david: this is my kitchen table and also my filing system. over much of the past three decades, i have been an investor. the highest calling of mankind, i've often thought, was private equity. and then i started interviewing. i watched your interviews, so i know how to do some interviewing. i learned from doing interviews how leaders make it to the top. >> i asked how much he wanted. he said 250. i said fine. i did not negotiate with him. i did no due diligence. >> i have something i would like to sell. and how they stay there. you don't feel inadequate being

only the second wealthiest man in the world, right? over the past half-century one of the most successful business leaders in the united states has been leonard lauder. he took a small family company, started by his mother, estee lauder, and built it into one of the largest beauty companies in the world. he has also become one of the biggest philanthropists in the united states, devoting himself to the worlds of art, the world s of alzheimer's research, and the world of cancer research. an incredible contributor in all of these areas. so, at the beginning of this conversation, i should point out to people that leonard has recently written a book about -- about his life in the world of beauty. so let's go back to the very beginning. you were born in new york city? leonard: absolutely. 1973. david: now, your mother is estee lauder, but that was not her name when she was born. her first name was not estee and her last name was not lauder. so how did that name come about? leonard: she was josephine

esther lauder, and her mother was hungarian. and they called her esty, and she liked that better than josephine. david: when you were growing up, were you in a wealthy family at that time? leonard: we were very, very poor. remember this, that this was the depression. my father has had a very successful business importing silk. now, silk did not do too well during the depression. so he -- his company had to close down, and my mother had always had ambitions to either be an actress or to make people beautiful. and i have a late friend who had been a high school classmate of hers, and he said she was always combing out her girlfriends' hair and making them look pretty. she loved doing that, and that

became her avocation and vocation. david: ok, now when you are talking about your youth in new york city, you do it in great detail in the book. how can somebody remember things that happened 80 years ago? how do you do that? leonard: david, it's easier to remember 80 years ago than what i had for lunch today. david: i understand that phenomenon. ok. [laughter] your mother was interested in making people more beautiful, but i guess everybody likes to make people more beautiful. so what is it that she did that actually got her started in the cosmetics world? leonard: she started to sell the products that her uncle had made. he was an aesthetician. and then she decided she could do even better, and she started making them in the kitchen. and i, as a little kid sitting in my high chair, would watch her make the creams on the kitchen stove. then as time went on, she would invite people to the house to do makeups. and i would come home for lunch

every day. i would sit in the kitchen eating my lunch, and she would be next door making someone's face up. but she was a miracle worker. anyone who came in there would undoubtedly walk away looking fantastic. david: so, when you are in high school, you went to which high school, bronx high school? leonard: yeah. david: that is a pretty good high school. did you have time to help your mother and father in the company at that time? leonard: i worked very often after school, every day, except when i was on the soccer team. so when i had soccer practice i was not there, but other than that i worked every afternoon. david: did they pay you or just said this is part of growing up? leonard: if $.15 an hour is pay, that's what i got. david: ok. you went to university of pennsylvania where you graduated third in your class. so what was it you took from the

university of pennsylvania, that you were a good business person, or a good scholar? what did you want to be when you graduated? leonard: i wanted to be in business. i told my parents that is what i wanted to do. i wanted to be in the business, but my father wanted me to be a chemist. no, thank you. i did not want to be a chemist, because i wanted to do marketing. david: ok. so you graduate the university of pennsylvania third in your class. you want to be in business. in those days people would say, i guess i will go to harvard business school. so you applied to harvard business school. did they accept you? leonard: i got turned down flat, which was a rather shock for me. however, i made lemonade out of lemons. i applied for the u.s. navy officer candidate school. i was accepted there and that was the beginning of my phd in leadership. and it is the best thing i ever

did. david: have you ever thought how much more successful your life could have been had you gotten into harvard business school? leonard: [laughs] i wish some people at harvard would know, i would like to send them a thank you note for what they did to me. david: you go into the u.s. navy. were there are lots of young, jewish boys in the navy with you? leonard: when i went to the navy, my father said, you know, there are no jews in the navy. i said, ok. i know that too. but that was good. that was the way the united states was. jews were in the minority. everyone was a minority then, but it was fascinating because i grew up, in my view, at the right time to grow up and learn. you don't grow up -- if you grow up in prosperity, you don't understand how to fight hard. i had to fight hard. david: so, one of your activities in the navy was running the commissary on the

boat you are on or the ship you are on. how did he manage to make that a very profitable business, and did you realize you were a pretty good business person as a result of making the commissary so profitable? leonard: i became the six-star officer aboard an aircraft carrier. an aircraft carrier, we had 3000 men on board the carrier. i had to get everything they needed and then some. so i started to buy perfume they could send out as gifts to their girlfriends, etc. i bought wristwatches, toothpaste, everything you wanted, i had. and i made it a point to have that so successful that that supported the entire ship's entertainment policy. david: after you leave the navy, you presumably could go do many things. you could get a lot of business opportunities. why did you join your parents' company? leonard: because i knew i could make it better. i had a vision of what the

company could be and would be, and i didn't have to sell it to them because i don't think they could see the same thing that i saw. david: you joined the company, what was it, 1958 when you joined? leonard: yes. david: the company has under $1 million of revenue? leonard: $800,000. david: what was your job? did you say to your mother and father you would like to be the ceo? the cfo? what was the job you actually had? leonard: my job description was son. david: i always wondered, when you are in business with your parents, do you call your boss mom or do you call her estee? leonard: i would call her mom. however, i would always address her in front of other people as mrs. lauder out of respect, and it worked well. they had trust in me from way back.

