Speaker 01

  Filed for a permit, yes.

• 31:54Guy Raz?

  For a permit to shoot a film called The Birth of a Shoe Company?

• 31:58Speaker 01

  Correct.

• 31:58Guy Raz?

  Okay. All right.

• 32:00Speaker 01

  And we opened for business on December 2nd. And we had two New York policemen as our doorman compliments of the fine mayor.

• 32:08Guy Raz?

  Wait, they gave you the permit? They believed you that you were gonna, did you shoot a film?

• 32:12Speaker 01

  We did. It never quite got edited, but we did.

• 32:16Guy Raz?

  Wait, you had like camera people just filming?

• 32:19Speaker 01

  We had a director. Sometimes there was film in his camera, sometimes there wasn't.

• 32:22Guy Raz?

  Yeah.

• 32:23Speaker 01

  It was cheaper that way. And we had stanchions and cleat lights.

• 32:27Guy Raz?

  Was anybody from the city permitting office there to confirm that you were a legit film company? Or was it just 1982 and that people were just more trusting back then?

• 32:36Speaker 01

  They had no reason not to trust it, I guess.

• 32:38Guy Raz?

  Right.

• 32:39Speaker 01

  I don't think anybody had done this before.

• 32:41Guy Raz?

  And the cops were there like as part of your, you know, security detail provided by the city? And they weren't like, hey, are you guys making a movie? I guess they wouldn't have asked that question.

• 32:49Speaker 01

  No, they weren't. But you know what did happen, though? We had a union guy came by after our first day of shooting.

• 32:56Guy Raz?

  To make sure that this was a union crew?

• 32:57Speaker 01

  A union job, right. And we told him we weren't really shooting. So he didn't buy that. So I just needed more security that night. And they didn't bother us. I guess eventually he just accepted that this was not a union job and that he wasn't going to be a beneficiary at some level.

• 33:18Guy Raz?

  This was not even a film production?

• 33:21Speaker 01

  Oh, no, it was. It was. Some of the footage is actually on our website.

• 33:25Guy Raz?

  Oh, OK, I got you. Got you. But so there was some filming, but really this was kind of a... It was a stunt to get people to come to your trailer to see your shoes. And by the way, how did they know to come there? Did you like paint Kenneth Cole Productions on the side?

• 33:41Speaker 01

  We did. There was a banner outside of the truck. And I would stand there and Sam would stand there and we would kind of, you know, wave to people. And then we saw every buyer in New York. And after the first few days, people, it became apparent, people heard about it. And then there was a, by the way, there's a phone booth on that corner. So I had committed to the factory to buy 40,000 pair of shoes. But I refused to commit to which, specifically which ones. But I told them, I would let them know as the show was happening. So, you know, I would give a little more red, a little more in the lower heel, a less of the blue, more of the red. So I was calling from the phone booth, I had lots of quarters in my pocket, and changing and adjusting the supply chain as we were selling the shoes.

• 34:28Speaker 01

  We get delivery in four to six weeks, which was unheard of, but we'd committed to do this. And I've air freighted, flew everything in.

• 34:37Guy Raz?

  How many shoes, by the way, did you sell at the show?

• 34:39Speaker 01

  I sold maybe 40,000 pair at the show.

• 34:43Guy Raz?

  Wow. So you could call these factories from just the corner of, what was the street?

• 34:48Speaker 01

  Sixth and 56.

• 34:49Guy Raz?

  Sixth and 56 in Manhattan and say, hey, yeah, we need, we need those shoes. We need 20,000, we need 30,000, whatever it was.

• 34:55Speaker 01

  Well, no, I'd already committed to the numbers. I was just adjusting them. And I was aspiring and believing and dreaming that I could sell all these shoes.

• 35:04Guy Raz?

  Right.

• 35:05Speaker 01

  And we did. We sold all of the shoes.

• 35:09Guy Raz?

  After that show, was there buzz about Kenneth Cole, this hot young designer, or not quite yet?

• 35:15Speaker 01

  I think there was. Invariably, if people wanted 10 pair, we'd only agree to sell them eight. And the more we said no, the more they wanted it. And we got a lot of good editorial. So Bloomingdale's gave, gave me my own shoe department on the main floor.

• 35:34Guy Raz?

  In 1983?

• 35:36Speaker 01

  In 83.

• 35:36Guy Raz?

  Wow.

• 35:37Speaker 01

  A little niche department.

• 35:38Guy Raz?

  With your name on the wall and everything?

• 35:40Speaker 01

  With my name on the wall.

• 35:41Guy Raz?

  Did your dad see that?

• 35:43Speaker 01

  He did. He was very proud. And he came to the truck, to the trailer and saw it. And, you know, we lost him a couple of years after that, unfortunately. He didn't really get to see how the business evolved over the years. But he was very proud.

• 35:59Guy Raz?

  What was so different about the shoes you were making at the time? Why were they so hot?

• 36:04Speaker 01

  Well, they were different. And, and street fashion was really just starting to happen at that point in time. You know, fashion up until that point had emanated from the runways of Milan and Paris. But now it was all, it was coming from the streets. And it was coming from people like Calvin.

• 36:18Guy Raz?

  Calvin Klein, yeah.

• 36:19Speaker 01

  Calvin Klein, and I think Donna came a bit after that. But that was about the time, the rise of the New York designers and American designers became a credible pursuit. And people were, they liked the shoes. And people would, they bought them. And I had them flown in from Italy. And I would then turn around and

• 36:40Speaker 01

  Shipped them before I had to pay for them. And then I got paid before I had to pay the factories. So I had positive cash flow like three months into business.

• 36:49Guy Raz?

  But I mean, the actual design of the shoes, was it the price point or was it the design? What was it that, I mean, do they look very different from other things in the market at the time?

• 37:00Speaker 01

  They were very different from other things in the market. They were. They had a very distinctive look, a very high heel, pointy toe pump, and then also a flat pump. And then it was a convertible boot that had the ability to become, you could wear it at any height and it was made in canvas. And in the early eighties denim was, you know, it became a big fashion statement at about that time.

• 37:24Guy Raz?

  Even in shoes?

• 37:25Speaker 01

  Well, but denim friendly footwear. Some of the shoes were made in stone washed canvas, which looked like denim. And then some of them were in stone washed suede, which also kind of looked like what, how people were dressing at the time. And I think people just, they liked it because it was new and different. But it was, we were going through, interestingly, a downturn in the economy in the eighties.

• 37:50Guy Raz?

  Yeah, eighty two was a slowdown.

• 37:52Speaker 01

  It was a recession. So, and then in tough times, I've always said are the greatest opportunities because people, you know, when things are good, people want to just do what they're doing and do more of it. And it's only when things are difficult that they, that they looking to kind of reinvent and reengage. So, you know, in tough times, the shoes were different. There was nothing like them in the marketplace. And people were intrigued and everybody felt they should have some. So we got off to a really great start.

• 38:21Guy Raz?

  So where were you getting your ideas from?

• 38:23Speaker 01

  I often would go out at night. This is also the Studio Fifty Four days. So I would go to the nightclubs and I would kind of get a drink and I'd sit in a lit corner and I'd see what people would wear when they were trying to look their best for whoever it was they were trying to dress for. And I learned also that what are they wearing, but what do they wish they could be wearing? And, you know, people have to choose from what the universe would exist. So. I had to be aware of what existed in the market, not so that I could make what existed, but how I could make what doesn't.

• 38:55Guy Raz?

  I read a quote of yours, talking about your early years, where you said, initially, I would make what I thought people should wear, but then I realized that I needed to make what people wanted, which is sort of the opposite of what Steve Jobs used to say. He would say, you don't know, customers, consumers don't know what they want. They need to be told what they want.

• 39:17Speaker 01

  My job isn't to tell people what they should wear. My job is to give them what they want, but not how they expect it. And I have to be sensitive to it, and I have to interpret it, and I have to give it to them in a way that doesn't exist in the competitive universe. But I need to listen better. And the best salesmen, I learned early on, were not the best speakers, they were the best listeners.

• 39:40Guy Raz?

  So essentially, by 1984, you've got this brand, you're in Bloomingdale's, and I'm assuming that now your customers are mainly big department stores, mainly in New York. Are you starting to sell nationally by 1984?

• 39:54Speaker 01

  I'm selling nationally in 1982. I'm selling, I mean, they, I, my first season, I sold, I remember I sold Fred Segal in California, I sold Bergdorf's in New York. We sold most of the better stores in the country. You know, we worked very hard to, and Sam was a great salesman, and we worked very hard to get the product placed in the best stores. And the company, its first year in business, did $5 million.

• 40:18Guy Raz?

  Wow, that's unbelievable. I think about a year in, Sam went off and started his own thing, or he left to go work for, I think, Esprit or something, right?

• 40:26Speaker 01

  Correct.

• 40:27Guy Raz?

  But you guys left on good terms.

• 40:29Speaker 01

  We left on good terms.

• 40:30Guy Raz?

  So you, I guess, pretty soon, you know, early on, and within the first two years, you branch out. You move beyond just women's shoes, you go into men's shoes. You go into women's handbags and leather goods, presumably because you thought there was demand for this, right?

• 40:46Speaker 01

  Yeah, I started with women's shoes, and at the time, there's a company called Nine West that started about the same time that we did.

• 40:54Guy Raz?

  Sure.

• 40:54Speaker 01

  And they were making and selling a lot more shoes quickly than we were. And I had a choice. I could There was clearly an opportunity to make more shoes and sell them to more people. Or, as opposed to the one I took, which just to sell similar accessories to the same person I was selling to. But I was trying to sell the coolest person in town, and there's only so many of them. And I knew that if I had to, if I was going to sell more shoes, I was invariably going to have to change the, my relationship with the customer, and I was going to have to be a little less cool and produce maybe them in a little more accessible manner.

• 41:32Guy Raz?

  Which means that you had to offer a lower price point.

• 41:35Speaker 01

  I would offer a little lower price point, and there would be a little less extreme in their design and execution. And I could have done that. But instead, I chose to keep the essence of the brand the way it was and create more products with the same person, and then not that much later, including the male complement to the women's shoes, which is myself. So I made shoes for me, shoes I wish I was there.

• 41:59Guy Raz?

  Yeah.

• 42:00Speaker 01

  What I often say is I put myself in the customer's shoes to try to get them to want to put themselves in mine.

• 42:05Guy Raz?

  Let me ask you about men's shoes, right? Because it seems intuitive that it would be easier to design men's shoes because they're more straightforward. Is that true?

• 42:16Speaker 01

  It was for me, because I would put myself in my shoes. I would look at it, I could much more critically look at it and say, is this, does this shoe need to exist in the world?

• 42:27Guy Raz?

  I mean, even in 1984, the designs of men's shoes, of course, are different than they are today, but there's some, some pretty substantial similarities, right? I mean, you had loafers, you had lace ups, you had Chaka boots and Chelsea boots. I mean, those existed in 1984.

• 42:43Speaker 01

  But fashion, men's fashion was just, you know, finding its stride at that time. You know, up until that point, men basically had suits, and then they had torn jeans and t-shirts and sneakers. That's what guys had. That's what every guy, we were like, we wore the same uniform.

• 43:02Guy Raz?

  Right.

• 43:02Speaker 01

  And at that point, people were almost being encouraged and motivated to express themselves, and that there was a, that vehicle was first really becoming accessible.

• 43:13Guy Raz?

  One of the things that you would eventually become really well-known for, in some ways as well-known for as your shoes, was a cause of bringing attention to AIDS, the AIDS crisis. And I think in the mid-'80s, you were already really getting involved in this because one of your designers, David Brugnoli, was the first person that you knew who was HIV-positive and eventually died of AIDS. Was it David who inspired you to become involved in AIDS awareness?

• 43:45Speaker 01

  So David didn't, because David didn't, never really acknowledged to me that he had AIDS. He would never, he never even told me he had AIDS. But I knew he did. And this was, and again, the mid-'80s, I adored David. David actually was an interior designer, is what it was. He actually designed the trailer. I think I had originally met him from Sam. I think Sam knew him.

• 44:07Guy Raz?

  He designed the trailer for you in 1982?