they said, anything leonard wants to do he can do. david: so your job was basically everything that your mother and father did not want to do, and your mother became the symbol of the company, really, the face of the company, is that right? leonard: yeah. she did everything, my father did everything, but i was the one who sort of brought it together, and my vision was make her famous. everything that i could do to make her famous was a step in the right direction, and she became world-famous because of that. david: how do you keep mentally sharp? what is the key? leonard: the brain is a muscle, and if you don't use it, you lose it. ♪

david: what did you do to convince people that your

mother's products or your company's products were better than the competitors'? leonard: two things. first thing, she created the idea of giving gifts away. at the beginning, she would send out a postcard and say, bring this card into such and such store, and we will give you a free lipstick or free this or free that. then she looked it up later on, to say if you buy something, we will give you a gift. that was magic in those days. it was really magic. now, when i -- i took over the sales area. in fact, i took over everything. i remember visiting the buyer of a major department store. he would not look at me. he kept his back to me, cleaning his nails. and finally i said to him, i think i can do great things for you. i can make you a lot of money, and he turned around and said, how can you do that? and then we were off and running from there.

so, i was able to think of the ideas necessary to make a hit and make a big splash no matter where we were. david: so at what point did you realize the company was going to be successful in the sense that it was going to survive? did you always think it was going to become a gigantic global company or did you have offers to sell the company when it was small and you thought about doing that? leonard: my mother came home one day when i was in high school saying, charles weston offered me $1 million, but i turned him down because i wanted to have the business for you. so i was very grateful for that. i knew that we were en route, we were out of the woods at the beginning of 1970. and by that time the company was in demand, and i was able to turn around and focus on what we could do in the future. david: was there something about the products that were better

than the others? did you try to make yours a higher level, higher cost kind of product so that gives it more prestige? leonard: they were much better products. they were expensive and very, very, very good for the customers. look, at the beginning we never advertised. what did we do? we gave out samples and gave out samples that were large enough. if you give a customer a sample of a product and they like it, and they come back and buy it again and again and again, that is what builds the business. so, it was years before we even started to advertise. david: now, the brand that you had was called estee lauder. leonard: that is correct. david: at some point you or somebody -- i think it was you -- came up with the idea of having a competing brand called clinique. leonard: right. david: so what was the idea of building a product with a different brand name that was competing with, in effect, your

other brand? leonard: by the time i started to work on clinique, which is in the late 1960's, estee lauder was very successful by that time. and our customers were saying, look, you have only grown 15% this year, we need more, we need more. and i did not want to over promote the brand. because i knew what i wanted to do. so i said, if i wanted to compete with estee lauder, what would i do? and that became clinique. it takes a thief to catch a thief. remember the movie with cary grant? it takes a thief to catch a thief. david: when i go into a department store, but when i do go in, usually on the first floor to your right, you smell nice fragrances and perfumes. i always said to myself, is that because these product are kind of leaking out of the bottle or something like that?

i mean, i thought they were airtight packaging, but in your book you kind of say, you spray it around a little bit to attract people. is that right? leonard: that's right. around. spray and spray. david: it is very important, as you point out in your book, to be in the right location, and you and your competitors, according to your book, would kind of spar over who was going to be in the right location in the department store. is that right? leonard: that's right. that is why acid to you that -- that is why i said to you that the main thing we were watching for and doing was growth, because every department store in the nation was built not just on the profit that they made, but on a growth percentage. and i made it a point that we would drive our business faster than any other brand of any kind in the store. so if the store had, say, a 10% increase, i wanted to have a 15% increase. if they had 20%, i wanted 30%.

and i always wanted a bigger increase than the whole store would have. when that happened, i would get all the support in the world. david: now, if i would go into a drugstore and say i want to buy an estee lauder product, i would not be able to find it. you tried very hard to not go into drugstores to compete with people at the lower price range, is that right? leonard: that is correct. david: and the reason was it makes people think -- and i guess it works -- your product is more upscale, more prestigious product? leonard: it is more than just that. remember, i mentioned growth. if you have one department store and up and down main street, you have two or three or four drugstores there. if you divide the business between everyone, you will not have the growth in that one store. by giving the department store the growth at the beginning, they were so happy with what we

were doing, they gave us a space and location in the store so they could do more. the result is we basically helped the department stores grow in that era. if it wasn't for us, they would not have had the same growth. david: so at one point your company is doing so well that investment bankers were not shy. come to you and say, why don't you take it public? it was a family-owned company. did you want to take the company public? leonard: we weren't ready yet. we really weren't. because when you are a privately held company, you can invest a lot of money and do what you think is right for the long-term and not have to worry about it. so, a few moments ago we were talking about the launch of clinique. clinique cost us millions of dollars of losses to get the brand started, but we were not public, and therefore, we could simply launch it and get it started. and it happened while -- well.