• 44:09Speaker 01

  Yeah. He designed the inside of the trailer. And he designed the inside of our showroom. And David was a gay man in New York, and that was a, you know, that wasn't something you wore on your sleeve in those days. And what I would do at the beginning of every season is I would essentially, as I said, put myself in people's shoes. And I would try, what is on people's minds? What are people thinking about?

• 44:28Guy Raz?

  Yeah.

• 44:29Speaker 01

  And in many ways, I was, it was me. I was speaking to myself, you know, what was consuming me? What was on my mind? What was I obsessed with?

• 44:36Guy Raz?

  You were thinking about AIDS and HIV?

• 44:38Speaker 01

  Well, HIV was consuming all of us. It was on everybody's minds, but very few people's lips at the time. And it was killing countless amount of, mostly gay men in New York and San Francisco and big cities, and intravenous drug users and then, but people were reluctant to talk about it because the stigma was so devastating. So I always sought to find ways to make what I was doing as meaningful as I could. And arguably, and I say this today, shoes are, in and of themselves are not, nobody needs what we sell. If every shoe store in America closed its doors tomorrow at 12 o'clock, hardly an American would go barefoot for 15 years. And I knew early on inherently that it needed to be about more

• 45:22Speaker 01

  than how much money we were making. And HIV was affecting our industry in a disproportionate way. And and people weren't talking about it because they couldn't. So I decided to do a campaign and and also at the time, contextually, I had all these initiatives happening. We had We Are The World, Hands Across America.

• 45:45Guy Raz?

  Right.

• 45:45Speaker 01

  Live Aid, World Aid, Farm Aid, and they were all about hunger. So there was this looming black cloud and no one, people were were not comfortable.

• 45:57Guy Raz?

  Talking about AIDS.

• 45:57Speaker 01

  Talking about AIDS.

• 45:59Guy Raz?

  Sure. People wouldn't want to be around you. People were afraid that they would catch it.

• 46:03Speaker 01

  People were afraid.

• 46:04Guy Raz?

  In that time.

• 46:05Speaker 01

  And you could potentially lose your job, you can lose your neighbors, you could lose your health insurance, you could lose everything that you valued. So it was a frightening time and maybe because I wasn't a member of one of those at-risk communities, I wasn't as fearful as others. And many women at the time were some of the biggest advocates. And I committed myself to it and quickly, quickly, what I was doing was becoming meaningful to me.

• 46:30Guy Raz?

  And and just to be clear, I mean, you launched an ad campaign to raise awareness around AIDS and and I mean, for people to remember, that was like a really iconic ad, right? I mean, it it showed up in all these magazines.

• 46:44Speaker 01

  Yeah, you had all these fashion models and they were just really becoming icons at that time and being celebrated. So I asked Annie Leibowitz, I was the little, you know, up and coming designer, but I asked Annie if she would do it.

• 46:59Guy Raz?

  She would take photographs?

• 47:00Speaker 01

  If she would, on a pro bono basis, because I didn't really have any money, if she would help me do a campaign, do a photograph, and she agreed to do it. And then we reached out to all of the top models in the industry.

• 47:11Guy Raz?

  Like the thing in the mid 80s, who were the top models at the time?

• 47:14Speaker 01

  At the time, Christie Brinkley was one of them. And Christie did it, by the way, and she was eight and a half months pregnant. And Christie hadn't been seen publicly in, I don't know, for five months, but she let herself be photographed for this ad, eight and a half months pregnant, as was Paulina and Beverly Johnson.

• 47:29Guy Raz?

  Paulina Perisova, I remember all these supermodels from the 80s.

• 47:34Speaker 01

  And Joan Severance. Beverly Johnson and Joan Severance and Kelly Enberg. So everybody said yes.

• 47:41Guy Raz?

  And they would just be photographed, what?

• 47:43Speaker 01

  So they were, the the concept with the campaign was, the message was for the future of our children.

• 47:48Guy Raz?

  Right.

• 47:49Speaker 01

  And the notion was, we're talking about stigma. How do you talk about what nobody would speak about? And that was, there was this silence that was deafening.

• 47:59Speaker 01

  And then I had to decide what they were gonna wear and I figured I can't put them in my shoes because then this campaign loses its purpose. It's gonna look like it's I'm self-serving it and I didn't wanna send that message to Annie. I didn't wanna send it to the viewer or anybody else. So I said, you know what, I'm not gonna put them in my shoes, I'm not gonna put them in anybody else's so they'd be barefoot. And that, at the end of the day, turned out to be even a bigger statement.

• 48:20Guy Raz?

  They were barefoot. They were not even wearing shoes.

• 48:22Speaker 01

  They were not wearing shoes.

• 48:23Guy Raz?

  And how, so the idea was to take out ads and publications and?

• 48:27Speaker 01

  So I wasn't sure how we were gonna do it. I had a very small budget. And there was no such thing as pro bono advertising also in those days. So we got all the models to agree to do it. And then with children, and these were two groups that were not stigmatized. Everybody appreciated Beautiful Woman. And we left all children. We didn't have a problem with them until they grew up and had opinions. So we had this beautiful photograph that Annie took of all these women. And the message was for the future of our children. And then in small letters, "Support AIDS Research."

• 49:03Guy Raz?

  And it didn't say Kenneth Cole anywhere on it?

• 49:05Speaker 01

  It said Kenneth Cole in a list of sponsors.

• 49:09Guy Raz?

  Wow. So you really were like, not, this was like?

• 49:13Speaker 01

  It was a gamble. I wanted people to know I was behind it. I wanted them to know I used my limited, fragile resources for this. But I was very careful. My role to a large degree was creative and conceptual and bringing everybody together. And that campaign, in many ways, changed me. It changed the man, it changed the brand, and it changed my business in a profound way.

• 49:35Guy Raz?

  Because all of a sudden, you became more focused on a social mission.

• 49:40Speaker 01

  We became, what we were doing just became important. And it became meaningful.

• 49:46Guy Raz?

  I'm looking at that ad. It's so cool, like just seeing all these young faces, Christie Brinkley and Andy McDowell and Paulina Porisco and all these kids. It's really cool.

• 49:56Speaker 01

  Yeah. So at the time, so I now had the message, I now had the ad. And I ran and I started calling all the magazines to see if anybody would run this for us because I didn't have the budget to. And I had, everybody had done everything pro bono. And that wasn't really what you did in those days. That notion didn't really exist out there. So the models all did it. Annie did it. The studio was donated, hair and makeup, I think, was donated. I even had cars donated so people could pick people up. And the magazines, I think the message ran in 23 magazines, which was a lot. And at the end, and then, once it ran in a couple, we had a lot of other people calling for it, offering to run it for free.

• 50:36Guy Raz?

  You also, I'm curious, because this was sort of a foundational moment for your career and for you personally. I mean, you would become the Chair of AMPFAR, the Foundation for AIDS Research, which you helped raise hundreds of millions of dollars for. You would go on to be involved in other causes that are quote unquote liberal, or considered to be liberal, and you are openly liberal.

• 51:02Speaker 01

  Right.

• 51:03Guy Raz?

  Talk about that. I mean, is it, I mean, you know, some companies and some business leaders can hide their politics. And, I mean, not only do you kind of wear it on your sleeve, you're married into the Cuomo family, or you got married in 1997 to the sister of the current governor of New York and daughter of the former governor of New York. I mean, did you ever think, oh, maybe I shouldn't be political because it could hurt my brand? Or was it like a non-negotiable?

• 51:26Speaker 01

  But, you know, Guy, I have been asked that question over the years. And I tell people, I'm not political. That my messages are not political messages, they're social messages, or maybe human messages.

• 51:38Guy Raz?

  Yeah.

• 51:39Speaker 01

  But they're not social, they're social messages that have been politicized. But I don't talk about politics.

• 51:46Guy Raz?

  Right.

• 51:47Speaker 01

  And, I mean, I have on one or two occasions, because I couldn't help myself. But for the most part, I have made a very exerted effort for 30-plus years not to talk about things that I, or certainly in ways that I thought was political.

• 52:03Guy Raz?

  Right. So, your business is really kind of, kind of growing in the, in the 80s. And really, your distribution model is still through big retailers, right? Because this is still the heyday of department stores and where lots of people got their clothes and... And I guess in like 94, you decide to actually make a change, to actually really focus on direct to consumer sales. What happened in 94? Was there like a catalyst that sort of inspired you to start to open up shops?

• 52:36Speaker 01

  What happened in 94 was the landscape changed. When I started my business, there was maybe 70 or 80 department store chains in the United States. All of a sudden, 10 years later, there's maybe 15 or 20.

• 52:51Guy Raz?

  Consolidation.

• 52:52Speaker 01

  After consolidations and some bankruptcies. And then I woke up one day, and I think, if I recall, Campo was trying to buy Federated department stores. And these are two stores that were in and of themselves leveraged and questionably solvent. And I said to myself that these guys are going to need to find economies because they don't exist today. And they can't sell any cheaper, so they're going to have to buy better. And it was likely going to mean is they're going to take out the middleman, and I'm the middleman. And I didn't, I didn't like the way that felt.

• 53:26Guy Raz?

  Why were you the middleman? I mean, you were selling your products to them.

• 53:30Speaker 01

  Yeah, but they could buy it directly from factories and then take out the middleman.

• 53:35Guy Raz?

  And then no longer sell Kenneth Cole, just buy your shoes and not sell your label.

• 53:39Speaker 01

  They'd buy similar shoes on their own labels, and I'm not in business anymore, which was happening to some people. So unless my brand was a destination, then I had no reason to exist in those stores. And I wouldn't. I didn't, I believed.

• 53:54Guy Raz?

  You didn't think that they would just continue to buy Kenneth Cole shoes and sell them?

• 53:58Speaker 01

  I didn't. I thought at a certain point, they're going to eliminate the middlemen if they could. So I needed to open stores. I needed to grow my presence, increase my marketing. And I also knew that I couldn't fund that. I wasn't willing to fund that.

• 54:20Guy Raz?

  So just to be clear, you had to fund that, that is, building stores?

• 54:25Speaker 01

  Building stores.

• 54:27Guy Raz?

  I'm just trying to understand though, because the value proposition was your designs. They couldn't steal your designs.

• 54:33Speaker 01

  But there were other designs. And if you don't see my designs, like a tree in the forest, I'm only as good as you know me to be. And if I'm not out there, then I don't exist.

• 54:45Guy Raz?

  When we come back in just a moment, why Kenneth decides to take the company public and why he takes a big financial loss to go private again. Stay with us. I'm Guy Raz and you're listening to How I Built This from NPR.

• 55:37Guy Raz?

  And one more thing, the New York Times bestselling book, How I Built This, is now available. It's a great read and a great gift for anyone looking for ideas, inspiration, wisdom, and encouragement to have the courage to put out an idea into the world. It's filled with tons of stories you haven't heard about how some of the greatest entrepreneurs you know and respect started out at the very bottom. Check out How I Built This, the book, available wherever you buy your books.

• 56:14Guy Raz?

  Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So it's 1994 and Kenneth Cole decides he no longer wants to depend on selling his shoes through department stores. What he wants is a direct relationship with his customers.

• 56:32Speaker 01

  So how do I become present where I need to be, when I need to be, to the degree I need to be? You can't do that without controlling ultimately the distribution of having your own stores, I felt, at that time.

• 56:45Guy Raz?

  So you needed cash. You needed money to make this happen.

• 56:49Speaker 01

  I needed the cash. I wasn't going to put myself in any more debt than I needed to be. And I decided by going public was the best way to do that. And invariably, when you go public and you ask the public for funding, There is a question everybody asks, which is use of proceeds. What are you going to do with the money?

• 57:06Guy Raz?

  Yeah.

• 57:06Speaker 01

  And I had a very clear use of proceeds.

• 57:09Guy Raz?

  You were going to expand like crazy.

• 57:10Speaker 01

  I was going to grow the business as responsibly, as quickly and as responsibly as I knew how.

• 57:16Guy Raz?

  I mean, it isn't, because on your own, you'd taken the company from a $5 million operation in your first year to a $85 million operation by 1994, which is impressive, but not enough. Because that's revenue, that's sales and revenue. That's not enough cash or profit to fund the ambitions that you had. You had to go public.

• 57:37Speaker 01

  Right.

• 57:37Guy Raz?