today it's harder to launch a brand, and since we are public, we now have to buy brands rather than creating them ourselves. david: you bought one or two extremely successful brands. you might mention one or two of your most famous brands that you bought. leonard: well, they were not so famous when we bought them, but we bought a company called mac, a company called bobbi brown, a company called joe malone, a company called creme de la mer, and etc. so we would buy a company that had already started itself. we kept the entrepreneur working with us. and sooner or later, we had a whole portfolio of brands that competed with each other as well as competing in the marketplace. ♪

david: when the company did ultimately go public at the end of the last century, i guess it was, it was very public what your company is worth and what your own net worth is. was it something where you did not want people to know quite how successful the company was? and people now realized how wealthy you are? did it change your life in any way? leonard: it never changed my life, but i would rather have no one know if i have any money. i collect art and i like to give it away. i don't need to show my wealth. i like to spread what i am doing to make other people better off. david: let's talk about some of the things you have done.

for example, as a young boy you got interested in postcards. leonard: right. david: then you later built one of the biggest postcard collections in the world. what was the fascination with postcards? leonard: postcards in those days were the snapchat of today. i have postcards that say "see you at lunch today." you would mail them before 10:00 in the morning and it would arrive before lunch where they were going. so, we don't realize, this was before the phone was used all the time, before email, before everything. and so, i loved the idea of postcards, because i liked the idea of instant communication. david: so what did you do with your postcard collection? do you still have it or have you put it in a museum somewhere? leonard: i gave 80% to 90% of it to the museum of fine arts in boston. and a good portion of it to the nori gallery in new york city, which was started by my brother. i don't buy things to possess

them. i buy things to give them away. owning things does not mean anything to me. david: so, one of the things you have given away is your cubist art collection, which i'm told is one of the finest, if not the finest in the world. what is it about cubist art that made you want to collect it, and why did you ultimately decide to give this billion dollar-plus collection to the metropolitan museum of art in new york? leonard: i had already given them almost half already. i love the idea of creating things. now, if i buy a postcard, it could cost me anywhere between five cents and a dollar, but if i buy a picasso painting, i could pay $60,000, $100,000 for it. so to me, i love the hunt and the search, and at the same time

the act of putting it together for a museum and giving it away. so everygive something away, i give them money to display it and do exhibitions. david: so you are now one of the wealthiest people in the united states, but when you were building your art collection, you were not quite as wealthy. so did you have to worry about coming up with the money to buy these picassos? leonard: absolutely. i was in debt up to my ears. david: you have also been involved with the whitney and where the chair of the whitney museum of art in new york for a long time, and their biggest donor. what was it about the whitney that made you so attracted to it. -- it? leonard: i bought thousands of works of art for them. and, uh, i like making museums successful. because when i was a kid three afternoons out of five after school, if i was not doing something else, i was in a museum looking at things. and i love museums and i wanted

to make them greater and greater and greater. david: let's talk for a moment about another thing you have mentioned. your first wife was very involved with breast cancer. she had had breast cancer. and you and she put together a foundation to work on breast cancer. you are still involved in that, is that right? leonard: absolutely. david: and your mother, as you point out in the book, suffered in her later years from alzheimer's and you have also been involved with alzheimer's research. is that an important cause for you? leonard: very important. my brother and i created the alzheimer's drug discovery foundation. we just do drug discovery for prevention and cure. we don't do care, we don't do anything else. but the research that we are doing is amazing, and in my lifetime we are going to have a a prevention -- a prevention and a cure for alzheimer's and related diseases. david: so, what do you attribute your obviously sharp mind at your age and good physique at

your age -- what is it that you do? do you exercise a lot? how do you keep mentally sharp? what's the key? leonard: i exercise a lot, number one. and don't forget this -- everyone should know this -- the brain is a muscle and if you don't use it, you lose it. so that each day i'm doing something -- not doing the crossword puzzles -- to activate my interest. we will read the newspaper in the morning and we will discuss the matters and where is it leading to? and i will make predictions. by the way, i am very good about seeing the future. i don't have my crystal ball with me, but i can predict from time to time. i can see the future, and i work with that knowledge to help in all the things that i'm doing. david: any regrets in this life story you have put together? anything you wish you had done differently? leonard: none whatsoever. i really -- i loved every step along the way. i have never regretted anything.

look, you can't build your life based on what you are looking back on. you can only build your life by looking forward to everything. ♪

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