  Presumably you raised a lot of money in that IPO. Now you got the cash to expand. So what was the expansion plan?

• 57:46Speaker 01

  So the expansion plan was to open stores in important markets, which are aspirational markets, in Chicago and Los Angeles and Miami and Boston. And we systematically went down that road.

• 58:00Guy Raz?

  And how did that do? I mean, did people, I mean, by the late 90s, were people flocking to Kenneth Cole stores?

• 58:08Speaker 01

  I don't know if I'd use the word flocking, but we were, we were, the stores were all profitable and they were driving customer engagement and the brand was doing better wherever it existed. It did better in the department stores and-

• 58:21Guy Raz?

  Because people would see the brick and mortar stores and that was like an advertisement.

• 58:25Speaker 01

  Yeah, and then there was people, I remember having a conversation with Nordstrom at the time and they were a big customer and they were challenging the fact that we had all these stores. And I would show them quantifiably how every mall that we had a store, where they had a store, they did better with our shoes than Nordstrom's that did not have a Kenneth Cole store. And I think because there's people that wanted to buy from Nordstrom or from Bloomingdale's or from Saks or whoever it was. And they're going to do that and I just helped create a cachet and elevate the brand equation on their behalf. So everybody won.

• 58:58Guy Raz?

  Do you know, it's very similar, in a strange way, to the story of Foot Locker. I interviewed the former CEO of Foot Locker, Ken Hicks.

• 59:06Speaker 01

  I know Ken.

• 59:06Guy Raz?

  And he told me that whenever there was a Nike store opened up in a mall, actually it increased Foot Locker's business.

• 59:13Speaker 01

  Right. Yeah, I believe that.

• 59:15Guy Raz?

  It's very interesting. You would think that the opposite. So you had these stores. And by the way, were, I mean, were you licensing your name at this point in the late 90s or not yet?

• 59:24Speaker 01

  I was.

• 59:25Guy Raz?

  You were licensing your name to- Other products apparel, men's dress shirts, things like that.

• 59:30Speaker 01

  I don't, I don't think I was doing apparel and dress shirts yet. I was doing, for sure, I had done women's handbags and then I had done outerwear. And I think I had done men's ties and a couple of things.

• 59:41Guy Raz?

  Right. But was your brand, I mean, your reputation was kind of aspirational, right? So you call it higher end or aspirational, what have you. But when you started to license your name, did that have an impact on, on how the brand was perceived? Because some of those products would show up at like TJ Maxx.

• 1:00:02Speaker 01

  Well, it didn't initially, because that wasn't the case initially. But I made it, one of the biggest deals I had ever made as a company. We licensed women's wear to Liz Claiborne. And they agreed to huge minimum sales levels, actually $250 million a year, which is crazy high numbers.

• 1:00:22Guy Raz?

  That was a guarantee that they would pay.

• 1:00:24Speaker 01

  Guaranteed by the, by the fifth year of our relationship.

• 1:00:27Guy Raz?

  That's a great deal.

• 1:00:29Speaker 01

  It is, but until you realize that they had to make the product more accessible, more accessibly priced, more accessibly fit, designed, so it fits a broader customer base. And it's priced to appeal to a broader customer base, which is what they wanted to do at the time. And I was, as a, running a public company, I was blinded by demands and encouragement to drive sales and.

• 1:00:55Guy Raz?

  Get shareholders, they wanted to make money.

• 1:00:57Speaker 01

  That was what we signed up for as, as chairman of public companies.

• 1:01:01Guy Raz?

  I'm sensing a hint of regret in that deal with Liz Claiborne because it sounds like maybe it started to affect the reputation of the brand.

• 1:01:10Speaker 01

  It, you know, again, it's, it was, it was a good short-term decision, but I didn't have appropriate foresight. And it, over time, it did dilute the brand value. So it did take the product down market. And as a fashion company, you have to keep reinventing yourself. And, and you need to maintain some level of aspiration, otherwise that's, you'd have no reason to exist at a certain point.

• 1:01:37Speaker 01

  So the brand lost a little bit of its esteem when we did that.

• 1:01:43Guy Raz?

  Meantime, you reach a market cap of a little more than half a billion dollars in 2006. And then in the subsequent years, we begin to hit the financial crisis. And I guess you decide at the time to step down as a CEO. Was it, did you decide to step down because you felt like somebody could better manage the crisis? Or were you, did you feel, were you under pressure from shareholders? What, what was the decision behind that?

• 1:02:10Speaker 01

  If I recall, I stepped down at the same time that I agreed to be the chairman of Amfar.

• 1:02:14Guy Raz?

  I got you. Okay, I got you. So it had nothing to do with the financial crisis?

• 1:02:17Speaker 01

  It would, no, it wasn't the crisis, but I also felt I needed, the company needed somebody who could be a little bit more accessible.

• 1:02:25Guy Raz?

  Focused, right.

• 1:02:26Speaker 01

  And more focused and could be all in all the time.

• 1:02:30Guy Raz?

  So you had kind of stepped away from running the day to day operations for a few years. You had a different CEO, Jill Granoff.

• 1:02:38Speaker 01

  Yeah.

• 1:02:39Guy Raz?

  And during that time, the revenue went down like 30% or more. And you decided to return to the CEO role, I think around 2011. I mean, I think I know why, but did you feel like you had to come? It was like Howard Schultz came back to Starbucks after being away from it for so long. Did you feel like you had to regain control and try and bring it back to life?

• 1:03:04Speaker 01

  I thought I needed to fix the business. And it wasn't working the way it was. We'd gotten too big. We were selling some of the wrong product to the wrong people. We were licensing to people maybe we shouldn't have been, had maybe the wrong product indoors it shouldn't have been in. Because invariably, that's what the public markets will do to companies like ours. But, you know, what was happening is we, as an executive team, were spending most of our time talking about how we're going to talk about the results rather than trying to, how to fix them.

• 1:03:37Guy Raz?

  You were trying to figure out how to spin things.

• 1:03:39Speaker 01

  That's, yeah, that's what you do. And how do you make what you're doing sound as good as you can? And rather than how do you make it better? So being public is not, you know, a desirable place to be unless you need the public markets to finance and or run your business. And we needed to get smaller to get bigger. We needed to shrink the business, step back, and we couldn't do that as a public company, partially because of my personal visibility. But as a private company, you can do those things. So we felt we needed to go private, and I needed to make that happen.

• 1:04:17Guy Raz?

  So you had, you decided to come back to the company with the goal of taking your company private. And for anyone who doesn't understand this, and I don't fully understand it, it is very hard to take a company private once it's gone public, because you essentially, you've got to buy back the shares from shareholders. It means you have to raise a lot of money to do that. And that's very challenging. I mean, I think, how did you go about doing it?

• 1:04:44Speaker 01

  I don't remember exactly step by step, but we did what most people do, and we hired a law firm, and we retained bank advisors, and I spoke to a lot of people in the industry. And, you know, actually, the process getting here is I spoke to all these very smart people that I knew.

• 1:05:00Guy Raz?

  Yeah.

• 1:05:01Speaker 01

  And many of them were friends, and I asked them, you know, if I totally tried to overhaul the business and put in a whole new board and restructure, and they all said to me, well, that's great, but you can't do that as a public company. And then they'd say, well, and by the way, why are you public? And I says, well, I, because I don't know how to not be public. Well, they said, well, just, it shouldn't be that hard, and they, you know, looking at your balance sheet. So, because I had always maintained that held on to a reasonable amount of the shares.

• 1:05:30Guy Raz?

  Right.

• 1:05:30Speaker 01

  So we realized that upon analysis that I could do this without a venture capital firm, because to do it with them, many will argue, it's harder, it's harder to exist in that structure than it is as a public company.

• 1:05:45Guy Raz?

  So you could do it with the shares that you already had?

• 1:05:48Speaker 01

  With the shares I had and traditional bank financing.

• 1:05:51Guy Raz?

  Right. And from what I understand, you, you bought the company back at 15 and 1/4 per share, which valued the company at like 280 million, which, which was hundreds of millions of dollars less than it was at its peak. So was there, I mean, I imagine there were some shareholders who were mad about this, who didn't want this to happen.

• 1:06:14Speaker 01

  You know, when we announced that we were going to do this, we announced it at nine o'clock when the New York Stock Exchange opened, we put out an announcement. We had a class action suit filed, and on our desk... By 10 o'clock, an hour later. So you have this built in process where, you know, these law firms just file suit and then they build the class afterwards. They start a class action suit, then they find class and they

• 1:06:40Guy Raz?

  Yeah.

• 1:06:41Speaker 01

  sue you without knowing any of the facts because that's irrelevant and they will attach them later on as part of the process.

• 1:06:49Guy Raz?

  You've been quoted as calling these lawyers who file these lawsuits extortionists. And you may not be wrong here, but, but just, just to play devil's advocate for, for a moment, I mean, could you make the argument that some shareholders were, you know, legitimately pissed off because they bought the shares for, you know, $20 or, you know, $18 and now they're going to lose $3 a share?

• 1:07:09Speaker 01

  But if I'm, if we offer $15

• 1:07:12Guy Raz?

  Right.

• 1:07:13Speaker 01

  and the stock at the time was 13, so we offer a premium of

• 1:07:16Guy Raz?

  Right.

• 1:07:16Speaker 01

  15 to 20%. So there was a benefit everybody was realizing. And then the process was going on so long, we lowered our offer because the value of the company had gone down in this process.

• 1:07:27Guy Raz?

  Just going down.

• 1:07:28Speaker 01

  And we had basically said to the marketplace, if you, and I had also said, I'm happy to do this and we're going to do a vote and it's called the majority of the minority. So I won't even vote my shares because my shares were more than 50% of the outstanding vote. So my shares will not vote and the public shares will. And if the majority of the minority shares win, then we, the deal will not go through. And if it does, then it will and we'll accommodate that. And it did. At the end of the day, the lawsuit, the class action suit continued and over time we prevailed.

• 1:08:04Guy Raz?

  But it must've been costly and stressful.

• 1:08:06Speaker 01

  It was costly, but it's part of the process. It's part of

• 1:08:10Guy Raz?

  Yeah.

• 1:08:11Speaker 01

  the way, you have no choice, you have to do that. And, and it was one of the best days of my professional life.

• 1:08:18Guy Raz?

  When you went private.

• 1:08:20Speaker 01

  When I went private.

• 1:08:22Guy Raz?

  So you go, you take the company private and now you're unshackled, I guess. All of a sudden, you didn't have to think about short-term profits. You could focus on the brand. You could focus on long-term strategy. And it was your company thing. I think you still own about 80% of it.

• 1:08:41Speaker 01

  Well, at that time, I owned 80%. Now I own 100. We had, I brought in some outside, some of these friends who were advisors and invited them to buy in at the same price that I did and they formed an advisory board.

• 1:08:54Guy Raz?

  And I should also mention that I think not long after that, you started to close down your stores, most of your stores.

• 1:09:02Speaker 01

  We systematically started to close the stores. And the prior management team had opened up a lot of outlet stores in places where we shouldn't have been.

• 1:09:11Guy Raz?

  We had like 63 outlet stores across the US.

• 1:09:14Speaker 01

  And the model had changed and we should not have been in that business.

• 1:09:17Guy Raz?

  And outlet stores, do outlet stores also kind of devalue a brand?

• 1:09:23Speaker 01

  I think they do, but also what changed in that period of time is the internet. You know, the outlet stores were a way to bring value to the customer, but the internet does it effortlessly. There's a whole marketplace that aggregates the best existing product, wherever it is, and makes it available, wherever there's supply to wherever there's demand. So the outlet model, in my mind anyway, at that time, was obsolete and I wanted to make the brand a better brand and I felt we should not be in these stores. So we systematically went about closing them.

• 1:09:57Guy Raz?

  You closed virtually all of your stores. I think today, today there's just, what, I think just one or two?

• 1:10:05Speaker 01

  There's one store, yeah. Up until about six years ago, we had 100 stores in the US.

• 1:10:11Guy Raz?

  I mean, completely overhauled this model that you had. I mean, the reason you went public was to expand the stores and expand the brand with stores and brick and mortar.

• 1:10:21Speaker 01

  And the reason we went private is to close them.

• 1:10:25Guy Raz?

  But really, it's now you on the line. It's your personal financial situation. Because if, at this point, you own 100% of the company, if it goes bust, you're broke. You've assumed the risk.

• 1:10:37Speaker 01

  I'm assuming all the risk. Yes, that's correct. Which is comforting, truthfully, at some level. Because, you know, when you're driving somebody else's car, you drive more carefully because it's somebody else's car. But you could be a hair more reckless if it's your own. Not that that's... Or you can take more risks. And, you know, you can explore kind of new paths that others might not otherwise.

• 1:10:59Guy Raz?

  You stepped down as CEO for the second time, and then brought in Mark Schneider to run the company and the brand in 2015. And together, you kind of focused on a rebranding, like a rebranding Kenneth Cole. What was... Because you had a bunch of different things. You had Kenneth Cole Reaction and different parts of Kenneth Cole. What was the rebrand supposed to signal to consumers in 2015?

• 1:11:26Speaker 01

  Well, what we wanted to do is to... You can have a label, and that could be a lot of products that have your name on it. But if you can have a brand, you have to deliver a consistent point of view at every point of execution. And that's the hardest part about doing it, especially over as many years as we've been doing it. And it's... We're on a lot of different products today. We licensed the brand in 20 some odd products. And we've been... I've been a licensor for 25 years.

• 1:11:51Guy Raz?

  Right.

• 1:11:52Speaker 01

  And it's probably something we do relatively well. But I think the brand definitely is diluted in the process at some level because... And you have to, every day, make very difficult decisions. And every single business decision has financial implications.

• 1:12:09Guy Raz?

  Right.

• 1:12:10Speaker 01

  And it also has brand implications. But right now, we're running and operating the shoe business ourselves. Everything else until... We were operating the clothing businesses too until recently, and then we licensed them out.

• 1:12:24Speaker 01

  So, but right now, we're running shoes.

• 1:12:26Guy Raz?

  Do you still think of your shoes in that same way, aspirational? I mean, I'm looking at the website, you know, they're, these are not, this is not fast fashion. I mean, you're, you know, you give a pair of your women's heels, they're still 100, some of them are 160, 170 dollars. So they're not, you know, designer prices, but they're, they're not the low end either.

• 1:12:45Speaker 01

  The goal is to, I don't think people buy price. They buy value and people are, a long time ago, you pay a dollar for something, you never wear it, you pay too much. So how do you create a product that is, that looks good, that's comfortable, that will look and feel good today as well as tonight? And that's the challenge and that's what we try to do every day.

• 1:13:07Guy Raz?

  I want to go back to the rebranding side, right? Because you, you, you had a very clear idea of what the brand was when you launched and it of course evolved because all brands evolve. But when you rebranded, who, who, who did you want your customer to become? Who did you imagine your customer to be?

• 1:13:26Speaker 01

  The goal was to, in my mind, I wanted it to be me. I wanted it to be, I wanted to want every one of the shoes and want to wear every one of those shoes and I wanted it to be my wife and people who I think have great taste. And so was it realistic? Was it a little aspirational? Did I go a little far too fast, maybe? But I still always believe in aiming higher, knowing that even if you come up a little short, you're, you're in a better place than you were.

• 1:13:54Guy Raz?

  Are you still involved in designing the shoes?

• 1:13:57Speaker 01

  I am, not as involved on a day-to-day basis, but I ultimately see everything and approve everything.

• 1:14:04Guy Raz?

  What is a shoe that gets you excited right now that you guys are making?

• 1:14:09Speaker 01

  It's something that does everything for you, that checks all the boxes, you know, that today... Post-COVID, I talk about a PC, what's the PC world, which is post-coronavirus? And what are going to be our expectations and what's our appetite? I don't think there is a closet anywhere that today is in full. So we have to give you a reason to make room in your closet, which is in and of itself. And it's very attribute-driven. And right now, I'm very focused on the most important new accessory, which is one that nobody has in their closet right now, and everybody knows they need. And even if they have it, they know it could be better.

• 1:14:47Guy Raz?

  The mask.

• 1:14:48Speaker 01

  It's the mask.

• 1:14:48Guy Raz?

  I see on your website, they're nice masks.

• 1:14:50Speaker 01

  So we're trying to make the perfect mask. It doesn't just look good, it has six layers of protection. It has temperature control, it's waterproof. So that is a kind of getting on for resources put behind that right now.

• 1:15:03Guy Raz?

  One of the benefits of our show, certainly this year, has been is a source of comfort for our audience and our listeners who are running businesses, because it's been a tough year for pretty much everybody unless you're running an online productivity software that everyone seems to be using remotely, right? And I have to imagine it's been a tough year for Kenneth Cole, because it's been a tough year for the entire fashion and retail industry, full stop.

• 1:15:29Speaker 01

  Yeah.

• 1:15:30Guy Raz?

  How are you building resilience into your company this year? Because, am I right? It must be a slower year.

• 1:15:38Speaker 01

  It is a very slow, it's a very difficult year, Guy. And, you know, we're better off than most, because a lot of our, the business model's built on contractual relationships and licenses.

• 1:15:49Guy Raz?

  Right.

• 1:15:50Speaker 01

  So there's some level of assured income. But this isn't sustainable, and we need to partner with our licensees, and we do. And the shoe business, you know, struggles in to the degree is how do you variablize as much of your business as you can, so you don't have all this, you know, massive overhead? Fortunately, we had closed stores, and fortunately, we had made other decisions as well, too, to become a little bit leaner. And our goal is to become as agile, relevant, and profitable. Those are the kind of the three boxes we look to check. And we're trying to, you know, stay a step ahead.

• 1:16:22Guy Raz?

  Kenneth, you, earlier this year, launched a new initiative called the Mental Health Coalition, to raise awareness about mental health and try to remove the stigma around it and help people get access to mental health services. First of all, we haven't talked about this. Have you ever? Been depressed or or or gone through mental mental health challenges?

• 1:16:49Speaker 01

  You know, I don't think I do, and I don't think I did. I shouldn't say I don't think I did. It wasn't what kind of set me off down this path. But so many people in my life are living and struggling with this every day. And then I came to realize maybe I am as well in different ways. I've been in a perpetual fog since COVID happened.

• 1:17:08Guy Raz?

  Yeah, yeah.

• 1:17:09Speaker 01

  WHO says that one in four people will live with mental health conditions in their lifetime. We say it's four in four. We say it's everybody because if it isn't you, it's somebody you love. It's somebody in your family, in your community or in the workplace. But we're all living with it. In fact, today, post COVID, I think it's five out of four people. I think it's also your pets. I think it's just so overwhelmed us. And I don't think people have a clue how devastating this is going to be for extensive periods of time.

• 1:17:37Guy Raz?

  Yeah.

• 1:17:37Speaker 01

  But so we, you know, we as a company were working with NAMI. I'll tell you just how this came about. My daughter also, Amanda, kind of encouraged this and some, it's very important to her. NAMI was, has a an initiative on anti stigma free companies as we always look to do.

• 1:17:54Guy Raz?

  What is NAMI? Sorry, I'm not familiar with NAMI.

• 1:17:56Speaker 01

  I'm sorry, National Alliance for Mental Illness. They're the largest grassroots mental health service provider in the country.

• 1:18:03Guy Raz?

  Got it.

• 1:18:04Speaker 01

  So they say to us, will you help us with an anti stigma campaign like you did with HIV? And that stigma for mental health is as bad today as it was with HIV 20 years ago. So we work on a whole new narrative. I asked five psychiatrists just out of curiosity for a definition of depression, and I got five different answers. And the reality is none of them are empowering. Every one of them are diminishing. So how do people talk about their circumstances? And you wonder why two thirds of the people with mental health issues are in the shadows because they don't have a narrative they can resort to. So let's create that. And let's build the community. So we go out and we reach out to the American Foundation for Suicide Prevention, the Anxiety and Depression Association of America,

• 1:18:49Speaker 01

  Bring Change to Mind, Brain and Behavior Institute, Child Mind, Crisis Text Line, JET Foundation, Mental Health America. Every one of them says we're all in. We built this massive coalition of mental health providers. And then we now set out to create this narrative. So it's an inspiring journey that I've embarked upon, and it's become a big part of what I'm doing, and an impact, I think, and a privilege that I have to be able to have such extraordinary organizations and individuals who've agreed to collaborate, to hold hands, and to work together on this.

• 1:19:26Guy Raz?

  Yeah. Ken, when you think about your journey, right, starting out, you know, kind of helping out your dad, and then you really had incredible success with this business. Not only financial success, but you cultural impact. I mean, you became a name, a designer, talked about with Donna Karan, and Calvin Klein, and Ralph Lauren, and Kenneth Cole, all the same breath. Pretty amazing achievement alone.

• 1:19:54Speaker 01

  You're a very kind guy. Thank you.

• 1:19:57Guy Raz?

  Do you attribute your success to how hard you worked and how smart you worked? Or do you think more of it just happened because you got lucky?

• 1:20:06Speaker 01

  Well, my father used to say to me that the harder I work, the luckier I get. But I don't think it's just brute, you know, working hard. I think it's also having a sense of what people want and putting yourself in their shoes. And I work hard. I'm very emotionally vested in what I do, and I love it. And I guess the time comes that I don't, it'll be harder to keep it going.

• 1:20:30Guy Raz?

  Are you comfortable calling yourself a designer now, after 35 years?

• 1:20:35Speaker 01

  I am, I still say I'm a shoe dog. That's an expression people in the shoe industry say, and I embrace it still.

• 1:20:43Guy Raz?

  I mean, you are still a young man. You've got a lot of life left in you, maybe 30, 40 years, who knows? With genetic engineering, maybe 50 or 100. But at some point, you won't be around. What do you think should happen to Kenneth Cole? Do you see it as a 100-year brand? Do you see it?

• 1:21:00Speaker 01

  I don't know. I think if the brand can have a role today, if it can make an impact, and it has a reason to exist tomorrow, then so be it. The world is very fragile, and people don't buy brands today, I don't believe. I think people recognize today that they are their own brands, and every day they wake up and they curate their own brands on their social media. And they don't just curate the content, they also curate the audience. And I'm just an accessory. I co-brand with them, and hopefully they'll allow me to be part of their brand. So if my brand has a reason to exist, for however long it does, then that's a privilege, and it's something I'll forever be grateful for. We have to earn the right to exist.

• 1:21:42Speaker 01

  I think after 30-some years, I've earned the right to be considered, but every day we have to earn the right to be chosen. And that's all we can do.

• 1:21:53Guy Raz?

  That's Kenneth Cole, the founder of Kenneth Cole. And by the way, remember how he registered Kenneth Cole as a film production company in the early days? And how they started to make a film called Birth of a Shoe Company? Well, you can actually see clips from that film on the company's YouTube page, where you will also notice a young, lanky, and bearded shoe salesman who happens to be Kenneth Cole. What kind of shoes are you wearing right now?

• 1:22:24Speaker 01

  I'm actually wearing Kenneth Cole sneakers.

• 1:22:27Guy Raz?

  Nice. Assuming your shoe closet is only Kenneth Cole.

• 1:22:31Speaker 01

  It's not only Kenneth Cole, but it's all that I admit to.

• 1:22:34Guy Raz?

  Got it. Fair enough. Because I think about my own shoe closet. I've got six pairs of Chukka boots.

• 1:22:41Speaker 01

  I'm sorry to hear that, guys.

• 1:22:42Guy Raz?

  I've had Kenneth Cole, too, of course.

• 1:22:43Speaker 01

  I respect you no less.

• 1:22:45Guy Raz?

  I'm wearing Birkenstocks right now, just so you know.

• 1:22:47Speaker 01

  Oh, you're pushing it. But...

• 1:22:53Guy Raz?

  And thanks so much for listening to the show this week. You can subscribe wherever you get your podcasts. You can also write to us at [email protected]. And if you want to follow us on Twitter, it's @HowIBuiltThis or @GuyRaz. And on Instagram, it's @Guy.Raz. This episode was produced by J.C. Howard with music composed by Ramtin Arablouei. Thanks also to Liz Metzger, Derek Gales, Julia Carney, Niva Grant, and Jeff Rogers. Our intern is Farah Safari. I'm Guy Raz, and you've been listening to How I Built This. This is NPR.